UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K/A
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from ____________ to_____________
Commission file number 0 - 24012
Nevada 13 - 3087510
--------------------------------------------- ----------------
(State or other jurisdiction of incorporation (I.R.S. Employer
or organization) Identification No.)
|
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15 (d) of the Securities Exchange Act during the preceding 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.
Indicate by a check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. ___
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PRECEDING FIVE YEARS:
Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court.
The aggregate market value of the voting stock held by non-affiliates of the Registrant (based upon the closing price of the Registrant's common stock on December 31, 2003 of $0.55 per share) was approximately $90,878. Shares of common stock held by each executive officer and director of the outstanding common stock have been excluded in that such persons may be deemed to be affiliates. This determination of affiliate status is not necessarily a conclusive determination for other purposes.
As of December 31, 2003, the Registrant had approximately 2,165,233 shares of Common Stock, $.001 par value per share outstanding. This figure accounts for, or takes into consideration, a reverse split of the Company's common stock that occurred and became effective on November 21, 2003. For financial statement purposes, the Company has shown 6,165,233 shares of common stock issued and outstanding. This incorporates an additional 4 million shares that are to be issued by the Company as ordered by the Bankruptcy Court.
INDEX
-----
PART I
Item 1. Business 1
Item 2. Properties 6
Item 3. Legal Proceedings 6
Item 4. Submission of Matters to a Vote of Security Holders 6
PART II
Item 5. Market for the Registrant's Common Equity and Related Stockholder
Matters 6
Item 6. Selected Financial Data 8
Item 7. Management's Discussion and Analysis or Plan of Operation 9
Item 7A. Quantitative and Qualitative Disclosure About Market Risks 12
Item 8. Financial Statements and Supplementary Data 12
Item 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure 32
Item 9A. Controls and Procedures 33
PART III
Item 10. Directors and Executive Officers of the Registrant 33
Item 11. Executive Compensation 34
Item 12. Security Ownership of Certain Beneficial Owners and Management 34
Item 13. Certain Relationships and Related Transactions 35
Item 14. Principal Accountant Fees and Services 35
PART IV
Item 15. Exhibits and Reports on Form 8-K 36
SIGNATURES 36
|
PART I
ITEM 1. BUSINESS
HISTORY
Deep Well Oil & Gas, Inc. ("Deep Well Oil & Gas", "Deep Well" or the "Company") (formerly "Allied Devices Corporation") was originally incorporated on July 18, 1988 under the laws of the state of Nevada as Worldwide Stock Transfer, Inc. These articles were complicated and lengthy, the type of provisions one would expect to find in by-laws, and consisted of 14 pages, single-spaced. On October 25, 1990, an amendment to our articles was made changing our name to Illustrious Mergers, Inc. At that time an article prohibiting preemptive rights was also added.
On June 18, 1991, a company known as Allied Devices Corporation was merged with and into Illustrious Mergers, Inc., and our name was at that time changed to Allied Devices Corporation. On August 19, 1996, a company called Absolute Precision, Inc., was merged with and into us and we retained our name; however, as a result of that transaction, our principal offices were relocated to New York.
We thereafter engaged in substantial business operations, primarily in the manufacture and distribution of standard and custom precision mechanical assemblies and components throughout the United States, however, on February 19, 2003, we filed a Petition for Relief under Chapter 11 of the U.S. Bankruptcy Code in the United States Bankruptcy Court in and for the Eastern District of New York titled In re: Allied Devices Corporation, et al., Chapter 11, Case No. 03-80962-511 ("the Bankruptcy Action").
REORGANIZATION
On July 23, 2003, a Liquidating Plan of Reorganization ("Plan") was filed and submitted to the Bankruptcy Court for the Court's approval. See Exhibit 2.1 attached hereto, a full and complete copy of such Plan. See also Form 8-K/A filed by the Company on November 25, 2003 for additional information.
On September 10, 2003, after notice to all creditors and a formal hearing, U.S. Bankruptcy Judge Melanie L. Cyganowski issued an "Order Confirming Liquidating Plan of Reorganization" in the Bankruptcy Action (hereinafter "Bankruptcy Order"). In conjunction with that Bankruptcy Order, the Company's liabilities, among other things, were paid off and extinguished. See Exhibit 2.2 attached hereto and incorporated by reference, a full and complete copy of such Bankruptcy Order.
The Bankruptcy Order, among other things, implements a change of control whereby Champion Equities, a Utah limited liability company ("Champion"), a Mr. David Roff, of Toronto, Canada ("Roff"), and a group of new investors, took control of the Company. The principal provisions of the Plan, which are authorized and implemented by the Bankruptcy Order, are the following, which is not an exhaustive list thereof:
a) the termination of present management and the present Board of Directors and appointment of Mr. David Roff in their place and stead;
b) giving a Utah entity known as Champion Industries ("Champion"), the power and authority to appoint such other directors, in addition to Mr. Roff, as Champion, in its sole discretion deems appropriate;
c) the reverse split of the Company's common capital stock 1-for-30 on the basis of 5,048,782 shares issued and outstanding immediately prior to the Bankruptcy Order;
d) authorizing Champion to amend the Company's Articles of Incorporation and Bylaws to (i) effect a quasi-reorganization for accounting purposes, (ii) provide the maximum indemnification or other protections to the Company's officers and directors that is allowed under applicable law, (iii) conform to the provisions of the Plan and the corollary Confirmation Order, (iv) set the authorized stock of the Company, post-reverse split, at fifty million (50,000,000) common capital shares; and (v) take all action necessary and appropriate to carry out the terms of the Plan;
e) authorizing Champion, without solicitation of or notice to shareholders, to issue (i) 2,000,000 post-reverse split shares of the Company's common stock to the Company's new management, and (ii) 4,000,000 post-reverse split shares, legend free, in the sole and unfettered discretion of Champion;
f) the Company's Board of Directors, was authorized, without seeking or obtaining shareholder approval to take any and all actions necessary or appropriate to effectuate amendments to the Company's Certificate of Incorporation and/or Bylaws called for under the Plan and the Company's Board of Directors and officers was authorized to execute, verify, acknowledge, file and publish any and all instruments or documents that may be required to accomplish the same; and
g) the Company's charter is to be amended in conformance with applicable bankruptcy rules and the amended charter or bylaws shall, among other provisions, authorize the issuance of any new shares while simultaneously prohibiting the issuance of nonvoting equity securities to the extent required by section 1123(a)(6) of the United States Bankruptcy Code.
After the entry of the Bankruptcy Order, the Company drafted and submitted a form of Restated and Amended Articles of Incorporation to the Secretary of State of Nevada implementing the foregoing, including but not limited to other provisions required of the Company under the Bankruptcy Order.
As a result of the Bankruptcy Order giving Mr. Roff the power and authority to change the Company's name and direction, we decided to change our name from "Allied Devices Corporation" to "Deep Well Oil and Gas, Inc." Accordingly, in the form of Restated and Amended Articles of Incorporation filed with the State of Nevada in October, we changed our name to "Deep Well Oil and Gas, Inc." Our
form of Restated and Amended Articles of Incorporation was accepted by the Nevada Secretary of State on October 22, 2003, pursuant to provisions of Nevada corporate law allowing the amending of corporate articles on the basis of orders entered by U.S. Bankruptcy Courts. A complete copy of our accepted form of Restated and Amended Articles of Incorporation, signed by Mr. Roff and stamped by the Nevada Secretary of State, is attached hereto as Exhibit 3.1.
Prior to the Bankruptcy Order adopting the Liquidating Plan of Reorganization, there were 5,048,782 outstanding shares of our common stock. Following the Bankruptcy Order and the acceptance by the Nevada Secretary of State of our form of Restated and Amended Articles which implements the 1-for-30 reverse split of our shares, and rounding up any fractional shares to the nearest share and also, after the issuance of 2 million shares to Mr. Roff as ordered by the Bankruptcy Court, there are now 2,165,233 issued and outstanding shares of the Registrant's common stock. For financial statement purposes, the Company has shown 6,165,233 shares of common stock issued and outstanding. This incorporates the additional 4 million shares that are to be issued by the Company as ordered by the Bankruptcy Court.
As part of the implementation of the Bankruptcy Order, the Company's stock symbol was changed from ALDVQ to DWOG. The Company's stock is quoted on the "Pink Sheets".
FRESH START
Upon emergence from Chapter 11 proceedings on September 10, 2003, the Company adopted fresh-start reporting in accordance with the American Institute of Certified Public Accountants Statement of Position 90-7, Financial Reporting By Entities in Reorganization Under the Bankruptcy Code (SOP 90-7). In connection with the adoption of fresh-start reporting, a new entity has been deemed created for financial reporting purposes. For financial reporting purposes, the Company adopted the provisions of fresh-start reporting effective September 10, 2003. All periods presented prior to September 10, 2003, have been designated Predecessor Company.
BUSINESS
The Company is no longer operating as Allied Devices Corporation, the Predecessor Company, and has emerged from Chapter 11 protection as a development stage company with no assets and liabilities. The past results of the Predecessor Company are no longer relevant to the operations of the Company.
As a result of the Bankruptcy Order and the implementation of the Liquidating Plan of Reorganization, we are currently headquartered in Toronto, Canada at the address set forth above. We intend to enter into the oil and gas exploration business once our restructuring is completed. At this time, we presently intend to look for properties or projects involving "heavy oil" projects. "Heavy oil" is a dark black, viscous oil that does not flow well and which has a high carbon to hydrogen ratio, along with a high amount of carbon residues, asphaltenes, sulphur, nitrogen, heavy metals, aromatics and/or waxes. Heavy oil is younger in
age than the typical oil people are familiar with. It is found at relatively shallow depths in the earth where there is not as much heat and pressure. In this regard, reference is made the website "Heavyoil.com". As the world's oil supplies become depleted, we believe that there will be more reliance on heavy oil. No assurance can be made or given that we will successfully engage in the oil and gas business or the heavy oil business, nor can any assurance be given that even if we are remotely or relatively successful, that we will have a profit or that our stock will appreciate in value.
At this time, the Company is in discussions to acquire properties or projects involving "heavy oil" projects.
RISKS
The Company has no recent operating history and no representation is made, nor is any intended, that the Company will in fact be able to carry on future business activities successfully.
Development stage companies like the Company compete to obtain favorable business opportunities. The Company faces competition from other development stage companies similarly situated.
The Company is unable to ascertain the exact number of competitor companies, or whether or when such competitors' competitive positions could improve or change. Thus, The Company may be unable to acquire merger or other partners or otherwise locate business combinations on terms acceptable to management. Accordingly, such competition, although customary with development stage companies, could result in delays, increased costs, or other types of adverse consequences affecting The Company and its financial condition.
Need for Additional Capital or Financing and Risks Associated Therewith
Management does not presently intend to borrow funds to compensate any persons, consultants, promoters or affiliates in relation to the implementation of its plans. However, if the Company engages outside advisors or consultants in its search for opportunities, it may be necessary for the Company to attempt to raise additional funds. As of the date hereof, the Company has not made any arrangements or definitive agreements to use outside advisors or consultants or to raise any capital. In the event the Company does need to raise capital, most likely the only method available to the Company would be the private sale of its securities. These possible private sales would more than likely have to be to persons known by the director or other shareholders of the Company or to venture capitalists that would be willing to accept the substantial risks associated with investing in a company with limited history, no current operations and nominal capital.
Because of the nature of the Company as a development stage company, it is unlikely that it could make a public offering of securities or be able to borrow any significant sum from either a commercial or private lender. Management will attempt to acquire funds or financing, if necessary, on the best available
terms. However, there can be no assurance that the Company will be able to obtain additional funding or financing when and if needed, or that such funding, if available, can be obtained on terms reasonable or acceptable to the Company. Although not presently anticipated, a possibility exists that the Company would offer and sell additional securities to its existing shareholders or their affiliates or possibly even "accredited investors."
Risks of Penny Stock Investing
The Company's common stock is considered to be a "penny stock" because it meets
one or more of the definitions in the Exchange Act Rule 3a51-1, a Rule made
effective on July 15, 1992. These include but are not limited to the following:
(i) the stock trades at a price less than five dollars ($5.00) per share; (ii)
it is NOT traded on a "recognized" national exchange; (iii) it is NOT quoted on
the NASD's automated quotation system (NASDAQ), or even if so, has a price less
than five dollars ($5.00) per share; OR (iv) is issued by a company with net
tangible assets less than $2,000,000, if in business more than three years
continuously, or $5,000,000, if in business less than a continuous three years,
or with average revenues of less than $6,000,000 for the past three years. The
principal result or effect of being designated a "penny stock" is that
securities broker-dealers cannot recommend the stock but must trade in it on an
unsolicited basis.
Risks Related to Broker-Dealer Requirements Involving Penny Stocks / Risks Affecting Trading and Liquidity
Section 15(g) of the Securities Exchange Act of 1934, as amended, and Rule 15g-2 promulgated thereunder by the Commission require broker-dealers dealing in penny stocks to provide potential investors with a document disclosing the risks of penny stocks and to obtain a manually signed and dated written receipt of the document before effecting any transaction in a penny stock for the investor's account. These rules may have the effect of reducing the level of trading activity in the secondary market, if and when one develops.
Potential investors in the Company's common stock are urged to obtain and read
such disclosure carefully before purchasing any shares that are deemed to be
"penny stock." Moreover, Commission Rule 15g-9 requires broker-dealers in penny
stocks to approve the account of any investor for transactions in such stocks
before selling any penny stock to that investor. This procedure requires the
broker-dealer to (i) obtain from the investor information concerning his or her
financial situation, investment experience and investment objectives; (ii)
reasonably determine, based on that information, that transactions in penny
stocks are suitable for the investor and that the investor has sufficient
knowledge and experience as to be reasonably capable of evaluating the risks of
penny stock transactions; (iii) provide the investor with a written statement
setting forth the basis on which the broker-dealer made the determination in
(ii) above; and (iv) receive a signed and dated copy of such statement from the
investor, confirming that it accurately reflects the investor's financial
situation, investment experience and investment objectives. Pursuant to the
Penny Stock Reform Act of 1990, broker-dealers are further obligated to provide
customers with monthly account statements. Compliance with the foregoing requirements may make it more difficult for investors in the Company's stock to resell their shares to third parties or to otherwise dispose of them in the market or otherwise.
EMPLOYEES
The Company currently has one part time employee. We expect to hire from time to time, independent consultants and contractors during the stages of implementing our plans.
ITEM 2. PROPERTY
Administrative operations are conducted from the offices of a consulting firm known as Brave Consulting located at Mr. Roff's offices in Toronto, Canada. We expect to operate for as long as possible from these offices to minimize operating expenses. We do not currently pay rent for these offices and do not anticipate paying rent to Mr. Roff or Brave Consulting for any such offices in the future. Our operations do not currently require office or laboratory space to meet our objectives, and therefore administration from these offices is sufficient. At some point in the future, as may be necessary to implement and carry our plans to engage in the oil and gas business, we may require additional office space requiring rental expense, but we do not anticipate any such need during the next six to nine months. We will however, incur common office operating expenses such as telephone, office supplies, postage, etc.
ITEM 3. LEGAL PROCEEDINGS
See Item 1 of Part I hereof titled "Business" and Item 7 of Part II hereof titled "Management's Discussion and Analysis or Plan of Operation" for a detailed discussion of the Company's Bankruptcy Action.
The company is not currently aware of any legal proceedings or claims that the company believes will have, individually or in the aggregate, a material adverse effect on the company's financial position or results of operations.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Not applicable.
PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
PREDECESSOR COMPANY
The Company's common stock was originally listed on the National Association of Securities Dealers Automated SmallCap Market ("NASDAQ") as of November 17, 1994. Following the downturn in sales and profits in 2001-2002, the Company no longer met the listing criteria for NASDAQ's SmallCap Market and accordingly the Company's stock was delisted to the OTC Bulletin Board ("OTC-BB") on September 16, 2002. Subsequent to the delisting, the Company did not file its Form 10-Q for the quarter ended December 31, 2002 on a timely basis, and accordingly, the Company's stock was delisted to the Pink Sheets on March 25, 2003.
SUCCESSOR COMPANY
The Company's stock is currently quoted on the Pink Sheets under the symbol DWOG. The Company's trading ranges by quarter for fiscal 2003 and 2002 were as follows:
High Low
Fiscal 2002
First Quarter $1.45 $0.65
Second Quarter $1.16 $0.40
Third Quarter $0.70 $0.35
Fourth Quarter $0.47 $0.05
Fiscal 2003
First Quarter $0.24 $0.12
Second Quarter $0.13 $0.01
Third Quarter $0.03 $0.002
Fourth Quarter $0.002 $0.0003
|
The Company has not paid cash dividends since inception. The Company intends to retain all of its earnings, if any, for use in its business and does not anticipate paying any cash dividends in the foreseeable future. The payment of any future dividends will be at the discretion of the board of directors and will depend upon a number of factors, including future earnings, the success of the company's business activities, capital requirements, the general financial condition and future prospects of the company, general business conditions and such other factors as the board of directors may deem relevant.
As of October 16, 2003, we had approximately 423 holders of record of the Successor Company's common stock.
RECENT SALES OF UNREGISTERED SECURITIES
On September 10, 2003, the Company issued 2 million shares of common stock to Mr. David Roff pursuant to the Bankruptcy Order. For financial statement purposes, the Company has shown 6,165,233 shares of common stock issued and outstanding. This incorporates the additional 4 million shares that are to be issued by the Company as ordered by the Bankruptcy Court.
ITEM 6. SELECTED FINANCIAL DATA
The Company emerged from Chapter 11 proceedings with no assets and no liabilities and a new plan of operation. Upon emergence from Chapter 11 proceedings on September 10, 2003, we adopted fresh-start reporting in accordance with the American Institute of Certified Public Accountants Statement of Position 90-7, Financial Reporting By Entities in Reorganization Under the Bankruptcy Code. The Company has included selected financial data for the Successor Company. The following selected financial data should be read in conjunction with the consolidated financial statements and related notes included elsewhere in this Form 10-K.
Deep Well Oil & Gas, Inc.
(formerly Allied Devices Corporation)
(Development Stage Company)
Predecessor Predecessor Predecessor Predecessor Predecessor
Successor Company Company Company Company Company
Company Period Year Year Year Year
Period Sep. 10 - Oct. 1, 2002 - ended ended ended ended
Sep. 30 Sep. 9 Sep. 30 Sep. 30 Sep. 30 Sep. 30
2003 2003 2002 2001 2000 1999
(Unaudited) (Unaudited) (Audited) (Audited) (Audited) (Audited)
------------------------------------------------------------------------------------------------------------------------------------
STATEMENT OF OPERATIONS DATA:
Net sales $ -- $ 9,244,193 $ 18,246,189 $ 29,868,056 $ 32,575,127 $ 22,827,298
Gross profit $ -- $ 1,117,981 $ 845,392 $ 4,958,005 $ 9,795,720 $ 7,897,701
Selling, general and administrative expenses $ -- $ 3,255,696 $ 6,175,483 $ 8,031,342 $ 7,507,908 $ 6,013,032
Interest expense, net $ -- $ 527,986 $ 1,809,372 $ 1,706,338 $ 1,220,592 $ 1,007,807
Net income (loss) $ (50,000) $ 1,272,197 $ (8,469,056) $ (3,656,111) $ 638,594 $ 560,417
Net income (loss) per share - basic $ (0.01) $ 0.26 $ (1.71) $ (0.74) $ 0.13 $ 0.11
Basic weighted average number of shares
of common stock outstanding 6,165,233 4,948,392 4,948,392 4,935,965 4,847,592 4,913,524
Net income (loss) per share - diluted $ (0.01) $ 0.26 $ (1.71) $ (0.74) $ 0.12 $ 0.11
Diluted weighted average number of shares
of common stock outstanding 6,165,233 4,948,392 4,948,392 4,935,965 5,537,748 4,948,546
BALANCE SHEET DATA:
Total assets $ -- $ -- $ 24,755,243 $ 34,300,780 $ 31,866,647 $ 26,471,002
Total debt $ -- $ -- $ 22,389,292 $ 23,901,833 $ 14,154,233 $ 12,508,974
Stockholders' deficit $ -- $ -- $ (1,272,197) $ 7,196,859 $ 10,956,620 $ 10,318,026
-----------------------------------------------------------------------------------------------------------------------------------
|
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS
All statements contained herein that are not historical facts, including, but not limited to, statements regarding the Company's current business strategy, the Company's projected sources and uses of cash, and the Company's plans for future development and operations, are based upon current expectations. These statements are forward-looking in nature and involve a number of risks and uncertainties. Actual results may differ materially. Among the factors that could cause actual results to differ materially are the following: the availability of sufficient capital to finance the Company's business plans on terms satisfactory to the Company; competitive factors; changes in labor, equipment and capital costs; changes in regulations affecting the Company's business; future acquisitions or strategic partnerships; general business and economic conditions; and factors described from time to time in the reports filed by the Company with the Securities and Exchange Commission. The Company cautions readers not to place undue reliance on any such forward-looking statements, which statements are made pursuant to the Private Litigation Reform Act of 1995 and, as a result, are pertinent only as of the date made.
