SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20509
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act
June 12, 2000
Date of Report
(Date of Earliest Event Reported)
Alpine Air Express, Inc.
(Exact Name of Registrant as Specified in its Charter)
Delaware 000-27011 33-0619518
(State or other juris- (Commission File No.) (IRS Employer
diction of incorporation) I.D. No.)
3450 West Jense Parkway
Provo, Utah 84601
(Address of Principal Executive Offices)
801-373-1508
Registrant's Telephone Number
24351 Pasto Road, #B
Dana Point, California 92629
----------------------
(Former Name and Address of Principal Executive Offices)
Item 1. Changes in Control of Registrant.
(a) Effective as of June 12, 2000, the Registrant; Alpine Aviation,
Inc., a Utah corporation ("Alpine"); and all of the stockholders of Alpine
(the "Alpine Stockholders"), executed an Agreement and Plan of Reorganization,
as amended (respectively, the "Alpine Plan" and the "Amended Alpine Plan"),
whereby the Registrant acquired 100% of the outstanding securities of Alpine.
The effective date of the Alpine Plan was June 12, 2000, and the combination
of these entities was treated as a purchase for accounting purposes, with
Alpine becoming a wholly-owned subsidiary of the Registrant on closing. On
August 28, 2000, the Alpine Plan was amended by the Amended Alpine Plan to
include certain persons and entities who had been given shares of Alpine by
its former sole stockholder, Eugene R. Mallette, prior to the completion of
the Alpine Plan; to include the grant of an option to the Registrant to
purchase 100% of the outstanding shares of C.L.B. Corporation, a Utah
corporation ("CLB"), that is wholly-owned by Mr. Mallette; and to amend
Exhibit I to the Alpine Plan.
The source of the consideration used by the Alpine Stockholders to
acquire their interest in the Registrant was the exchange of 100% of the
outstanding securities of Alpine.
The basis of the "control" by the Alpine Stockholders is stock
ownership, and two of the Alpine Stockholders, Mr. Mallette and Bill
Distefano, were designated and elected to the Board of Directors of the
Registrant. Mr. Mallette was also elected as the CEO; and Mr. Distefano was
elected the President. These persons served Alpine in these capacities prior
to the completion of the Alpine Plan.
The principal terms of the Alpine Plan were:
1. The acquisition of 100% of the outstanding securities of
Alpine in exchange for 9,895,000 shares of the Registrant's common stock
("restricted securities").
2. The execution of a Stock Purchase and Sale Agreement (the "CLB
Option Agreement") pursuant to which the Registrant was granted an option to
purchase 100% of the outstanding common stock of CLB for a total purchase
price of $17,000,000 payable by the issuance of 5,000,000 shares of the
Registrant's common stock at an agreed value of $3.40 per share to Mr.
Mallette, the sole stockholder of CLB. The option expires two years from the
date of the execution of the CLB Option Agreement or August 27, 2002. Alpine
leases all of its aircraft from CLB.
3. The Resignation of the directors and executive officers of
the Registrant, and the election of the directors and executive officers of
Alpine as directors and executive officers of the Registrant.
4. A change of name of the Registrant to "Alpine Air Express,
Inc."
5. The issuance of 105,000 shares of common stock of the Registrant
("restricted securities") to Smith Consulting Services, Inc., a Utah
corporation and financial consulting firm ("SCS"), as partial consideration of
fees due and owing SCS that were rendered in connection with the negotiation
and consummation of the Alpine Plan. See Item 5.
6. The filing of a registration statement with the Securities and
Exchange Commission to register certain outstanding securities of the
Registrant for resale (the "Registration Statement").
Prior to the completion of the Alpine Plan, there were 1,000,000
outstanding shares of the Registrant's common stock. Following the
completion of the Alpine Plan, there were 11,000,000 outstanding shares of
common stock.
A copy of the Alpine Plan, as amended, including all material
exhibits and related instruments, accompanies this Report, which, by this
reference, is incorporated herein; the foregoing summary is modified in its
entirety by such reference. See Item 7, Exhibits 2 and 2.1.
The former principal stockholder of the Registrant and his percentage of
ownership of the outstanding voting securities of the Registrant prior to the
completion of the Alpine Plan was: Jehu Hand, Esq., former President and Chief
Financial Officer of the Registrant, 800,000 (80%).
(b) To the knowledge of management and based upon a review of the
stock ledger maintained by the Registrant's transfer agent and registrar, the
following table sets forth the beneficial ownership of persons who own more
than five percent of the Registrant's common stock as of the date hereof, and
the share holdings of new management:
Name Positions Held Shares Owned %
Eugene R. Mallette CEO, Director 9,396,688 * 85.4%
The Mallette Family Stockholder 989,500 * 8.9%
Limited Partnership
Bill Distenfano President, Director 491,979 4.5%
Max A. Hansen Secretary/Treasurer, Director -0- -0-
Charles L. Bates Director -0- -0-
Richard Rowack Director -0- -0-
SCS Financial Consultant 723,850 6.6%
* The 9,396,688 shares owned beneficially by Eugene R. Mallette
includes the 989,500 shares that are also included as being owned by The
Mallette Family Limited Partnership of which Mr. Mallette is the General
Partner.
Officers and
Directors
Collectively 9,888,667 89.9%
Item 2. Acquisition or Disposition of Assets.
(a) See Item 1.
The consideration exchanged under the Alpine Plan was
negotiated at "arms length" and the sole Director, Mr. Hand, of the Registrant
used criteria used in similar uncompleted proposals involving the Registrant
in the past, including the relative value of the assets of the Registrant in
comparison to those of Alpine; Alpine's present and past business operations;
the future potential of Alpine; its management; and the potential benefit to
the stockholders of the Registrant. The sole Director determined that the
consideration for the exchange was reasonable, under these circumstances.
No director, executive officer or controlling person of the
Registrant had any direct or indirect interest in Alpine prior to the
completion of the Alpine Plan.
(b) The Registrant is a successor to and intends to continue the
business operations conducted and intended to be conducted by Alpine, and
which are described below under the caption "Business."
Also see the Financial Statements of Alpine which accompany this Report.
See Item 7.
MANAGEMENT
Directors and Executive Officers
- --------------------------------
The members of the Board of Directors of Alpine serve until the next
annual meeting of stockholders, or until their successors have been elected.
The officers serve at the pleasure of the Board of Directors. The following
are the directors and executive officers of Alpine:
Name Age Position Held Position Since*
Eugene R. Mallette 51 Chairman and CEO 1986
Bill Distefano 53 President and Director 1982
Leslie Hill 46 Chief Financial Officer 2000
Max Hansen 51 Secretary/Treasurer
and Director 1986
Charles L. Bates 76 Director 2000
Richard A. Rowack 52 Director 2000
* These years represent the period of service as a director or
executive officer of Alpine.
Mr. Mallette began his career with Alpine in 1979 as its Sales Manager,
then became General Manager later in 1979. He became Chief Executive Officer
and Director upon acquiring Alpine in 1986. Prior to his employment by
Alpine, he was employed by the State of Montana as a staff auditor. He
received a B.A. in Business Administration from Carroll College in 1971. Mr.
Mallette holds a private pilot's license and maintains proficiency in many of
the Company's aircraft types. He devotes time to civic and charitable causes
and was previously Chairman of the Better Business Bureau of Utah County and
Vice-President of the Provo Chamber of Commerce.
Bill Distefano has been Director of Maintenance for Alpine since 1972.
He became a director in 1986 and president in 1992. He holds an Aircraft and
Engine Repair Certificate and an Airframe Inspector certificate from the FAA.
Leslie Hill has been our accountant since 1998 and named Chief Financial
Officer in 2000. Prior to 1998, Ms. Hill was employed by Sendsations Card
Company as controller. She received a Bachelor of Science degree from Brigham
Young University in 1991. In 1999, Ms. Hill received the "Outstanding
Achievement Award" from the Dale Carnegie Foundation in Salt Lake City, Utah.
Max Hansen has been a director since 1986. He has been practicing law
since 1976 and has had his own firm, Max A. Hansen & Associates, P.C. since
1980. Mr. Hansen provides legal services to Alpine. From 1988 to 1989, he
was President of the Montana Bar Association and is currently a member of the
American Bar Association House of Delegates. From 1982 to 1987 he was also
Chairman of the Police Commission of Dillon, Montana. He was an instructor at
Western Montana College of Law from 1980 to 1987. Mr. Hansen has received
distinguished service awards from the Montana State Bar Association and the
Montana Supreme Court. He received a JD degree from the University of San
Diego in 1976, where he was a member of law review, and received a BA in
Political Science from Carroll College.
Charles L. Bates was named a director in 2000. Mr. Bates is currently
retired. He received a Bachelor of Science degree with honors in Mechanical
Engineering from Northeastern University in Boston. Mr. Bates has been
founder and president of the Valtek Company, a producer of high pressure
automated valves, with manufacturing operations and offices in Utah, Alberta,
Canada, Houston, Los Angeles, Melbourne, Auckland, New Zealand and Japan.
Valtek products are also manufactured under license in England, Brazil, South
Africa and Indonesia. In 1978, Valtek was named "Growth Company of the Year",
by the National Association of Investment Clubs. In 1976 the Small Business
Association named Mr. Bates the "Utah Businessman of the Year" and in 1977 he
was recognized as "Utah's Outstanding Practicing Engineer" by the Utah
Engineering Council. Mr. Bates served as a Member of the Board of Directors
of the National Association of Manufacturers and the Utah Manufacturers
Association. He was a Vice-President of the Utah Foundation and has served as
the President of the Utah County Unit of the American Cancer Society. He is a
former President of the Fluid Controls Institute and the Salt Lake City
Chapter of the Instrument Society of American. He is a member of the National
Council of Northeastern University and is a member of the Board of Directors
of Daw Technologies, Inc. and was a member of the Board of Directors of
Duriron Co.
Richard A. Rowack was named a director of Alpine in 2000. Mr. Rowack
has been employed by Republic Financial Corporation since 1988 working in
their international commercial aircraft group. Republic Financial Corporation
is focused on the acquisitions, sales and leasing of commercial, transport
category passenger and cargo aircraft. Mr. Rowack graduated from the
University of Colorado in 1973 with a degree in Finance.
BUSINESS
Background
- ----------
Alpine Aviation, Inc., a Utah Corporation ("Alpine Aviation"), was
organized in 1972 and has been operated by the same management since 1986; it
is presently a wholly-owned subsidiary of the Registrant.
Alpine is an air cargo operator, transporting mail packages and other
time-sensitive cargo between 19 cities in the western portion of the United
States. Alpine began its operations in the 1970's with the intent of being a
regional charter and cargo carrier. After present management acquired control
in 1986, Alpine began to focus less on the charter or passenger services and
more on the cargo aspects of the airline industry. Throughout most of the
1990's, Alpine has focused more and more on hauling mail for the Postal
Service because of their favorable contracts, routes and payment practices.
As a result of this focus, approximately 80% of Alpine's revenues now come
from the Postal Service.
Industry overview
- -----------------
The package delivery or cargo business has evolved rapidly over the last
two decades, driven by the integration of world markets, the rationalization
of corporate supply chains and the implementation of enterprise software and
Internet-based information technology solutions. The ability to provide
time-definite delivery options and transfer information increasingly
determines success. Customer demands for real-time information processing and
worldwide distribution and logistics capabilities favor larger companies with
integrated services.
Customers increasingly focus on the timing and predictability of
deliveries rather than the mode of transportation. As customers re-engineer
the total distribution process, which includes order processing,
administration, warehousing, transportation and inventory management, they are
attempting to reduce the most expensive and fastest growing component --
inventory carrying costs. Time-definite transportation, which is no longer
limited to air express, has become a critical part of just-in-time inventory
management and improving overall distribution efficiency.
Technology advances have made it easier for companies to analyze and
compare distribution options. Rapid advances in technology have also helped
move the traditional business model in which manufacturers "pushed" products
into the supply chain, often based on incomplete information, toward a model
where end-user demand "pulls" products into the supply chain. This evolution
has placed greater demands on transportation systems for visibility of
information at all stages of the order/delivery process, because
time-to-market is becoming a key component of financial and operating success.
As a result of these changes, individual shipments are generally smaller
but more frequent and a greater proportion of products is being delivered
directly to end-users, particularly as e-commerce takes hold. Customers expect
high performance levels and broad product offerings as they seek to optimize
supply chain solutions.
Delivery of packages to a specific destination at a guaranteed time has
been the growth engine for the package delivery industry over the past decade.
Time-definite service has grown from 4% of the U.S. parcel delivery market in
1977 to over 60% today. Time-definite service has grown from just under 10
billion revenue ton miles in 1989 to over 14 billion revenue ton miles in
1997, for a compound annual growth rate of 4.3%, while charter, scheduled mail
and scheduled freight have remained relatively flat during that period.
Internationally, however, time-definite service represents only 6% of the
parcel delivery market, demonstrating the potential for substantial growth.
The key U.S. industry trends are:
There has been dramatic growth in the utilization of e-commerce by both
consumers and businesses for the transfer of goods. Consumers who use the
Internet for home shopping and other services shop across borders and require
global delivery capabilities. According to Forrester Research, $80 billion in
goods were purchased globally over the Internet in 1998, and this figure is
expected to reach over $3.2 trillion in 2003. Of this $80 billion, 80% to 85%
represented business-to-business sales, with the remainder representing
business-to-residential sales.
Customers are demanding increasingly complex supply chain management
solutions that require more sophisticated information technology systems.
Major manufacturers require increased precision in delivery time, and
customers demand precise tracking and timely information about potential
service disruptions.
Industry Consolidation. The industry has become increasingly dominated
by large integrated carriers such as FedEx and UPS that provide seamless
services, including pick-up and delivery, shipment via air and/or road
transport and customs clearance. The pace of consolidation in the package
delivery industry has increased on a global scale, particularly in Europe, due
to the following factors:
- the need for global distribution networks, large vehicle fleets,
global information technology systems and the resources necessary for their
development or acquisition;
- customers' desire for integrated services;
- high growth in the international and cross-border delivery
segments;
- deregulation of European delivery markets.
Industry participants are acquiring, merging with or forming alliances
with partners that can expand global reach, breadth of services or
technological capabilities in order to better enable those participants to
compete in a rapidly changing global environment. In particular,
government-run post offices have made several recent alliances with and
acquisitions of private-sector companies. Post offices, which still maintain
numerous advantages over private-sector companies, create significant
challenges for competitors worldwide. Statistics compiled by Boeing Aircraft
Company indicated air cargo traffic will nearly triple by 2017. We feel with
the growth in cargo and with e-commerce taking hold, the need for companies
like Alpine will only continue to expand. We offer the ability to deliver
mail and cargo to smaller markets without the associated capital cost.
Routes and Delivery
- -------------------
Alpine currently has 20 routes covering 19 western cities in 9 states.
Most routes are flown every day and some several times a day. In fiscal 1999,
Alpine transported 9,360 tons of cargo. The largest component of Alpine's
cargo mix is U.S. mail, which accounted for approximately 80% of our fiscal
1999 revenue. Alpine's delivery commitment on U.S. mail and most of the cargo
ranges from one to four hours. Alpine has consistently garnered awards from
the U.S. Postal service for timeliness ranking in the top 10% of all contract
carriers for the Postal Service.
Alpine services its routes with 18 aircraft which are smaller turbo-prop
planes. Currently, the largest planes in our fleet are Beechcraft 99 which
hold 3,000 pounds of cargo. The Postal Service delivers and picks up all
cargo we carry at the plane, unless separate arrangements have been made. The
Post Office delivery and pick up plane side enables us to reduce our cost.
Expansion Strategy
- ------------------
Our current routes could support additional and larger planes. To meet
this need, we have located, and made an offer to purchase up to fifteen
Beechcraft 1900's along with their spare parts inventory. The Beechcraft 1900
is typically configured for 5,400 pounds and 611 cubic feet of cargo capacity.
The Beechcraft 1900 is an all-weather aircraft powered by twin, PT-6 Pratt
Whitney turbo props. It has a range of about 800 statute miles and enjoys a
sound reputation for safety. Acquisition of the Beechcraft 1900 will increase
the total cargo capacity of the Company's aircraft from 54,000 pounds to
135,000 pounds per day, an increase of 150%. With these aircraft, Alpine will
be able to bid on additional Postal Service routes and also try to receive
some of the contract hauling contracts from integrated carriers like FedEx and
Emery. The additional advantages of the Beechcraft 1900 include allowing us to
carry more freight on routes increasing our economies of scale since it does
not cost much more to operate than our current planes.
The offer is for a purchase price of approximately two million dollars
($2,000,000) per plane payable at delivery. Our offer was accepted in July
2000. Presently, management has made the decision that Alpine will assign its
rights to purchase the planes to Eugene Mallette. Mr. Mallette, in turn, has
agreed to purchase the planes and lease them back to Alpine on similar terms
as our other leases. The decision was made to transfer the purchase rights to
Mr. Mallette because management did not want Alpine to take on the debt
associated with the planes. We have agreed to loan Mr. Mallette $1,000,000
towards the down payment on the planes. As part of the terms of this loan,
Alpine will receive an irrevocable two year option to purchase the planes from
Mr. Mallette. The purchase price will be the fair market value on the date
the option is exercised. Alpine is hopeful that it will be able to sell our
equity in the future to buy the planes. In the meantime, Alpine is
maintaining its flexibility in having the ability to use the planes without
the burdensome debt associated with the planes.
Alpine is also seeking potential acquisitions in the western portion of
the United States which would add planes, additional contracts and additional
maintenance facilities at a location which would be able to serve our routes.
Presently, Alpine does not have any agreements to acquire any other cargo
companies. Alpine has talked to its competitors in our region to see if any
are interested in being acquired by Alpine. So far, all talks are in the
early/development stages and no agreements are anticipated until Alpine is
finished with the registration of its securities and has its shares of Common
Stock listed for trading. Even then, Alpine anticipates a potential seller
would want to wait a period of time to see how shares of Alpine's Common Stock
are valued by the marketplace.
Ancillary Services
- ------------------
Our Provo, Utah base contains a fixed base operation. Our fixed base
operation operates a flight school, sells aviation fuel, provides catering and
charter services, performs "outside" maintenance, and houses a training
facility for our captains and first officers. Our operation has grown to the
point the fixed base operation has become a drain in terms of the time to
manage and in trying to handle third party needs in conjunction with our own
needs for maintenance and training facilities. We, therefore, anticipate
selling the fixed base operation to a third party or parties and concentrate
our personnel resources, which would stay with Alpine on our own maintenance
and training needs. We do not anticipate a significant change in earnings as
a result of its sale to a third party. In recent years, our own expansion has
resulted in most of the fixed base operation being directed to the maintenance
of our own planes.
Employees
- ---------
The Company has 64 employees including 7 in administration and 57 in
flight operations which includes 19 pilots. No employees belong to any labor
union.
Facilities
- -----------
Alpine leases all of its real property, exclusive of buildings. Alpine
leases 41,496 square feet at the Provo Municipal Airport under a lease that
expires in 2013. The lease calls for monthly payment of $572.80. The
buildings on the lease grounds are the property of Alpine. These facilities
are not large enough to handle current and future needs and Alpine has
tentatively leased additional property at the airport under a proposed lease
that would expire in 2040. Under the terms of the proposed lease Alpine will
pay a monthly lease rate of approximately $800. We intend to build new
facilities on this property to meet our current and future operational needs.
Alpine hopes to sell our current buildings and assign the current lease to a
third party once the new facility is completed. Presently, we estimate the
new facilities will be completed around February 2001 at a cost of up to
$1,000,000.
We also lease a 10,403 square foot hangar in Billings, Montana at a
lease rate of $14,980 per year. This lease expires on October 31, 2002, if
not renewed by mutual consent.
Item 5. Other Events.
On July 5, 2000, the Registrant filed an Amendment to the Articles
of Incorporation changing its name to "Alpine Air Express, Inc." A copy of
the Certificate of Amendment is attached hereto and incorporated herein by
reference. See Item 7, Exhibit 3.
On October 5, 1999, Alpine entered into a Consulting Services Agreement
with SCS whereby it engaged SCS to identify a publicly-held company into which
Alpine could effect a reverse reorganization or merger, and pursuant to which
SCS would pay all costs associated with the reorganization or merger; engage
counsel to gather and review documentation respecting any identified publicly-
held company; cause the necessary documentation respecting any such
reorganization or merger to be prepared and filed, where required; to assist
the reorganized Alpine with introductions to broker/dealers; and to pay all
costs incident to listing the reorganized Alpine in two nationally recognized
financial manuals. Alpine paid SCS a deposit of $150,000, with the Alpine
Stockholders to receive 87% of the reorganized Alpine; SCS to receive 8.5%;
and the public stockholders to retain 4.5%. Alpine and SCS subsequently
agreed to orally modify the consideration by agreeing that the Alpine
Stockholders would receive approximately 90% of the reorganized Alpine, and
that SCS and the public stockholders would together own the remaining 10% (SCS
would be entitled to receive approximately 9.5% of this amount or 1,048,850
shares, to be divided by it with its counsel and certain other consultants and
employees). Taking into consideration shares of the Registrant acquired by
SCS from former principal stockholders of the Registrant and the shares
retained by the public stockholders, the Registrant was required to issued SCS
an additional 105,000 shares of its common stock as outlined in the amended
Exhibit I to the Alpine Plan. A copy of the Consulting Services Agreement is
attached hereto and incorporated herein by reference. See Item 7, Exhibit
10.2.
Item 6. Resignations of Registrant's Directors.
Pursuant to the Registrant's Bylaws, the sole pre-Alpine Plan director
and executive officer of the Registrant resigned and designated the directors
and executive officers of Alpine to serve in the same capacities in which they
served for Alpine, until the next respective annual meetings of the
stockholders and the Board of Directors and until their respective successors
are elected and qualified or until their prior resignations or terminations.
Item 7. Financial Statements, Pro Forma Financial Information and
Exhibits.
(a) Financial Statements of Businesses Acquired.
(i) Historical financial information of Alpine Aviation, Inc.
for the years ended October 31, 1999 and 1998 (audited)and the period ended
April 30, 2000 (unaudited).
INDEPENDENT AUDITOR'S REPORT
To the Board of Directors
of Alpine Aviation, Inc.
We have audited the accompanying balance sheets of Alpine Aviation, Inc. (a
Utah corporation) as of October 31, 1999 and 1998, and the related statements
of income, stockholder's equity, and cash flows for the years then ended.
These financial statements are the responsibility of the management of Alpine
Aviation, Inc. Our responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall 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 Alpine Aviation, Inc. as of
October 31, 1999 and 1998, and the results of its operations and its cash
flows for the years then ended in conformity with generally accepted
accounting principles.
Squire & Company, P.C.
Orem, Utah
November 17, 1999
ALPINE AVIATION, INC.
BALANCE SHEETS
<TABLE>
<CAPTION>
April 30, October 31, October 31,
2000 1999 1998
-------- ----------- -----------
(Unaudited)
<S> <C> <C> <C>
ASSETS
Current Assets:
Cash and cash
equivalents $ 723,689 $ 2,008,747 $ 905,537
Marketable securities 2,514,038 649,715 39,414
Accounts receivable 1,518,703 1,050,998 1,398,999
Prepaid expense 218,399 167,360 107,489
Inventories 748,310 501,791 468,496
Current portion of
deferred tax asset 76,142 53,588 -
---------- ----------- ------------
Total current assets 5,799,281 4,432,199 2,919,395
Property, Plant and
Equipment net 106,439 109,627 60,361
----------- ----------- -----------
Total assets $ 5,905,720 $ 4,541,826 $ 2,980,296
=========== =========== ===========
LIABILITIES AND STOCKHOLDER'S EQUITY
Current Liabilities:
Accounts payable $ 92,252 $ 194,322 $ 465,207
Accounts payable -
related party 276,746 210,921 237,849
Accrued expenses 416,861 472,995 484,562
Refundable deposits 20,080 - -
Current income tax payable 230,323 133,195 -
Current portion of deferred
taxes 57,319 28,068 -
----------- ----------- -----------
Total current
liabilities 1,093,581 1,039,501 1,187,618
Deferred Income Taxes 8,599 2,433 14,718
----------- ----------- -----------
Total liabilities 1,102,180 1,041,934 1,202,336
ALPINE AVIATION, INC.
BALANCE SHEETS
Continued
Stockholder's Equity:
Common stock, 50,000
shares authorized, 25,000
shares issued and
outstanding, no par
value 95,361 95,361 95,361
Cumulative other
comprehensive income 59,195 (31,405) 3,147
Retained earnings 4,648,984 3,435,936 1,679,452
---------- ---------- ----------
Total stockholder's
equity 4,803,540 3,499,892 1,777,960
---------- ---------- ----------
Total liabilities and
stockholder's equity $ 5,905,720 $ 4,541,826 $ 2,980,296
=========== =========== ===========
</TABLE>
The accompanying footnotes are an integral part of these statements.
ALPINE AVIATION, INC.
STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
<TABLE>
<CAPTION>
Six Months Ended Years Ended
April 30, October 31,
---------------- -----------
2000 1999 1999 1998
---- ---- ---- ----
(Unaudited) (Unaudited)
<S> <C> <C> <C> <C>
Operating Revenues $8,791,496 $5,811,011 $12,477,816 $9,629,491
---------- ---------- ----------- ----------
Operating Expenses:
Direct operating
expenses 4,713,624 3,636,071 7,756,988 7,522,051
General and
administrative 516,769 341,936 1,672,480 1,083,489
Depreciation 16,903 16,442 33,001 21,462
---------- ---------- ----------- ----------
Total operating
expenses 5,247,296 3,994,449 9,462,469 8,627,002
---------- ---------- ----------- ----------
Operating Income 3,544,200 1,816,562 3,015,347 1,002,489
Other Income (Expense) 122,202 19,561 (120,504) (80,045)
---------- ---------- ----------- ----------
Income Before Income
Taxes 3,666,402 1,836,123 2,894,843 922,444
Income Tax Expense
(Benefit):
Current income tax
expense 1,500,892 708,988 1,153,130 329,618
Deferred income tax
expense (benefit) (47,538) (31,486) (14,771) 28,474
---------- ---------- ---------- ----------
Total income tax expense
(benefit) 1,453,354 677,502 1,138,359 358,092
---------- ---------- ---------- ----------
Net Income $2,213,048 $1,158,621 $1,756,484 $ 564,352
========== ========== ========== ==========
Earnings Per Share -
Basic and Fully Diluted $ 88.52 $ 46.34 $ 70.26 $ 22.57
========== ========== ========== ==========
Weighted Average
Shares Outstanding 25,000 25,000 25,000 25,000
========== ========== ========== ==========
The accompanying footnotes are an integral part of these statements.
</TABLE>
ALPINE AVIATION, INC.
STATEMENTS OF STOCKHOLDER'S EQUITY
<TABLE>
<CAPTION>
Cumulative
other
Compre-
Common Stock hensive Retained
Shares Amount Income Earnings Total
------ ------ ------- -------- ---------
<S> <C> <C> <C> <C> <C>
Balance,
November 1, 1997 25,000 $95,361 $ $1,115,100 $ 1,210,461
Comprehensive Net
Income
Calculation:
Net income - - 564,352 564,352
Other comprehensive
income - net of tax.
Unrealized holding
gains arising during
the period - - 3,147 - 3,147
------ ------- ----- ---------- ---------
Comprehensive Income - - 3,147 564,352 567,499
------ ------- ----- ---------- ---------
Balance, October 31,
1998 25,000 95,361 3,147 1,679,452 1,777,960
Comprehensive Net
Income
Calculation:
Net income - - - 1,756,484 1,756,484
Other comprehensive
income - net of tax.
Unrealized holding
losses arising during
the period - - (34,552) - (34,552)
------ ------- ------ --------- ----------
Comprehensive Income - - (34,552) 1,756,484 1,721,932
------ ------- -------- ---------- ---------
Balance, October 31,
1999 25,000 95,361 (31,405) 3,435,936 3,499,892
Comprehensive Net
Income
Calculation
(unaudited):
Net income - - - 2,213,048 2,213,048
Other comprehensive
income net of tax.
Unrealized holding
gains arising during
the period - - 90,600 - 90,600
------ ------- ------ --------- ---------
Comprehensive Income
(unaudited) - - 90,600 2,213,048 2,303,648
Dividends
(unaudited) - - - (1,000,000) (1,000,000)
------ ------- ------ --------- ---------
Balance, April 30,
2000 (unaudited) 25,000 $95,361 $59,195 $4,648,984 $4,803,540
====== ======= ======= ========== ==========
</TABLE>
The accompanying footnotes are an integral part of these
statements.
ALPINE AVIATION, INC.
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Six Months Ended Years Ended
April 30, October 31,
-------------------------------------------------------
2000 1999 1999 1998
-------------------------------------------------------
(Unaudited) (Unaudited)
<S> <C> <C> <C> <C>
Cash Flows from
Operating
Activities:
Net income $2,213,048 $1,158,621 $1,756,484 $564,352
Adjustments to
reconcile net
income to net cash
provided (used) by
operating activities:
Realized loss on
marketable securities 16,980 - - -
Gain (loss) on disposal
of fixed assets (1,036) - - (23)
Deferred tax expense
(benefit) (47,538) (31,486) (14,771) 28,474
Depreciation and
amortization 16,903 16,442 33,001 21,462
Bad debt provision - (572) - (110)
Changes in assets and
liabilities:
Accounts receivable (467,705) 324,275 348,001 (879,112)
Inventories (246,519) 53,403 (33,296) (94,693)
Prepaid expense (51,039) (5,075) (32,561) (79,036)
Accounts payable (102,070) (446,305) (273,360) 213,478
Accounts payable -
related party 65,825 2,474 (26,928) 78,144
Accrued expenses (56,134) (422,787) (9,091) 424,409
Customer deposits 20,080 - - (22,964)
Income taxes payable 97,128 539,315 105,885 (45,607)
--------- --------- -------- ------
Total adjustments (755,125) 29,684 96,880 (355,578)
--------- --------- -------- -------
Net cash provided by
operating activities 1,457,923 1,188,305 1,853,364 208,774
Cash Flows from Investing
Activities:
Purchase of marketable
securities (1,730,303) (1,635) (667,887) -
Proceeds from sale of
equipment 2,500 - - -
Purchase of
equipment (15,178) (77,035) (82,267) (2,322)
---------- ---------- --------- -------
ALPINE AVIATION, INC.
STATEMENTS OF CASH FLOWS
Continued
Net cash used by
investing activities (1,742,981) (78,670) (750,154) (2,322)
Cash Flows from
Financing Activities:
Dividends paid (1,000,000) - - -
---------- ---------- ---------- ---------
Net Increase (Decrease)
in Cash and
Cash Equivalents (1,285,058) 1,109,635 1,103,210 206,452
Beginning Cash and
Cash Equivalents 2,008,747 905,537 905,537 699,085
---------- ---------- ----------- --------
Ending Cash and Cash
Equivalents $ 723,689 $2,015,172 $ 2,008,747 $905,537
========== ========== =========== ========
</TABLE>
The accompanying footnotes are an integral part of these statements
ALPINE AVIATION, INC. NOTES TO FINANCIAL STATEMENTS
Note 1.Summary of Significant Accounting Policies
This summary of significant accounting policies of Alpine Aviation, Inc. (the
Company) is presented to assist in understanding the Company's financial
statements. These accounting policies conform to generally accepted
accounting principles and have been consistently applied in the preparation of
the financial statements.
Business Description - The Company was incorporated in the state of Utah on
October 3, 1975 for the purpose of, but not limited to, hauling air freight,
serving commuter routes, and providing pilot training. The Company terminated
commuter flights in July 1999. The Federal government enhances the income of
the company on some of those essential air service routes.
Interim Financial Statements - The balance sheet as of April 30, 2000 and
related statements of income, stockholder's equity and cash flows for the six-
month periods ended April 30, 2000 and 1999 are unaudited. However, in the
opinion of management these interim financial statements include all
adjustments (consisting of only normal recurring adjustments) which are
necessary for the fair presentation of the results for the interim periods
presented. The results of operations for the unaudited six-month period ended
April 30, 2000 are not necessarily indicative of the results which may be
expected for the entire 2000 fiscal year.
Marketable Securities - The Company held marketable equity and debt securities
recorded at aggregate fair market values totaling, $649,715, and $34,414 at
October 31, 1999 and 1998, respectively. These securities are classified as
available-for-sale. Gross unrealized gains and (losses) were $(57,586) and
$4,995, for the years ending October 31, 1999 and 1998, respectively.
Accounts Receivable - The Company grants credit to its customers,
substantially all of whom are businesses located in the western United States.
The Company has no policy requiring collateral on any of its accounts
receivable.
Allowances of $100,000 and $50,000 were established for accounts receivable
for each year ended October 31, 1999 and 1998, respectively.
Inventory - Inventory consists of airplane parts, fuel and oil, and supplies
and is stated at the lower of cost or market, determined using the first-in,
first-out method (FIFO).
ALPINE AVIATION, INC.
NOTES TO FINANCIAL STATEMENTS
Note 1. Summary of Significant Accounting Policies (Continued)
Depreciation - Provision for depreciation of property, plant and equipment is
computed on the straight-line method for financial reporting purposes.
Depreciation is based upon estimated useful lives as follows:
Buildings and improvements 10 to 20 Years
Equipment 2 to 7 Years
Furniture and fixtures 2 to 7 Years
Maintenance, repairs, and renewals which neither materially add to the value
of the equipment nor appreciably prolong its life are charged to expense as
incurred. Gains and losses on dispositions of equipment are included in net
income.
Accumulated depreciation consists of $328,971, and $295,970 at October 31,
1999 and 1998, respectively.
Cash and Cash Equivalents - The Company considers demand deposits at banks and
money market funds at other financial institutions with a maturity of three
months or less to be cash equivalents.
Use of Estimates - The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts disclosed. Accordingly,
actual results could differ from those estimates.
Additional Cash Flow Statement Disclosures - During the six months ended April
30, 2000 and 1999, the Company paid $3,059 and $7,028 in interest and
$1,243,974 and $166,238 in income taxes, respectively. The Company paid
$12,307 and $3,953 in interest and $989,068 and $195,558 in income taxes
during the years ended October 31, 1999 and 1998, respectively. There were no
non-cash investing and financing activities.
Note 2.Accounts Receivable
Accounts receivable consist of the following at October 31,:
1999 1998
---- ----
Trade accounts receivable $1,010,273 $ 998,172
Accounts receivable - related party 30,830 400,827
Accounts receivable - employee 9,895 -
---------- ----------
$1,050,998 $1,398,999
========== ==========
ALPINE AVIATION, INC.
NOTES TO FINANCIAL STATEMENTS
Note 3.Income Taxes
The Company accounts for income taxes under the provision of SFAS 109
"Accounting for Income Taxes." This method requires the recognition of
deferred tax liabilities and assets for the expected future tax consequences
of temporary differences between tax bases and financial reporting bases of
assets and liabilities.