REORGANIZATION
On February 19, 2003, the Company filed a Petition for Relief under Chapter 11 of the U.S. Bankruptcy Code in the United States Bankruptcy Court in and for the Eastern District of New York titled In re: Allied Devices Corporation, et al., Chapter 11, Case No. 03-80962-511 ("the Bankruptcy Action").
On July 23, 2003, a Liquidating Plan of Reorganization ("Plan") was filed and submitted to the Bankruptcy Court for the Court's approval. See Exhibit 2.1 attached hereto, a full and complete copy of such Plan. See also Form 8-K/A filed by the Company on November 25, 2003 for additional information.
On September 10, 2003, after notice to all creditors and a formal hearing, U.S. Bankruptcy Judge Melanie L. Cyganowski issued an "Order Confirming Liquidating Plan of Reorganization" in the Bankruptcy Action (hereinafter "Bankruptcy Order"). In conjunction with that Bankruptcy Order, the Company's liabilities, among other things, were paid off and extinguished. See Exhibit 2.2 attached hereto and incorporated by reference, a full and complete copy of such Bankruptcy Order.
The Bankruptcy Order, among other things, implements a change of control whereby Champion Equities, a Utah limited liability company ("Champion"), a Mr. David Roff, of Toronto, Canada ("Roff"), and a group of new investors, took control of the Company. The principal provisions of the Plan, which are authorized and implemented by the Bankruptcy Order, are the following, which is not an exhaustive list thereof:
a) the termination of present management and the present Board of Directors and appointment of Mr. David Roff in their place and stead;
b) giving a Utah entity known as Champion Industries ("Champion"), the power and authority to appoint such other directors, in addition to Mr. Roff, as Champion, in its sole discretion deems appropriate;
c) the reverse split of the Company's common capital stock 1-for-30 on the basis of 5,048,782 shares issued and outstanding immediately prior to the Bankruptcy Order;
d) authorizing Champion to amend the Company's Articles of Incorporation and Bylaws to (i) effect a quasi-reorganization for accounting purposes, (ii) provide the maximum indemnification or other protections to the Company's officers and directors that is allowed under applicable law, (iii) conform to the provisions of the Plan and the corollary Confirmation Order, (iv) set the authorized stock of the Company, post-reverse split, at fifty million (50,000,000) common capital shares; and (v) take all action necessary and appropriate to carry out the terms of the Plan;
e) authorizing Champion, without solicitation of or notice to shareholders, to issue (i) 2,000,000 post-reverse split shares of the Company's common stock to the Company's new management, and (ii) 4,000,000 post-reverse split shares, legend free, in the sole and unfettered discretion of Champion;
f) the Company's Board of Directors, was authorized, without seeking or obtaining shareholder approval to take any and all actions necessary or appropriate to effectuate amendments to the Company's Certificate of Incorporation and/or Bylaws called for under the Plan and the Company's Board of Directors and officers was authorized to execute, verify, acknowledge, file and publish any and all instruments or documents that may be required to accomplish the same; and
g) the Company's charter is to be amended in conformance with applicable bankruptcy rules and the amended charter or bylaws shall, among other provisions, authorize the issuance of any new shares while simultaneously prohibiting the issuance of nonvoting equity securities to the extent required by section 1123(a)(6) of the United States Bankruptcy Code.
After the entry of the Bankruptcy Order, the Company drafted and submitted a form of Restated and Amended Articles of Incorporation to the Secretary of State of Nevada implementing the foregoing, including but not limited to other provisions required of the Company under the Bankruptcy Order.
As a result of the Bankruptcy Order giving Mr. Roff the power and authority to change the Company's name and direction, we decided to change our name from "Allied Devices Corporation" to "Deep Well Oil and Gas, Inc." Accordingly, in the form of Restated and Amended Articles of Incorporation filed with the State of Nevada in October, we changed our name to "Deep Well Oil and Gas, Inc." Our form of Restated and Amended Articles of Incorporation was accepted by the Nevada Secretary of State on October 22, 2003, pursuant to provisions of Nevada
corporate law allowing the amending of corporate articles on the basis of orders entered by U.S. Bankruptcy Courts. A complete copy of our accepted form of Restated and Amended Articles of Incorporation, signed by Mr. Roff and stamped by the Nevada Secretary of State, is attached hereto as Exhibit 3.1.
Prior to the Bankruptcy Order adopting the Liquidating Plan of Reorganization, there were 5,048,782 outstanding shares of our common stock. Following the Bankruptcy Order and the acceptance by the Nevada Secretary of State of our form of Restated and Amended Articles which implements the 1-for-30 reverse split of our shares, and rounding up any fractional shares to the nearest share and also, after the issuance of 2 million shares to Mr. Roff as ordered by the Bankruptcy Court, there are now 2,165,233 issued and outstanding shares of the Registrant's common stock. For financial statement purposes, the Company has shown 6,165,233 shares of common stock issued and outstanding. This incorporates the additional 4 million shares that are to be issued by the Company as ordered by the Bankruptcy Court.
PLAN OF OPERATION
The Company is no longer operating as Allied Devices Corporation, the Predecessor Company, and has emerged from Chapter 11 protection as a development stage company with no assets and liabilities. Accordingly, the Company has prepared this Plan of Operations to discuss its current plans. The past results of the Predecessor Company are no longer relevant to the operations of the Company.
As a result of the Bankruptcy Order and the implementation of the Liquidating Plan of Reorganization, we are currently headquartered in Toronto, Canada at the address set forth above. We intend to enter into the oil and gas exploration business once our restructuring is completed. At this time, we presently intend to look for properties or projects involving "heavy oil" projects. "Heavy oil" is a dark black, viscous oil that does not flow well and which has a high carbon to hydrogen ratio, along with a high amount of carbon residues, asphaltenes, sulphur, nitrogen, heavy metals, aromatics and/or waxes.
Heavy oil is younger in age than the typical oil people are familiar with. It is found at relatively shallow depths in the earth where there is not as much heat and pressure. In this regard, reference is made the website "Heavyoil.com". As the world's oil supplies become depleted, we believe that there will be more reliance on heavy oil. No assurance can be made or given that we will successfully engage in the oil and gas business or the heavy oil business, nor can any assurance be given that even if we are remotely or relatively successful, that we will have a profit or that our stock will appreciate in value.
At this time, the Company is in discussions to acquire properties or projects involving "heavy oil" projects. Reference is made to our Form 8-K/A filed on EDGAR on November 25, 2003.
OFFICES
Administrative operations are conducted from the offices of a consulting firm known as Brave Consulting located at Mr. Roff's offices in Toronto, Canada. We expect to operate for as long as possible from these offices to minimize operating expenses. We do not currently pay rent for these offices and do not anticipate paying rent to Mr. Roff or Brave Consulting for any such offices in the future. Our operations do not currently require office or laboratory space to meet our objectives, and therefore administration from these offices is sufficient. At some point in the future, as may be necessary to implement and carry our plans to engage in the oil and gas business, we may require additional office space requiring rental expense, but we do not anticipate any such need during the next six to nine months. We will however, incur common office operating expenses such as telephone, office supplies, postage, etc.
RAISING CAPITAL
The Company currently lacks the capital resources to implement and carry out its business plan as described herein. Operations to date have involved identification of properties and leases we wish to investigate for oil and gas potential. We believe we have sufficient capital resources funded through current shareholders to perform initial investigations in this regard. At some point in the future we expect to raise additional capital, either through debt, equity or any combination thereof. In the event that additional capital is raised at some time in the future, existing shareholders will experience dilution of their interest in the Company.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISKS
Not applicable.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Member SEC Practice Section of the AICPA 941 East 3300 South, Suite 202
Salt Lake City, Utah 84106
Telephone 801 486-0096
Fax 801 486-0098
Board of Directors
Deep Well Oil & Gas, Inc.
Toronto, Ontario, Canada
|
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
We have audited the accompanying balance sheet of Deep Well Oil & Gas, Inc. (development stage company) at September 30, 2003 and the statements of operations, stockholders' equity, and cash flows for the period September 10, 2003 to September 30, 2003. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the over all financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Deep Well Oil & Gas, Inc. at September 30, 2003 and the statements of operations, and cash flows for the period September 10, 2003 to September 30, 2003 in conformity with accounting principles generally accepted in the United States of America.
The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. The Company will need additional working capital for its planned activity, which raises substantial doubt about its ability to continue as a going concern. Management's plans in regard to these matters are described in the notes to the financial statements. These financial statements do not include any adjustments that might result from the outcome of this uncertainty.
Salt Lake City, Utah
December 18, 2003 s\Sellers & Andersen L.L.C.
Deep Well Oil & Gas, Inc.
(formerly Allied Devices Corporation)
(Development Stage Company)
Consolidated Balance Sheets
Successor Predecessor Predecessor
Company Company Company
Sep. 30 Sep. 9 Sep. 30
2003 2003 2002
(Unaudited) (Unaudited) (Audited)
-----------------------------------------------------------------------------------------------------------
Assets
Current
Cash $ -- $ -- $ 1,536,299
Accounts receivable, net of allowance for doubtful accounts
of $nil, $nil and $58,000, respectively -- -- 2,291,625
Inventories -- -- 5,620,833
Prepaid expenses and other assets -- -- 299,511
Income tax refund receivable -- -- 294,000
-----------------------------------------------------------------------------------------------------------
Total current assets -- -- 10,042,268
-----------------------------------------------------------------------------------------------------------
Property, plant and equipment, at cost, net of accumulated
depreciation and amortization -- -- 9,368,554
Goodwill and other intangibles, net of accumulated amortization --
of $nil, $nil and $1,686,160, respectively -- -- 5,280,653
Other assets -- -- 63,768
-----------------------------------------------------------------------------------------------------------
Total assets $ -- $ -- $ 24,755,243
-----------------------------------------------------------------------------------------------------------
Liabilities and Stockholders' (Deficit) Equity
Current
Accounts payable $ -- $ -- $ 2,017,381
Accrued expenses and other current liabilities -- -- 1,184,787
Current portion of long-term debt and capital lease obligations -- -- 16,478,259
-----------------------------------------------------------------------------------------------------------
Total current liabilities -- -- 19,680,427
-----------------------------------------------------------------------------------------------------------
Long-term debt and accrued interest -- -- 5,911,033
Other liabilities -- -- 435,980
-----------------------------------------------------------------------------------------------------------
Total liabilities -- -- 26,027,440
-----------------------------------------------------------------------------------------------------------
Stockholders' (Deficit) Equity
Common stock, $.001 par value, authorized 50,000,000 shares,
issued and outstanding 6,165,233 shares 6,165 5,049 5,049
Additional paid-in capital 43,835 3,520,970 3,520,970
Retained deficit (50,000) (3,396,848) (4,669,045)
-----------------------------------------------------------------------------------------------------------
Subtotal -- 129,171 (1,143,026)
Treasury stock, at cost -- (129,171) (129,171)
-----------------------------------------------------------------------------------------------------------
Total stockholders' deficit -- -- (1,272,197)
-----------------------------------------------------------------------------------------------------------
Total liabilities and stockholders' deficit $ -- $ -- $ 24,755,243
-----------------------------------------------------------------------------------------------------------
14
|
Deep Well Oil & Gas, Inc.
(formerly Allied Devices Corporation)
(Development Stage Company)
Consolidated Statements of Operations
Predecessor Predecessor Predecessor
Successor Company Company Company
Company Period Year Year
Period Sep. 10 - Oct. 1, 2002 - ended ended
Sep. 30 Sep. 9 Sep. 30 Sep. 30
2003 2003 2002 2001
(Unaudited) (Unaudited) (Audited) (Audited)
-------------------------------------------------------------------------------------------------------------------------
Net sales $ -- $ 9,244,193 $ 18,246,189 $ 29,868,056
Cost of sales -- 8,126,212 14,897,237 22,191,192
Inventory write-downs -- -- 2,503,560 2,718,859
-------------------------------------------------------------------------------------------------------------------------
Gross profit -- 1,117,981 845,392 4,958,005
Selling, general and administrative expenses -- 3,255,696 6,175,483 8,031,342
Write-downs 50,000 -- 2,323,765 --
Restructuring expense -- -- -- 914,785
-------------------------------------------------------------------------------------------------------------------------
Income (loss) from operations (50,000) (2,137,715) (7,653,856) (3,988,122)
---------------------------------------------------------------------------------------------------------------------
Other (income) expense -- -- (173,458) (7,536)
Interest expense (net) -- 527,986 1,809,372 1,706,338
-------------------------------------------------------------------------------------------------------------------------
Income (loss) before reorganization items and income taxes (50,000) (2,665,701) (9,289,770) (5,686,924)
-------------------------------------------------------------------------------------------------------------------------
Reorganization items
Inventory write-downs -- 4,231,528 -- --
Write-downs (recoveries) -- (8,169,426) -- --
-------------------------------------------------------------------------------------------------------------------------
-- (3,937,898) -- --
Income taxes -- -- (820,714) (2,030,813)
-------------------------------------------------------------------------------------------------------------------------
Net income (loss) $ (50,000) $ 1,272,197 $ (8,469,056) $ (3,656,111)
-------------------------------------------------------------------------------------------------------------------------
Net income (loss) per share - basic $ (0.01) $ 0.26 $ (1.71) $ (0.74)
-------------------------------------------------------------------------------------------------------------------------
Basic weighted average number of shares
of common stock outstanding 6,165,233 4,948,392 4,948,392 4,935,965
-------------------------------------------------------------------------------------------------------------------------
Net income (loss) per share - diluted $ (0.01) $ 0.26 $ (1.71) $ (0.74)
-------------------------------------------------------------------------------------------------------------------------
Diluted weighted average number of shares
of common stock outstanding 6,165,233 4,948,392 4,948,392 4,935,965
-------------------------------------------------------------------------------------------------------------------------
|
Deep Well Oil & Gas, Inc.
(formerly Allied Devices Corporation)
(Development Stage Company)
Consolidated Statements of Stockholders' (Deficit) Equity
Common stock
$0.001 par value
-------------------------
Total
Additional Retained Stockholders'
Number Paid-in Treasury (Deficit) (Deficit)
of Shares Amount Capital Stock Earnings Equity
----------------------------------------------------------------------------------------------------------------------------------
PREDECESSOR COMPANY
Balance, September 30, 2000 4,947,942 $ 4,948 $ 3,624,721 $ (129,171) $ 7,456,122 $ 10,956,620
Net loss (3,656,111) (3,656,111)
Sale of common stock 800 1 2,599 -- -- 2,600
Shares issued for acquisition 100,000 100 399,900 -- -- 400,000
Stock price guarantee
related to acquisition -- -- (506,250) -- -- (506,250)
--------------------------------------------------------------------------------------------------------------------------------
Balance, September 30, 2001 5,048,742 5,049 3,520,970 (129,171) 3,800,011 7,196,859
Net loss (8,469,056) (8,469,056)
--------------------------------------------------------------------------------------------------------------------------------
Balance, September 30, 2002 5,048,742 5,049 3,520,970 (129,171) (4,669,045) (1,272,197)
UNAUDITED
Net income, Oct. 1, 2002 - Sep. 9, 2003 -- -- -- -- 1,272,197 1,272,197
--------------------------------------------------------------------------------------------------------------------------------
Balance, September 9, 2003 5,048,742 5,049 3,520,970 (129,171) (3,396,848) --
SUCCESSOR COMPANY (UNAUDITED)
Reverse stock split (4,883,509) (4,884) -- -- -- (4,884)
Acquisition of corporate entity -- -- 43,835 -- -- 43,835
Adoption of fresh start accounting -- -- (3,520,970) 129,171 3,396,848 5,049
Issuance of common stock 6,000,000 6,000 -- -- 6,000
Net loss, Sep. 12, 2003 - Sep. 30, 2003 -- -- -- -- (50,000) (50,000)
--------------------------------------------------------------------------------------------------------------------------------
Balance, September 30, 2003 6,165,233 $ 6,165 $ 43,835 $ -- $ (50,000) $ --
--------------------------------------------------------------------------------------------------------------------------------
|
Deep Well Oil & Gas, Inc.
(formerly Allied Devices Corporation)
(Development Stage Company)
Consolidated Statements of Cash Flows
Predecessor Predecessor Predecessor
Successor Company Company Company
Company Period Year Year
Period Sep. 10 - Oct. 1, 2002 - ended ended
Sep. 30 Sep. 9 Sep. 30 Sep. 30
2003 2003 2002 2001
(Unaudited) (Unaudited) (Audited) (Audited)
---------------------------------------------------------------------------------------------------------------------------
Cash flows from operating activities
Net (loss) income (50,000) 1,272,197 (8,469,056) (3,656,111)
Adjustments to reconcile net loss to net cash provided by
(used in) operating activities:
Depreciation and amortization -- 837,864 2,850,147 2,469,080
Allowance for doubtful accounts -- -- (2,000) (7,000)
Provision (benefit) for income taxes -- -- 885,400 (1,112,400)
Write-downs of assets and goodwill 50,000 11,593,671 4,827,325 2,718,859
Recoveries of liabilities -- (4,411,031) -- --
Loss (gain) on sale of equipment -- 2,717,630 (189,903) (7,536)
Recoveries of debt and capital lease obligations -- (13,838,168) -- --
Unrealized loss (gain) on interest rate collar -- (16,003) 47,248 200,000
Changes in assets and liabilities, net of effects from
acquisitions:
Decrease (increase) in:
Accounts receivable -- 2,291,625 (158,352) 2,814,891
Inventories -- 1,389,305 298,297 (833,626)
Prepaid expenses and other current assets -- (89,650) 249,921 (393,263)
Income tax refund receivable -- 294,000 311,503 (605,503)
Other assets -- 1,185 (80) 141,047
(Decrease) increase in:
Accounts payable and accrued expenses -- 773,261 715,649 (1,583,237)
Other liabilities -- -- 47,102 50,411
Income taxes payable -- -- -- (881,801)
--------------------------------------------------------------------------------------------------------------------------
Total adjustments 50,000 1,543,689 9,882,257 2,969,922
--------------------------------------------------------------------------------------------------------------------------
Net cash provided by (used in) operating activities -- 2,815,886 1,413,201 (686,189)
--------------------------------------------------------------------------------------------------------------------------
Cash flows from investing activities
Capital expenditures -- (9,640) (66,936) (515,648)
Business acquisitions, net of cash acquired -- -- -- (682,975)
Proceeds from sale of equipment -- 4,260,911 -- 180,000
--------------------------------------------------------------------------------------------------------------------------
Net cash provided by (used in) investing activities -- 4,251,271 (66,936) (1,018,623)
--------------------------------------------------------------------------------------------------------------------------
Financing Activities
Increase (decrease) in bank borrowings -- -- 200,000 3,900,000
Principal payments on long-term debt and capital
lease obligations -- (8,603,456) (64,688) (2,777,363)
Proceeds from equipment financing -- -- -- 224,111
Deferred financing costs -- -- -- 2,600
--------------------------------------------------------------------------------------------------------------------------
Net cash provided by (used in) financing activities -- (8,603,456) 135,312 1,349,348
--------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in cash -- (1,536,299) 1,481,577 (355,464)
Cash, beginning of period -- 1,536,299 54,722 410,186
--------------------------------------------------------------------------------------------------------------------------
Cash, end of period -- -- 1,536,299 54,722
--------------------------------------------------------------------------------------------------------------------------
Supplemental disclosure of cash flow information:
Cash paid (received) during the year:
Interest $ -- $ 527,986 $ 1,312,161 $ 1,332,334
Income taxes $ -- $ -- $ (2,511,770) $ 691,480
Supplemental schedule of non-cash investing and financing:
Equipment (returned) acquired under capital leases $ -- $ -- $ (1,891,889) $ 4,153,000
Debt change from equipment returned and acquired $ -- $ -- $ 2,081,791 $ --
Consideration in connection with acquisition paid with debt $ -- $ -- $ 60,000 $ 3,816,000
17
|
DEEP WELL OIL & GAS, INC.