The provision for income taxes consists of the following:
October 31,
----------
1999 1998
---- ----
Current:
Federal $ 982,405 $275,544
State 170,725 54,074
---------- --------
Total current 1,153,130 329,618
Deferred Expense (Benefit):
Income tax expense (benefit) (14,771) 28,474
---------- --------
Total income tax expense $1,138,359 $358,092
========== ========
The income tax provision reconciled to the tax computed at the federal
statutory rate is as follows:
October 31,
----------
1999 1998
---- ----
Income taxes at the statutory rate $ 964,667 $315,329
Non-deductible expenses 3,712 323
State income taxes, net of federal benefit 169,980 42,440
---------- --------
Total income tax provision $1,138,359 $358,092
========== ========
The tax effects of temporary differences that give rise to significant
portions of the deferred tax assets and liabilities are as follows:
ALPINE AVIATION, INC.
NOTES TO FINANCIAL STATEMENTS
CONTINUED
Note 3.Income Taxes
Continued
October 31,
----------
1999 1998
---- ----
Deferred tax assets:
Allowance for bad debts $ 20,544 $ 4,543
Accrued vacation and sick leave 33,044 -
Valuation allowance - (4,543)
---------- --------
Total deferred assets 53,588 -
Deferred tax liabilities:
Unrealized holding gains (27,837) -
Excess tax depreciation (2,664) (14,718)
----------- --------
Total deferred liabilities (30,501) (14,718)
----------- --------
Net deferred tax assets (liabilities) $ 23,087 $(14,718)
=========== ========
ALPINE AVIATION, INC.
NOTES TO FINANCIAL STATEMENTS
Note 4.Related Party Transactions
The Company leases its aircraft from CLB Corporation (CLB) and other related
leasing entities, which are owned by the sole stockholder of the Company. The
lease terms for aircraft and equipment vary from month to month and
approximates $153,000 per month. The Company owed $210,921, and $237,849 in
lease payments to related parties, at October 31, 1999 and 1998, respectively.
Total lease expenses to related parties for the years ended October 31, 1999
and 1998 is detailed below.
October 31,
-----------
1999 1998
---- ----
CLB Corporation $ 2,690,048 $ 2,337,330
CLB Bates Partnership - 93,600
----------- -----------
$ 2,690,048 $ 2,430,930
=========== ===========
Monthly engine overhaul reserves are paid based on actual flying hours during
the month.
CLB reimburses the Company for certain qualifying repairs paid for or
performed by the Company. At October 31, 1999 and 1998, the Company had a
receivable of $30,830 and $400,827, respectively, related to these repairs.
Note 5.Operating Leases
The Company also leases real property under two operating lease agreements.
One lease has a remaining term of 13 years. The other lease will expire
October 2001. Future minimum lease payments are as follows:
2001 $ 21,914
2002 21,914
2003 6,934
2004 6,934
2005 6,934
Thereafter 58,356
--------
$122,986
========
ALPINE AVIATION, INC.
NOTES TO FINANCIAL STATEMENTS
Note 6.401(k) Profit Sharing Plan
Employees who have been employed at least 3 months may contribute up to 17
percent of their compensation to the Company's 401(k) profit sharing plan.
The Company contributes an additional 50 percent of the amount contributed by
employees up to a maximum of 3 percent of compensation. Participants are
fully vested in employer contributions after two years of service. The
Company contributed $15,163, and $13,828 for the years ended October 31, 1999
and 1998, respectively.
Note 7.Concentrations
The Company receives the majority of its revenues from contracts with the U.S.
Postal Service (USPS). For the years ending October 31, 1999 and 1998, the
revenues from contracts with the USPS represented 79 percent and 67 percent of
total revenues, respectively. For the years ending October 31, 1999 and 1998,
accounts receivable from the USPS was $1,152,536 and $992,133, respectively.
Although a loss of contracts with the USPS would severely impact the financial
position of the Company, the Company's management believes that the
relationship with the USPS is excellent and will continue.
The Company maintains cash balances at several financial institutions.
Accounts at each institution are insured by the Federal Deposit Insurance
Corporation up to $100,000. As of October 31, 1999 and 1998, the Company's
uninsured cash balances totaled $1,142,849 and $721,448, respectively.
Note 8.Subsequent Events
On June 12, 2000, the Company consummated a reverse merger with a public
shell, Riverside Ventures, Inc., wherein all of the outstanding common stock
of the Company was exchanged for 9,895,000 shares of common stock of Riverside
Ventures, Inc. The transaction qualified as a tax-free exchange pursuant to
Section 368 (a)(I)(B) of the Internal Revenue Code, as amended.
The Company has acquired an option to purchase CLB for $17,000,000. The
purchase price will be paid for with shares of the Company's common stock.
Solely for purposes of the CLB transaction, the Company's common stock will be
valued at $3.40 per share. The option is for a period of two years. The
purchase price was determined by the "blue book" value of the planes owned by
CLB less any debt still owed on the planes. As of the date of the option, CLB
had less than $840,000 in debt on its 24 planes.
Note 9.Recent Accounting Pronouncements
In June 1998, the Financial Accounting Standards Board ("FASB") issued SFAS
No. 133, Accounting for Derivative Instruments and Hedging Activities." This
statement establishes accounting and reporting standards requiring that every
derivative instrument be recorded on the balance sheet as either an asset or
liability measure at fair value. The statement also requires that changes in
the derivative's fair value be recognized currently in earnings unless
specific hedge accounting criteria are met. In June 1999, the FASB issued
SFAS No. 137, which deferred the application of SFAS No. 133 from fiscal years
beginning after June 15, 1999 to fiscal years beginning after June 15, 2000.
The application of SFAS No. 133 is not expected to have a material impact on
the Company's financial statements.
(ii) Historical financial information of Riverside Ventures,
Inc. for the years ended October 31, 1999 and 1998 and for the period ended
April 30, 2000 (Unaudited). These financial statements were re-configured to
align with the financial statements of Alpine Aviation, Inc. as of October 31,
1999 and 1998 and April 30, 2000.
INDEPENDENT AUDITOR'S REPORT
To the Board of Directors
of Riverside Ventures, Inc.
We have audited the accompanying balance sheets of Riverside Ventures, Inc. (a
Delaware corporation) as of October 31, 1999 and 1998, and the related
statements of operations, stockholders' equity, and cash flows for the years
then ended. These financial statements are the responsibility of the
management of Riverside Ventures, Inc. Our responsibility is to express an
opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall 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 balance sheets of Riverside Ventures, Inc. as of
October 31, 1999 and 1998, and the results of its operations and its cash
flows for the years then ended in conformity with generally accepted
accounting principles.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. The Company is a development stage
company seeking out business opportunities, including acquisitions. As
discussed in Note 1 to the financial statements, the Company's activities have
resulted in negative cash flows from operating activities and raise
substantial doubt about its ability to continue as a going concern.
Management's plans concerning these matters are also described in Note 1.
These financial statements do not include any adjustments that might result
from the outcome of this uncertainty.
Squire & Company, P.C.
Orem, Utah
July 26, 2000
RIVERSIDE VENTURES, INC.
(A Development Stage Company)
BALANCE SHEETS
<TABLE>
<CAPTION>
April 30, October 31, October 31,
2000 1999 1998
--------- ----------- -----------
(Unaudited)
<S> <C> <C> <C>
ASSETS $ - $ - $ -
-------- ------------ -----------
LIABILITIES AND STOCKHOLDERS'
EQUITY
Current Liabilities:
Accounts payable $ 7,608 $ 108 $ -
Accounts payable - related party 1,730 993 468
--------- ----------- -----------
Total current liabilities 9,338 1,101 468
Stockholders' Equity:
Preferred stock, $.001 par value,
1,000,000 shares authorized,
no shares issued and
outstanding - - -
Common stock, $.001 par value,
20,000,000 shares authorized,
1,000,000 shares issued
and outstanding 1,000 1,000 1,000
Additional paid-in capital 7,515 15 15
Accumulated deficit during the
development stage (17,853) (2,116) (1,483)
-------- ---------- -----------
Total stockholder deficit (9,338) (1,101) (468)
-------- ---------- -----------
Total liabilities and stockholders
equity $ - $ - $ -
========= ========== ===========
</TABLE>
The accompanying footnotes are an integral part of these statements.
RIVERSIDE VENTURES, INC.
(A Development Stage Company)
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
Cumulative
from
Inception
(April 20, 1994)
April 30, October 31, to April 30
2000 1999 1999 1998 2000
---- ---- ---- ---- ---------------
<S> <C> <C> <C> <C> <C>
REVENUES - - - - -
--------- --------- --------- --------- ---------
Operation Expenses:
General and
administrative 15,737 468 633 108 17,853
--------- --------- --------- --------- ---------
Total operating
expenses 15,737 468 633 108 17,853
--------- --------- --------- --------- ---------
Net Loss $ (15,737) $ (468) $ (633) $ (108) $ (17,853)
========= ========= ========= ========= =========
Net Loss Per
Common Share-
Basic and Fully
Diluted $ - $ - $ - $ - $ -
========= ========= ========= ========= =========
Weighted Average
Shares 1,000,000 1,000,000 1,000,000 1,000,000 1,000,000
========= ========= ========= ========= =========
</TABLE>
The accompanying footnotes are an integral part of these statements.
RIVERSIDE VENTURES, INC.
(A Development Stage Company)
STATEMENTS OF STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
Accumulated
Deficit
Common Stock Additional During the
------------ Paid-In Development
Shares Amount Capital Stage
------ ------ ------- -----------
<S> <C> <C> <C> <C>
Issuance of Common
Stock for Cash
and Services,
April 20, 1994 1,000,000 $1,000 $15 $ -
Net Loss - - - (1,015)
--------- ------ ---- --------
Balances at
October 31, 1994 1,000,000 1,000 15 (1,015)
Net Loss - - - (134)
--------- ----- ---- --------
Balances at
October 31, 1995 1,000,000 1,000 15 (1,149)
Net Loss - - - (116)
--------- ----- ---- --------
Balances at
October 31, 1996 1,000,000 1,000 15 (1,265)
Net Loss - - - (110)
--------- ----- ---- --------
Balances at
October 31, 1997 1,000,000 1,000 15 (1,375)
Net Loss - - - (108)
--------- ----- ---- --------
Balances at
October 31, 1998 1,000,000 1,000 15 (1,483)
Net Loss - - - (633)
--------- ----- ---- --------
Balances at
October 31, 1999 1,000,000 1,000 15 (2,116)
Net Loss -
(unaudited) - - - (15,737)
--------- ----- ---- --------
Balances at
April 30, 2000 -
(unaudited) 1,000,000 $1,000 $ 15 $(17,853)
========= ====== ===== ========
</TABLE>
The accompanying footnotes are an integral part of these statements.
RIVERSIDE VENTURES, INC.
(A Development Stage Company)
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Cumulative
from
Inception
April 30, October 31, (April 20, 1994)
to April 30,
2000 1999 1999 1998 2000
---- ---- ---- ---- ---------------
--------------------------------------------------------------------
(Unaudited) (Unaudited) (Unaudited)
<S> <C> <C> <C> <C> <C>
Cash Flows from
Operating Activities:
Net loss $(15,737) $ (468) $ (633) $ (108) $(17,853)
Adjustments to
reconcile net income
to net cash provided
by operating
activities:
Increase in accounts
payable 8,237 468 633 108 9,338
--------- ------ ----- ----- ---------
Net cash used in
operating activities (7,500) - - - (8,515)
Cash Flows from
Financing Activities:
Additional paid-in
capital 7,500 - - - 7,515
Sale of common stock - - - - 1,000
Total operating
expenses --------- ------ ----- ----- ---------
Net cash provided by
financing activities 7,500 - - - 8,515
--------- ------ ----- ----- ---------
Net increase in Cash
and Cash Equivalents - - - - -
Cash and Cash Equivalents
Balance at Beginning
of Period - - - - -
--------- ------ ----- ----- ---------
Cash and Cash
Equivalents
Balance at End
of Period $ - $ - $ - $ - $ -
</TABLE>
The accompanying footnotes are an integral part of these statements.
RIVERSIDE VENTURES, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
Note 1.Organization and Significant Accounting Policies
Nature of Business - The Company was incorporated under the laws of the State
of Delaware on April 20, 1994, for the purpose of seeking out business
opportunities, including acquisitions. The Company is in the development
stage and will be very dependent on the skills, talents, and abilities of
management to successfully implement its business plan.
Business Condition - Since inception, the Company's activities have been
limited to organizational matters resulting in negative cash flows from
operating activities. The Company's continued existence is dependent upon the
cash inflows from its investors. Management believes that the Company will
continue as a going concern through investor capital contributions and
profitable business ventures.
Note 2.Cash and Cash Equivalents
The Company considers all short-term investments with an original maturity of
three months or less to be cash equivalents.
Note 3.Related Party Transactions
The Company currently receives the use of office space free of charge from an
officer of the Company. The fair market value of the office space is
insignificant.
Additionally, the Company has received legal services valued at $1,730 from
stockholder's of the Company and is shown in the accounts payable - related
party account.
Note 4.Income Taxes
As of April 30, the Company has a net operating loss carry forward of $17,853
that will begin expiring in the year 2009. No deferred tax asset has been
booked due to the uncertainty of the ability of the Company to use the loss
carry forward.
RIVERSIDE VENTURES, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
Note 5.Stock Option Plan
The Company has stock option plans for directors, officers, employees,
advisors, and employees of companies that do business with the Company, which
provide for non-qualified and qualified stock options. The Stock Options
Committee of the Board determines the option price, which cannot be less than
the fair market value at the date of the grant or 110 percent of the fair
market value if the Optionee holds 10 percent or more of the Company's common
stock. The price per share of shares subject to a Non-Qualified Option shall
not be less than 85 percent of the fair market value at the date of the grant.
Options generally expire either three months after termination of employment
or ten years after date of grant (five years if the optionee holds 10 percent
or more of the Company's common stock at the time of grant). No options have
been granted under the plan.
Note 6.Subsequent Event
On June 12, 2000, the Company acquired all of the outstanding common stock of
Alpine Aviation, Inc. in exchange for 9,895,000 shares of common stock of
Riverside Ventures, Inc. in a transaction qualifying as a tax-free exchange
pursuant to Section 368 (a)(I)(B) of the Internal Revenue Code, as amended.
The transaction will be accounted for as a reverse acquisition with the
surviving entity being Alpine Air Express, Inc. (formerly Alpine Aviation,
Inc.)
Note 7.Recent Accounting Pronouncements
In June 1998, the Financial Accounting Standards Board (FASB) issued SFAS No.
133, Accounting for Derivative Instruments and Hedging Activities. This
statement establishes accounting and reporting standards requiring that every
derivative instrument be recorded on the balance sheet as either an asset or
liability measured at fair value. The statement also requires that changes in
the derivative's fair value be recognized currently in earnings unless
specific hedge accounting criteria are met. In June 1999, the FASB issued
SFAS No. 137, which deferred the application of SFAS No. 133 from fiscal years
beginning after June 15, 1999 to fiscal years beginning after June 15, 2000.
The application of SFAS No. 133 is not expected to have a material impact on
the Company's financial statements.
(iii) Management Discussion and Analysis of Operations.
General
- -------
Since the mid 90's, Alpine has been profitable with consistent revenue.
Net profits have ranged from a low in 1995 of $96,981 on revenue of $7,050,026
to net profits of $1,756,484 in 1999 on revenue of $12,477,816. We believe
this increase in revenue and more importantly net income is the result of
focusing on our primary customer, the Postal Service. The focus on the Postal
Service comes after pursuing various avenues in the aviation industry. We
have tried to be a charter carrier, passenger carrier and support integrated
cargo carriers. We discovered in each of these avenues that a small carrier
such as Alpine has little negotiation capabilities and is at the discretion of
the larger carriers and customers as to terms of payment. This placed
substantial burden on our ability to meet our own financial needs, much less
grow. Although these other markets could be profitable, certain dynamics such
as size and steady cash flow had to be achieved before entering them. After
analyzing the various options available, we determined that until a certain
size was reached, we should focus on government contracts, specifically the
Postal Service.
The Postal Service offered us the ability to have a consistent, reliable
source of revenue and immediate payments helping to solve cash flow problems
we previously faced. The Postal Service also had need for a carrier who
could expand in the western portion of the United States and would meet
certain customer service goals such as on-time performance, which is critical
to the Postal Service. By focusing our efforts to satisfy the needs of the
Postal Service, we have been able to build a strong relationship resulting in
our expansion to 20 Postal Service routes.
While we will continue to focus on maintaining our Postal Service
contracts and feel confident we will be able to acquire additional Postal
Service routes, there is always the possibility that someone will enter our
market area and take some of these routes. However, there is no indication,
at this time, that any other parties are trying to do this. We believe our
relationship with the Postal Service is strong enough to maintain our current
relationship, at a minimum.
Since we now have the established revenue flow from our Postal Service
routes, we would like to go after some of the cargo business we were not able
to handle before, including providing carrier services to integrated carriers
such as FedEx and Emery. Many of these integrated carriers use local airlines
to carry the integrated carriers cargo between smaller markets where the
economics do not make sense for them to devote manpower and planes. These
routes, however, are profitable to a carrier with the right structure. We
have proven the profitability of servicing these smaller markets through our
work with the Postal Service and now feel we can grow our business by offering
the same quality service to the integrated carriers, freight forwarding
companies and non-integrated domestic, international and regional cargo
companies. We anticipate it will take time to develop material contracts with
integrated carriers and freight forwarders. Most of these companies already
have existing relationships with air cargo companies.
Plan of Operation
- -----------------
We have been successful in steadily increasing revenue and net income.
Over the next year we anticipate a new Postal Service contract being announced
which, based on current discussions, should be on similar terms as the
existing contract. We have no reason to believe we would not receive our
current routes and are hopeful that as the amount of mail continues to
increase we will be able to receive additional routes in the western portion
of the United States which can be serviced from our current facilities.
We do intend to acquire, through lease or purchase, additional planes to
meet increasing demand and allow us to bid on additional work. Management has
consistently maintained a policy of low debt ratios so we will not finance
these planes with heavy debt. We anticipate using existing cash flow and
potentially selling equity in Alpine to make up any other sums needed. A
third alternative and one we most likely will use in the short term, will be
to rely on the financing provided by Eugene Mallette who, through CLB, owns
the other planes we use. Mr. Mallette has indicated a willingness to purchase
the planes and lease them back to Alpine on similar terms to the current CLB
agreements. Mr. Mallette has stated he has the financing to purchase up to 15
additional planes.
We are in the process of building new facilities at our Provo, Utah
headquarters. These new facilities will serve as our corporate offices,
maintenance and training facilities. We intend to sell the current
facilities in Provo to help pay for the new facilities and to pay the balance
of the cost with our current capital and ongoing revenue. The facilities will
be at the Provo Airport and be built on grounds leased from Provo City. The
lease will be for 40 years, and like our current lease be for a fairly nominal
monthly rent.
Liquidity and Capital Resources
- -------------------------------
October 31, 1999
- ----------------
In reviewing our financial position, we have focused on Alpine Aviation's
operations prior to the merger with Riverside. We have treated the merger as
a "reverse acquisition" and we are changing year ends to October 31 to match
Alpine Aviation's.
Financially, Alpine is experiencing its best times since inception. For
the fiscal year ended October 31, 1999, we had record profits that left Alpine
with current assets of $4,432,199 compared with current liabilities of
$1,093,581 and little long term debt. With a working capital surplus of
$3,336,618 we are positioned to complete the building of our new facility in
Provo, Utah which we anticipate costing around $1,000,000. We only anticipate
having to expend approximately $500,000 out of existing funds once we complete
the sale of our existing facility. Even if our current facility does not sell
for a period of time or we receive less than anticipated, our budget will be
able to handle the in-house financing of the new facility. We do not
anticipate any problems with liquidity in the upcoming year. Revenues should
exceed the previous years, resulting in additional cash to fund operations and
expansion.
The only expenditures anticipated besides the new facility are for
additional cargo aircraft. Management anticipates following its existing
practice of not incurring large amounts of long term debt. Accordingly, if
the planes cannot be financed out of existing revenue, management will seek
alternatives. Hopefully, we will raise the necessary capital through the sale
of equity. If not, Eugene Mallette has indicated a willingness, through other
entities he controls, to purchase the planes and lease them back to Alpine.
The lease terms would be similar to the ones currently being paid on our other
planes which are also leased from an entity controlled by Mr. Mallette. We
believe these terms to be very favorable.
April 30, 2000
- --------------
As of April 30, 2000, our working capital surplus improved to $4,705,700,
with current assets of $5,799,281 and total liabilities of approximately
$1,100,000. We feel good about the $1,000,000 increase in working capital
since October 31, 1999, particularly since we paid $1,000,000 in dividends
during the quarter ended April 30, 2000.
We believe the next two quarters should produce similar results leaving
us with a strong financial position for the next twelve months. Even with
anticipated expansion, the operations are producing enough cash flow that our
business should continue to remain profitable, as long as our Postal Service
routes continue.
Results of Operation
- --------------------
October 31, 1999
- ----------------
Our last fiscal year was our best year ever in terms of revenue and net
income. Revenue for the fiscal year ended October 31, 1999, was $12,477,816
which represented an increase of $2,848,325 or 30% over the $9,629,491 in
revenue for the same period in 1998. More importantly, net income increased
almost 211% to $1,756,484 for the fiscal year ended October 31, 1999, from
$564,352 received in 1998.
The increase in net income was the result of increased loads and expanded
route system resulting in better utilization of planes and pilots. We
consider these results even better than expected given the high fuel cost we
had to pay in 1999 and continue to pay today. As we are able to expand
routes, net income should continue to increase given our ratio of fixed cost
to variable cost.
Our contract with the Postal Service more than made up for the higher
fuel cost as they awarded us expanded routes increasing from 12 routes in 1998
to 19 in 1999. These increased routes allowed us to utilize our planes and
pilots more efficiently. This additional revenue offset the increased
variable cost of fuel and maintenance. We anticipate that fuel costs will
remain about the same for this year, somewhere near $1.65 per gallon on
average.
One advantage we have over other carriers is the Postal Service contracts
have a fuel expense increase clause. This clause automatically increases the
amount the Postal Service pays us when fuel costs increase, making adjustments
every quarter. Accordingly, as fuel costs go up, we generally only experience
a quarter lag time before we begin to be paid at a higher rate.
Wage expense increased by $524,267 for a couple of reasons. First, our
business expanded which required we hire additional pilots to fly the new
routes. However, a major increase came from bonus to our employees and
management. To show our appreciation to our employees, we gave them part of a
"bonus" received from the Postal Service. The bonus was for our on-time
performance being in the top 10% for all regional carriers. This bonus was
$135,949 for 1999. To show our appreciation for our employees making this
bonus possible, we passed along $66,200 of the bonus to the employees.
Unfortunately, the Postal Service will not be offering a performance bonus
until September 2001, at the earliest. They have indicated other incentives
will be built into the new contract but at this time we do not know how these
new incentives of the contract will affect our revenue. The other major
increase in wages related to bonuses to officers of $265,000.
One factor we anticipate might change in upcoming years is the revenue
received from our fixed based operations. We do not feel it makes long term
economic sense to continue to operate our fixed based operations for third
party use. Last year, the fixed based operation contributed about $654,000 to
our revenue. Although this seems like a lot of money for a company our size,
when matched with the related expenses, the fixed based operation operated at
only a slight profit. As, and if, this change occurs, we will refocus the
personnel used in the fixed based operation to maintenance of our own planes
and to other administrative needs.
April 30, 2000
- --------------
For the six months ending April 30, 2000, operating revenue increased to
$8,791,496. This was almost a $3,000,000 increase over the same period in
1999 when revenue was $5,811,011. More importantly, our operating income
increased to $3,544,200 from $1,816,562 for the six months ending April 30,
2000, as compared to April 30, 1999. Net income after taxes was $2,213,048.
Management is pleased with these numbers and feels they show how well we
have been able to expand operations and maintain our expenses. Except for
those variable costs related to the increase in operations, expenses remained
fairly constant from prior periods. As expected flight operations,
maintenance and rental expenses increased as we added flights. These
increases, however, were more than offset by the additional revenue generated.
As a result of management's efforts to maintain cost and expand operations,
our profit margin on operating income increased to 40% from 31% from the prior
six month period. Management feels these profit margins are reflective of
future results if we are able to continue to expand operations.
For the six months ended April 30, 2000, general and administrative
expenses expanded as we continued to reward employees with payroll bonuses.
We do not anticipate paying large bonuses as we move forward. In the past as
a private company, bonuses were the best way to reward management. Now, as
we move into more of a public company, we plan on creating an option plan to
link management's performance with increasing shareholder value. As we branch
out into different revenue sources and reduce our dependency on the Postal
Service, we would anticipate that profit margins on the new business would not
be as favorable, at first, as new routes have to be developed, and additional
planes and personnel added.
We also will reduce some expenses completely in the future. Flight
instruction and rentals which were $217,535 expense item will no longer be
incurred once we sell our fixed base facility. This will also remove $262,397
in revenue from these items. Management feels the reallocation of these
resources will more than make up for the lost revenue. Particularly when
considering the maintenance on the aircraft and the managerial time devoted to
these marginal revenue activities.
(b) Pro Forma Financial Information.
Pro forma combined financial statements of Alpine Air Express, Inc.
(formerly Riverside Ventures, Inc. and Alpine Aviation, Inc.) as of April 30,
2000 (Unaudited).
Alpine Air Express, Inc.
(Formerly Riverside Ventures, Inc. and
Alpine Aviation, Inc.)
Pro Forma Combined Financial Statements
(Unaudited)
The following unaudited pro forma combined balance sheet and statement of
income aggregate the unaudited balance sheet and statement of income of
Riverside Ventures, Inc. (Riverside) (a Delaware Corporation) as of April 30,
2000, and the unaudited balance sheet and statement of income of Alpine
Aviation, Inc. (Alpine) (a Utah Corporation) as of April 30, 2000, giving
effect to a transaction which was completed on June 12, 2000, wherein
Riverside acquired Alpine (the "Acquisition"). The business combination is
treated as a recapitalization of Alpine with Riverside issuing common stock in
exchange for all of the issued and outstanding shares of Alpine. The
following pro forma balance sheet and statements of income used management
assumptions as described in the notes and the historical financial information
available at April 30, 2000. The financial statements of Riverside included
in the October 31, 1999 pro forma income statement were audited as of October
31, 1999 and are herein included with Alpine at October 31, 1999. The
financial statements of Alpine included in the October 31, 1999 pro forma
income statement were audited as of October 31, 1999. Again, the format and
amounts used in these pro forma financial statements are based on those
financial statements.
The pro forma combined balance sheet and statements of income should be read
in conjunction with the separate financial statements and related notes
thereto of Riverside and Alpine. The pro forma combined financial statements
are not necessarily indicative of the combined balance sheet and statements of
income which might have existed for the period indicated or the results of
operations as they may be now or in the future.
ALPINE AIR EXPRESS, INC.
(Formerly Riverside Ventures, Inc. and Alpine Aviation, Inc.)
PRO FORMA COMBINED BALANCE SHEET
April 30, 2000
(Unaudited)
<TABLE>
<CAPTION>
Alpine Riverside Pro forma
Aviation, Ventures, Increase Pro forma
Inc. Inc. (Decrease) Combined
---------- --------- ---------- ---------
<S> <C> <C> <C> <C>
ASSETS
Current Assets:
Cash and cash
equivalents $ 723,689 $ - $ - $ 723,689
Marketable securities
2,514,038 - - 2,514,038
Accounts receivable 1,518,703 - - 1,518,703
Prepaid expense 218,399 - 229,807 448,206
Inventories 748,310 - - 748,310
Current portion of
deferred tax asset 76,142 - - 76,142
---------- ------- ---------- ----------
Total current assets 5,799,281 - 229,807 6,029,088
Property, Plant and
Equipment - net 106,439 - - 106,439
----------- ------- ---------- ----------
Total assets $5,905,720 $ - $ 229,807 $6,135,527
=========== ======= ========== ==========
LIABILITIES AND
STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable $ 92,252 $ 9,338 $ - $ 101,590
Accounts payable -
related party 276,746 - - 276,746
Accrued expenses 416,861 - - 416,861
Refundable deposits 20,080 - - 20,080
Current income tax payable 230,323 - (230,323) -
Current portion of
deferred taxes 57,319 - - 57,319
--------- ------- ---------- -------
Total current
liabilities 1,093,581 9,338 (230,323) 872,596
Deferred Income Taxes 8,599 - - 8,599
--------- ----- ---------- -------
Total liabilities 1,102,180 9,338 (230,323) 881,195
</TABLE>
ALPINE AIR EXPRESS, INC.
(Formerly Riverside Ventures, Inc. and Alpine Aviation, Inc.)
PRO FORMA COMBINED BALANCE SHEET
April 30, 2000
(Unaudited)
<TABLE>
<CAPTION>
Alpine Riverside Pro forma
Aviation, Ventures, Increase Pro forma
Inc. Inc. (Decrease) Combined
---------- --------- ---------- ---------
<S> <C> <C> <C> <C>
Stockholders' Equity:
Preferred stock,
1,000,000 shares
authorized, no shares
issued and
outstanding,
$.001 par value - - - -
Common stock, 20,000,000
shares authorized,
11,000,000 shares issued
and outstanding, $.001
par value 95,361 1,000 (85,361) 11,000
Paid-in capital- 7,515 1,497,758 1,505,273
Cumulative unrealized
holding gains
on securities 59,195 - - 59,195
Retained earnings 4,648,984 (17,853) (952,267) 3,678,864
----------- ------- --------- ---------
Total stockholders'
equity 4,803,540 (9,338) 460,130 5,254,332
----------- ------- --------- ---------
Total liabilities and
stockholders'
equity $ 5,905,720 $ - $ 229,807 $6,135,527
=========== ======= ========== ==========
</TABLE>
The accompanying notes are an integral part of the pro forma combined
financial statements.
ALPINE AIR EXPRESS, INC.
(Formerly Riverside Ventures, Inc. and Alpine Aviation, Inc.)
PRO FORMA COMBINED STATEMENT OF INCOME
For the Six Months Ended April 30, 2000
(Unaudited)
<TABLE>
<CAPTION>
Alpine Riverside Pro forma
Aviation, Ventures, Increase Pro forma
Inc. Inc. (Decrease) Combined
---------- --------- ---------- ---------
<S> <C> <C> <C> <C>
Operating Revenues $8,791,496 $ - $ - $8,791,496
Operating Expenses:
Direct operating
expenses 4,713,624 - - 4,713,624
General and
administrative 516,769 15,737 1,430,250 1,962,756
Depreciation 16,903 - - 16,903
--------- ---------- --------- ---------
Total operating
expenses 5,247,296 15,737 1,430,250 6,693,283
--------- --------- --------- ---------
Operating Income
(Loss) 3,544,200 (15,737) (1,430,250) 2,098,213
Other Income 122,202 - - 122,202
--------- --------- --------- ---------
Income (Loss)
Before Income
Taxes 3,666,402 (15,737) (1,430,250) 2,220,415
Income Tax Expense
(Benefit):
Current income
tax expense 1,500,892 - (460,130) 1,040,762
Deferred income
tax benefit (47,538) - - (47,538)
--------- --------- --------- ---------
Total income
tax expense
(benefit) 1,453,354 - (460,130) 993,224
---------- --------- --------- ---------
Net Income
(Loss) $ 2,213,048 $ (15,737) $ (970,120)$1,227,191
=========== =========== ============ =========
Net Income Per
Common Share -
Basic and Fully
Diluted $ .11
===========
Weighted Average
Shares Outstanding 11,000,000
==========
</TABLE>
The accompanying notes are an integral part of the pro forma combined
financial statements.
ALPINE AIR EXPRESS, INC.
(Formerly Riverside Ventures, Inc. and Alpine Aviation, Inc.)
PRO FORMA COMBINED STATEMENT OF INCOME
For the Year Ended October 31, 1999
(Unaudited)
<TABLE>
<CAPTION>
Alpine Riverside Pro forma
Aviation, Ventures, Increase Pro forma
Inc. Inc. (Decrease) Combined
---------- --------- ---------- ---------
<S> <C> <C> <C> <C>
Operating Revenues $12,477,816 $ - $ - $12,477,816
Operating Expenses:
Direct operating
expenses 7,756,988 - - 7,756,988
General and
administrative 1,672,480 633 1,430,250 3,103,363
Depreciation 33,001 - 33,001
----------- --------- ---------- ---------
Total operating
expenses 9,462,469 633 1,430,250 10,893,352
----------- --------- ---------- ----------
Operating Income
(Loss) 3,015,347 (633) (1,430,250) 1,584,464
Other Income (120,504) - - (120,504)
----------- --------- --------- ---------
Income (Loss)
Before Income
Taxes 2,894,843 (633) (1,430,250) 1,463,960
Income Tax Expense
Current income
tax expense 1,153,130 - (460,130) 693,000
Deferred income
tax expense (14,771) - - (14,771)
----------- --------- --------- ---------
Total income
tax expense
1,138,359 - (460,130) 678,229
----------- --------- --------- ---------
Net Income
(Loss) $ 1,756,484 $ (633) $(970,120) $ 785,731
=========== ========== ========= ==========
Net Income Per
Common Share -
Basic and Fully
Diluted $ .07
==========
Weighted Average
Shares Outstanding 11,000,000
==========
</TABLE>
The accompanying notes are an integral part of the pro forma combined
financial statements.
ALPINE AIR EXPRESS, INC.
(Formerly Riverside Ventures, Inc. and Alpine Aviation, Inc.)
PRO FORMA COMBINED NOTES TO FINANCIAL STATEMENTS
Riverside Ventures, Inc. - The Company was incorporated under the laws of the
State of Delaware on April 20, 1994, for the purpose of seeking out business
opportunities, including acquisitions. The Company is a development stage
company and since inception, the Company's activities have been limited to
organizational matters and has not commenced its principal business
activities.
Alpine Aviation, Inc. - The Company was organized under the laws of the State
of Utah on October 3, 1975. The Company was formed for the purpose of, but
not limited to, hauling air freight, serving commuter routes, and providing
pilot training.
Pro forma Adjustments - Riverside acquired all of the issued and outstanding
shares of Alpine in exchange for 9,895,000 shares of previously authorized but
unissued common stock of Riverside with a par value of $.001. The acquisition
has been treated as a recapitalization of Alpine. In addition, as part of the
merger, an additional 105,000 shares were issued in the merger in satisfaction
of an obligation of Riverside to Smith Consulting Services (SCS). The
agreement required a total of 1,048,850 shares to be received in payment of
fees associated with the merger. Consequently, a pro forma adjustment has
been recorded for the total value of shares issued to SCS of $1,430,250.
Exhibits
2.1 Agreement and Plan of Reorganization
Exhibit A- Amended List of Stockholders of Alpine
Aviation, Inc.
Exhibit B- Riverside's Financial Statements for
the years ended 6/30/99 and 6/30/98
Exhibit B-1- Riverside's Financial Statements for the
period ended March 31, 2000.
Exhibit C- Riverside's Exceptions.
Exhibit D- Alpine Aviation, Inc. Financial
Statements for the years ended October
31, 1999 and 1998
Exhibit E- Alpine Exceptions.
Exhibit F- Investment Letters.
Exhibit G- Riverside's Compliance Certificate.
Exhibit H- Alpine's Compliance Certificate.
Exhibit I- Amended Finder's Agreements
2.2 Amendment to Agreement and Plan of Reorganization
3 Certificate of Amendment effecting the name change to
"Alpine Air Express, Inc."