(FORMERLY ALLIED DEVICES CORPORATION)
(DEVELOPMENT STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. UNAUDITED FINANCIAL STATEMENTS
The Company is filing unaudited financial statements for the period October 1, 2002 to September 9, 2003 and the period September 10, 2003 to September 30, 2003. The Company's public auditing firm has not yet completed its registration with the Public Company Accounting Oversight Board ("PCAOB") and is unable to sign an audit opinion of the Company until such time as it is registered with the PCAOB.
2. NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Deep Well Oil & Gas, Inc. (formerly Allied Devices Corporation) (the "Company") is a development stage company that intends to engage in the oil and gas exploration business. At this time, the Company is in discussions to acquire properties or projects involving "heavy oil" projects.
Prior to September 10, 2003, the Predecessor Company, known as Allied Devices Corporation, was engaged primarily in the manufacture and distribution of standard and custom precision mechanical assemblies and components throughout the United States. The Predecessor Company was comprised of Allied Devices Corporation ("ADCO"), and its wholly owned subsidiaries, Empire - Tyler Corporation ("Empire") and APPI, Inc. ("APPI"), (collectively the "Predecessor Company").
REORGANIZATION
On February 19, 2003, the Company filed a Petition for Relief under Chapter 11 of the U.S. Bankruptcy Code in the United States Bankruptcy Court in and for the Eastern District of New York titled In re: Allied Devices Corporation, et al., Chapter 11, Case No. 03-80962-511 ("the Bankruptcy Action").
On July 23, 2003, a Liquidating Plan of Reorganization ("Plan") was filed and submitted to the Bankruptcy Court for the Court's approval. See Form 8-K/A filed by the Company on November 25, 2003 for additional information.
On September 10, 2003, after notice to all creditors and a formal hearing, U.S. Bankruptcy Judge Melanie L. Cyganowski issued an "Order Confirming Liquidating Plan of Reorganization" in the Bankruptcy Action (hereinafter "Bankruptcy Order"). In conjunction with that Bankruptcy Order, the Company's liabilities, among other things, were paid off and extinguished.
The Bankruptcy Order, among other things, implements a change of control whereby Champion Equities, a Utah limited liability company ("Champion"), a Mr. David Roff, of Toronto, Canada ("Roff"), and a group of new investors, took control of the Company. The principal provisions of the Plan, which are authorized and implemented by the Bankruptcy Order, are the following, which is not an exhaustive list thereof:
a) the termination of present management and the present Board of Directors and appointment of Mr. David Roff in their place and stead;
b) giving a Utah entity known as Champion Industries ("Champion"), the power and authority to appoint such other directors, in addition to Mr. Roff, as Champion, in its sole discretion deems appropriate;
c) the reverse split of the Company's common capital stock 1-for-30 on the basis of 5,048,782 shares issued and outstanding immediately prior to the Bankruptcy Order;
d) authorizing Champion to amend the Company's Articles of Incorporation and Bylaws to (i) effect a quasi-reorganization for accounting purposes, (ii) provide the maximum indemnification or other protections to the Company's officers and directors that is allowed under applicable law, (iii) conform to the provisions of the Plan and the corollary Confirmation Order, (iv) set the authorized stock of the Company, post-reverse split, at fifty million (50,000,000) common capital shares; and (v) take all action necessary and appropriate to carry out the terms of the Plan;
e) authorizing Champion, without solicitation of or notice to shareholders, to issue (i) 2,000,000 post-reverse split shares of the Company's common stock to the Company's new management, and (ii) 4,000,000 post-reverse split shares, legend free, in the sole and unfettered discretion of Champion;
f) the Company's Board of Directors, was authorized, without seeking or obtaining shareholder approval to take any and all actions necessary or appropriate to effectuate amendments to the Company's Certificate of Incorporation and/or Bylaws called for under the Plan and the Company's Board of Directors and officers was authorized to execute, verify, acknowledge, file and publish any and all instruments or documents that may be required to accomplish the same; and
g) the Company's charter is to be amended in conformance with applicable bankruptcy rules and the amended charter or bylaws shall, among other provisions, authorize the issuance of any new shares while simultaneously prohibiting the issuance of nonvoting equity securities to the extent required by section 1123(a)(6) of the United States Bankruptcy Code.
After the entry of the Bankruptcy Order, the Company drafted and submitted a form of Restated and Amended Articles of Incorporation to the Secretary of State of Nevada implementing the foregoing, including but not limited to other provisions required of the Company under the Bankruptcy Order.
FRESH START REPORTING
Upon emergence from Chapter 11 proceedings, the Company adopted fresh-start reporting in accordance with the American Institute of Certified Public Accountants Statement of Position 90-7, Financial Reporting By Entities in Reorganization Under the Bankruptcy Code (SOP 90-7). In connection with the adoption of fresh-start reporting, a new entity has been deemed created for financial reporting purposes. For financial reporting purposes, the Company adopted the provisions of fresh-start reporting effective September 10, 2003. All periods presented prior to September 10, 2003, including the financial information contained in this quarterly report, have been designated Predecessor Company.
In adopting the requirements of fresh-start reporting as of September 10, 2003, the Company was required to value its assets and liabilities at fair value and eliminate its accumulated deficit as of September 10, 2003. The Company emerged from Chapter 11 proceedings with no assets and liabilities pursuant to the Bankruptcy Order and its balance sheet at that time is stated as such.
PRINCIPLES OF CONSOLIDATION
The Successor Company has no subsidiaries.
The consolidated financial statements include the accounts of the Predecessor Company and its subsidiaries. All significant intercompany balances and transactions have been eliminated in consolidation.
INVENTORIES
During the first quarter of fiscal 2002, the Predecessor Company changed its method of inventory costing from last-in first-out (LIFO) to first-in first-out (FIFO). Prior periods have been restated to reflect this change.
Inventories are valued at the lowerf of cost (first-in, first-out (FIFO) method) or market in the Predecessor Company.
DEPRECIATION AND AMORTIZATION
Property, plant and equipment are stated at cost in the Predecessor Company. Depreciation and amortization of property, plant and equipment was computed using the straight-line method over the estimated useful lives of the assets. The estimated lives were as follows:
Machinery and equipment 3 - 10 years Tools, molds and dies 8 years Furniture, fixtures and office equipment 5 - 7 years Buildings and improvements 30 years |
Leasehold improvements Shorter of the lease term or the estimated useful life of the improvement
INCOME TAXES
Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and tax loss and credit carry forwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rate is recognized in income in the period that includes the enactment date.
On September 30, 2003, the Successor Company had an available net operating loss carry forward of $50,000. The tax benefit of $15,000 from the carry forwards has been fully offset by a valuation reserve because the use of the future tax benefit is undeterminable since the Company has no operations. The loss carryover will expire in 2023.
BASIC AND DILUTED NET INCOME (LOSS) PER SHARE
Basic net income (loss) per share amounts are computed based on the weighted average number of shares actually outstanding. Diluted net income (loss) per share amounts are computed using the weighted average number of common shares and common equivalent shares outstanding unless the exercise becomes antidilutive and then only the basic per share amounts are shown in the report.
GOODWILL
The Successor Company has adopted Statement of Financial Accounting Standards No. 142, "Goodwill and Other Intangible Assets". On September 10, 2003, the Successor Company assigned the $50,000 purchase price for the corporate entity as goodwill to its sole reporting unit. At the same time, the Successor Company conducted an impairment test and determined that the goodwill balance was fully impaired due to uncertainty with regard to future cash flows and a general lack of financial resources. In accordance with this impairment, the Successor Company wrote off the entire goodwill balance against earnings.
The Predecessor Company implemented FAS No. 142 on October 1, 2002. During the first quarter of the Predecessor Company's fiscal 2003, the entire balance of $5,230,653 of goodwill was written off as the amount was impaired. As of September 30, 2002, the net carrying value of goodwill was $5,230,653, which is net of a write off in fiscal 2002 of $2,323,765 related to an impairment. Amortization expense during the year ended September 30, 2002, was approximately $696,000.
LONG-LIVED ASSETS
The Predecessor Company reviewed the carrying values of its long-lived and identifiable intangible assets for possible impairment whenever events or changes in circumstances indicated that the carrying amount of the assets may not be recoverable. Any long-lived assets held for disposal were reported at the lower of their carrying amounts or fair value less cost to sell. The Predecessor Company recorded an asset impairment loss of $2,323,765 for the year ended September 30, 2002.
REVENUE RECOGNITION
The Predecessor Company recognized sales upon shipment of products. All sales were shipped F.O.B. shipping point and were not sold subject to a right of return unless the products are defective. The Predecessor Company's level of returns arising from defective products had historically been immaterial.
SHIPPING AND HANDLING COSTS
The Predecessor Company recorded its shipping and handling fee costs as required under EITF No. 00-10, "Accounting for Shipping and Handling Fee Costs." Accordingly, shipping and handling fee costs were recorded in Sales and Cost of Sales.
ADVERTISING EXPENSES
Advertising expenses are expensed as incurred in the Predecessor Company.
STOCK BASED COMPENSATION
The Successor Company has no stock based compensation plans.
The Predecessor Company accounted for stock based compensation using the
intrinsic value method as permitted by SFAS No. 123 and accounted for such
transactions in accordance with Accounting Principles Board ("APB") No. 25 and,
as required by SFAS No. 123, provided pro forma information regarding net income
(loss) as if compensation costs for the Predecessor Company's stock plan had
been determined in accordance with the fair value method presented by SFAS No.
123.
USE OF ESTIMATES
In preparing financial statements in conformity with generally accepted accounting principles, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the dates of the financial statements and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from those estimates.
FAIR VALUE OF FINANCIAL INSTRUMENTS
The carrying amounts of the Predecessor Company's financial instruments, including cash, receivables, payables and short-term debt, approximated fair value as of September 30, 2002. The carrying value of the Predecessor Company's long-term debt, approximated fair value as of September 30, 2002 based upon the borrowing rates available to the Predecessor Company for bank loans with similar terms and average maturities.
CONCENTRATIONS OF RISK
The Predecessor Company extended credit based on an evaluation of its customer's financial condition, generally without requiring collateral. Exposure to losses on receivables was principally dependent on each customer's financial condition. The Predecessor Company monitored its exposure for credit losses and maintained allowances for anticipated losses. No individual customer was considered to be a significant risk.
RECENT ACCOUNTING PRONOUNCEMENTS
The Company does not expect that the adoption of other recent accounting pronouncements will have a material impact on its financial statements.
3. REORGANIZATION ITEMS
As a result of the Bankruptcy Action, the Predecessor Company recognized reorganization charges for asset write-downs during the period October 1, 2002 to September 9, 2003 as follows:
Period
October 1, 2002 -
September 9, 2003
----------------------------------------------------------------
Write downs:
Inventory $4,231,528
Prepaid expenses and other assets 479,139
Property, plant and equipment 1,602,351
Goodwill and other intangibles 5,280,653
---------
$11,593,671
===========
|
During the period October 1, 2002 to June 30, 2003, the Predecessor Company sold property, plant and equipment for proceeds of $4,260,911 and recognized a loss on sale of property, plant and equipment of $2,717,630. The loss on sale of property, plant and equipment was offset by a waiver of certain prepetition long term debt owed to a creditor (see below).
As a result of the Bankruptcy Action, the Predecessor Company recognized recoveries of certain liabilities for the period October 1, 2002 to September 9, 2003 as follows:
Period
October 1, 2002 -
September 9, 2003
-----------------------------------------------------------------------------
Recoveries:
Accounts payable $2,874,206
Accrued expenses and other current liabilities 1,048,891
Other liabilities 487,934
----------
$4,411,031
==========
|
During the period October 1, 2002 to September 9, 2003, the Predecessor Company paid $8,603,456 in principal to its secured lenders and capital leaseholders from proceeds of equipment sales and working capital. As a result of the Bankruptcy Action, the Predecessor Company recognized recoveries of $8,195,138 of long term debt and capital lease obligations. The Predecessor Company also sold certain assets to an unsecured creditor, and as part of the sale, received a waiver of $5,643,030 in prepetition long term debt owed to the creditor.
4. CAPITAL STOCK
The outstanding common capital stock on February 19, 2003 (the date the Company filed for bankruptcy) was 5,048,742 shares. As part of the settlement from the bankruptcy the Company completed a reverse stock split, reducing the outstanding shares to 165,233, and the rights to issue 6,000,000 post split common shares, in exchange for $50,000, resulting in total outstanding shares of 6,165,233. On the report date the 6,000,000 shares were in the process of being issued, and for reporting purposes the shares are shown as outstanding on September 30, 2003.
5. ASSET IMPAIRMENT LOSS
In accordance with FAS No. 121 "Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed Of", the Predecessor Company recorded an impairment loss of $2,323,765 on the goodwill of APPI (including goodwill from its Martin Machine, Inc. acquisition). Business trends of APPI indicated that the undiscounted future cash flows for this business were less than the carrying value of the long-lived assets related to that business. The loss recognized was the difference between the carrying value of APPI's net assets and the estimated fair value of those assets based on discounted estimated future cash flows.
6. PREDECESSOR COMPANY RESTRUCTURING
In the third quarter of fiscal 2001, the Predecessor Company developed and began to implement a cost savings initiative to increase long-term profitability. The Predecessor Company closed three manufacturing facilities and consolidated these operations into a new facility in Sanford, Maine, following an orderly transition of production to the new facility.
Other restructuring costs associated with downsizing included severance for layoffs throughout the Predecessor Company and professional fees incurred in restructuring and forbearance negotiations. The Predecessor Company estimated the costs associated with the restructuring to be approximately $915,000 and recorded this expense for the year ended September 30, 2001. The restructuring expense consisted of $243,000 in moving costs paid and $672,000 in accrued expenses and liabilities. The accrual in fiscal 2001 included approximately $392,000 ($142,000 in severance, $50,000 in moving costs, and $200,000 in professional fees with approximately $86,000 remaining at the end of fiscal 2002), and $280,000 in lease abandonment costs (approximately $138,000 remaining at the end of fiscal 2002).
7. PREDECESSOR COMPANY ACQUISITIONS
On July 8, 1998, with an effective date of July 1, 1998, the Predecessor Company acquired the assets and business of APPI from Atlantic Precision Products, Inc., a manufacturer of high precision, machined components for original equipment manufacturers with advanced engineering requirements. The price of net assets acquired (including assumption of specified liabilities) was made up of cash, stock, and performance consideration. The consideration was $7,237,500 in cash and 250,000 shares of the Predecessor Company's common stock. The common stock portion of the consideration was recorded at $4 per share, the value guaranteed by the Predecessor Company. On July 9, 2001, the Predecessor Company settled the stock price guarantee portion of the APPI acquisition by issuing a note to the seller in the amount of $506,250 with interest thereon at 7% per annum. The note represented the difference between the guaranteed stock price of $4 per share and the average stock price from July 6 to July 9, 2001 for 250,000 shares of stock. The Predecessor Company had recorded this as a long term note payable and reduction of stockholders' equity. The note was subject to a subordination agreement between the seller and the Predecessor Company's lending institution.
The performance consideration was a stipulated percentage of the future earnings (as defined) for APPI for three years. The Predecessor Company's policy with respect to any such contingent consideration was to record a liability for such amounts as the defined earnings were achieved. After September 30, 2001 no further contingent consideration was accrued. As of that date, contingent consideration of $5,981,061 was recorded as additional goodwill, of which $1,521,998 was paid in cash and $4,459,063 was delivered in the form of five year notes, subordinated to the bank credit facility, due through September 30, 2006 bearing interest at 7% per annum, in accordance with the terms of the asset purchase agreement. The total amount of goodwill amounted to $8,827,797.
On November 15, 2000, the Predecessor Company acquired Martin Machine, Inc., ("Martin Machine") located in Raymond, Maine. The acquisition was accounted for using the purchase method of accounting, and results of operations of this
company have been included in the Predecessor Company's consolidated financial statements from the date of acquisition. Original purchase consideration amounted to $1,031,000, including the value of 100,000 shares of common stock (issued immediately following closing), $400,000 in cash, and a $300,000 five year note payable subordinated to the bank credit facility (Notes 8 and 10), due through September 30, 2006, bearing interest at 7% per annum. Subsequent to the closing the Predecessor Company paid an additional $18,912 in cash, which was recognized as additional goodwill. The total excess of cost over the fair value of assets acquired amounted to $448,374, which has been recorded as goodwill.
The Predecessor Company recorded an impairment loss of $2,323,765 on the goodwill of APPI (including goodwill from its Martin Machine, Inc. acquisition) during fiscal 2002.
The Predecessor Company wrote off all goodwill during the first quarter of 2003 as a result of impairment. See note 2 for additional detail.
8. PREDECESSOR COMPANY INVENTORIES
Inventories are summarized as:
September 30, September 30,
2003 2002
---------------------------------------------------------------------------
Raw materials - $634,604
Work-in-process - 1,043,629
Finished goods - 3,942,600
---- ---------
- $5,620,833
==== ==========
|
The Predecessor Company wrote off $4,231,528 and $2,503,560 for the period October 1, 2002 to September 9, 2003 and the year ended September 30, 2002, respectively, of inactive, slow moving and excess inventories.
9. PREDECESSOR COMPANY PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment consists of:
September 30, September 30,
2003 2002
------------------------------------------------------------------------------
Machinery and equipment - $17,201,771
Tools, molds and dies - 1,317,591
Furniture, fixtures and office equipment - 675,933
Leasehold improvements - 266,144
Building and improvements - 94,520
Land - 5,000
--- ----------
- 19,560,959
Less: accumulated depreciation and amortization - 10,192,405
--- ----------
Property, plant and equipment (net) - 9,368,554
=== ==========
|
Included in machinery and equipment and office equipment at September 30, 2002 is approximately $8,931,000 of equipment under capital lease agreements. At September 30, 2002, the related accumulated depreciation amounts were approximately $3,174,000. During fiscal 2002, property, plant and equipment decreased approximately $2,184,000 and accumulated depreciation decreased approximately $261,000 as a result of returning to a lessor certain under-utilized equipment on a capitalized lease in exchange for retirement of the full amount of related debt outstanding. The Predecessor Company recorded a related gain of approximately $173,000, net of disposition costs.