10.1 Stock Purchase and Sale Agreement
10.2 Consulting Services Agreement with Smith Consulting
Services, Inc.
99 10-SB Registration Statement*
* Incorporated herein by reference.
Item 8. Change in Fiscal Year.
None; not applicable.
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of
1934, the Registrant has duly caused this Report to be signed on its behalf by
the undersigned hereunto duly authorized.
ALPINE AIR EXPRESS, INC.
Date: 8/30/00 By: /s/ Eugene R. Mallette
--------------- -------------------------------------
Eugene R. Mallette
CEO and Director
Date: 8/31/00 By: /s/ Bill Distenfano
--------------- --------------------------------------
Bill Distenfano
President and Director
Date: 8/31/00 By: /s/ Max A. Hansen
---------------- --------------------------------------
Max A. Hansen
Secretary/Treasurer and Director
AGREEMENT AND PLAN OF REORGANIZATION
THIS AGREEMENT AND PLAN OF REORGANIZATION (the "Agreement") is made
this 12th day of June, 2000, between Riverside Ventures, Inc., a Delaware
corporation ("Riverside"); Jehu Hand, Esq., the principal stockholder and the
sole director and executive officer of Riverside ("Hand"); Alpine Aviation,
Inc., a Utah corporation ("Alpine"); and the person listed in Exhibit A hereof
who is the record and beneficial owner of all of the outstanding common of
Alpine (the "Alpine Stockholder").
Riverside wishes to acquire all of the outstanding common stock of
Alpine in exchange for common stock of Riverside in a transaction qualifying
as a tax-free exchange pursuant to Section 368(a)(1)(B) of the Internal
Revenue Code of 1986, as amended;
NOW, THEREFORE, in consideration of the mutual covenants and
promises contained herein, IT IS AGREED:
Section 1
Exchange of Stock
1.1 Number of Shares. The Alpine Stockholder agrees to
transfer to Riverside at the closing (the "Closing") 100% of the outstanding
securities of Alpine, which are listed in Exhibit A attached hereto and
incorporated herein by reference (the "Alpine Shares"), in exchange for
9,895,000 shares of the one mill ($0.001) par value "unregistered" and
"restricted" common voting stock of Riverside.
1.2 Delivery of Certificates by Alpine Stockholder. The
transfer of the Alpine Shares by the Alpine Stockholder shall be effected by
the delivery to Riverside at the Closing of stock certificate or certificates
representing the transferred shares duly endorsed in blank or accompanied by
stock powers executed in blank, with all signatures witnessed or guaranteed to
the satisfaction of Riverside and with all necessary transfer taxes and other
revenue stamps affixed and acquired at the Alpine Stockholder's expense.
1.3 Further Assurances. At the Closing and from time to
time thereafter, the Alpine Stockholder shall execute such additional
instruments and take such other action as Riverside may request in order to
exchange and transfer clear title and ownership in the Alpine Shares to
Riverside.
1.4 Resignation of Present Sole Director and Executive
Officer and Designation of New Directors and Executive Officers. On Closing,
the sole present director and executive officer of Riverside, Jehu Hand, Esq.,
shall resign and designate the directors and executive officers nominated by
Alpine to serve in his place and stead, until the next respective annual
meetings of the stockholders and Board of Directors of Riverside, and until
their respective successors shall be elected and qualified or until their
respective prior resignations or terminations, who shall be Eugene R.
Mallette; Max A. Hansen, Esq.; Bill Distefano; Richard Rowack; and Charles L.
Bates.
1.5 Amendment of Charter. At or prior to the Closing,
the Board of Directors and majority stockholders of Riverside shall have
adopted all resolutions required or necessary under the Delaware Corporations
Law Annotated to change the name of Riverside to "Alpine Air Express, Inc." or
such other or similar name as shall be designated by Alpine.
1.6 Assets and Liabilities of Riverside at Closing and
Indemnification by Hand. Riverside shall have no material assets and no
liabilities at Closing, and all costs incurred by Riverside incident to the
Agreement or relating to its obligations hereunder shall have been paid or
satisfied. Hand shall indemnify and hold Riverside and Alpine harmless from
and against any and all liabilities of any type or nature whatsoever of
Riverside, whether presently known or unknown, that relate to any debt, claim,
fact, other act or otherwise regarding Riverside that occurred or is based
upon any such occurrence relating to Riverside prior to the Closing.
1.7 Post-Agreement Quotations of the Reorganized
Riverside's Common Stock on the OTC Bulletin Board and/or NASDAQ of the NASD
and the SB-2 Registration Statement. In the event that despite the "best
efforts" of the parties and their counsel, that the NASD does not grant the
reorganized Riverside quotations of its common stock within 45 days of the
effective date of an SB-2 Registration Statement that will be filed with the
Securities and Exchange Commission within 30 days of the Closing and that will
register for resale all of the present outstanding shares of common stock of
Riverside and such additional shares as the newly designated Board of
Directors of the Reorganized Riverside shall designate, and/or if the SB-2
Registration Statement is not declared effective by the Securities and
Exchange Commission on or before 90 days from the Closing, the Alpine
Agreement may be terminated and shall be deemed to be null and void, at the
sole option of Alpine. If this option is exercised, all stock or other items
exchanged under the Agreement shall be returned to the other party or parties
that provided any such items, and no party shall have any claim against any
other by reason of such termination.
Section 2
Closing
The Closing contemplated by Section 1.1 shall be held at the offices
of Leonard W. Burningham, Esq., Suite 205 Hermes Building, 455 East 500 South,
Salt Lake City, Utah 84111, unless another place or time is agreed upon in
writing by the parties. The Closing may be accomplished by wire, express mail
or other courier service, conference telephone communications or as otherwise
agreed by the respective parties or their duly authorized representatives.
Section 3
Representations and Warranties of Riverside and Hand
Riverside and Hand represent and warrant to, and covenant with, the
Alpine Stockholder and Alpine as follows:
3.1 Corporate Status. Riverside is a corporation duly
organized, validly existing and in good standing under the laws of the State
of Delaware and is licensed or qualified as a foreign corporation in all
states in which the nature of its business or the character or ownership of
its properties makes such licensing or qualification necessary (Delaware
only). Riverside is a publicly held company, having previously and lawfully
offered and sold a portion of its securities in accordance with applicable
federal and state securities laws, rules and regulations. There is presently
no public market for these or any other securities of Riverside. Riverside
has done no act or thing that would prevent the Securities and Exchange
Commission from granting it an effective SB-2 Registration Statement for the
registration and resale of any of the presently authorized and outstanding
securities of Riverside, nor that would prevent its securities from being
quoted on the OTC Bulletin Board of the National Association of Securities
Dealers, Inc. (the "NASD").
3.2 Capitalization. The authorized capital stock of
Riverside consists of 20,000,000 shares of one mill ($0.001) par value common
voting stock, of which 1,000,000 shares are issued and outstanding, all fully
paid and non-assessable; and 1,000,000 shares of one mill ($0.001) par value
preferred stock, of which no shares are issued and outstanding. There are no
outstanding options, warrants or calls pursuant to which any person has the
right to purchase any authorized and unissued common stock, preferred stock or
other securities of Riverside.
3.3 Financial Statements. The financial statements of
Riverside furnished to the Alpine Stockholder and Alpine, consisting of
audited financial statements for the years ended June 30, 1999 and 1998,
attached hereto as Exhibit B and incorporated herein by reference, and
unaudited financial statements for the period ended March 31, 2000, attached
hereto as Exhibit B-1 and incorporated herein by reference, are correct and
fairly present the financial condition of Riverside at such dates and for the
periods involved; such statements were prepared in accordance with generally
accepted accounting principles consistently applied, and no material change
has occurred in the matters disclosed therein, except as indicated in Exhibit
C, which is attached hereto and incorporated herein by reference. Such
financial statements do not contain any untrue statement of a material fact or
omit to state a material fact necessary in order to make the statements made,
in light of the circumstances under which they were made, not misleading.
3.4 Undisclosed Liabilities. Riverside has no
liabilities of any nature except to the extent reflected or reserved against
in its balance sheets, whether accrued, absolute, contingent or otherwise,
including, without limitation, tax liabilities and interest due or to become
due, except as set forth in Exhibit C.
3.5 Interim Changes. Since the date of its balance
sheets, except as set forth in Exhibit C, there have been no (1) changes in
financial condition, assets, liabilities or business of Riverside which, in
the aggregate, have been materially adverse; (2) damages, destruction or
losses of or to property of Riverside, payments of any dividend or other
distribution in respect of any class of stock of Riverside, or any direct or
indirect redemption, purchase or other acquisition of any class of any such
stock; or (3) increases paid or agreed to in the compensation, retirement
benefits or other commitments to employees.
3.6 Title to Property. Riverside has good and marketable
title to all properties and assets, real and personal, reflected in its
balance sheets, and the properties and assets of Riverside are subject to no
mortgage, pledge, lien or encumbrance, except for liens shown therein or in
Exhibit C, with respect to which no default exists.
3.7 Litigation. There is no litigation or proceeding
pending, or to the knowledge of Riverside, threatened, against or relating to
Riverside, its properties or business, except as set forth in Exhibit C.
Further, no officer, director or person who may be deemed to be an affiliate
of Riverside is party to any material legal proceeding which could have an
adverse effect on Riverside (financial or otherwise), and none is party to any
action or proceeding wherein any has an interest adverse to Riverside.
3.8 Books and Records. From the date of this Agreement
to the Closing, Riverside will (1) give to the Alpine Stockholder and Alpine
or their respective representatives full access during normal business hours
to all of its offices, books, records, contracts and other corporate documents
and properties so that the Alpine Stockholder and Alpine or their respective
representatives may inspect and audit them; and (2) furnish such information
concerning the properties and affairs of Riverside as the Alpine Stockholder
and Alpine or their respective representatives may reasonably request.
3.9 Tax Returns. Riverside has filed all federal and
state income or franchise tax returns required to be filed or has received
currently effective extensions of the required filing dates.
3.10 Confidentiality. Until the Closing (and thereafter
if there is no Closing), Riverside and its representatives will keep
confidential any information which they obtain from the Alpine Stockholder or
from Alpine concerning the properties, assets and business of Alpine. If the
transactions contemplated by this Agreement are not consummated by June 30,
2000, Riverside will return to Alpine all written matter with respect to
Alpine obtained by Riverside in connection with the negotiation or
consummation of this Agreement.
3.11 Investment Intent. Riverside is acquiring the Alpine
Shares to be transferred to it under this Agreement for investment and not
with a view to the sale or distribution thereof, and Riverside has no
commitment or present intention to liquidate Alpine or to sell or otherwise
dispose of the Alpine Shares.
3.12 Corporate Authority. Riverside has full corporate
power and authority to enter into this Agreement and to carry out its
obligations hereunder and will deliver to the Alpine Stockholder and Alpine or
their respective representatives at the Closing a certified copy of
resolutions of its Board of Directors authorizing execution of this Agreement
by its officers and performance thereunder, and the sole director adopting and
delivering such resolutions is the duly elected and incumbent director of
Riverside.
3.13 Due Authorization. Execution of this Agreement and
performance by Riverside hereunder have been duly authorized by all requisite
corporate action on the part of Riverside, and this Agreement constitutes a
valid and binding obligation of Riverside and performance hereunder will not
violate any provision of the Articles of Incorporation, Bylaws, agreements,
mortgages or other commitments of Riverside.
3.14 Environmental Matters. Riverside has no knowledge of
any assertion by any governmental agency or other regulatory authority of any
environmental lien, action or proceeding, or of any cause for any such lien,
action or proceeding related to the business operations of Riverside. In
addition, to the best knowledge of Riverside, there are no substances or
conditions which may support a claim or cause of action against Riverside or
any of its current or former officers, directors, agents or employees, whether
by a governmental agency or body, private party or individual, under any
Hazardous Materials Regulations. "Hazardous Materials" means any oil or
petrochemical products, PCB's, asbestos, urea formaldehyde, flammable
explosives, radioactive materials, solid or hazardous wastes, chemicals, toxic
substances or related materials, including, without limitation, any substances
defined as or included in the definition of "hazardous substances," "hazardous
wastes," "hazardous materials," or "toxic substances" under any applicable
federal or state laws or regulations. "Hazardous Materials Regulations" means
any regulations governing the use, generation, handling, storage, treatment,
disposal or release of hazardous materials, including, without limitation, the
Comprehensive Environmental Response, Compensation and Liability Act, the
Resource Conservation and Recovery Act and the Federal Water Pollution Control
Act.
3.15 Access to Information Regarding Alpine. Riverside and Hand
acknowledge that they have been delivered copies of what has been represented
to be documentation containing all material information respecting Alpine and
its present and contemplated business operations, potential acquisitions,
management and other factors; that they have had a reasonable opportunity to
review such documentation and discuss it, to the extent desired, with their
legal counsel, directors and executive officers; that they have had, to the
extent desired, the opportunity to ask questions of and receive responses from
the directors and executive officers of Alpine, and with the legal and
accounting firms of Alpine, with respect to such documentation; and that to
the extent requested, all questions raised have been answered to their
complete satisfaction.
Section 4
Representations, Warranties and Covenants of Alpine
and the Alpine Stockholder
Alpine and the Alpine Stockholder represent and warrant to, and
covenant with, Riverside as follows:
4.1 Alpine Shares. The Alpine Stockholder is the record
and beneficial owner of all of the Alpine Shares listed in Exhibit A, free and
clear of adverse claims of third parties; and Exhibit A correctly sets forth
the names, addresses and the number of Alpine Shares respectively owned by the
Alpine Stockholder.
4.2 Corporate Status. Alpine is a corporation duly
organized, validly existing and in good standing under the laws of the State
of Utah and is licensed or qualified as a foreign corporation in all states in
which the nature of its business or the character or ownership of its
properties makes such licensing or qualification necessary.
4.3 Capitalization. The authorized capital stock of
Alpine consists of 50,000 shares of no par value common voting stock, of which
25,000 shares are issued and outstanding, all fully paid and non-assessable.
There are no outstanding options, warrants or calls pursuant to which any
person has the right to purchase any authorized and unissued capital stock or
other securities of Alpine.
4.4 Financial Statements. The financial statements of
Alpine furnished to Riverside, consisting of audited financial statements for
the years ended October 31, 1999 and 1998, attached hereto as Exhibit D, and
incorporated herein by reference, are correct and fairly present the financial
condition of Alpine as of these dates and for the periods involved; such
statements were prepared in accordance with generally accepted accounting
principles consistently applied, and no material change has occurred in the
matters disclosed therein, except as indicated in Exhibit E, which is attached
hereto and incorporated herein by reference. These financial statements do
not contain any untrue statement of a material fact or omit to state a
material fact necessary in order to make the statements made, in light of the
circumstances under which they were made, not misleading.
4.5 Undisclosed Liabilities. Alpine has no material
liabilities of any nature except to the extent reflected or reserved against
in its balance sheets, whether accrued, absolute, contingent or otherwise,
including, without limitation, tax liabilities and interest due or to become
due, except as set forth in Exhibit E.
4.6 Interim Changes. Since the date of its balance
sheets, except as set forth in Exhibit E, there have been no (1) changes in
the financial condition, assets, liabilities or business of Alpine, which in
the aggregate, have been materially adverse; (2) damages, destruction or loss
of or to the property of Alpine, payment of any dividend or other distribution
in respect of the capital stock of Alpine, or any direct or indirect
redemption, purchase or other acquisition of any such stock; or (3) increases
paid or agreed to in the compensation, retirement benefits or other
commitments to their employees.
4.7 Title to Property. Alpine has good and marketable
title to all properties and assets, real and personal, proprietary or
otherwise, reflected in its balance sheets, and the properties and assets of
Alpine are subject to no mortgage, pledge, lien or encumbrance, except for
liens shown therein or in Exhibit E, with respect to which no default exists.
4.8 Litigation. There is no litigation or proceeding
pending, or to the knowledge of Alpine, threatened, against or relating to
Alpine or its properties or business, except as set forth in Exhibit E.
Further, no officer, director or person who may be deemed to be an affiliate
of Alpine is party to any material legal proceeding which could have an
adverse effect on Alpine (financial or otherwise), and none is party to any
action or proceeding wherein any has an interest adverse to Alpine.
4.9 Books and Records. From the date of this Agreement
to the Closing, the Alpine Stockholder will cause Alpine to (1) give to
Riverside and its representatives full access during normal business hours to
all of its offices, books, records, contracts and other corporate documents
and properties so that Riverside may inspect and audit them; and (2) furnish
such information concerning the properties and affairs of Alpine as Riverside
may reasonably request.
4.10 Tax Returns. Alpine has filed all federal and state
income or franchise tax returns required to be filed or has received currently
effective extensions of the required filing dates.
4.11 Confidentiality. Until the Closing (and continuously
if there is no Closing), Alpine, the Alpine Stockholder and their
representatives will keep confidential any information which they obtain from
Riverside concerning its properties, assets and business. If the transactions
contemplated by this Agreement are not consummated by June 30, 2000, Alpine
and the Alpine Stockholder will return to Riverside all written matter with
respect to Riverside obtained by them in connection with the negotiation or
consummation of this Agreement.
4.12 Investment Intent. The Alpine Stockholder is
acquiring the shares to be exchanged and delivered to him under this Agreement
for investment and not with a view to the sale or distribution thereof, and
the Alpine Stockholder has no commitment or present intention to liquidate the
Riverside or to sell or otherwise dispose of the Riverside shares. The
Alpine Stockholder shall execute and deliver to Riverside on the Closing an
Investment Letter attached hereto as Exhibit F and incorporated herein by
reference, acknowledging the "unregistered" and "restricted" nature of the
shares of Riverside being received under the Agreement in exchange for the
Alpine Shares, and receipt of certain material information regarding
Riverside, including its 10-SB Registration Statement and all reports filed
with the Securities and Exchange Commission during the past 12 months.