During the period October 1, 2002 to September 9, 2003, the Predecessor Company wrote off $1,602,351 of property, plant and equipment as a result of the Bankruptcy Action, sold property, plant and equipment for proceeds of $4,260,911 and recognized a loss on sale of property, plant and equipment of $2,717,630. The loss on sale of property, plant and equipment was offset by a waiver of certain prepetition long term debt owed to a creditor (see note 2 for additional information).
Depreciation and amortization expense totaled $837,864, $1,989,000 and $1,906,000 for the period October 1, 2002 to September 9, 2003 and the years ended September 30, 2002 and 2001, respectively.
10. PREDECESSOR COMPANY CREDIT FACILITIES
In July 1998, the Predecessor Company entered into a new credit agreement with its existing lender and repaid all amounts due with respect to its previous credit facility. The new credit agreement provided for a revolving credit loan and a term note. During fiscal 1999, the revolving credit facility was amended. Beginning in October 2001, the Predecessor Company and its lenders undertook to negotiate a Forbearance Agreement, prompted by the Predecessor Company's default on certain financial covenants contained in its lending agreements. Borrowings under the revolving credit loan were $7,000,000 at September 30, 2002.
Under the terms of the five and one-half year (66 months) term note, the Predecessor Company originally borrowed $6,250,000. Interest thereon is computed at the higher of the bank's prime rate plus 1/2% or a LIBOR rate plus 2.50%. The weighted average interest rate for fiscal 2002 was 5.17%. The term note was payable in twenty quarterly installments of principal, which began in March 1999. The quarterly principal installments increased ratably from $150,000 per quarter during the first year to $400,000 per quarter for the last year plus a final installment of $950,000 on December 31, 2003. The Predecessor Company had not made any principal payments since September 30, 2001.
The proceeds of the term note and a portion of the funds drawn against the revolving credit loan were used to finance the APPI acquisition. In conjunction with the issuance of the term note, the Predecessor Company issued the lender warrants to purchase 125,000 shares of its common stock. The value of the warrants totaled $97,000 and was accounted for as deferred financing costs (included in other assets) that was being amortized over the term of the credit agreement.
During the period October 1, 2002 to September 9, 2003, the Predecessor Company paid $8,603,456 in principal to its secured lenders and capital leaseholders from proceeds of equipment sales and working capital. As a result of the Bankruptcy Action, the Predecessor Company recognized recoveries of $8,195,138 of long term debt and capital lease obligations. The Predecessor Company also sold certain assets to an unsecured creditor, and as part of the sale, received a waiver of $5,643,030 in prepetition long term debt owed to the creditor. (See note 2 for additional information.)
The Successor Company emerged from the Chapter 11 proceedings with no assets and no liabilities and has no credit facility or debt obligations.
11. PREDECESSOR COMPANY LONG-TERM DEBT AND CAPITAL LEASE OBLIGATIONS
Long-term debt consisted of:
September 30, September 30,
2003 2002
-----------------------------------------------------------------------------------------------
Revolving credit loan - $7,000,000
Term note - 3,712,500
Acquisition notes plus accrued interest - 5,890,697
Capital lease obligations with varying monthly payments and
interest rates ranging from 7.2% to 9.9% per annum
maturing 2003 through
2006; secured by an interest in specific
machinery and equipment - 5,786,095
--- ----------
Subtotal - 22,389,292
Less: current maturities - 16,478,259
--- ----------
Long-term debt and capital lease obligations - 5,911,033
=== =========
|
Deferred financing costs (gross) included in other assets amounted to $297,223 at September 30, 2002. Accumulated amortization amounted to $226,701 at September 30, 2002.
The Predecessor Company was in default on certain of its debt agreements at September 30, 2002, the outstanding amount of which had all been classified as current.
The Successor Company emerged from the Chapter 11 proceedings with no assets and no liabilities and has no credit facility or debt obligations. (See notes 2 and 9 for additional information.)
12. LEASES
The Predecessor Company rented facilities in Hicksville, New York and in Sanford, Maine under various operating lease agreements expiring through April 2011. In addition, the Predecessor Company was also obligated for two leases in buildings it no longer occupied in Maine. As part of a restructuring in 2001, the Predecessor Company expensed $280,000, representing the full amount due
under the remaining lease obligations. Rent expense amounted to approximately $632,000, $983,000 and $1,003,000 for the period October 1, 2002 to September 9, 2003 and the years ended September 30, 2002 and 2001, respectively.
The Successor Company has no leases.
13. STOCK BASED COMPENSATION
The Successor Company does not have a stock based incentive compensation plan. All outstanding options, warrants and other instruments that were convertible into the Predecessor Company's common stock were cancelled pursuant to the Bankruptcy Order.
In October 1993, the Board of Directors of the Predecessor Company adopted an incentive stock option plan. The Plan, as amended in December 1995, January 1998, and February 2001, allowed the Board of Directors to issue options to purchase an aggregate of 2,000,000 shares of the Predecessor Company's common stock to key employees.
As of September 30, 2002, the Predecessor Company had issued options to purchase an aggregate of 1,746,750 shares of the Predecessor Company's common stock to employees and members of the Predecessor Company's Board of Directors. The Predecessor Company estimated the fair value of each stock option at the grant date by using the Black-Scholes option-pricing model with the following weighted average assumptions used for grants in 2002 and 2001: no dividend yield, expected volatility of approximately 80.00% to 46.00%, risk free interest rates of 4.72% to 6.29%, with an expected life of 7.5 to 10 years. If compensation cost for the Predecessor Company's Stock Option Plan had been determined in accordance with SFAS No. 123, net income would have been reduced in 2002 and 2001 by approximately $76,000 and $86,000, respectively, and net (loss) income per diluted share would have been $(1.73) and $(.76) for each year, respectively.
The following table summarizes information about stock options outstanding at September 30, 2002:
Options Outstanding Options Exercisable
Weighted Average Weighted Weighted
Remaining Average Average
Number Contractual Life Exercise Number Exercise
Exercise Price Outstanding (years) Price Exercisable Price
$0.35 4,600 2.5 $ 0.35 4,600 $ 0.35
$0.35-2.44 55,400 4.6 1.55 55,400 1.55
$1.88-2.19 44,500 5.3 1.91 44,500 1.91
$1.06-1.31 210,500 6.6 1.15 208,400 1.16
$1.03-2.03 944,400 2.4 1.08 944,400 1.08
$1.00 130,000 9.0 1.00 108,000 1.00
$0.55-0.91 303,750 9.5 0.67 260,417 0.64
1,693,150 4.9 $ 1.05 1,625,717 $ 1.05
29
|
Changes in qualified and non-qualified options and warrants outstanding are
summarized as follows:
Warrants Options
Weighted
average
Exercise Option price Exercise
Shares Price Shares per share price
Outstanding September 30, 2000 125,000 $ 2.00 1,437,900 $0.35 - $3.00 $ 1.34
Granted -- -- 130,000 $ 1.00 $ 1.00
Cancelled -- -- (112,500) $1.06 - $2.88 $ 2.76
Outstanding September 30, 2001 125,000 $ 2.00 1,455,400 $0.35 - $3.00 $ 1.20
Granted -- -- 303,750 $0.55 - $0.91 $ .67
Cancelled -- -- (66,000) $1.03 - $3.00 $ 2.60
Outstanding September 30, 2002 125,000 $ 2.00 1,693,150 $0.35 - $2.44 $ 1.05
At September 30, 2002, there were 1,625,717 options exercisable at a weighted
average exercise price of $1.05. The weighted average fair value of options
granted during fiscal 2002 and 2001 was $ .25 and $ .82, respectively.
14. COMMITMENTS
The Predecessor Company had a discretionary 401(k) plan. For the years ended
September 30, 2002 and 2001, the Predecessor Company contributed $73,153 and
$110,835, respectively.
15. TAXES (BENEFIT) ON LOSS
Provisions for income taxes (benefit) on loss in the consolidated statement of
operations consist of the following:
Period
October 1, 2002 - September 30, September 30,
September 9, 2003 2002 2001
--------------------------------------------------------------------------------------------------
Current:
Federal - $(1,686,714) $(854,496)
State - (19,000) (64,317)
--- ----------- ---------
Total current: - (1,705,714) (918,813)
--- ----------- ---------
Deferred:
Federal - 823,000 (1,034,000)
State - 62,000 (78,000)
--- ----------- ---------
Total deferred - 885,000 (1,112,000)
--- ----------- ---------
Total taxes (benefit) on income (loss)
- $(820,714) $(2,030,813)
=== ========== ============
30
|
Deferred tax (assets) liabilities consist of the following:
September 30, September 30,
2003 2002
------------------------------------------------------------------------------------------------
Tax depreciation in excess of book - $1,226,000
Impairment of goodwill (15,000) (871,000)
Investment tax credit carryforward - (36,000)
Restructuring - (46,000)
Provision for accounts receivable - (22,000)
Inventory capitalization - (68,000)
Other temporary differences -- net - (134,000)
Accrued expenses - (190,000)
Net operating loss carryforward - (2,484,000)
Less valuation allowance 15,000 2,625,000
========= ----------
Net deferred tax (assets) $ - $ -
========= ==========
|
The Successor and Predecessor Companies provided a 100% valuation allowance against the net deferred tax assets.
16. GOING CONCERN
The Company intends to seek business opportunities that will provide a profit, however, the Company does not have the working capital necessary to be successful in this effort, which raises substantial doubt about its ability to continue as a going concern.
Continuation of the Company as a going concern is dependent upon obtaining additional working capital and the management of the Company has developed a strategy, which it believes will accomplish this objective through short term related party loans, and equity funding, which will enable the Company to operate for the coming year.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
Effective March 20, 2003, BDO Seidman, LLP (the "Predecessor Accountant") resigned as the independent auditors for the Company. Sellers and Andersen, LLC (the "Successor Accountant") were appointed as the Company's new independent accountants. The Company's Board of Directors approved this action on November 10, 2003. During the last two fiscal years ended September 30, 2002 and 2001 and the subsequent periods to March 20, 2003 (i) there were no disagreements between the Company and BDO Seidman, LLP on any matter of accounting principles or practices, financial statement disclosure or auditing scope or procedure which, if not resolved to the satisfaction of BDO Seidman, LLP would have caused BDO Seidman, LLP to make reference to the matter in its reports on the Company's financial statements, and (ii) BDO Seidman, LLP's reports did not contain an adverse opinion or a disclaimer of opinion, or was qualified or modified as to uncertainty, audit scope, or accounting principles. During the last two most recent fiscal years ended September 30, 2002 and 2001 and the subsequent periods to March 20, 2003, there were no reportable events as the term described in Item 304(a)(1)(iv) of Regulation S-B. BDO Seidman, LLP's opinion in its report on the Company's financial statements for the year ended September 30, 2002 and 2001, expressed substantial doubt with respect to the Company's ability to continue as a going concern.
The Company has not previously consulted with the Successor Accountant regarding the application of accounting principles to a specific completed or contemplated transaction or the type of audit opinion that might be rendered on the Company's financial statements.
ITEM 9A. CONTROLS AND PROCEDURES
(a) Evaluation of disclosure controls and procedures.
Mr. David Roff, the Company's current President, CEO and CFO has concluded, based on his evaluation as of a date within 90 days prior to the filing of this report, that the Company's disclosure controls and procedures are effective to ensure that information required to be disclosed by the Company in the reports filed or submitted by it under the Securities Exchange Act of 1934, as amended, is recorded, processed, summarized and reported as specified in the Securities and Exchange Commission's rules and forms, and include controls and procedures designed to ensure that information required to be disclosed by the Company in such reports is accumulated and communicated to the Company's management, as appropriate, to allow timely decisions regarding required disclosure.
(b) Changes in internal controls over financial reporting.
Since the Company filed its Form 10-K for the year ended September 30, 2002, the Company has entered and emerged from Chapter 11 protection under the U.S. Bankruptcy Code with a new board of directors and new management. The Company contracted the past management of the Company, including its CFO, to assist in the preparation of the financial statements presented herein (for the Predecessor Company) and believes that the control environment that existed to prepare this financial information has not materially affected, or is not reasonably likely to materially affect, our internal control over financial reporting.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT The executive
officers and directors of the Company are as follows:
Name Age Position
David Roff 32 President, CEO, Chairman of the Board,
Sole Director and CFO
|
Brief biographies of the Executive Officers and Directors of the Company are set forth below. All Directors hold office until the next Annual Stockholders' Meeting or until their death, resignation, retirement, removal, disqualification or until their successors have been elected and qualified. Vacancies in the existing Board may be filled by majority vote of the remaining Directors. Officers of the Company serve at the will of the Board of Directors. There are no written employment contracts outstanding.
David Roff, age 32, is the co-president of a private consulting firm called Brave Consulting. Brave Consulting invested in, started and manages four private Internet companies. Mr. Roff has held this position since 2001. From 1998 until 2001, Mr. Roff founded and was vice president of an investor relations and public relations firm. From 1995 until 1998, Mr. Roff was a management consultant for Coopers & Lybrand Consulting where he advised large financial institutions, mutual funds, pension funds and other organizations on technology, internal control strategies and where he additionally provided computer audit support. Mr. Roff has a Bachelor of Arts degree from the University of Western Ontario located in London, Ontario. He is also a Canadian Chartered Accountant.
ITEM 11. EXECUTIVE COMPENSATION
No executive officer currently receives any cash compensation or other benefits from the Company. Cash compensation amounts will be determined in the future based on the services to be rendered and time devoted to the affairs of the Company and the availability of funds. Other elements of compensation, if any, will be determined at that time or at other times in the future.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth the number and percentage of the shares of the Company's Common Stock owned of record and beneficially by each person or entity owning more than 5% of such shares and by all executive officers, officers and directors, as a group at December 31, 2003:
Number of Shares Percentage of Shares
Name Beneficially Owned Beneficially Owned (1)
David Roff (2) 2,000,000 92.4%
All officers and directors
as a group (1 person) 2,000,000 92.4%
|
(1) Based on 2,165,233 common shares outstanding on December 31, 2003.
(2) The address for David Roff is c/o Deep Well Oil & Gas, Inc., 31 Walmer Rd., Suite 6, Toronto, Ontario, Canada, M5R 2W7.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Not applicable.
ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES
The following table is a summary of the fees billed to us by Sellers & Andersen, LLC for professional services for the fiscal years ended September 30, 2003 and September 30, 2002:
Fee Category Fiscal 2003 Fees Fiscal 2002 Fees
Audit Fees $4,075 -
Audit-Related Fees - -
Tax Fees - -
All Other Fees - -
- -
Total Fees $4,075 -
====== ===
|
Audit Fees. Consists of fees billed for professional services rendered for the audit of our financial statements and review of the interim financial statements included in quarterly reports and services that are normally provided by Sellers & Andersen, LLC in connection with statutory and regulatory filings or engagements.
Audit-Related Fees. Consists of fees billed for assurance and related services that are reasonably related to the performance of the audit or review of our consolidated financial statements and are not reported under "Audit Fees." These services include employee benefit plan audits, accounting consultations in connection with acquisitions, attest services that are not required by statute or regulation, and consultations concerning financial accounting and reporting standards.
Tax Fees. Consists of fees billed for professional services for tax compliance, tax advice and tax planning. These services include assistance regarding federal, state and international tax compliance, tax audit defense, customs and duties, mergers and acquisitions, and international tax planning.
All Other Fees. Consists of fees for products and services other than the services reported above. In fiscal 2003 and 2002, there were no other fees other than as reported above.
PART IV
ITEM 15. EXHIBITS AND REPORTS ON FORM 8-K
EXHIBITS
o 2.1 - July 23, 2003, Liquidating Plan of Reorganization of Allied Devices Corporation, now known as Deep Well Oil and Gas, Inc.
o 2.2 - September 10, 2003, Order and Plan of Reorganization of the U.S.
Bankruptcy Court in and for the Eastern District of New York, In re: Allied
Devices Corporation, Chapter 11, Case No. 03-80962-511
o 3.1 - Restated and Amended Articles of Incorporation filed with and accepted by the Secretary of State of Nevada on October 22, 2003, changing the name to "Deep Well Oil and Gas, Inc." and otherwise implementing the Plan
o 31 - Certification of President and Chief Financial Officer Pursuant to
Section 302 of the Sarbanes-Oxley Act of 2002
o 32 - Certification of President and Chief Financial Officer Pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002
REPORTS ON FORM 8-K
The Company has filed the following Form 8-K's since it filed a Form 10-K for the year ended September 30, 2002 with the SEC on January 14, 2003:
o February 20, 2003 - Form 8-K filed to announce the Company's voluntary filing for relief under Chapter 11 of the U.S. Bankruptcy Code.
o April 15, 2003 - Form 8-K filed with a press release announcing that the Company's auditors had declined to continue as auditors of the Company and that the Company intended at the time to wind down its operations and liquidate its assets.
o November 18, 2003 - Form 8-K filed to announce the Company's emergence from Chapter 11 of the U.S. Bankruptcy Code, the change in control of the Company, the change in the Company's certifying accountant and the changes in the Company's directors.
o November 25, 2003 - Form 8-K/A filed to amend the Company's discussion of the change in the Company's certifying accountant.
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
DEEP WELL OIL & GAS, INC.
(Registrant)
Dated: January 26, 2004 By: /s/ DAVID ROFF
-------------------
David Roff
President, CFO and Sole Director
|
EXHIBIT 2.1
UNITED STATES BANKRUPTCY COURT
SOUTHERN DISTRICT OF NEW YORK
-------------------------------------x
In re: Chapter 11
Case No. 03-80962-511
ALLIED DEVICES CORPORATION, d/b/a
ADCO DEVICES CO., STROBA MANU-
FACTURING CO., ABSOLUTE PRECISION
CO., ASTRO INSTRUMENT CO., KAY
PNEUMATICS, AND KING VALVE;
Debtor.
-------------------------------------x
The Debtor proposes the following plan of liquidation pursuant to section 1121(b) of Chapter 11 of Title 11 of the Bankruptcy Code.
Article I
Definitions
1.1 Meaning. For the purpose of this Chapter 11 Plan, each of the terms set forth herein shall have the meaning ascribed below and such meaning shall be equally applicable to the singular and plural forms of the terms defined. All of the definitions and provisions contained in this Article 1 are, and shall be, regarded as integral, substantive and operative provisions of this Plan.
1.2 Other Terms. A term that is used in the Plan and not defined herein, but that is defined in the Bankruptcy Code or in the Federal Rules of Bankruptcy Procedure, shall have the meaning set forth therein. Any reference contained in this Plan to a particular exhibit, paragraph or article shall be deemed to be a reference to an exhibit, paragraph or article of this Plan.
1.3 Rules of Construction. The rules of construction set forth in ss.102 of the Bankruptcy Code shall be applicable to all of the provisions of this Plan. Without in any way limiting the foregoing, as used in this Plan, the words "includes" and "including" are without limitation.
"Administrative Claim" shall mean a claim incurred after the Filing Date and allowed under ss.ss.503(b) or 507(a)(1) and (b) of the Bankruptcy Code, all allowances of compensation or reimbursement of expenses to Professional Persons to the extent allowed by the Court only upon entry of a Final Order under ss.330 of the Bankruptcy Code and the Federal Rules of Bankruptcy Procedure, and any fees or charges assessed against the Debtor's Estate under 28 U.S.C. ss.1930.
"Allowed" or "Allowed Amount", when referring to a Claim, shall mean the amount of a Claim
a. filed with the Court on or before the Bar Date and as to which no objection to the allowance thereof has been interposed within any applicable period of limitation fixed by Final Order or this Plan,
b. which has been scheduled by the Debtor as liquidated and not disputed or contingent in amount and as to which no objection to the amount hereof has been interposed within any applicable period of limitation,
c. as to which any objection has been interposed, to the extent such Claim has been allowed by a Final Order, or
d. any Claim specifically identified in this Plan as an Allowed Claim.
"Assets" shall mean all recoveries from Bankruptcy Actions, the Debtor's equity in and to property of any type or nature whatsoever, real and personal, tangible and intangible, owned or subsequently acquired by the Debtor, after the satisfaction of the Secured Claims secured by such property, including, without limitation, property of the estate pursuant to ss.541 of the Bankruptcy Code,
and the Debtor's interest in Cash, but, in each case, excluding all claims, causes of action or other rights specifically released pursuant to this Plan or the Confirmation Order.
"Available Cash" shall mean the Debtor's interest in Cash on hand and the net proceeds derived, heretofore or hereafter, by the Debtor or the Liquidating Agent, from the liquidation of the Assets, together with the interest earned thereon, less the Professional Fee Reserve as provided hereunder.
"Ballot" shall mean the form distributed to holders of Claims and Interests on which is to be indicated acceptance or rejection of the Plan.
"Bankruptcy Actions" shall mean actions and causes of action (and the proceeds thereof), whether or not commenced as of the date hereof, arising under the Bankruptcy Code, including, without limitation, ss.ss.544, 547, 548 and 549 thereof, but, in each case, excluding all claims, causes of action or other rights specifically released pursuant to this Plan or the Confirmation Order, which non-released claims shall be prosecuted on behalf of the Debtor for the benefit of creditors of the Case.
"Bankruptcy Code" shall mean Title 11 of the United States Code, 11 U.S.C.ss.101, et. seq., as amended. "Bar Date" shall mean June 16, 2003, the last date fixed by Final Order dated April 30, 2003 for filing proofs of Claim or Interests in the Case, which arose at any time either (a) prior to the Filing Date, or (b) on or after the Filing Date through and including the Bar Date, except for the Claims of Professional Persons who render services on behalf of the Case, the Liquidating Agent or the Liquidating Agent's Professionals, for which no bar date is in effect.
"Business Day" shall mean any day on which commercial banks are open for business in New York, New York.
"Carve-outs" shall mean the sums that the Lenders have agreed to pay to holders of Unsecured Claims and certain Professional Persons from the proceeds of the liquidation of the Lenders' collateral as set forth in the Final Orders of the Court approving the Debtor's use of Cash Collateral, including but not limited to, the Unsecured Creditors' Carve-out.
"Case" shall mean the Debtor's Case under chapter 11 of the Bankruptcy Code, Case Nos. 03-80962-511, 03-80963-511, and 03-80964-511.
"Cash" shall mean lawful currency of the United States of America (U.S. dollars), regular check, certified check, bank check or wire transfer from a domestic bank or other cash equivalents.
"Champion" shall mean Champion Equities LLC or its assignee or nominee, an entity that has agreed to infuse New Value into the Debtor's estate, in exchange for the New Stock in New Allied.
"Claim" shall have the meaning given to such term in ss.101(5) of the Bankruptcy Code, as supplemented by ss.102(2) of the Bankruptcy Code.
"Claimant" shall mean the holder of a Claim.
"Class" shall mean any category of Claims or Interests as specified in Article III of this Plan.
"Committee" shall mean the Official Committee of Unsecured Creditors of the Debtor approved in the Jointly Administered Debtors' Cases by the United States Trustee (as such committee may be reconstituted from time to time).
"Committee Counsel" shall mean Westerman, Ball, Ederer, Miller & Sharfstein, LLP, the attorneys retained by the Committee to represent it in these Cases, which retention was approved by a Final Order.
"Confirmation Date" shall mean the date of entry by the Court of the Confirmation Order.
"Confirmation Order" shall mean an order of the Court confirming the Plan in accordance with the Bankruptcy Code.
"Consummation Date" shall mean the date that is twenty (20) days following the Effective Date.
"Court" shall mean the United States Bankruptcy Court for the Eastern District of New York, sitting in Central Islip, New York and any appellate or other court that is competent to exercise jurisdiction over any matter or proceeding arising in or relating to the Jointly Administered Debtors' Cases.
"Debtor" shall mean APPI, Inc., d/b/a Atlantic Precision Products, Inc. "Debtor's Counsel" shall mean Marilyn Simon & Associates.
"Disputed Claim" shall mean a Claim as to which an objection has been timely filed and which objection (a) is not the subject of a Final Order allowing or disallowing the Claim, and (b) has not been withdrawn.
"Distributions" shall mean Cash that is required under the Plan to be distributed to the holders of Allowed Claims.
"Effective Date" shall mean the date on which the Confirmation Order has become a Final Order.
"Equipment Lessors" shall mean Banc One Leasing Corporation, HSBC Business Credit (USA), Inc., JP Morgan Leasing, Inc., Citicorp Vendor Financing, Inc., the entities holding Secured Claims that are secured by specific items of equipment owned by certain of the Debtor.
"Excess Cash" shall mean the Debtor's Pro Rata share of 20% of the net recovery to the Lenders in excess of $4.8 million (exclusive of costs and the satisfaction of other permitted liens) resulting from the sale or liquidation of the assets of the estates of the Jointly Administered Debtors' Cases.
"Federal Rules of Bankruptcy Procedure" shall mean the Federal Rules of Bankruptcy Procedure in effect on the date of this Plan.
"Filing Date" shall mean February 19, 2003, the date on which the Debtor filed its voluntary petition under Chapter 11 of the Bankruptcy Code, thereby commencing the Case.
"Final Distribution Date" shall mean the date of the last payment to
holders of Allowed Claims in accordance with the provisions of this Plan, which
date shall be no later than the tenth (10th) Business Day after the last to
occur of (a) the date on which no Claim remains a Disputed Claim, (b) the date
on which all Assets have been abandoned, disposed of or converted to Cash, and
(c) the date on which all Bankruptcy Actions have been abandoned, settled or
litigated to Final Order.
"Final Order" shall mean an order of the Court which has not been reversed, stayed, modified or amended and (i) the time to appeal from, or to seek review or rehearing of, has expired, (ii) no appeal, review, certiorari or rehearing is pending, and (iii) the order has become conclusive of all matters adjudicated therefor and is in full force and effect.
"Final Pro Rata Share" shall mean, as to any Allowed Class 3 Claim as of the Final Distribution Date, a fraction (i) the numerator of which is the amount of such Allowed Class 3 Claim and (ii) the denominator of which is the sum of all Allowed Class 3 Claims.
"Interest" shall mean the rights of owners of issued and outstanding shares of Stock of the Debtor. "Lenders" shall mean JP Morgan Chase Bank as agent for itself and Citizens Bank, the Debtor' pre-petition lenders and post-petition lenders under the cash collateral orders approved by the Court.
"Liquidating Agent" shall mean Joseph S. Maniscalco, Esq. of LaMonica, Herbst, and Moniscalco, LLP or any successor thereto designated by the Committee.
"Liquidating Agent's Professionals" shall mean all attorneys, accountants and financial consultants retained by the Liquidating Agent after the Confirmation Date.
"New Allied" shall mean the reorganized Debtor following entry of the Confirmation Order.
"New Stock" shall mean the Debtor's Class 4 common shares of stock which shall be reversed at a ratio of 30:1, based on the existence of 5,048,782 issued shares of stock, with New Allied authorized to issue fifty (50) million common shares of stock, post-reverse split.
"New Value" shall mean the sum of $50,000 paid to the Debtor to acquire the New Stock. "Plan" shall mean this Plan of Liquidation. "Police Power Claims" shall mean liabilities arising under (i) the environmental laws of the United States, any municipality, city, county or state and (ii) any criminal laws of the United States, any municipality, city, county or state.
"Post Effective Date Reserve" shall mean the sum of $50,000 to be reserved by Liquidating Agent. Such funds shall be used to pay post Confirmation Date fees and expenses of the Liquidating Agent and the Professional Persons retained in the Jointly Administered Debtors' Cases for the objections to Claims, distributions to Claimants and the pursuit of Bankruptcy Actions.
"Priority Claim" shall mean any Claim entitled to priority in accordance with ss.507(a) of the Bankruptcy Code other than an Administrative Claim.
"Professional Fees" shall mean all Claims for fees, costs and expenses of Professional Persons incurred in this Case, which fees, costs, and expenses shall have been awarded by Final Order pursuant to ss.ss.330 or 503(b) of the Bankruptcy Code.
"Professional Fee Reserve" shall mean the amount of $35,000 held at interest by Debtor's Counsel or the Liquidating Agents for the payment of Professional Fees and post confirmation fees, costs and expenses of Professional Persons.
"Professional Persons" shall mean all attorneys, accountants and financial consultants and other professional persons retained by a Final Order within the meaning of ss.ss.327 or 1103 of the Bankruptcy Code or otherwise.
"Pro Rata" shall mean the proportion that the Allowed Claim in a particular Class bears to the aggregate amount of all Claims (including Disputed Claims until allowed or disallowed) in such Class.
"Released Parties" shall mean the Committee, the Debtor, the Professional Persons, the Liquidating Agent, the Liquidating Agent's Professionals and each of their affiliates, agents, counsel, advisers, consultants, representatives, investment bankers, other professionals and past, present and future officers, directors, and employees of the foregoing.
"Schedules" shall mean the Statement of Financial Affairs and Schedule of Assets, Liabilities and Executory Contracts filed by the Debtor with the Bankruptcy Court under Bankruptcy Rule 1007, as such Schedules have been or may be amended from time to time.
"Secured Claims" shall mean the Claims of the Lenders and the Equipment Lessors and any other Claim that is secured, within the meaning of ss.506(a) of the Bankruptcy Code.
"Stock" shall mean all the issued and outstanding shares of capital stock of the Debtor as of the Confirmation Date.
"Unsecured Claim" shall mean any Claim that is not a Secured Claim, an Administrative Claim or a Priority Claim. "Unsecured Creditors' Carve-out" shall mean the sum of $125,000, plus the Excess Cash that the Lenders have made available to pay the holders of Allowed Unsecured Claims, the Committee, Professional Persons retained by the Committee as set forth in Final Orders of the Court approving Debtors' use of cash collateral and, as modified herein, the Liquidating Agent and the Liquidating Agent's Professionals.
Article II Provision for the Treatment of Administration Claims
Administrative Claims may be impaired. The Allowed Amount of such Claims shall be satisfied, settled and discharged, in full, by the payment of their Pro Rata share up to 100% of such Claims from Available Cash or with respect to Allowed Professional Fees, from the Carve-Outs first and then from Available Cash, on the later of the Consummation Date or the date such claims become Allowed, or upon such terms as may be agreed upon between the Debtor, the Committee, the Liquidating Agent and the respective Claimant entitled to such payment, or in accordance with a Final Order of the Court; provided, however, that for purposes of any payments to holders of Allowed Administrative Claims, other than Allowed Administrative Claims of the Committee, the Liquidating Agent and Professional Persons retained by the Committee or the Liquidating Agent by Final Order, Available Cash shall not include the Unsecured Creditors' Carve-out.
Article III Classification of Claims and Interests
3.1 Classes. A Claim is in a particular class only to the extent that the Claim falls within the description of that Class and is in a different Class to the extent that the remainder of the Claim falls within the description of such different Class. In addition, a Claim or Interest is in a particular Class only to the extent that the Claim or Interest is an Allowed Claim.
Class 1 - Secured Claims Class 2 - Priority Claims Class 3 - Unsecured Claims Class 4 - Holders of Common Shares of stock in Allied Class 5 - Holders of Types and Classes of Stock in Allied, |
other than Common Stock, including without limitation, preferred shares, warrants, options and convertible bonds.
Unimpaired Claims. Only Claims in Class 1 are unimpaired.
Article IV Treatment of Classes of Claims and Interests
4.1 Secured Claims. Class 1 Claims are not impaired and shall be satisfied, settled and discharged, in full, by the payment of the proceeds of the sale of the assets, less expenses, that secured such Secured Claims, or distribution to the Claimant of the asset(s) on which such Claimant holds a Secured Claim or upon such terms as may be agreed upon between the Debtor, the Committee, and the respective Claimant entitled to such payment.
4.2 Priority Claims. Class 2 Claims may be impaired and shall be satisfied, settled and discharged, in full, by the payment of their Pro Rata share of Available Cash up to100% of the Allowed Amount of such Claims on the later of
the Consummation Date or on the date such Claims become Allowed, or upon such terms as may be agreed upon between the Debtor and/or the Committee, and the respective Claimant entitled to such payment.
4.3 Unsecured Claims. Class 3 Claims are impaired. In full and complete satisfaction, discharge and release of Class 3 Claims, the holders of Class 3 Claims shall receive their Pro Rata share of (a) the Available Cash (after the Post Effective Date Reserve is funded and after all Administrative Claims, Secured Claims and Priority Claims are paid in full, less any reserves with respect thereto) and (b) Unsecured Creditors' Carve-out after payment of the Allowed Claims of the Committee, Professional Persons retained by the Committee, the Liquidating Agent and the Liquidating Agent's Professionals, on the later of the Consummation Date, the date such Claims become Allowed, any additional distribution date selected by the Liquidating Agent, or the Final Distribution Date.
4.4 Common Stock Interests. The holders of Class 4 Common Stock Interests are impaired. Pursuant to the Plan, the New Stock will be issued by New Allied and delivered to Champion following the Confirmation Date and promptly after the Debtor receives the New Value from Champion.
4.5 Holders of Types and Classes of Stock in Allied, other than Common Stock. The holders of Class 5 interests are impaired. On the Effective Date, all Class 5 Interests shall be deemed cancelled and holders of Class 5 Interests shall receive no Distribution under the Plan.
Article V Means for Execution of the Plan
5.1 The Confirmation Order shall appoint the Liquidating Agent which shall be granted all the rights, powers and duties of a Trustee under Chapter 7 of the Bankruptcy Code. The Liquidating Agent shall replace the Debtor in all
litigation, adversary proceedings and contested matters commenced prior to the Confirmation Date and shall, with the advice and the consent of the Committee, prosecute claims of the Debtor to final conclusion. The significant majority of the funds for the implementation of the Plan shall be derived from the recoveries from the Bankruptcy Actions.
5.2 The Liquidating Agent shall obtain a defalcation bond from a recognized surety company for funds held following the Confirmation Date.
5.3 Promptly following entry of the Confirmation Order
(a) New Allied shall transfer its corporate shell to Champion, free and clear of any and all public and private liens, interests, judgments, obligations and encumbrances.
(b) New Allied shall deliver all of its corporate books and records to Champion; provided, however, that the Debtor, the Committee and the Liquidating Agent shall be provided reasonable access to such books and records as may be reasonably necessary or appropriate, to implement or consummate this Plan and the provisions of this Plan.
(c) Champion shall terminate the present management and Board of Directors, and shall appoint David Roff as the Chairman of the Board and such other directors, as Champion, in its sole discretion deems appropriate.
(d) Champion shall amend the Articles of Incorporation and Bylaws of New
Allied to (i) effect a quasi-reorganization for accounting purposes,
(ii) provide the maximum indemnification or other protections to New
Allied's officers and directors that is allowed under applicable law,
(iii) conform to the provisions of the Plan and the Confirmation Order
and (iv) set the authorized New Stock at fifty (50) million,
post-reverse split, and (v) take all action necessary and appropriate
to carry out the terms of the Plan.
(e) As part of the agreement to obtain the New Value Champion shall be authorized, without solicitation of or notice to shareholders, to issue (i) 2,000,000 shares of New Stock to the new management of New Allied and (ii) 4,000,000 free trading shares to new investors in New Allied, in the sole and unfettered discretion of Champion. New Stock is to be issued on a post-reverse split basis.
5.4 The Confirmation Order shall determine, as of the date of its entry,
(a) that New Allied is a corporation in good standing, (b) that Champion is
acquiring New Allied's corporate shell in good faith, and (c) shall direct the
appropriate governmental agency to issue a Certificate of Good Standing for New
Allied effective as of the Confirmation Date.
5.5 The Lenders shall deliver the Unsecured Creditors' Carve-out to the Liquidating Agent and the Debtor's Counsel shall deliver the Available Cash to the Liquidating Agent, if any, in its possession, less the Professional Fee Reserve, which Debtor's Counsel shall retain at interest until entry of a Final Order(s) of the Court fixing Professional Fees and Debtor' Counsel shall disburse sums in accordance therewith. Debtor's Counsel shall retain excess funds remaining in the Professional Fee Reserve for ninety (90) days following the Effective Date to pay post confirmation fees, costs and expenses of Professional Persons. Thereafter, any sums remaining in the Professional Fee Reserve shall be promptly delivered to the Liquidating Agent for distribution in accordance with this Plan.
5.6 The Liquidating Agent shall hold all funds delivered to him in his capacity as Liquidating Agent in interest bearing accounts and shall establish the Post Effective Date Reserve. Any Cash remaining in the Post Effective Date Reserve, immediately prior to the Final Distribution Date, shall be treated as Available Cash for distribution to Creditors as provided in Articles II and IV herein.
5.7 Distributions to holders of Allowed Claims pursuant to this Plan shall be paid by checks drawn on the Liquidating Agent's checking account for the Case. The Confirmation Order (and any subsequent Final Orders) shall be a final determination as to the rights of all Claimants and Interest holders to participate in the Distributions under the Plan, whether or not (a) a proof of
claim is filed or deemed filed under ss.501 of the Bankruptcy Code, (b) such Claim is an Allowed Claim, or (c) the holder of such Claim has accepted the Plan. The Liquidating Agent shall make payments and Distributions to holders of Allowed Claims only in accordance with the Plan. Distributions of Cash pursuant to the Plan shall be rounded down to the nearest whole dollar.
5.8 The Liquidating Agent shall commence such Bankruptcy Actions as the Liquidating Agent in its sole discretion shall deem appropriate. The Liquidating Agent may litigate the merits of each such action until determined by Final Order.
5.9 Objections to Claims. The Liquidating Agent shall continue the
retention of Committee Counsel as its counsel or such other counsel as selected
by the Committee, and shall have the exclusive right, within the first ninety
(90) days following the Confirmation Date, or during such additional time
requested for cause shown and authorized by Final Order, to object to any and
all Claims (except the Claims of Secured Creditors) and to litigate, settle or
withdraw any objection to Disputed Claims. Unless otherwise ordered by the
Court, or agreed to by written stipulation approved by a Final Order, or until
the objection thereto is withdrawn or contested matter or adversary proceeding
dismissed, the Liquidating Agent may litigate the merits of each Disputed Claim
until determined by Final Order. Any Claim for which no objection or contested
matter or adversary proceeding addressed to a Claim has been filed on or before
ninety (90) days after the Confirmation Order becomes a Final Order, unless such
date is extended by the Court, shall be deemed an Allowed Claim in such amount
as is set forth in a proof of claim filed with the Court, or if no proof of
claim is filed, as listed in the schedules filed by the Debtor with the Court
pursuant to Rule 1007 of the Federal Rules of Bankruptcy Procedure and not
identified as disputed, contingent or unliquidated as to amount.
5.10 Payments and Distributions on Disputed Claims.
a. Notwithstanding any other provision of this Plan, no distributions will be made with respect to a Disputed Claim until resolution of such dispute by a Final Order. During the time a Claim is a Disputed Claim it shall receive no post Confirmation Date interest or penalties in connection therewith. As soon as practicable after the date on which a Disputed Claim becomes an Allowed Claim, the holder of such Allowed Claim will receive all distributions to which such holder is then entitled under this Plan on account of such Allowed Claim. Any Person who holds both an Allowed Claim and a Disputed Claim will receive the appropriate distribution on the Allowed Claim, and no distribution will be made on the Disputed Claim until such dispute is resolved by a Final Order.
b. In addition, the Liquidating Agent may at any time request that the Bankruptcy Court estimate any Claim under ss.502(c) of the Bankruptcy Code, regardless of whether such Claim has been previously objected to or whether the Bankruptcy Court has ruled on any such objection. In the event that the Bankruptcy Court estimates any Claim, the estimated amount will constitute either the Allowed Amount of such Claim or a maximum limitation on such Claim, as determined by the Bankruptcy Court.