4.13 Corporate Authority. Alpine has full corporate power
and authority to enter into this Agreement and to carry out its obligations
hereunder and will deliver to Riverside or its representative at the Closing a
certified copy of resolutions of its Board of Directors authorizing execution
of this Agreement by its officers and performance thereunder.
4.14 Due Authorization. Execution of this Agreement and
performance by Alpine hereunder have been duly authorized by all requisite
corporate action on the part of Alpine, and this Agreement constitutes a valid
and binding obligation of Alpine and performance hereunder will not violate
any provision of the Articles of Incorporation, Bylaws, agreements, mortgages
or other commitments of Alpine, other than required notices.
4.15 Environmental Matters. Alpine and the Alpine
Stockholder have no knowledge of any assertion by any governmental agency or
other regulatory authority of any environmental lien, action or proceeding, or
of any cause for any such lien, action or proceeding related to the business
operations of Alpine or its predecessors. In addition, to the best knowledge
of Alpine, there are no substances or conditions which may support a claim or
cause of action against Alpine or any of its current or former officers,
directors, agents, employees or predecessors, whether by a governmental agency
or body, private party or individual, under any Hazardous Materials
Regulations. "Hazardous Materials" means any oil or petrochemical products,
PCB's, asbestos, urea formaldehyde, flammable explosives, radioactive
materials, solid or hazardous wastes, chemicals, toxic substances or related
materials, including, without limitation, any substances defined as or
included in the definition of "hazardous substances," "hazardous wastes,"
"hazardous materials," or "toxic substances" under any applicable federal or
state laws or regulations. "Hazardous Materials Regulations" means any
regulations governing the use, generation, handling, storage, treatment,
disposal or release of hazardous materials, including, without limitation, the
Comprehensive Environmental Response, Compensation and Liability Act, the
Resource Conservation and Recovery Act and the Federal Water Pollution Control
Act.
4.16 Access to Information Regarding Riverside. Alpine and the
Alpine Stockholder acknowledge that they have been delivered copies of what
has been represented to be documentation containing all material information
respecting Riverside and its present and contemplated business operations,
potential acquisitions, management and other factors; that they have had a
reasonable opportunity to review such documentation and discuss it, to the
extent desired, with their legal counsel, directors and executive officers;
that they have had, to the extent desired, the opportunity to ask questions of
and receive responses from the directors and executive officers of Riverside,
and with the legal and accounting firms of Riverside, with respect to such
documentation; and that to the extent requested, all questions raised have
been answered to their complete satisfaction.
Section 5
Conditions Precedent to Obligations of Alpine, the Alpine Stockholder
All obligations of Alpine and the Alpine Stockholder under this
Agreement are subject, at their option, to the fulfillment, before or at the
Closing, of each of the following conditions:
5.1 Representations and Warranties True at Closing. The
representations and warranties of Riverside and Hand contained in this
Agreement shall be deemed to have been made again at and as of the Closing and
shall then be true in all material respects and shall survive the Closing.
5.2 Due Performance. Riverside and Hand shall have
performed and complied with all of the terms and conditions required by this
Agreement to be performed or complied with by them before the Closing.
5.3 Officers' Certificate. Alpine and the Alpine
Stockholder shall have been furnished with a certificate signed by the
President of Riverside, in such capacity and personally, attached hereto as
Exhibit G and incorporated herein by reference, dated as of the Closing,
certifying (1) that all representations and warranties of Riverside and Hand
contained herein are true and correct; and (2) that since the date of the
financial statements (Exhibit B and B-1 hereto), there has been no material
adverse change in the financial condition, business or properties of
Riverside, taken as a whole.
5.4 Opinion of Counsel of Riverside. Alpine and the
Alpine Stockholder shall have received an opinion of counsel for Riverside,
dated as of the Closing, to the effect that (1) the representations of
Sections 3.1, 3.2 and 3.12 are correct; (2) except as specified in the
opinion, counsel knows of no inaccuracy in the representations in 3.5, 3.6 or
3.7; and (3) that the shares of Riverside to be issued to the Alpine
Stockholder under this Agreement will, when so issued, be validly issued,
fully paid and non- assessable.
5.5 Assets and Liabilities of Riverside. Riverside shall
have no material assets and no liabilities at Closing, and all costs, expenses
and fees incident to the Agreement shall have been paid.
5.6 Resignation of Sole Director and Executive Officer
and Designation of New Directors and Executive Officers. The present sole
director and executive officer of Riverside shall resign, and shall have
designated the nominees of Alpine as directors and executive officers of the
Reorganized Riverside to serve in their place and stead, until the next
respective annual meetings of the stockholders and Board of Directors of
Riverside, and until their respective successors shall be elected and
qualified or until their respective prior resignations or terminations, who
shall be: Eugene R. Mallette; Max A. Hansen, Esq.; and Bill Distefano.
5.7 Name Change of Riverside. The requirements of
Section 1.5 hereof shall have been fully satisfied at Closing.
5.8 Conditions Subsequent. The Closing is subject to the
terms and conditions of Section 1.7 hereof, in that this Agreement may be
voided at the option of Alpine and the Alpine Stockholder, if the time
requirements of that Section are not fully met in a timely fashion, regardless
of the "best efforts" of the parties and their legal counsel.
Section 6
Conditions Precedent to Obligations of Riverside and Hand
All obligations of Riverside and Hand under this Agreement are
subject, at their option, to the fulfillment, before or at the Closing, of
each of the following conditions:
6.1 Representations and Warranties True at Closing. The
representations and warranties of Alpine and the Alpine Stockholder contained
in this Agreement shall be deemed to have been made again at and as of the
Closing and shall then be true in all material respects and shall survive the
Closing.
6.2 Due Performance. Alpine and the Alpine Stockholder
shall have performed and complied with all of the terms and conditions
required by this Agreement to be performed or complied with by them before the
Closing.
6.3 Officers' and Stockholders' Certificate. Riverside
and Hand shall have been furnished with a certificate signed by the President
of Alpine, attached hereto as Exhibit H and incorporated herein by reference,
dated as of the Closing, certifying (1) that all representations and
warranties of Alpine and the Alpine Stockholder contained herein are true and
correct; and (2) that since the date of the financial statements (Exhibit D),
there has been no material adverse change in the financial condition, business
or properties of Alpine, taken as a whole.
6.4 Opinion of Counsel of Alpine. Riverside shall have
received an opinion of counsel for Alpine, dated as of the Closing, to the
effect that (1) the representations of Sections 4.2, 4.3 and 4.13 are correct;
and (2) except as specified in the opinion, counsel knows of no inaccuracy in
the representations in 4.6, 4.7 or 4.8.
6.5 Books and Records. The Alpine Stockholder or the
Board of Directors of Alpine shall have caused Alpine to make available all
books and records of Alpine, including minute books and stock transfer
records; provided, however, only to the extent requested in writing by
Riverside at Closing.
6.6 Acceptance by Alpine Stockholder. The terms of this
Agreement shall have been accepted by the Alpine Stockholder by the execution
and delivery of a copy of the Agreement and related instruments.
Section 7
Termination
Prior to Closing, this Agreement may be terminated (1) by
mutual consent in writing; (2) by either the sole director of Riverside or
Alpine and the Alpine Stockholder if there has been a material
misrepresentation or material breach of any warranty or covenant by the other
party; or (3) by either the sole director of Riverside or Alpine and the
Alpine Stockholder if the Closing shall not have taken place, unless adjourned
to a later date by mutual consent in writing, by the date fixed in Section 2.
Section 8
General Provisions
8.1 Further Assurances. At any time, and from time to
time after the Closing, each party will execute such additional instruments
and take such action as may be reasonably requested by the other party to
confirm or perfect title to any property transferred hereunder or otherwise to
carry out the intent and purposes of this Agreement.
8.2 Waiver. Any failure on the part of any party hereto
to comply with any of its obligations, agreements or conditions hereunder may
be waived in writing by the party to whom such compliance is owed.
8.3 Brokers. Each party represents to the other parties
hereunder that except as provided in Exhibit I attached hereto and
incorporated herein by reference, no broker or finder has acted for any party
in connection with this Agreement, and agrees to indemnify and hold harmless
the other parties against any fee, loss or expense arising out of claims by
brokers or finders employed or alleged to have been employed the indemnifying
party.
8.4 Notices. All notices and other communications
hereunder shall be in writing and shall be deemed to have been given if
delivered in person or sent by prepaid first-class registered or certified
mail, return receipt requested, as follows:
If to Riverside: 24351 Pasto Road, Suite B
Dana Point, California 92629
With a copy to: Jehu Hand, Esq.
Hand & Hand
24351 Pasto Road, Suite B
Dana Point, California 92629
If to Alpine: 3450 West Jense Parkway
Provo, Utah 84601
With a copy to: Leonard W. Burningham, Esq.
455 East 500 South, #205
Salt Lake City, Utah 84111
If to the Alpine
Stockholder: To the Address listed in Exhibit A
8.5 Entire Agreement. This Agreement constitutes the
entire agreement between the parties and supersedes and cancels any other
agreement, representation, or communication, whether oral or written, between
the parties hereto relating to the transactions contemplated herein or the
subject matter hereof.
8.6 Headings. The section and subsection headings in
this Agreement are inserted for convenience only and shall not affect in any
way the meaning or interpretation of this Agreement.
8.7 Governing Law. This Agreement shall be governed by
and construed and enforced in accordance with the laws of the State of
Delaware, except to the extent pre-empted by federal law, in which event (and
to that extent only), federal law shall govern.
8.8 Assignment. This Agreement shall inure to the
benefit of, and be binding upon, the parties hereto and their successors and
assigns; provided however, that any assignment by any party of any rights
under this Agreement without the prior written consent of the other parties
shall be void.
8.9 Counterparts. This Agreement may be executed
simultaneously in two or more counterparts, each of which shall be deemed to
be an original, but all of which together shall constitute one and the same
instrument.
8.10 Default. In the event of default hereunder, the non-
defaulting and prevailing party in any action to enforce the terms and
provisions hereof shall be entitled to recover reasonable costs and expenses
incurred in enforcing this Agreement, including attorney's fees and associated
costs.
IN WITNESS WHEREOF, the parties have executed this Agreement and
Plan of Reorganization effective the day and year first above written.
RIVERSIDE VENTURES, INC.
Dated: 6/12/00. By/s/Jehu Hand
Jehu Hand, Esq., President
Dated: 6/12/00. /s/Jehu Hand
Jehu Hand, Esq., Personally
ALPINE AVIATION, INC.
Dated: 6/8/00. By/s/Eugene R. Mallette
Eugene R. Mallette
ALPINE STOCKHOLDER
Dated: 6/8/00. /s/Eugene R. Mallette
Eugene R. Mallette
AMENDED EXHIBIT A
Number of Shares
Number of Shares Riverside
Owned of to be
Name and Address Alpine Received in Exchange
[S] [C] [C]
Eugene R. Mallette 21,241 8,407,188
3450 West Jense Parkway
Provo, Utah 84601
The Mallette Family 2,500 989,500
Limited Partnership
3450 West Jense Parkway
Provo, Utah 84601
Bill Distefano 1,243 491,979
3450 West Jense Parkway
Provo, Utah 84601
Mark Anderson 16 6,333
10 West Broadway, Suite 630
Salt Lake City, Utah 84101
Total: 25,000 9,895,000
EXHIBIT B
RIVERSIDE VENTURES, INC.
AUDITED FINANCIAL STATEMENTS
FOR THE YEARS ENDED
JUNE 30, 1999 AND 1998
INDEPENDENT AUDITORS' REPORT
To the Board of Directors and Shareholders
Riverside Ventures, Inc.
We have audited the statements of financial position of Riverside Ventures,
Inc. ( a development stage company) as of June 30, 1999 and 1998, and the
related statements of operations, changes in stockholders' equity and cash
flows for the years then ended and cumulative for the period April 20, 1994
(date of inception) through June 30, 1999. 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 generally accepted auditing
standards. Those standards require that we plan and perform the audits to
obtain reasonable assurance about whether the financial statements are free of
material misstatements. 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 overall
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 Riverside Ventures, Inc. (a
development stage company) as of June 30, 1999 and 1998, and the results of
its operations, changes in stockholders' equity and cash flows for the period
April 20, 1994 (date of inception) through June 30, 1999, in conformity with
generally accepted accounting principles.
Bountiful, Utah
July 1, 1999
RIVERSIDE VENTURES, INC.
(A Development Stage Company)
Statements of Financial Position
June 30, 1999 and 1998
<TABLE>
<CAPTION>
1999 1998
<S> <C> <C>
ASSETS
Current assets-cash $ - $ -
Other assets
Organization costs, net of accumulated
amortization of $1,015 and $858 - 157
Total assets $ - $ 157
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable $ 108 $ -
Accounts payable - related party 993 468
Total current liabilities 1,101 468
Stockholders' equity
Preferred stock, $.001 par value;
1,000,000 shares authorized; no
shares issued and outstanding
Common stock, $.001 par value;
20,000,000 shares authorized;
1,000,000 shares issued and outstanding 1,000 1,000
Additional paid-in capital 15 15
Accumulated deficit during the
development stage (2,116) (1,326)
Total stockholders' equity (1,101) (311)
Total liabilities and stockholders' equity $ - $ 157
</TABLE>
See accompanying notes to financial statements
RIVERSIDE VENTURES, INC.
(A Development Stage Company)
Statements of Operations
Years Ended June 30, 1999 and 1998
and Cumulative from Inception to June 30, 1999
<TABLE>
<CAPTION>
Cumulative
From
Inception
(April 20, 1994)
to June 30,
1999 1998 1999
<S> <C> <C> <C>
Revenues $ - $ - $ -
Operating expenses
General and administrative 633 108 1,101
Amortization 157 204 1,015
Total operating expenses 790 312 2,116
Net (loss) $ (790) $ (312) $ (2,116)
Net (loss) per share $ - $ - $ -
Weighted average number of
shares outstanding 1,000,000 1,000,000 1,000,000
</TABLE>
See accompanying notes to financial statements
RIVERSIDE VENTURES, INC.
(A Development Stage Company)
Statement of Changes in Stockholders' Equity
From Inception (April 20, 1994) Through June 30, 1999
<TABLE>
<CAPTION>
Accumulated
Deficit
Common Stock Additional During the
Paid-In Development
Shares Amount Capital Stage Total
<S> <C> <C> <C> <C> <C>
Issuance of common
stock for cash,
April 20, 1994 1,000,000 $ 1,000 $ 15 $ - $ 1,015
Net (loss) - - - (42) (42)
Balances at June 30,
1994 1,000,000 1,000 15 (42) 973
Net (loss) - - - (338) (338)
Balances at June 30,
1995 1,000,000 1,000 15 (380) 635
Net (loss) - - - (320) (320)
Balances at June 30,
1996 1,000,000 1,000 15 (700) 315
Net (loss) - - - (314) (314)
Balances at June 30,
1997 1,000,000 1,000 15 (1,014) 1
Net (loss) - - - (312) (312)
Balances at June 30,
1998 1,000,000 1,000 15 (1,326) (311)
Net (loss) - - - (790) (790)
Balances at June 30,
1999 1,000,000 $ 1,000 $ 15 $(2,116) $(1,101)
</TABLE>
See accompanying notes to financial statements
RIVERSIDE VENTURES, INC.
(A Development Stage Company)
Statements of Cash Flows
Years Ended June 30, 1999 and 1998
and Cumulative from Inception to June 30, 1999
<TABLE>
<CAPTION>
Cumulative
From
Inception
(April 20, 1994)
to June 30,
1999 1998 1999
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net (loss) $(790) $(312) $(2,116)
Add item not requiring the use
of cash - amortization 157 204 1,015
Increase in accounts payable 633 108 1,101
Net cash flows from operating
activities - - -
CASH FLOWS FROM INVESTING ACTIVITIES
Organization costs - - (1,015)
Net cash flows from investing
activities - - (1,015)
CASH FLOWS FROM FINANCING ACTIVITIES
Sale of common stock - - 1,015
Net cash flows from financing
activities - - 1,015
Net increase (decrease) in cash - - -
Cash balance at beginning of period - - -
Cash balance at end of period $ - $ - $ -
</TABLE>
See accompanying notes to financial statements
RIVERSIDE VENTURES, INC.
(A Development Stage Company)
Notes to Financial Statements
Years Ended June 30, 1999 and 1998
1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
The Company was incorporated under the laws of the State of Delaware on
April 20, 1994, for the purpose of seeking out business opportunities,
including acquisitions. The Company is in the development stage and
will be very dependent on the skills, talents, and abilities of
management to successfully implement its business plan. Due to the
Company's lack of capital, it is likely that the Company will not be
able to compete with larger and more experienced entities for business
opportunities which are lower risk and are more attractive for such
entities. Business opportunities in which the Company may participate
will likely be highly risky and speculative. Since inception, the
Company's activities have been limited to organizational matters.
Organizational costs are amortized on a straight-line basis over five
years.
2. CASH AND CASH EQUIVALENTS
The Company considers all short-term investments with an original
maturity of three months or less to be cash equivalents.
3. RELATED PARTY TRANSACTIONS
The Company currently receives the use of office space free of charge
from an officer of the Company. The fair market value of the office
space in the same geographic region is $20 per month.
4. INCOME TAXES
The fiscal year end of the Company is June 30th and an income tax return
has not been filed. However, if an income tax return had been filed,
the Company would have a net operating loss carry forward of $2,116 that
would begin expiring in the year 2009.