5.11 Unclaimed Distributions. Unclaimed Distributions (including Distributions made by checks which fail to be negotiated) shall be retained by the Liquidating Agent and held in trust for the beneficial holders of Allowed Claims entitled thereto for a period of ninety (90) days after the Distribution date. Any Distribution remaining unclaimed ninety (90) days after the Distribution date shall be canceled (by a stop payment order or otherwise), the Claim(s) relating to such Distributions(s) shall be deemed forfeited and expunged and the holder of such Claim shall be removed from the Distribution schedule and shall receive no further Distributions under this Plan. Any and all
canceled Distributions shall be deemed Available Cash and shall be distributed, after payment of any Professional Fees incurred in connection therewith, to the holders of Class 3 Claims in accordance with paragraph 4.3 of this Plan.
5.12 Mailing of Distributions. All Distributions shall be made by check and shall be deemed made at the time such check is duly deposited in the United States mail, postage prepaid, to the holders of Claims at the address listed on their respective proofs of claim filed with the Court, or if no proof of claim was filed, the latest mailing address filed by the holder of an Allowed Claim entitled to a distribution, or if no such mailing address has been filed, the mailing address reflected on the Schedules.
5.13 Maintenance and Proceeds of Bankruptcy Actions. From and after the Effective Date, the Liquidating Agent and no other entity shall be authorized to assert and litigate all Bankruptcy Actions for Distribution under this Plan. The Liquidating Agent may settle any such controversy without Bankruptcy Court approval if the amount in controversy or sum to be recovered is less than $10,000. Any recoveries shall be held by the Liquidating Agent for distribution to holders of Allowed Claims in accordance with Articles II and IV of the Plan until a Distribution date, or such date to be determined by the Liquidating Agent in consultation with the Committee. All costs and expenses incurred by the Liquidating Agent in connection with the pursuit of any Bankruptcy Actions (including Professional Fees and disbursements) shall be paid out of first, from the Unsecured Creditors' Carve-out and next, from Available Cash.
5.14 Notwithstanding any other provision of this Plan, including, without limitation, paragraphs 5.9 and 5.13, above, the Liquidating Agent shall have no right or authority, nor shall any other person or entity have the right or authority, to assert or prosecute any claims, causes of action or rights specifically released pursuant to the terms of the Plan or the Confirmation Order. Pursuant to the Unsecured Creditors' Carve-out, in exchange for the
benefits of the carve-out, the Committee agreed on behalf of the Committee, the Liquidating Agent and any superceding trustee in Bankruptcy, to waive any and all claims against the Lenders that the Debtors, their estates or the creditors now possesses or in the future may possess.
5.15 Setoffs. The Liquidating Agent may, but shall not be required to, setoff against the payments and/or Distribution of other property to be made under this Plan in respect of any Claim of any nature whatsoever the Debtor may have against the holder of such Claim, but neither the failure to do so nor the allowance of any Allowed Claim hereunder shall constitute a waiver of any such Claim the Debtor may have against such holder.
5.16 Saturday, Sunday or Legal Holiday. If any payment or act under this Plan is required to be made or performed on a date that is not a Business Day, then the making of such payment or the performance of such act may be completed on the next succeeding Business Day, but shall be deemed to have been completed as of the required date.
5.17 Fractional Cents; Multiple Distributions.
(a) Notwithstanding any other provisions of this Plan to the contrary, no payment of fractional cents will be made under this Plan. Cash will be issued to holders entitled to receive a Distribution of Cash in whole cents (rounded to the nearest whole cent). To the extent that cash remains undistributed as a result of rounding of such fractions, such Cash shall be treated as unclaimed property under the Plan.
(b) If any creditor shall be entitled to an interim distribution in an amount less than $1.00, such distribution may instead be held by the Liquidating Agent and distributed to such creditor together with any additional distribution made to such creditor on the Final Distribution Date.
5.18 Post Confirmation Reports. All post confirmation reports shall be prepared and filed the Liquidating Agent. Post confirmation fees payable to the Office of the United States Trustee pursuant to 28 U.S.C. Section 1930(a)(6) shall be paid by the Liquidating Agent out of Available Cash.
5.19 Post-Confirmation Professional Services. The Professional Persons may,
from time to time, provide professional services following the Confirmation
Date. Such services shall be paid from the Professional Fee Reserve and/or
Available Cash, subject to the limitations set forth in Article II for payment
of Allowed Administrative Claims. The Liquidating Agent may retain the
Liquidating Agent's Professionals following the Confirmation Date to render
services including objections to claim, the calculation and distribution of
Available Cash and such Liquidating Agent's Professionals' fees, costs and
expenses, shall be paid first, from the Unsecured Creditors' Carve-out and next,
from Available Cash. Fees, costs and expenses of (a) the Professional Persons or
(b) the Liquidating Agent and the Liquidating Agent's Professionals, shall be
paid within ten (10) days after submission of a bill to Debtor's Counsel or the
Liquidating Agent, as the case may be, with copies to counsel to the Committee,
the Liquidating Agent and the Office of the United States Trustee, provided that
no objection to the payment is received by Debtor's Counsel or the Liquidating
Agent, as the case may be, during such ten (10) day period. If an objection is
asserted and remains unresolved, the Professional Person, the Liquidating Agent
or the Liquidating Agent's Professionals against which the objection is asserted
may file an application for allowance with the Court and such fees, costs and
expenses will be paid in such amounts and from such funds as shall be directed
by Final Order of the Court, allowing such fees, costs and expenses.
Article VI The Liquidating Agent
6.1 The duties of the Liquidating Agent are only as herein specifically provided in this Plan.
6.2 (a) The Liquidating Agent shall establish the reserves contemplated by this Plan, shall complete the collection or liquidation of the Assets, the Bankruptcy Actions in accordance with the terms, conditions and limitations of this Plan, and shall make the Distributions contemplated by this Plan. The Liquidating Agent shall have the right to hire and retain attorneys and other advisers. All reasonable fees and expenses incurred by the Liquidating Agent shall be paid from the Post Effective Date Reserve, Available Cash and/or the Unsecured Creditors' Carve-out.
(b) The Liquidating Agent, under the supervision of the Committee and subject to the terms, conditions and limitations set forth in this Plan, is authorized and empowered to investigate, prosecute, and if necessary, litigate any claims or causes of action constituting Assets on behalf of the Debtor and shall have standing as an estate representative to pursue such Assets, Bankruptcy Actions and Claims objections and may assert any defenses that may otherwise have been asserted by a "trustee" under the Bankruptcy Code. The Liquidating Agent shall also be vested with all rights, powers and benefits afforded to a "trustee" under ss.ss.704 and 1106 of the Bankruptcy Code. The Liquidating Agent is also authorized to take any and all other actions necessary or appropriate to implement or consummate this Plan and the provisions of this Plan.
6.3 The Liquidating Agent shall incur no liability whatsoever for any action taken, or failure to act, except for its own gross negligence or willful misconduct.
a. In the performance of its duties hereunder, the Liquidating Agent shall be entitled to rely upon any document, instrument or signature reasonably believed to be genuine.
b. The Liquidating Agent may assume that any party purporting to give any notice in writing has been duly authorized to do so.
c. The Liquidating Agent shall be paid from Available Cash compensation for the services to be rendered as Liquidating Agent at the customary hourly rate of $275 per hour or such other hourly rate agreed to by the Committee and the Lenders and shall be reimbursed for all expenses and reasonable out of pocket disbursements in connection with carrying out its duties hereunder. The Liquidating Agent shall have the right to retain LaMonica, Herbst and Maniscalco, LLP for the limited purpose of conducting claims analysis review and distributions to creditors at a paralegal rate not to exceed $85.00 per hour. The retention of LaMonica, Herbst and Maniscalco, LLP as attorneys for the Liquidating Agent is subject to entry of a Final Order of the Court approving the retention of the firm.
d. The Liquidating Agent shall obtain insurance, paid with Available Cash, which shall indemnify the Liquidating Agent for and hold it harmless against any loss, liability or expense incurred without gross negligence or willful misconduct on the part of the Liquidating Agent in carrying out its duties hereunder, including the costs and expenses of defending itself against any claim of liability.
e. The provisions of subparagraph (d) of this Article 6.3 shall survive the termination of this Plan.
6.4 The Liquidating Agent shall prepare and maintain distribution schedules with respect to all Classes of Claims. As soon as practicable following the Confirmation Date, but no later than the Consummation Date, the Debtor shall prepare and deliver to the Liquidating Agent Distribution schedules with respect to Administrative Claims (except for Professional Fees), and for all other Classes of Claims, including Disputed Claims. Except as otherwise agreed by the affected Claimant or as estimated under a Final Order, the entire amount of the Disputed Claim shall be included in the schedules for purposes of computing any initial Pro Rata Distribution payable to Class 3 Claimants under Article IV of the Plan. The Liquidating Agent shall reserve and maintain the Pro Rata
Distribution payable to a holder of a Disputed Claim until entry of a Final Order with respect to such Claim. When all objections to all Claims have been resolved by a Final Order and all Assets have been converted to Cash or abandoned, the Liquidating Agent shall compute the Final Pro Rata Share and distribute the Available Cash on the Final Distribution Date.
6.5 Turnover of Lenders' Collateral. If the Liquidating Agent comes into possession of assets subject to the lien of the Lenders, he shall forthwith deliver such assets in the form received to Lenders' counsel, Herrick Feinstein, 2 Park Avenue, New York, New York 10016, Attn: Andrew Gold, Esq.
6.6 Termination of Duties of Liquidating Agent. Upon the completion of the liquidation of the Debtor' Assets and distribution of the Available Cash in accordance with the Plan, the duties, powers, responsibilities and rights of Liquidating Agent shall terminate, ipso facto.
Article VII The Committee
7.1 Until all Distributions have been made in accordance with the terms of this Plan, the members of the Committee shall constitute the Committee.
7.2 The Committee shall direct and control the liquidation of the Debtor' Assets and the prosecution of objections to Claims pursuant to the Plan and shall direct, oversee and control all activity of the Liquidating Agent. The Liquidating Agent shall serve at the pleasure of the Committee. Professional Persons who served as professionals to the Committee prior to the Effective Date may also continue to serve as professionals to the Committee thereafter. Committee Counsel shall also serve as special litigation counsel to the Liquidating Agent in connection with the Bankruptcy Actions and other matters at the discretion of the Liquidating Agent.
7.3 In the event that a vacancy occurs on the Committee by reason of death, resignation or retirement, or because a designee of a member of the Committee shall no longer be employed by such member, the vacancy thereby created shall be filled within thirty (30) days thereafter by a person designated by the member of the Committee that employed the former designee or with whom the former designee was affiliated. In the event such member of the Committee fails to designate a successor representative to serve on the Committee, the vacancy may, but need not, be filled by a designee of a majority of the remaining members of the Committee from among the employees or representatives of the remaining holders of Class 3 Claims.
7.4 Upon the occurrence of any one of the following events, and effective immediately upon such occurrence, a member of the Committee shall be deemed to have resigned from the Committee if such member
a. Shall assign all or any portion of its Claim other than as security for an obligation of, or to an affiliate of, such Claimant, or
b. Releases the Debtor from payment of all or a portion of its Claim.
Any vacancy created as a result of the foregoing may, but need not, be filled by a designee of a majority of the remaining members of the Committee from among the employees or representatives of the remaining holders of the Class 3 Claims.
7.5 The Committee shall function as such whether or not any vacancy is filled. No holder of a Class 3 Claim shall have more than one representative on the Committee at any given time.
7.6 The Committee shall act by a majority vote of its members present and voting, either with or without formal meetings.
7.7 The Committee shall have the power and right, upon such terms and conditions as the Committee may determine, to waive, modify or excuse performance of any of the covenants of the Debtor or the Liquidating Agent set forth in the Plan, but such waiver or excuse shall not be deemed to constitute a waiver of any other term or provision of this Plan or waiver or excuse of the same covenant on a different occasion.
7.8 Members of the Committee and their designees shall serve without compensation. However, the Debtor or the Liquidating Agent shall reimburse each member of the Committee, out of the Post Effective Date Reserve, for all reasonable post-Confirmation Date out-of-pocket expenses or disbursements incurred by it or its designee in the performance of its duties as a member of the Committee, or a designee thereof.
7.9 Neither the Committee nor any member of the Committee, Committee Counsel, or any of its employees, professions or agents, shall be liable for any action taken, or failure to act as a member of the Committee, except for its own gross negligence or willful misconduct. The Available Cash shall be used to indemnify and hold harmless the Committee, its members, and its professionals, and the Liquidating Agent and the Liquidating Agent's Professionals, from and against any and all liabilities, expenses, claims damages or losses incurred by them as a direct result of acts or omissions taken by them in their capacities as members or agents for the Committee or the Liquidating Agent, except for their gross negligence or willful misconduct.
7.10 Upon the completion of the Distributions to be made to the holders of Class 3 Claims in accordance with the Plan, the duties, powers, responsibilities and rights of the Committee and its agents shall terminate, ipso facto.
Article VIII Executory Contracts and Unexpired Leases
8.1 Rejection of Executory Contracts and Unexpired Leases. All executory contracts and unexpired leases to which the Debtor is a party, which were not previously rejected by the Debtor, shall be deemed rejected and disaffirmed as of the Confirmation Date.
8.2 Filing of Claims. Each entity who is a party to any executory contract rejected pursuant to this Article VIII shall be entitled to file, no later than thirty (30) days following the Confirmation Date, a proof of Claim for damages, if any, alleged to arise from the rejection of such executory contract or unexpired lease. A copy of the proof of claim must be delivered to the Debtor's Counsel, the Committee's Counsel and the Liquidating Agent. The failure of such entity to file a proof of Claim within the period prescribed shall forever bar such entity from asserting any Claim for damages arising from the rejection of such executory contract or unexpired lease. The filing of any such proof of Claim shall be without prejudice to any and all rights the Liquidating Agent may have to object to the allowance thereof.
Article IX Injunction and Release
9.1 Except as otherwise expressly provided in this Plan, the Confirmation Order shall operate as an injunction against the commencement or continuation of any action or the employment of any process to collect, offset or recover any sums against the Released Parties with respect to
a. any Claim or interest thereon, whether or not a proof of Claim is filed or deemed filed under ss.501 of the Bankruptcy Code, such Claim or interest becomes an Allowed Amount under ss.502 of the Bankruptcy Code or the holder of such Claim has accepted the Plan, and whether or not such Claim is reduced to judgment, liquidated or unliquidated, contingent or noncontingent, asserted or unasserted, fixed or unfixed, matured or unmatured, disputed or undisputed, legal or equitable,
known or unknown, that arises or may arise from any agreement of the Debtor entered into or obligation of the Debtor incurred before the Confirmation Date, or from any conduct of the Debtor prior to the Confirmation Date, or that otherwise arose before the Confirmation Date and
b. any liability of a kind specified in ss.ss.502(g), 502(h), and 502(i) of the Bankruptcy Code, whether or not a proof of claim is filed or deemed filed under ss.501 of the Bankruptcy Code, such Claim becomes an Allowed Amount under ss.502 of the Bankruptcy Code, or the holder of such Claim has accepted the Plan.
9.2 Except for their obligations under the Plan, as of the Effective Date
a. the Released Parties shall be deemed to have exchanged mutual general releases of all Claims by and among them, and
b. all creditors, interest holders and other parties in interest in this Case shall be deemed to have granted a complete release, waiver and discharge of the Released Parties with respect to all claims, causes of action, rights and liabilities addressed and released by the Plan.
9.3 General Injunction. Exclusive of any applications or appeals pending as of the Confirmation Date, all holders of Claims against or Interests in the Debtor shall forever be enjoined from the commencement or continuation in any manner, or any action or other proceeding of any kind, the employment of process, or any act to assert a Claim for relief against the Released Parties, in respect of:
a. Any actions taken during the course of the Jointly Administered Debtors' Cases;
b. The Plan;
c. The authorization for or the formulation, negotiation, confirmation or consummation of the Plan;
d. Distributions, payments or transfers made under and in accordance with the provisions of the Plan;
e. Any other matter, claim, cause of action, right or liability released pursuant to the Plan including paragraphs 9.2 above and 9.7 below;
f. Acts performed pursuant to the Plan; or
g. Any matter released pursuant to the terms of the Plan, including paragraphs 9.2 above or 9.7 below.
9.4 Injunction against Recording and Taxing Authorities. As of the
Effective Date, any and all federal state and local taxing authorities shall be
permanently enjoined from the commencement or continuation of any action to
collect any transfer taxes from the Debtor, any Released Party, or the Interest
Holders, which shall in all events be exempt from payment as provided under
Section 1146(c) of the Bankruptcy Code, and the Confirmation Order shall so
provide.
9.5 Discharge of Liquidating Agent. The Liquidating Agent shall be discharged of and from his responsibilities and obligations as Liquidating Agent, automatically and without further act or deed on the part of any entity, on the date of the clearance of the final Distribution in the Jointly Administered Debtors' Cases and after the payment of all Allowed Claims of Professional Persons as provided in the Plan.
9.6 The automatic stay pursuant to Section 362 of the Bankruptcy Code shall continue in effect until the final Distribution of Available Cash under the Plan.
9.7 Limitation of Liability. Except as expressly set forth herein or in the Confirmation Order and without limiting the scope or effectiveness of the releases granted in this Plan, effective on the Effective Date, none of Released Parties shall have or incur any liability for any past, present or future actions taken or omitted to be taken before, on or after the Filing Date under or in connection with, related to, affecting or arising out of the Debtor, any of the Debtor's operations, the filing of the chapter 11 petition, the Case, the administration of the Debtor's Cash, Assets, real and personal property, the negotiation, implementation, pursuit of confirmation of the Plan, the Consummation and administration of the Plan, the sale and liquidation of the
Assets, and the property to be distributed under this Plan, except by reason of his, her or its gross negligence or willful misconduct, and in all respects, the Released Parties shall be entitled to rely upon the advice of counsel with respect to his, her or its duties and responsibilities under the Plan. The Plan shall constitute a release by all past, present or future holders of Claims or Interests, directly or indirectly, to effect the foregoing, effective as of the Confirmation Date, but subject to the occurrence of the Effective Date, and the Confirmation Order shall so provide.
9.8 Notwithstanding anything to the contrary contained in this Article IX, none of the injunctions and releases provided for herein shall limit, affect or otherwise impair the right of governmental authorities to assert Police Power Claims, as appropriate, against any entity.
Article X Certain Provisions Regarding New Allied and the New Stock
10.1 Take Required Actions.
(a) Without shareholder approval, the Board of Directors of New Allied shall be authorized to take any and all action necessary or appropriate to effectuate any amendments to New Allied's Certificate of Incorporation and/or Bylaws called for under the Plan and the Board of Directors and officers of New Allied shall be authorized to execute, verify, acknowledge, file and publish any and all instruments or documents that may be required to accomplish same.
(b) New Allied shall amend its charter in conformance with section 1123(a)(5)(I) of the Bankruptcy Code. The amended charter or bylaws shall, among other provisions: (i) authorize the issuance of the New Stock; and (ii) prohibit the issuance of nonvoting equity securities to the extent required by section 1123(a)(6) of the Bankruptcy Code. The amended charter and bylaws will become effective upon (i) Confirmation of the Plan, and (ii) the occurrence of the Effective Date.
10.2 Exemption From Registration Under Section 1145 of the Bankruptcy Code.
The New Stock will be issued without being registered under the Securities Act of 1933 (the "Act") or equivalent state securities or "blue sky" laws, in reliance on the exemption from registration provided by section 3(a)(7) of the Act (15 U.S.C. Section 77(c)(a)(7) and Section 1145(a)(1) of the Bankruptcy Code.