5. STOCK OPTION PLAN
The Company has stock option plans for directors, officers, employees,
advisors, and employees of companies that do business with the Company,
which provide for non-qualified and qualified stock options. The Stock
Option Committee of the Board determines the option price which cannot
be less than the fair market value at the date of the grant or 110% of
the fair market value if the Optionee holds 10% or more of the Company's
common stock. The price per share of shares subject to a Non-Qualified
Option shall not be less than 85% of the fair market value at the date
of the grant. Options generally expire either three months after
termination of employment, or ten years after date of grant (five years
if the optionee holds 10% or more of the Company's common stock at the
time of grant). No options have been granted under the plan.
EXHIBIT B-1
RIVERSIDE VENTURES, INC.
UNAUDITED FINANCIAL STATEMENTS
FOR THE PERIOD ENDED MARCH 31, 2000
RIVERSIDE VENTURES, INC.
(A Company in the Development Stage)
BALANCE SHEETS
<TABLE>
<CAPTION>
ASSETS
June 30, March 31,
1999 2000
<S> <C> <C>
TOTAL ASSETS $ $
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable $ 108 $ 108
Accounts payable - related party 993 1,730
TOTAL LIABILITIES $ 1,101 $ 1,838
STOCKHOLDERS' EQUITY
Preferred Stock, $.001 par value;
1,000,000 shares authorized; no shares
issued and outstanding
Common Stock, $.001 par value; 20,000,000
shares authorized; 1,000,000 shares issued
and outstanding 1,000 1,000
Additional paid-in capital 15 15
Accumulated deficit during the
development stage (2,116) (2,853)
TOTAL STOCKHOLDERS' EQUITY (1,101) (1,838)
TOTAL LIABILITIES AND STOCKHOLDER'S EQUITY $ $
</TABLE>
The accompanying notes are an integral part of the financial statements.
RIVERSIDE VENTURES, INC.
(A Company in the Development Stage)
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
CUMULATIVE
FOR THE NINE FOR THE THREE FROM INCEPTION
MONTHS ENDED MONTHS ENDED (April 20, 1994)
March 31, March 31, TO
2000 1999 2000 1999 March 31, 2000
<S> <C> <C> <C> <C> <C>
REVENUES $ $ $ $ $
OPERATING EXPENSES
General and
Administrative 737 1,838
Amortization 36 12 1,015
TOTAL OPERATING EXPENSES 737 12 2,853
NET (LOSS) (737) (36) $(12) $ (2,853)
NET (LOSS) PER SHARE $ (Nil) $(Nil) $ $(Nil) $ (Nil)
WEIGHTED AVERAGE NUMBER
OF SHARES OUTSTANDING 1,000,000 1,000,000 1,000,000 1,000,000 1,000,000
</TABLE>
See accompanying Notes to Financial Statements.
RIVERSIDE VENTURES, INC.
(A Company in the Development Stage)
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
CUMULATIVE
FOR THE NINE FOR THE THREE FROM INCEPTION
MONTHS ENDED MONTHS ENDED (April 20, 1994)
March 31, March 31, TO
2000 1999 2000 1999 March 31, 2000
<S> <C> <C> <C> <C> <C>
CASH FLOWS FROM
OPERATING ACTIVITIES
Net (Loss) $ (737) $(36) $ $ 12 $ (2,853)
Add item not
requiring the
use of cash -
amortization 36 12 1,015
Increase (decrease)
in accounts
payable 737 1,838
Net cash flows from
operating activities
CASH FLOWS FROM INVESTING
ACTIVITIES
Organizational Costs (1,015)
CASH FLOWS FROM FINANCING
ACTIVITIES
Sale of Common Stock 1,015
Net Cash flows from
financing activities 1,015
NET INCREASE (DECREASE)
IN CASH
CASH BALANCE AT BEGINNING
OF PERIOD
CASH BALANCE AT END OF
PERIOD $ $ $ $ $
</TABLE>
See accompanying Notes to Financial Statements.
RIVERSIDE VENTURES, INC.
(A Company in the Development Stage)
NOTES TO CONDENSED FINANCIAL STATEMENTS
(UNAUDITED)
March 31, 2000
1. Comments
The accompanying financial statements are unaudited, but in the
opinion of the management of the Company, contain all adjustments, consisting
of only normal recurring accruals, necessary to present fairly the financial
position at March 31, 2000, the results of operations for the nine and three
months ended March 31, 2000 and 1999, and the cash flows for the nine and
three months ended March 31, 2000 and 1999. Reference is made to the
Company's Form 10-SB filed on August 11, 1999. The results of operations for
the nine and three months ended March 31, 2000 are not necessarily indicative
of the results of operations to be expected for the full fiscal year ending
June 30, 2000.
EXHIBIT C
None.
EXHIBIT D
ALPINE AVIATION, INC.
AUDITED FINANCIAL STATEMENTS
FOR THE YEARS ENDED OCTOBER 31, 1999 AND 1998
See Item 7(a)(1).
EXHIBIT E
None.
EXHIBIT F
Riverside Ventures, Inc.
24351 Pasto Road, Suite B
Dana Point, California 92629
Re: Exchange of shares of Alpine Aviation, Inc., a Utah
corporation ("Alpine"), for shares of Riverside
Ventures, Inc., a Delaware corporation ("Riverside" or
the "Company")
Dear Ladies and Gentlemen:
Pursuant to that certain Agreement and Plan of Reorganization (the
"Agreement") between the undersigned, Alpine, the sole stockholder of Alpine
and Riverside, I acknowledge that I have approved this exchange; that I am
aware of all of the terms and conditions of the Agreement; that I have
received and personally reviewed a copy of the Agreement and any and all
material documents regarding the Company, including, but not limited to
Articles of Incorporation, Bylaws, minutes of meetings of directors and
stockholders, financial statements and reports filed with the Securities and
Exchange Commission during the past 12 months. I represent and warrant that
no director or officer of the Company or any associate of either has solicited
this exchange; that I am an "accredited investor" as that term is known under
the Rules and Regulations of the Securities and Exchange Commission (see
Exhibit 1 hereto); and/or, I represent and warrant that I have sufficient
knowledge and experience to understand the nature of the exchange and am fully
capable of bearing the economic risk of the loss of my entire cost basis.
I further understand that immediately prior to the completion of
the Plan, Riverside had little, if any assets, of any measurable value, and
that in actuality, the completion of the Agreement and the exchange of my
shares of Alpine for shares of Riverside results in a decrease in the actual
percentage of ownership that my shares of Alpine represented in Alpine prior
to the completion of the Plan.
I understand that you have and will make books and records of your
Company available to me for my inspection in connection with the contemplated
exchange of my shares, options or warrants, and that I have been encouraged to
review the information and ask any questions I may have concerning the
information of any director or officer of the Company or of the legal and
accounting firms for the Company. I understand that the accountant for the
Company is Thurman Shaw & Co., LC, Certified Public Accountants, 215 South
State Street, Salt Lake City, Utah 84111, Telephone 801-359-2428; and that
legal counsel for Riverside is Jehu Hand, Esq., Suite B, 24351 Pasto Road,
Dana Point, California 92629, Telephone 949-489-2400; Mr. Hand is also the
sole director and executive officer of Riverside.
I also understand that I must bear the economic risk of ownership
of any of the Riverside shares, options or warrants for a long period of time,
the minimum of which will be one (1) year, as these shares are "unregistered"
shares and may not be sold unless any subsequent offer or sale is registered
with the United States Securities and Exchange Commission or otherwise exempt
from the registration requirements of the Securities Act of 1933, as amended
(the "Act"), or other applicable laws, rules and regulations.
I intend that you rely on all of my representations made herein
and those in the personal questionnaire (if applicable) I provided to Alpine
for use by Riverside as they are made to induce you to issue me the shares of
Riverside under the Plan, and I further represent (of my personal knowledge or
by virtue of my reliance on one or more personal representatives), and agree
as follows, to-wit:
1. That the shares being acquired are being received for
investment purposes and not with a view toward further distribution;
2. That I have a full and complete understanding of the phrase
"for investment purposes and not with a view toward further distribution";
3. That I understand the meaning of "unregistered" shares and
know that they are not freely tradeable;
4. That any stock certificate issued by you to me in connection
with the shares being acquired shall be imprinted with a legend restricting
the sale, assignment, hypothecation or other disposition unless it can be made
in accordance with applicable laws, rules and regulations;
5. I agree that the stock transfer records of your Company
shall reflect that I have requested the Company not to effect any transfer of
any stock certificate representing any of the shares being acquired unless I
shall first have obtained an opinion of legal counsel to the effect that the
shares may be sold in accordance with applicable laws, rules and regulations,
and I understand that any opinion must be from legal counsel satisfactory to
the Company and, regardless of any opinion, I understand that the exemption
covered by any opinion must in fact be applicable to the shares;
6. That I shall not sell, offer to sell, transfer, assign,
hypothecate or make any other disposition of any interest in the shares,
options or warrants being acquired except as may be pursuant to any applicable
laws, rules and regulations;
7. I fully understand that my shares which are being exchanged
for shares of the Company are "risk capital," and I am fully capable of
bearing the economic risks attendant to this investment, without
qualification; and
8. I also understand that without approval of counsel for
Riverside, all shares of Riverside to be issued and delivered to me in
exchange for my shares of Alpine shall be represented by one certificate only
and which such certificate shall be imprinted with the following legend or a
reasonable facsimile thereof on the front and reverse sides thereof:
The shares, options or warrants of stock represented
by this certificate have not been registered under the
Securities Act of 1933, as amended, and may not be
sold or otherwise transferred unless compliance with
the registration provisions of such Act has been made
or unless availability of an exemption from such
registration provisions has been established, or
unless sold pursuant to Rule 144 under the Act.
Any request for more than one stock certificate must be
accompanied by a letter signed by the requesting stockholder setting forth all
relevant facts relating to the request. Riverside will attempt to accommodate
any stockholders' request where Riverside views the request is made for valid
business or personal reasons so long as in the sole discretion of Riverside,
the granting of the request will not facilitate a "public" distribution of
unregistered shares of Riverside.
You are requested and instructed to issue a stock certificate as
indicated in Exhibit 2 hereof.
Dated this 8th day of June, 2000.
Very truly yours,
/s/ Eugene R. Mallette
EXHIBIT 2
Eugene R. Mallette
3450 West Jense Parkway
Provo, Utah 84601
To Whom It May Concern:
I hereby give the following securities to the following persons who are
relatives or close personal friends that I have known for no less than 10
years, subject to the following conditions:
1. That the issuance and deliver of the stock certificates to
represent these shares shall be registered with the Securities and
Exchange Commission and be subject to an effective registration
statement covering such issuance and delivery; and,
2. That regardless of any such registration, the donees shall be
receiving these securities for "investment purposes" and that
resales thereof shall be made in total compliance with the terms
and provisions of Rule 144 of the Securities and Exchange
Commission, with each stock certificate issued to each donee to
bear an appropriate "restrictive" legend indicating these
restrictions.
1 X 5,000 Adeline Voldseth
Lennep, Rt
Martinsdale, MT 59053
1 X 5,000 Bill & Nancy Doyle
126 Westwood Land
Kalispell, MT 59901
1 X 5,000 Dorene Maixner
236 Waterford Drive
Butte, MT 59701
1 X 5,000 Katie Mallette
5796 Angie Ct.
Parker, CO 80134
1 X 5,000 Kelly & Marcie McMullan
805 Park Ave.
Boone, IA 50036
1 X 5,000 Kristen Mallette
5796 Angie Ct.
Parker, CO 80134
1 X 5,000 Margaret Maixner
1118 Sampson
Butte, MT 59701
1 X 5,000 Mike & Dana Maixner
345 Chickasaw Ct.
Jacksonville, FL 32259
1 X 5,000 Sarah Mallette
5796 Angie Ct.
Parker, CO 80134
1 X 5,000 Tom and Alice Gregoire
17311 Cedar Rd.
Lake Oswego, OR 97034
1 X 1,000 Amy & Jeff Castro
242 Browns St.
Bettendorf, IA 52722
1 X 1,000 Andrew Maixner
345 Chicksaw Ct.
Jacksonville, FL 32259
1 X 1,000 Brent Gregoire
28015 Camino Del Rio
San Juan Capistrano, CA 92675
1 X 1,000 Brian Gregoire
623 Via Del Campo
San Marcos, CA 92069
1 X 1,000 Carol Ann Gregoire
8191 Ships Curve Lane
Springfield, VA 22153
1 X 1,000 Chris & Kelly Clark
133 S. 200 East
Lindon, Utah 84042
1 X 1,000 D. J. Schnee, Jr.
730 Hill
Shelby, MT 59474
1 X 1,000 Dan Marcon
3250 S. Blvd.
Idaho Falls, ID 83402
1 X 1,000 Dave Dart
P. O. Box 5065
Kailua Kona, HI 96745
1 X 1,000 Dick Torkildson
629 Leslie Ave.
Helena, MT 59601
1 X 1,000 Don Stocker
#11 Jackson Cr. Rd.
Clancy, MT 59634
1 X 1,000 Gary & Barb Harmon
110 E. Granite Ave.
Shelby, MT 59474
1 X 1,000 Gene & Krysti Doyle
1311 N. W. Island Dr.
N W Poulsbo, WA 98370-8104
1 X 1,000 Jess Pellett
1216 McDonald #A
Missoula, MT 59801
1 X 1,000 J'neanne & Gene Theus
17311 SW Cedar Rd.
Lake Oswego, OR 97034
1 X 1,000 Joe & Diane Gregoire
5375 Washington Ct.
Lake Oswego, OR 97035
1 X 1,000 Joe Estenson
1377 Bighorn Rd.
Helena, MT 59602
1 X 1,000 Lynn & Mark Richardson
730 S. 1650 East
Spanish Fork, UT 84660
1 X 1,000 Marie Walsh
P. O. Box 579
East Helena, MT 59635
1 X 1,000 Mary Ann Harwood
678 Hill Street
Shelby, MT 59474
1 X 1,000 Mary Pat McMullan
805 Park Ave.
Boone, IA 50036
1 X 1,000 Max & Kathy Mallette
218 E. Cascade Ave.
Shelby, MT 59474
1 X 1,000 Max & Patti Hansen
P. O. Box 1301
Dillon, MT 59725
1 X 1,000 Maxine & Wayne Van Dine
16513 190th Ave. N.E.
Woodenville, MT 98072
1 X 1,000 Mike McMullan
805 Park Ave.
Boone, IA 50036
1 X 1,000 Pat & Sandy Doyle
340 Kings Way
Kalispell, MT 59901
1 X 1,000 Patrick Maixner
345 Chicksaw Ct.
Jacksonville, FL 32259
1 X 1,000 Ray Gregorie
5552 Yorkshire Pl
Lake Oswego, OR 57035
1 X 1,000 Tom & Jeannie Robinson
20212 108th Ave. NE
Bothell, WA 98011
1 X 500 Cathy Orehoski
1701 N. Sagehen Rd.
Orem, UT 84057
1 X 500 Daria Jones
93 East 350 North
Orem, UT 84057
1 X 500 Dave & Joan Hardy
2116 Clark
Billings, MT 59102
1 X 500 Dick & Kathy Walsh
5805 San Sonead Tr
Billings, MT 59106-1020
1 X 500 Ed & Franki Browning
C/O Red Baron Restaurant
Alpine, WY 83128
1 X 500 Frank & Mary Ciez
1022 Stagecoach Tr
Ronam, MT 59864-9550
1 X 500 Fred & Linda Ross
401 23rd N.E.
E. Wenatchee, WA 98801
1 X 500 Larry Schofield
SLC Int'l Airport
AMF Box 22862
Salt Lake City, Utah 84122-0862
1 X 500 Lillian Pellett
211 E. Teton Ave.
Shelby, MT 59474
1 X 500 Lorraine Nicholson
3534 S. 194th Street
Seatac, WA 98188
1 X 500 Mark S. Mezger
203 Mazdell Way
Woodland, CA 95695
1 X 500 Mike & Michelle Stevenson
950 Mellot Lane
Missoula, MT 59802
1 X 500 Nancy Oreskovich
269 S. Beverly
Beverly Hill, CA 90212
1 X 500 Pat & Colleen McCutcheon
7 Cloverview Drive
Helena, MT 59601
1 X 500 Pat & Edna Cahill
5530 Gene Sarazen Dr.
Billings, MT 59106
1 X 500 Pete & Audrey Carter
1755 Canyon Rd.
Springville, UT 84663
1 X 500 Ray & Sue Walsh
3231 Rustic Villa
Kingswood, TX 77345
1 X 500 Sheila Mello
19883 Summetset Ln
Parker, CO 80134
1 X 500 Simon O'Hanion
12192 Florida
Aurora, CO 80012
1 X 500 Steve Bennett
P. O. Box 1516
Columbia Falls, MT 59912
1 X 500 Terry & Janet Bresnahan
1650 Newport
Denver, CO 80220
1 X 500 Tim & Sarah Kelly
11 Wood Ct.
Helena, MT 59601
1 X 500 Tom & Janeen McCarvel
626 N. Benton Ave.
Helena, MT 59601
1 X 500 Tom & Sharon Walsh
9000 Pickering Lane
Missoula, MT 59808
1 X 500 Tony & Jan Hunthausen
14042 College Street
Westminster, CA 92683
1 X 200 Al & Joanne Luzietti
30856 Agoura Rd. G15
Agoura Hills, CA 91301
1 X 200 Annie McGahee
3911 Jewell
San Diego, CA 92109
1 X 200 Archbishop (ret.) Hunthausen
c/o Marie Walsh
313 W. Groschell
East Helena, MT. 59635
1 X 200 Art & Bernie Kramish
9724 Cherokee Lane
Leawood, KS 66206
1 X 200 Art Hunthausen
6 Woodcourt
Helena, MT 59601
1 X 200 Bill & Joan Cote
602 Red Deer Rd.
Franktown Co 80116
1 X 200 Bill & Karen Spencer
2864 Spruce
Geneva, IL 60134
1 X 200 Bill Woon
631 Wilder
Helena, MT 59601
1 X 200 Bob & Bernie Sturm
1111 East 4th Street
Anaconda, MT 59711
1 X 200 Bob & Kathy Porter
6293 Northwoods Glenn Drive
Parker, CO 80134
1 X 200 Bob & Mary Mikes
7501 Nuthatch Cir
Parker, CO 80134
1 X 200 Bob Button
c/o Button Trans. Inc.