10.3 Notwithstanding anything contained in this Article X, in Section 4.4 or any other provision of this Plan to the contrary, the exchange for stock by Champion and the actions to be taken by New Allied pursuant to the Plan as provided hereunder, shall be at no cost to the Debtor or its estate.
Article XI Miscellaneous Provisions
11.1 Effect of Confirmation. The Distributions and other treatment afforded holders of Claims and Interests under this Plan shall be the only payments received by the holders of Claims against and Interests in the Debtor.
11.2 Entire Agreement. The Plan and the Confirmation Order, including any exhibits to the Plan set forth the entire agreement and understanding among the parties hereto relating to the subject matter hereof and supersede all prior discussions and documents. No party shall be bound by any terms, conditions, definitions, warrants, understandings or representations with respect to the Plan other than as are expressly provided for herein. Should any provision in the Plan be determined to be unenforceable by a court of competent jurisdiction, such determination shall in no way limit or affect the enforceability and operative effect of any and all other provisions of the Plan. The duties, rights
and obligations of any person or entity named or referred to in the Plan shall be binding upon, inure to the benefit of and shall be the responsibility of, the successors and assigns of such person or entity.
11.3 Headings. The headings of the Articles, paragraphs and sections of the Plan are inserted for convenience only and shall not affect the interpretation hereof. The Plan, including any exhibits and other attachments hereto, shall constitute the entire Plan, subject to amendment or modification solely as provided herein. Article I of the Plan is and shall be regarded as an integral, substantive and operative part of the Plan.
11.4 Post-Consummation Effectiveness of Evidence of Claims or Interest. Evidence of Claims or Interests shall, upon the Effective Date, represent only the right to participate in the Distributions contemplated by the Plan and otherwise shall have no further force or effect. 11.5 Modification of the Plan. The Debtor may amend or modify this Plan in accordance with ss.1127(b) of the Bankruptcy Code, or remedy any defect or omission or reconcile any inconsistency in the Plan in such manner as may be necessary to carry out the purpose and intent of the Plan. On or before substantial consummation of the Plan, the Debtor or the Committee may issue, execute, deliver or file with the Bankruptcy Court or record any agreements and other documents, and take any action as may be necessary or appropriate to effectuate, consummate and further evidence the terms and conditions of the Plan.
11.6 Payment of Statutory Fees. All fees payable pursuant to ss.1930 of title 28 of the United States Code, as determined by the Bankruptcy Court at the Confirmation Hearing, shall be paid on or before the Effective Date. The Liquidating Agent shall pay fees that accrue under ss.1930 of title 28 until a Final Decree is entered in this Case, or the Court otherwise orders, out of Available Cash and/or the Post Effective Date Reserve. The Liquidating Agent shall submit U.S. Trustee quarterly fee status reports with each quarterly fee paid after Confirmation of this Plan.
11.7 No Interest or Attorneys' Fees. Unless otherwise specifically provided for in the Plan or Confirmation Order or Allowed by a Final Order of the Bankruptcy Court, post-petition interest shall not accrue or be paid on Claims, and no holder of a Claim or Interest shall be entitled to such interest or any penalty or late charge accruing on or after the Filing Date on any such Claim or Interest. Interest shall not accrue or be paid upon any Disputed Claim with respect to the period the Filing Date to the date paid with respect to such Claim once Allowed. No attorneys' fees will be paid by the Debtor with respect to any Claim or Interest except as expressly specified herein or Allowed by a Final Order of the Bankruptcy Court.
11.8 Defenses with Respect to Unimpaired Claims. Except as otherwise provided in this Plan, nothing shall affect the rights and legal and equitable defenses of the Debtor with respect to any unimpaired Claim, including but not limited to, all rights in respect of legal and equitable defenses to setoffs or recoupments against unimpaired Claims.
11.9 Failure of Bankruptcy Court to Exercise Jurisdiction. If the Bankruptcy Court abstains from exercising or declines to exercise jurisdiction, or is otherwise without jurisdiction over any matter arising out of this Case, including any of the matters set forth in this Plan, this Plan shall not prohibit or limit the exercise of jurisdiction by any other court of competent jurisdiction with respect to such matter.
11.10 Governing Law. Except to the extent that the Bankruptcy Code or any other federal law is applicable or to the extent the law of a different jurisdiction is validly elected by the Debtor, the rights, duties and obligations arising under the Plan shall be governed in accordance with the substantive laws of the United States of America and, to the extent federal law is not applicable, the laws of the State of New York.
11.11 Notice. Any notice described in or required by the terms of this Plan shall be deemed to have been properly given (a) if mailed, five (5) days after the date of mailing, or (b) if sent via facsimile, on the date of the transmission confirmation, to
The Debtor c/o its Attorneys, Marilyn Simon & Associates 280 Madison Avenue, 5th floor New York, New York 10016 Facsimile # (212) 686-1544 Attn: Marilyn Simon, Esq.
The Committee c/o its Attorneys Westerman, Ball, Ederer, Miller & Scharfstein 170 Old Country Road Mineola, New York 11501 Facsimile # (516) 622-9212 Attn: Thomas A. Draghi, Esq.
Joseph S. Maniscalco, Esq.
The Liquidating Agent
c/o LaMonica, Herbst and Maniscalco, LLP
3305 Jerusalem Avenue
Wantagh, New York 11793
Facsimile # (516) 826-0222
or to such other address as the recipient may give written notice in accordance with the provisions of this paragraph of the Plan.
11.12 Revocation. The Debtor reserves the right to revoke and withdraw this Plan at any time prior to the Confirmation Date. If the Plan is revoked or withdrawn, it shall be deemed null and void, and in such event, nothing contained herein shall be deemed to constitute a waiver or release of any Claim by or against the Debtor, the Committee, or any other entity, or to prejudice in any manner, the rights of the Debtor, the Committee, or any entity in any further proceeding involving the Debtor or the Committee.
11.13 Substantial Consummation. The Plan will be deemed substantially consummated, as such term is used in ss.1101(2) of the Bankruptcy Code, upon the commencement of Distributions to the holders of any class of Claims under this Plan. Following such substantial consummation, any appeal, rehearing or other post-confirmation motion of any nature with respect to this Plan or the Confirmation Order except as specifically provided herein or therein shall be rendered moot and no longer justiciable.
11.14 Cramdown. If any impaired Class fails to accept the Plan in accordance with ss.1129(a) of the Bankruptcy Code, the Debtor will request that the Court confirm the Plan in accordance with the provisions of ss.1129(b) of the Bankruptcy Code.
11.15 Confirmation. This Plan may be confirmed if there is insufficient
Cash to pay a distribution to any Class of Claims, provided that (i) no junior
class receives any distribution until all superior classes are paid in full and
(ii) if there is insufficient Cash to pay any superior Class in full, such Class
receives its Pro Rata share of Available Cash.
11.16 Continuation of Prior Orders. Entry of a Confirmation Order shall not supercede or affect any prior Orders entered by the Court.
11.17 Reservation of Rights. In the event that this Plan is not confirmed or that the Effective Date does not occur, the rights of all parties in interest in the Case shall be reserved in full.
Article XII Retention of Jurisdiction
Notwithstanding the entry of the Confirmation Order, the occurrence of the Effective Date or the closing of the Case, the Court shall retain and have jurisdiction of this proceeding under the provisions of the Bankruptcy Code, including, without limitation, ss.1142(b) thereof and of the Federal Rules of
Bankruptcy Procedure, and all matters arising out of, and related to the Case and the Plan, and to ensure that the intent and the purpose of the Plan is carried out and given effect. Without limitation by reason of specification, the Court shall retain and have jurisdiction for the following purposes:
a. To consider any modification of the Plan pursuant toss.1127 of the Bankruptcy Code and/or any modification of the Plan after substantial consummation thereof,
b. To hear and to determine:
(i) all controversies, suits and disputes, if any, as may arise in connection with the interpretation or enforcement of the Plan,
(ii) all controversies, suits and disputes, if any, as may arise between or among the holders of any Class of Claims or Interests and the Debtor,
(iii) all claims and causes of action which may exist on behalf of the Debtor, including Bankruptcy Actions,
(iv) applications for allowance of compensation and objections to Claims which have been or may be timely asserted in accordance with orders of this Court or this Plan,
(v) any and all pending applications, adversary proceedings, litigated matters and contested matters, and
(vi) matters concerning state, local and federal taxes in accordance with ss.ss.345, 505 and 1146 by the Bankruptcy Code.
c. To ensure that Distributions are accomplished as provided herein, and to resolve any dispute or issue concerning Distributions,
d. To protect the property of the Estate and the Assets from adverse claims or interference inconsistent with the Plan,
e. To interpret and enforce orders previously entered in any of the Jointly Administered Debtors' Cases to the extent such orders are not superseded or inconsistent with this Plan,
f. To recover all Assets of the Debtor and property of the Estate for Distribution under the Plan,
g. To hear, determine and resolve any actions or controversies by or against the Liquidating Agent or Committee or the conduct, action, inaction or omission of the Liquidating Agent or Committee after the Effective Date, and
h. To perform any other functions set forth in the Confirmation Order.
Dated: Central Islip, New York
July 23, 2003 ALLIED DEVICES CORPORATION
By: /s/Paul M. Cervino
----------------------------
Paul M. Cervino, President
|
EXHIBIT 2.2
UNITED STATES BANKRUPTCY COURT
EASTERN DISTRICT OF NEW YORK
------------------------------------------------x
In re: Chapter 11
Case No. 03-80962-511
ALLIED DEVICES CORPORATION, d/b/a
ADCO DEVICES CO., STROBA MANU-
FACTURING CO., ABSOLUTE PRECISION
CO., ASTRO INSTRUMENT CO., KAY
PNEUMATICS, AND KING VALVE;
Debtor.
------------------------------------------------x
Allied Devices Corporation, d/b/a Adco Devices Co., Stroba Manufacturing Co., Absolute Precision Co., Astro Instrument Co., Kay Pneumatics, and King Valve, debtor and debtor in possession (the Debtor") having proposed and filed a liquidating plan of reorganization dated July 23, 2003 (the "Plan") in this case under Chapter 11 of Title 11 of the United States Code (the "Bankruptcy Code");
AND a hearing to consider approval of the joint disclosure statement having been held before this Court on July 23, 2003 on notice to all holders of Claims* and Interests in the Case, and the joint disclosure statement dated July 23, 2003 (the "Disclosure Statement") having been approved by order of this Court dated July 28, 2003 (the "Disclosure Statement Order");
AND pursuant to the Disclosure Statement Order, copies of the Plan, the Disclosure Statement, a "Notice Fixing the Time for Acceptances or Rejections of the Plan, the Hearing on the Confirmation of the Plan and the Time for Filing Objections to Confirmation" and the ballot forms for acceptance or rejection of the Plan (collectively, the "Solicitation Materials") having been transmitted to all holders of Claims and Interests;
AND the solicitation of acceptances from holders of Claims and Interests in this Case having been made within the time and in the manner required by the Disclosure Statement Order, and the acceptances and rejections of the Plan having been received by counsel to the Debtor and having been filed with the Court under cover of a pleading entitled "Certification of Acceptances";
AND no objections to confirmation of the Plan having been filed or asserted herein;
AND a confirmation hearing having been held by this Court on September 10, 2003 upon proper and timely notice to all persons entitled thereto in accordance with the Disclosure Statement Order, ss.1128 of the Bankruptcy Code and Rule 2002(b) of the Federal Rules of Bankruptcy Procedure, and upon the affidavit of service by mail of the Solicitation Materials, and upon the record of such hearing and all the proceedings held before the Court in this Case, and after due deliberation, and sufficient cause appearing therefor;
IT IS HEREBY FOUND, CONCLUDED and DETERMINED, after notice and a hearing, that
1. The Plan complies with the applicable provisions of the Bankruptcy Code and the Federal Rules of Bankruptcy Procedure:
a. Proper Classification (ss.1123(a)(1)). The classification of Claims and Interests under the Plan complies with ss.1122 of the Bankruptcy Code. The Claims or Interests placed in a particular class pursuant to the Plan are substantially similar to the other Claims or Interests, as the case may be, in such class.
b. Specific Unimpaired Classes (ss.1123(a)(2)). Class 1 is not impaired under the Plan.
c. Specific Treatment of Impaired Classes and of Classes Which May Be Impaired (ss.1123(a)(3)). The Plan specifies the treatment of Administration Claims and Claims in Class 2, which may be impaired and Claims in Classes 3, 4 and 5, which are impaired, the details of which are contained in Article IV of the Plan.
d. No Discrimination (ss.1123(a)(4)). The Plan provides for the same treatment of each Claim or Interest in a particular Class.
e. Implementation of the Plan (ss.1123(a)(5)). The Plan provides adequate means for the Plan's implementation. Debtor's counsel has represented to the Court that it has commenced 29 actions to recover preferences aggregating $94,413.69.
f. Executory Contracts and Unexpired Leases (ss.1123(b)(2)). All executory contracts and unexpired leases of the Debtor shall be deemed rejected.
g. The Debtor is in Compliance with the Bankruptcy Code (ss.1129(a)(2)). The Debtor, as proponent of the Plan, has complied with the applicable provisions of the Bankruptcy Code. The solicitation of acceptances and rejections from holders of Claims that were placed in impaired Classes 2, 3 and 4 under the Plan was in compliance with (i) the Disclosure Statement Order, (ii) the applicable provisions of the Bankruptcy Code and (iii) the applicable Federal Rules of Bankruptcy Procedure. Class 5 will not receive or retain any property under the Plan and is conclusively presumed to have rejected the Plan under ss.1126(g) of the Bankruptcy Code.
h. Plan Proposed in Good Faith (ss.1129(a)(3)). The Plan has been proposed in good faith and not by any means forbidden by law.
i. Payments of Costs and Expenses (ss.1129(a)(4)). Any payment made or to be made by the Debtor for services or for costs and expenses in or in connection with the Case, or in connection with the Plan and incident to the Case has been disclosed to the Court, and where appropriate pursuant to the Plan, has been approved by the Court or is subject to approval of this Court as reasonable.
j. Insider Employees (ss.1129(a)(5)). No insiders of the Debtor will be employed or retained by the reorganized Debtor or New Allied.
k. No Rate Change (ss.1129(a)(6)). No rate changes are provided for in the Plan that would require governmental regulatory commission approval.
l. Best Interests of Creditors (ss.1129(a)(7)). With respect to each impaired class of Claims or Interests, each holder of a Claim or Interest in any such Class has (i) accepted the Plan, or (ii) will receive or retain under the Plan on account of such Claim or Interest property of a value, as of the Effective Date, that is not less than the amount that such holder would so receive or retain if the Debtor were liquidated under chapter 7 of the Bankruptcy Code on such date.
m. Plan Acceptance (ss.1129(a)(8)). (i) Classes 2, 3 and 4 have accepted the Plan in accordance with the provisions of ss.1126(c) and (d) of the Bankruptcy Code, (ii) Class 1 is unimpaired, within the meaning of ss.1124 of the Bankruptcy Code, and is conclusively presumed to have accepted the Plan under ss.1126(f) of the Bankruptcy Code, and (iii) Class 5 will not receive or retain any property under the Plan and is conclusively presumed to have rejected the Plan under ss.1126(g) of the Bankruptcy Code.
n. Plan Treatment of Administrative Claims and Priority Claims
(ss.1129(a)(9)). Except to the extent that the holder of a particular
Claim has agreed to a different treatment of such Claim, the Plan
provides that Claims of a kind specified inss.507(a)(1) and (2) of the
Bankruptcy Code and Claims of a kind specified inss.507(a)(3), (4),
(5), (6), (7) or (8) of the Bankruptcy Code, which have not otherwise
been paid previously, shall be satisfied and discharged by paying the
holder thereof an amount equal to such Allowed Claim, without
interest, from Available Cash, on a Pro Rata Basis, up to 100% of the
Allowed Amount of such Claims, on the later of the Consummation Date
or the date on which such Claim becomes Allowed until all such Claims
are paid in full.
o. At Least One Impaired Class of Claims Accepted the Plan (ss.1129(a)(10)). Classes 2, 3 and 4, which Classes are impaired and do not include any insider of the Debtor, have accepted the Plan.
p. Feasibility (ss.1129(a)(11)). The Debtor has demonstrated its ability to meet the financial obligations under the Plan and confirmation of the Plan is not likely to be followed by the need for liquidation of the Debtor under chapter 7 of the Bankruptcy Code.
q. Fees (ss.1129(a)(12)). All fees payable under 28 U.S.C.ss.1930, as determined by the Court at the Confirmation Hearing, have been or will be paid in Cash through the entry of a final decree closing this case.
r. Retiree Benefits (ss.1129(a)(13)). The Debtor does not have any obligations in respect of retiree benefits.
s. Cramdown (ss.1129(b)). The Plan does not discriminate unfairly, and is fair and equitable with respect to each class of claims or interests that is impaired under and has not accepted the Plan. Because Class 5 is conclusively presumed to have rejected the Plan under ss.1126(g) of the Bankruptcy Code, the Debtor is seeking confirmation of the Plan under ss.1129(b) of the Bankruptcy Code.
t. No Other Plan (ss.1129(c)). No other chapter 11 plan remains subject to consideration by this Court in the Case.
u. Principal Purpose (ss.1129(d)). The principal purpose of the Plan is neither the avoidance of taxes nor the avoidance of the application of section 5 of the Securities Act of 1933.
2. New Allied is a corporation in good standing and Champion is (i) providing fair and reasonable value in exchange for acquiring New Allied's corporate shell; and (ii) acquiring New Allied's corporate shell, and the stock issued pursuant to the Plan, in good faith.
3. The foregoing findings and conclusions satisfy the requirements of Rule 7052 of the Federal Rules of Bankruptcy Procedure. A finding of fact shall operate as a finding of fact, no matter how denominated, and a conclusion of law shall operate as a conclusion of law, no matter how denominated. All offers of proof and discussion for the record at the Confirmation Hearing constitute additional findings and conclusions with respect to this order.
4. Finding that the Plan is confirmable for all of the foregoing reasons, IT IS HEREBY ORDERED THAT:
1) The Plan, a copy of which is annexed hereto as Exhibit "A", the terms and provisions of which are incorporated herein by reference as if fully set forth herein, be, and it hereby is, confirmed in all respects regardless of whether specific reference is made herein to a particular article, paragraph or provision of the Plan.
2) The provisions of the Plan and this Order shall be, and they hereby are, binding upon the Debtor, the Committee, Champion, any holder of a Claim or Interest, and their officers and assigns, whether or not the Claim or Interest is impaired under the Plan and whether or not the holder of such Claim or Interest has accepted the Plan. The provisions of this Order shall be, and they hereby are, non-severable and mutually dependent.
3) Joseph S. Maniscalco, Esq. of LaMonica, Herbst, and Moniscalco, LLP is hereby appointed as the Liquidating Agent and the Liquidating Agent is hereby granted all the rights, powers and duties of a Trustee under Chapter 7 of the Bankruptcy Code. The Liquidating Agent hereby replaces the Debtor in all litigation, adversary proceedings and contested matters commenced prior to the Confirmation Date and shall, with the advice and the consent of the Committee, prosecute claims of the Debtor to final conclusion.
4) The Liquidating Agent shall obtain a defalcation bond from a recognized surety company for funds held following the Confirmation Date.
5) Promptly following entry of this Confirmation Order and receipt of the balance of the purchase price therefor, subject to the Lender's lien:
(a) The Debtor or New Allied, however the case may be, shall be deemed to have transferred its corporate shell to Champion, free and clear of any and all public and private liens, interests, judgments, obligations and encumbrances.
(b) New Allied shall deliver all of its corporate books and records to Champion; provided, however, that the Debtor, the Committee and the Liquidating Agent shall be provided reasonable access to such books and records as may be reasonably necessary or appropriate, to implement or consummate the Plan and its provisions.
(c) The present management and Board of Directors of the Debtor are hereby terminated without further action required by any parties and David Roff is hereby appointed as the Chairman of the Board of Directors of New Allied, and Champion shall appoint such other directors, as Champion, in its sole discretion deems appropriate.
(d) All Class 4 Interests in the Debtor shall be immediately deemed to be reversed at a ratio of 30:1, based on the existence of 5,048,782 shares, without further action required by any party.
(e) Champion is herewith authorized to amend the Articles of Incorporation
and Bylaws of New Allied to (i) effect a quasi-reorganization for
accounting purposes, (ii) provide the maximum indemnification or other
protections to New Allied's officers and directors that is allowed
under applicable law, (iii) conform to the provisions of the Plan and
this Confirmation Order, (iv) set the authorized New Stock at fifty
(50) million, post-reverse split, and (v) take all action necessary
and appropriate to carry out the terms of the Plan.
(f) Champion is authorized, without solicitation of or notice to shareholders, to issue (i) 2,000,000 shares of New Stock to the new management of New Allied and (ii) 4,000,000 free trading shares to new investors in New Allied, in the sole and unfettered discretion of Champion. The New Stock shall be issued on a post-reverse split basis.
6) The Board of Directors of New Allied is herewith authorized, without seeking or obtaining shareholder approval, to take any and all actions necessary or appropriate to effectuate any amendments to New Allied's Certificate of Incorporation and/or Bylaws called for under the Plan and the Board of Directors and officers of New Allied are hereby authorized to execute, verify, acknowledge, file and publish any and all instruments or documents that may be required to accomplish the same.
7) New Allied shall amend its charter in conformance with section 1123(a)(5)(I) of the Bankruptcy Code. The amended charter or bylaws shall, among other provisions: (i) authorize the issuance of the New Stock; and (ii) prohibit the issuance of nonvoting equity securities to the extent required by section 1123(a)(6) of the Bankruptcy Code. The amended charter and bylaws shall become effective upon (i) entry of this Confirmation Order, and (ii) the occurrence of the Effective Date.
8) The New Stock shall be issued without being registered under the Securities Act of 1933 (the "Act") or equivalent state securities or "blue sky" laws, in accordance with the exemption from registration provided by section 3(a)(7) of the Act (15 U.S.C. ss.77(c)(a)(7) and ss.1145(a)(1) of the Bankruptcy Code.
9) Notwithstanding anything contained in the Plan to the contrary, the acquisition of stock by Champion and the actions to be taken by New Allied pursuant to the Plan as provided in this Confirmation Order, shall be at no cost to the Debtor or its estate.
10) New Allied is deemed to be a corporation in good standing, effective as of the date of this Confirmation Order.
11) The Secretary of State of the State of Nevada and all other appropriate governmental agencies are hereby directed to issue a Certificate of Good Standing for New Allied, effective as of the date of this Confirmation Order.
12) To the extent applicable, Champion is hereby provided all of the protections of Section 363(m) of the Bankruptcy Code.
13) The Lenders are directed to deliver $125,000 of the Unsecured
Creditors' Carve-out to the Liquidating Agent within five (5) business days
following entry of this order. In addition, within five (5) business days
following the earliest to occur of (a) receipt of a final computation (the "GHA
Compultation") by Getzler Heinrich & Associates, the Lenders' financial
consultants, of the amounts the Lenders have received in net cash recoveries
from the liquidation of the Debtor's assets, subject to their liens and those of
the Debtor's affiliates in the jointly administered Chapter 11 cases, subject to
their liens, less the costs in connection therewith, or (b) entry of an order of
the Court determining the amount of the net cash recovery, the Lenders shall
deliver to the Liquidating Agent an amount equal to twenty (20%) percent of the
net cash recovery in excess of $4.8 million. The Lenders are directed to deliver
the GHA Computation, which shall include a detailed breakdown and reconciliation
of all receipts and disbursements relating to the liquidation of Debtor's
assets, to the Liquidating Agent, Debtor's Counsel and Counsel to the Committee,
within thirty (30) days following entry of this order. Debtor's Counsel shall
deliver the Available Cash to the Liquidating Agent, if any, in its possession,
less the Professional Fee Reserve within thirty (30) days following entry of
this order. Debtor's Counsel shall retain the Professional Fee Reserve at
interest until entry of Final Order(s) of the Court fixing Professional Fees and
Debtor' Counsel shall disburse sums in accordance therewith. Debtor's Counsel
shall retain excess funds remaining in the Professional Fee Reserve for ninety
(90) days following the Effective Date to pay post confirmation fees, costs and
expenses of Professional Persons. Thereafter, any sums remaining in the
Professional Fee Reserve shall be promptly delivered to the Liquidating Agent
for distribution in accordance with this Confirmation Order and the Plan.
14) The Liquidating Agent shall hold all funds delivered to him in his capacity as Liquidating Agent in interest bearing accounts and shall establish the Post Effective Date Reserve. Any Cash remaining in the Post Effective Date Reserve, immediately prior to the Final Distribution Date, shall be treated as Available Cash for distribution to Creditors as provided in Articles II and IV of the Plan.
15) This Confirmation Order (and any subsequent Final Orders) shall be a
final determination as to the rights of all Claimants and Interest holders to
participate in the Distributions under the Plan, whether or not (a) a proof of
claim or interest is filed or deemed filed under ss.501 of the Bankruptcy Code,
(b) such Claim is an Allowed Claim, or (c) the holder of such Claim or Interest
has accepted the Plan. The Liquidating Agent shall make payments and
Distributions to holders of Allowed Claims only in accordance with the Plan.
16) The Liquidating Agent shall commence such Bankruptcy Actions as the Liquidating Agent in its sole discretion shall deem appropriate. The Liquidating Agent may litigate the merits of each such action until determined by Final Order.
17) The Debtor, the Committee, the Liquidating Agent, New Allied and Champion and their agents and attorneys shall be, and they hereby are, authorized, empowered and directed to execute, deliver and carry out all of the provisions of the Plan, and to perform such other acts as are necessary for the consummation of the Plan.
18) Subject to the limitations set forth in the Plan, all holders of Claims and Interests are precluded from asserting against the Debtor, its estate, New Allied, Champion, the Committee, the Liquidating Agent or their professionals and agents, any Claim based upon any act of, or omission by, the Debtor, New Allied, Champion, the Committee or the Liquidating Agent or any transaction or other activity of the Debtor, New Allied, Champion, the Committee or the Liquidating Agent of any kind or nature that occurred prior to the Effective Date except for acts of willful neglect and gross negligence.
19) All executory contracts of the Debtor are hereby deemed rejected by the Debtor.
20) In accordance withss.1146(c) of the Bankruptcy Code, the transfer or sale of the assets and property of the Debtor during the administration of this case shall not be taxed under any state or local law imposing a stamp tax or similar tax.
21) The Debtor is hereby authorized and directed to turn over the unpaid accounts receivable in its possession to a collection agency chosen by the Lenders. All collections received by such collection agency shall be paid to the Lenders in accordance with the Cash Collateral Orders of this Court, subject to the Unsecured Creditors' Carve-out, which shall be paid by the Lenders to the Liquidating Agent, promptly upon receipt of such collections. The Court shall retain jurisdiction in connection with the recovery and the collection of the accounts receivable. The Lenders shall provide monthly reports of any collected accounts receivable to the Liquidating Agent, Debtor's Counsel and Counsel to the Committee.
22) The Debtor, New Allied, the Committee, the Liquidating Agent and Champion be and they hereby are authorized to execute any and all documents, do any and all things and pay any and all sums necessary or required to effectuate the transactions approved or contemplated by this order.
23) This Court shall retain jurisdiction of this proceeding under the provisions of the Bankruptcy Code, including, without limitation, ss.1142(b) thereof, and the Federal Rules of Bankruptcy Procedure, to ensure that the intent and the purpose of the Plan is carried out and given effect. Without limitation by reason of specification, this Court shall retain jurisdiction for the purposes set forth in Article XII of the Plan, as well as any action commenced by the Liquidating Agent under Article V of the Plan.
24) The Debtor's estate, through the Liquidating Agent, shall be responsible for the payment of United States Trustee quarterly fees arising under 28 U.S.C. ss.1930(a)(6) from and after the Confirmation Date through the entry of a final decree closing this case.
25) The Liquidating Agent shall be responsible for the filing of all post-confirmation reports.
26) Either the application for the Final Decree or an application to extend same, shall be filed by the Liquidating Agent within 180 days of entry of this Confirmation Order.
Dated: Central Islip, New York
September __, 2003
------------------------------
UNITED STATES BANKRUPTCY JUDGE
|
EXHIBIT 3.1
RESTATED AND AMENDED ARTICLES OF INCORPORATION OF
ALLIED DEVICES CORPORATION
(now known as DEEP WELL OIL & GAS, INC.)
Pursuant to the provisions and subject to the requirements of Title 7, Chapter 78 of Nevada Revised Statutes (NRS), specifically, NRS 78.622 titled Reorganization under federal law: Powers of corporation, and the acts amendatory thereof, and hereinafter sometimes referred to as the General Corporation Law of the State of Nevada, these Restated and Amended Articles of Incorporation are made by the above-named Corporation having recently emerged from Chapter 11 bankruptcy.
The undersigned President of the Corporation and its Chairman of the Board, its only officer and director, also an assignee of the entity known as "Champion," and pursuant to a certain "Order Confirming Liquidating Plan of Reorganization" of the United States Bankruptcy Court in and for the Eastern District of New York dated September 10, 2003, and signed by U.S. Bankruptcy Judge Melanie L. Cyganowski, in the matter titled In re: Allied Devices Corporation, et al., Chapter 11, Case No. 03-80962-511, a certified copy of which has been provided to the Secretary of State, hereby affirms and confirms the following post-bankruptcy Restated and Amended Articles of Incorporation:
ARTICLE ONE - NAME AND DURATION
The name of the corporation (hereinafter "Corporation") was "ALLIED DEVICES CORPORATION" but the name is hereby changed to "DEEP WELL OIL & GAS, INC." The Corporation shall have perpetual existence.
ARTICLE TWO - PREEMPTIVE RIGHTS
No shareholder of the Corporation shall have any preemptive or other right, by reason of his status as a stockholder, to acquire any unissued shares, treasury shares, or securities convertible into shares of the capital stock of the Corporation. This denial of preemptive rights shall, and is intended to, negate any rights which would otherwise be given to stockholders pursuant to NRS ss. 78.265, titled Preemptive rights of stockholders in corporations organized before October 1, 1991, or a successor statute.
ARTICLE THREE - CAPITALIZATION
The number of shares the Corporation is authorized to issue is fifty million (50,000,000) shares, having a par value of one mill or one tenth cent ($0.001) per share, and the Corporation is authorized to issue, and/or grant options and/or warrants to purchase, or otherwise acquire, shares of the common stock of the Corporation, upon such terms and for such consideration as the Board of Directors of the Corporation shall determine. All shares of stock of this Corporation shall be of the same class, namely, common capital shares, and shall have the same rights and preferences.
The Corporation is prohibited from issuing nonvoting equity securities to the extent required by section 1123(a)(6) of the United States Bankruptcy Code.
The total number of issued and outstanding common capital shares, prior to the filing of this document with the Secretary of State is 5,048,782. Pursuant to the Bankruptcy Court's Plan of Reorganization, these shares are hereby reverse-split one (1) for every thirty (30) shares.
ARTICLE FOUR -- GOVERNING BOARD
The governing board of the Corporation shall be styled as a "Board of Directors" and any member of said Board shall be styled as a "Director."
The number of members constituting Board of Directors of the Corporation is a minimum of at least one (1), and the name and address, either residence or business, of the currently existing single member of the Board of Directors, and the Corporation's only officer, is Mr. David Roff whose address is 31 Walmer Road, Unit 6, Toronto, Ontario M5R 2W7 Canada
The number of directors of the Corporation may be increased or decreased in the manner provided in the Bylaws of the Corporation; provided, that the number of directors shall never be less than one. In the interim between elections of directors by stockholders entitled to vote, all vacancies, including vacancies caused by an increase in the number of directors and including vacancies resulting from the removal of directors for any reason, may be filled by the remaining directors, though less than a quorum.
ARTICLE FIVE -- ELIMINATING PERSONAL LIABILITY
The personal liability of the directors and officers of the Corporation is hereby eliminated to the fullest extent permitted by the General Corporation Law of the State of Nevada, as the same may be amended and supplemented.
ARTICLE SIX -- INDEMNIFICATION
The Corporation shall, to the fullest extent permitted by the General Corporation Law of the State of Nevada, as the same may be amended and supplemented, indemnify any and all persons whom it shall have power to indemnify under said Law from and against any and all of the expenses, liabilities, or other matters referred to in or covered by said Law, and the indemnification provided for herein shall not be deemed exclusive of any other rights to which those indemnified may be entitled under any Bylaw, agreement, vote of stockholders or disinterested directors or otherwise, both as to action in his official capacity and as to action in another capacity while holding such office, and shall continue as to a person who has ceased to be a director, officer, employee or agent and shall inure to the benefit of the heirs, executors and administrators of such a person.
ARTICLE SEVEN -- PURPOSE
The nature of the business of the Corporation and the objects or purposes to be transacted, promoted, or carried on by it are to engage in and conduct any lawful business, activity or enterprise for which corporations may
be organized under Nevada law. At present, the reorganized Corporation intends to engage in the oil and gas business.
ARTICLE EIGHT -- AMENDMENT OF ARTICLES OF INCORPORATION
The Corporation reserves the right to amend, alter, change or repeal any provision contained in these Articles of Incorporation in the manner now or hereafter prescribed by statute, and all rights conferred upon stockholders herein are granted subject to this reservation.
To the full extent permitted under Nevada law, the Board of Directors shall also have the power and other authority to amend, alter, change or repeal any provision in the Corporation's Articles of Incorporation. The Board of Directors may also take action to change the Corporation's capitalization, such as a reverse-stock split or forward split, so long as it does not require an amendment to the Corporation's Articles of Incorporation.
ARTICLE NINE -- CONTROL SHARES ACQUISITIONS
The Corporation expressly opts-out of, or elects not to be governed by, the "Acquisition of Controlling Interest" provisions contained in NRS ss.ss. 78.378 through 78.3793 inclusive--all as permitted under NRS ss. 78.378.1.
ARTICLE TEN -- COMBINATIONS WITH
INTERESTED STOCKHOLDERS
The Corporation expressly opts-out of, and elects not to be governed by, the "Combinations with Interested Stockholders" provisions contained in NRS ss.ss. 78.411 through 78.444, inclusive--all as permitted under NRS ss. 78.434.
ARTICLE ELEVEN -- CONFLICTS OF INTEREST
To the full extent contemplated by Nevada law, no contract or other transaction between this Corporation and any other corporation, entity or person shall be affected by the fact that a director or officer of this Corporation is interested in, or is a director or other officer of such other corporation. Any director or officer, individually or with others, may be a party to or may be interested in any transaction of this Corporation or any transaction in which this Corporation is interested. Each person who is now or may become a director or officer of this Corporation is hereby relieved from and indemnified against any liability that might otherwise obtain in the event such director or officer contracts with the Corporation for the benefit of such director, officer or any firm, association or corporation in which such director or officer may be interested in any way, provided such director or officer acts in good faith.
ARTICLE TWELVE -- BY-LAWS
By-laws of this Corporation may be adopted by the Board of Directors, which shall also have the power to alter, amend or repeal the same from time to time as permitted under Nevada law.
Regarding the legality of, or authority to file, these Restated and Amended Articles of Incorporation of the Corporation, the undersigned hereby certifies as follows:
In the "Order Confirming Liquidating Plan of Reorganization" of the
United States Bankruptcy Court in and for the Eastern District of New York dated
September 10, 2003, and signed by U.S. Bankruptcy Judge Melanie L. Cyganowski,
in the matter titled In re: Allied Devices Corporation, et al., Chapter 11, Case
No. 03-80962-511, the U.S. Bankruptcy Court has given the undersigned, as the
Corporation's only director and officer and also, as the assignee of Champion,
broad powers to amend the Corporation's Articles of Incorporation to effectuate
and implement the Court's Plan of Reorganization. These include but are not
limited to the following, which are set specifically forth on p. 6 through 7 of
the Court's Order:
1. "The present management and Board of Directors of the
Debtor are hereby terminated without further action required by any parties and
David Roff is hereby appointed as Chairman of the Board of Directors of New
Allied [the new Corporation emerging from bankruptcy], and Champion shall
appoint such other directors, as Champion, in its sole discretion deems
appropriate."
2. "All Class 4 Interests [common stockholder interests] in
the Debtor shall be immediately deemed to be reversed at a ratio of 30:1, based
on the existence of 5,048,782 shares, without further action required by any
party."
3. "Champion is herewith authorized to amend the Articles of
Incorporation and Bylaws of New Allied to (i) effect a quasi-reorganization for
accounting purposes, (ii) provide the maximum indemnification or other
protections to New Allied's officers and directors that is allowed under
applicable law, (iii) conform to the provisions of the Plan and this
Confirmation Order, (iv) set the authorized New Stock [stock to be issued after
emergence from bankruptcy] at fifty (50) million, post-reverse split, and (v)
take all action necessary and appropriate to carry out the terms of the Plan."
4. "The Board of Directors of New Allied is herewith
authorized, without seeking or obtaining shareholder approval to take any and
all actions necessary or appropriate to effectuate any amendments to New
Allied's Certificate of Incorporation and/or Bylaws called for under the Plan
and the Board of Directors and officers of New Allied are hereby authorized to
execute, verify, acknowledge, file and publish any and all instruments or documents that may be required to accomplish the same."
Based on the provisions of the Bankruptcy Court's Order and Plan of Reorganization quoted above and the authority provided by NRS 78.622 titled Reorganization under federal law: Powers of corporation, these Restated and Amended Articles of Incorporation have been duly and lawfully adopted in accordance with Nevada law.
IN WITNESS WHEREOF, the undersigned hereby certifies that, as set forth above, he has been authorized by the U.S. Bankruptcy Court in and for the Eastern District of New York and, as the lawful assignee of Champion, to execute these Restated and Amended Articles of Incorporation of what is now DEEP WELL OIL & GAS, INC., formerly ALLIED DEVICES CORPORATION, on this day of October, 2003; further, this document correctly sets forth the text of the articles of incorporation as amended to the date hereof.
Exhibit 31
CERTIFICATION
I, David Roff, Chairman of the Board, President, CEO, CFO and the sole Director of Deep Well Oil & Gas, Inc. (formerly Allied Devices Corporation), certify that:
1. I have reviewed this annual report on Form 10-K of Deep Well Oil & Gas, Inc. (formerly Allied Devices Corporation);
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; 4. I am responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:
a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
c) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
5. I have disclosed, based on my most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent functions):
a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
December 31, 2003
By: /s/ DAVID ROFF ------------------ David Roff President, CEO, Chairman of the Board, Sole Director and CFO |
Exhibit 32
CERTIFICATION PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
(18 U.S.C. SECTION 1350)
In connection with the Annual Report of Deep Well Oil & Gas, Inc. (formerly Allied Devices Corporation), a Nevada corporation (the "Company"), on Form 10-K for the year ended September 30, 2003, as filed with the Securities and Exchange Commission (the "Report"), David Roff, President, CEO, Chairman of the Board, sole Director and Chief Financial Officer of the Company, does each hereby certify, pursuant to ss. 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. ss. 1350), that to his knowledge:
(1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
(2) The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company.
December 31, 2003
By: /s/ DAVID ROFF ---------------- David Roff President, CEO, Chairman of the Board, Sole Director and CFO |