8034 Shrooder Rd.
Dixon, CA 95620
1 X 200 Bobby Morrelli
7828 Foxwood Place
Las Vegas, NV 89145
1 X 200 Bobby Orehoski
1701 N. Sagehen Rd.
Orem, UT 84057
1 X 200 Carmen Barnagan
430 E. 86th Street, Apt 17H
New York City, NY 10028
1 X 200 Charles L. & Ellen Bates
1143 S. 800 E.
Mapleton, UT 84664
1 X 200 Chris & Sheryl Dowling
1914 N. 50 West
Orem, Utah 84057
1 X 200 Cheryl & Ken Prevot
6004 N. Belmont Way
Parker, CO 80134
1 X 200 Craig Snyder
c/o Howard, Lewis & Peterson
120 E. 300 N.
Provo, Utah 84601
1 X 200 Dan Dart
816 W. Maryland Lane
Laurel, MT 59044
1 X 200 Dan Shumway
Provo Minicipal Airport-Asst Mgr.
Provo, Utah 84601
1 X 200 Daryl & Ruth Roberson
3 Wood Creek Dr.
Taylors, SC 29687
1 X 200 Dave & Claire Leonard
5588 Ponderosa Dr.
Parker, CO 80134
1 X 200 Dave Bruck
525 S. Harris
Helena, MT 59601
1 X 200 Dave Choquett
10151 Eshamy Bay Dr.
Anchorage, AK 99515
1 X 200 Dave Fagaoga
Aviation Dr. Provo Airport
Provo, Utah 84601
1 X 200 Dave Jewitt
10700 S. W. Beaverton Suite #465-Bldg #2
Beaverton, OR 97005
1 X 200 David & June Voldseth
Lennep, Rt.
Martinsdale, MT 59053
1 X 200 Dean Englestead
136 N. Main Street
Panguitch, Utah 84759
1 X 200 Dennis L. Goodheart
1179 Toole Ct.
Billings, MT 59105
1 X 200 Dick & Mary Lou Meerian
601 S. Hanover Street
Hanover, KS 66945-8859
1 X 200 Dick Sonju
2902 Hwy. 93N
Kalispell, MT 59901
1 X 200 Don Bussell (Buddy)
1537 Haven Crest Dr.
Powder Springs, GA 30127
1 X 200 Donna & Paul Krause
2349 Rolling Hills Dr.
Clarkston, WA 99403
1 X 200 Donna Maixner
931 Longview Drive
Missouri Valley, IA 51555
1 X 200 Dorthy Walsh
608 Maple
Anaconda, MT 59711
1 X 200 Dru Dunning
225 NE Walker Ct.
Roseberg, OR 97470
1 X 200 E. Jim Opitz
920 Vallejo
Helena, MT 59601
1 X 200 Ed & Maureen Durzay
1216 W. Park Ave.
Anaconda, MT 59711
1 X 200 Fr. Ed Stupca
Box 17
Sheridan, MT 49649
1 X 200 Fr. Gene Peoples
c/o Carrol College
1601 N. Benton Ave.
Helena, MT 59625-0002
1 X 200 Fr. Jack Huntausen
c/o Marie Walsh
313 W. Groschell
East Helena, MT 59635
1 X 200 Fred Murphy
5692 S. Blake Drive
Kearns, Utah 84118
1 X 200 Gary & Marilyn Voldseth
Lennep, Rt.
Martinsdale, MT 59053
1 X 200 Gene & Peg Walsh
1818 Hamburg
Anaconda, MT 59711
1 X 200 Gennifer Mello
19883 Summetset Ln.
Parker, CO 80134
1 X 200 George Roberts
41 Munster Dr.
Bella Vista, AR 72715
1 X 200 Georgia Anne Maixner
Homestead Health Care
54th & LaSalle
Lincoln, NE 68516
1 X 200 Glen Johnson
c/o AAA Trading
402 W. Center
Provo, Utah 84601
1 X 200 Hal Taylor
c/o I.R.S. m/s 1547
50 S. 200 East
Salt Lake City, Utah 84111
1 X 200 Hank Burgess
1506 Leslie Ave.
Helena, MT 59601
1 X 200 Hildy Narowetz
P. O. Box 235
Limon, Co 80828
1 X 200 Jay & Pillar Sweaney
372 Volley Ct.
Arnold, MD 21012
1 X 200 Jeanne & Johnny Stergar
701 W. 3rd
Anaconda, MT 59711
1 X 200 Jim Grady
120 Hilltop Rd.
Silverspring, MD 20910
1 X 200 Jim Pellett
c/o Montana Bar
Main Street
Shelby, MT 59474
1 X 200 Joe Etchart
P. O. Bos 429
Glasgow, MT 59230
1 X 200 Joe Hammond
241 Beverly Ave.
Missoula, MT 59801
1 X 200 Joe Steckly
7311 S. Delaware Ct.
Littleton, CO 80120
1 X 200 Joe Thibodeau
155 S. Madison, Suite #209
Denver, CO 80209
1 X 200 John & Melanie Mavros
14911 Yucca Ave.
Irvine, CA 92606
1 X 200 John Muszala
c/o Pacific Fighters
Fanning Field
Idaho Falls, ID 83401
1 X 200 Joy Barton
543 N 80th
Seattle, WA 98110
1 X 200 Julie Morton
426 Hilltop Ave.
Kalispell, MT 59901
1 X 200 Julie Webster O'Reily
838 5th ave.
Los Angeles, CA 90005
1 X 200 Karen Hammel
548 3rd St.
Helena, MT 59601
1 X 200 Karen Orehoski
1701 N. Sagehen Rd.
Orem, Utah 84057
1 X 200 Kenny Voldseth
Main Street
Martinsdale, MT 59053
1 X 200 Kevin Hammond
3700 Snowdrift Lane
Missoula, MT 59802
1 X 200 Kim Orehoski
1701 N. Sagehen Rd.
Orem, Utah 84057
1 X 200 Lavon Barnby
P. O. Box 2092
Kamukla, HI 96743
1 X 200 Leon Garner
P. O. Box 49
Preston, ID 93263
1 X 200 Loretta Rotellini Hammond
21515 Blackhorn Dr.
Missoula, MT 59803
1 X 200 Lorie Filo-Jones
2200 Las Brisas Way, Apt 506
Sierra Vista, AZ 85635
1 X 200 Louis & Elda Vejraska
P. O. Box 588
Omak, WA 98841
1 X 200 Lucille Davis
19701 48th Ave. W., Apt 202
Lynnwood, WA 98036-5580
1 X 200 Marc & Dorie Choquette
5921 Lund St
Juneau, AK 99801
1 X 200 Mary Jane Mead
7475 E. Lakeshore Dr.
Parker, CO 80134
1 X 200 Maurice & Lucy Ferrat
191 Ferral Ln
Toston, MT 59643
1 X 200 Mike & Lorna Lang
P. O. Box 104
Malta, MT 59538-0104
1 X 200 Nancy Stearns
545 Kingswood
Eugene, OR 97405
1 X 200 Nick Porter
6293 Northwoods Glenn Dr.
Parker, CO 80134
1 X 200 Niel Connole
513 State Street
Helena, MT 59601
1 X 200 Norman & June Voldseth
Lennep, Rt.
Martinsdale, MT 59053
1 X 200 Paul & Cathy Schulte
POB 135
Wolf Creek, MT 59648
1 X 200 Paul Wachholz
P. O. Box 1475
Kalispell, MT 59901
1 X 200 Pete & Margaret McCann
6439 N. Lakewind Cir
Parker, CO 80134
1 X 200 Pete Jansen
370 E. Teton Ave. #37
Shelby, MT 59474
1 X 200 Randy Richards
1439 East Northridge Dr.
Bountiful, Utah 84010
1 X 200 Reynelda Maixner
5523 SW 25th Street
Topeka, KS 66614
1 X 200 Richard L. Stang
Box 1056
Plains, MT 59859
1 X 200 Richard Rowack
8526 Lt. William Clark Rd.
Parker, CO 80134
1 X 200 Rick Streett
1230 Londonberry Ave.
Idaho Falls, ID 83404
1 X 200 Ron & Janice King
1728 Moore Lane
Orem, Utah 84057-2215
1 X 200 Ronnie Voldseth
Lennep, Rt.
Martinsdale, MT 59053
1 X 200 Ross Hansen
Sheep Creek Rd.
Dell, MT 59724
1 X 200 Roy G. Ereaux
Box 1287
Malta, MT 59538
1 X 200 Sam Taylor
c/o Times Independent
Moab, Utah 84532
1 X 200 Sark Barakat
c/o Mountain Motors
5th W. 3rd S.
Provo, Utah 84601
1 X 200 Scott Adams
2150 S. 950 East
Provo, Utah 84606-6285
1 X 200 Shane Quintana
5244 Firwood Rd.
Lake Oswego, OR 97305
1 X 200 Sisters of Charity
4200 S. 4th
Leavenworth, KS 66048-5054
1 X 200 Sr. Edna Huntausen
Catholic Church
Browning, MT
1 X 200 Steve & Claudia Weirich
8659 E. Summit Rd.
Parker, CO 80138
1 X 200 Steve & Lucy Ruduski
544 Hilltop Dr.
Bayfield, CA 81122
1 X 200 Steve Hayden
c/o Kings Avionics
176 N. 220 Airport Bldg. #4
Salt Lake City, Utah 84116
1 X 200 Susan Rice
c/o Norman Voldesth
Lennep Rt.
Martinsdale, MT 59053
1 X 200 Theresa Dunning
225 NE Walker Dt.
Roseberg, OR 97470
1 X 200 Todd Guelich
c/o Airsure, Ltd.
25548 Genesse Tr. Rd.
Golden, CO 80401
1 X 200 Tom & Donetta Antonovich
100 Garland
Kalispell, MT 59901
1 X 200 Tom Root
P. O. Box 544
Kalispell, MT 59903
1 X 200 Tom Tobin
2055 Corner Creek Ln.
Jackson, WY 83001
1 X 200 Tony & Harriot Hunthausen
404 W. Groschell
East Helena, MT 59635
1 X 200 Ty Dunning
c/o Theresa Dunning
225 N E Walker Ct.
Roseberg, OR 97470
1 X 200 William Curtis
1900 Pyndall Circle
Hampton, VA 23663
Dated this 30th day of August, 2000.
Very truly yours,
THE MALLETTE FAMILY
LIMITED PARTNERSHIP
By /s/ Eugene R. Mallette
The Mallette Management Trust,
General Partner
/s/ Eugene R. Mallette, Trustee
Dated this 12th day of June, 2000.
Very truly yours,
/s/ Mark D. Anderson
EXHIBIT 2
All shares are to be issued in one certificate in the name of Mark
D. Anderson.
Dated this 24th day of June, 2000.
Very truly yours,
/s/ Bill Distefano
EXHIBIT 2
All shares are to be issued in one certificate in the name of Bill
Distefano.
EXHIBIT G
CERTIFICATE OF OFFICER PURSUANT TO
AGREEMENT AND PLAN OF REORGANIZATION
The undersigned, the President of Riverside Ventures, Inc., a
Delaware corporation ("Riverside"), represents and warrants the following as
required by the Agreement and Plan of Reorganization (the "Agreement") between
Riverside and Alpine Aviation, Inc., a Utah corporation ("Alpine"), and the
sole stockholder of Alpine (the "Alpine Stockholder"), to-wit:
1. That he is the President of Riverside and has been
authorized and empowered by its Board of Directors to execute and deliver this
Certificate to Alpine and the Alpine Stockholder;
2. Based upon his personal knowledge, information, belief and
opinions of counsel for Riverside regarding the Agreement:
(i) All representations and warranties of Riverside
contained within the Agreement are true and correct;
(ii) Riverside has complied with all terms and provisions
required of it pursuant to the Agreement; and
(iii) There have been no material adverse changes in the
financial position of Riverside as set forth in its
financial statements for the years ended June 30, 1999
and 1998 and the period ended March 31, 2000, except
as set forth in Exhibit C to the Agreement.
RIVERSIDE VENTURES, INC.
By/S/Jehu Hand
Jehu Hand, Esq., President
/s/Jehu Hand
Jehu Hand, Esq., Personally
EXHIBIT H
CERTIFICATE OF OFFICER PURSUANT TO
AGREEMENT AND PLAN OF REORGANIZATION
The undersigned, the President of Alpine Aviation, Inc., a Utah
corporation ("Alpine"), represents and warrants the following as required by
the Agreement and Plan of Reorganization (the "Agreement") between Alpine, its
sole stockholder (the "Alpine Stockholder") and Riverside Ventures, Inc., a
Delaware corporation ("Riverside"), to-wit:
1. That he is the President of Alpine and has been authorized
and empowered by its Board of Directors to execute and deliver this
Certificate to Riverside;
2. Based on his personal knowledge, information, belief:
(i) All representations and warranties of Alpine contained
within the Agreement are true and correct;
(ii) Alpine has complied with all terms and provisions
required of it pursuant to the Agreement; and
(iii) There have been no material adverse changes in the
financial position of Alpine as set forth in its
financial statements for the years ended October 31,
1999 and 1998, except as set forth in Exhibit E to the
Agreement.
ALPINE AVIATION, INC.
By/S/Eugene R. Mallette
Eugene R. Mallette
AMENDED EXHIBIT I
Smith Consulting Services, Inc., a Utah corporation and financial
consultant to Alpine ("SCS"), shall be issued 105,000 shares of "restricted
securities" of the Reorganized Riverside, which shall be the balance of the
fees due and owing to SCS by Alpine in connection their Letter Agreement dated
October 5, 1999, regarding the negotiation and consumption of the Agreement,
with SCS having acquired an aggregate of 890,000 shares from certain principal
stockholders of Riverside and being required to include 53,850 of the pre-
Agreement outstanding shares of Riverside in arriving at its fee, for an
aggregate of 1,048,850 shares or 9.5% of the post-Agreement outstanding shares
of the Reorganized Riverside.
AMENDMENT TO
AGREEMENT AND PLAN OF REORGANIZATION
THIS AMENDMENT TO AGREEMENT AND PLAN OF REORGANIZATION is made and
entered into this 28th August, 2000, by and between Riverside Ventures, Inc.,
a Delaware corporation ("Riverside," [now named "Alpine Air Express, Inc."]);
Jehu Hand, Esq., the principal stockholder and the sole director and executive
officer of Riverside ("Hand"); Alpine Aviation, Inc., a Utah corporation
("Alpine"); Eugene R. Mallette, The Mallette Family Limited Partnership, a
Washington Limited Partnership, Bill Distefano and Mark Anderson
(respectively, "Mallette," or the "Partnership," or "Distefano," or
"Anderson," or collectively, the "Alpine Stockholders").
WHEREAS, Riverside, Alpine and Mallette have executed and
delivered an Agreement and Plan of Reorganization (the "Plan") on June 12,
2000, whereby all parties intended that Riverside would acquire 100% of the
outstanding securities of Alpine; and
WHEREAS, prior to the completion of the Plan, Mallette had
transferred a portion of the securities of Alpine to the Partnership,
Distefano and Anderson; and
WHEREAS, Riverside, Alpine, Mallette, the Partnership, Distefano
and Anderson desire to amend the Plan by the execution and delivery of this
Amendment to Agreement and Plan of Reorganization (the "Amended Plan") whereby
the Partnership, Distefano and Anderson shall become parties to the Plan,
making only the required representations contained in Section 4 of the Plan as
to ownership (Section 4.1) and investment intent (Section 4.12), and to the
capacity and authority to execute and deliver the Amended Plan and convey the
respective interests of the Partnership, Distefano and Anderson in securities
of Alpine to Riverside in exchange for "restricted securities" (common stock)
of Riverside, as outlined in the Plan and Exhibit A to the Plan, as amended
and attached hereto and incorporated herein by reference; and,
WHEREAS, it was the intention of all parties that Riverside shall
have an option to purchase 100% of C.L.B., a Utah corporation ("C.L.B.") from
Mallette;
NOW, THEREFORE, the Plan is hereby amended by this Amended Plan,
with all of the terms and provisions thereof to remain the same, except as
follows:
1. Exhibit A to the Plan shall be amended to reflect that
Mallette is the owner of 21,241 Alpine shares, exchangeable
for 8,407,188 shares of common stock of Riverside under the
Plan; that the Partnership owns 2,500 Alpine shares,
exchangeable for 989,500 shares of common stock of Riverside
under the Plan; that Distefano owns 1,243 Alpine shares,
exchangeable for 491,979 shares of common stock of Riverside
under the Plan; and that Anderson owns 16 Alpine shares,
exchangeable for 6,333 shares of common stock of Riverside
under the Plan.
2. That Riverside be granted the option to purchase 100% of
C.L.B. as outlined in the attached Stock Purchase and Sale
Agreement, which is incorporated herein by reference.
3. That Exhibit I to the Plan attached hereto and incorporated
herein by reference be amended as indicated therein.
4. That all of the Alpine Stockholders shall be deemed to be
parties to Plan, as amended.
5. The parties hereby reaffirm each and every other term or
provision of the Plan and this Amended Plan.
RIVERSIDE VENTURES, INC.
Dated: 8/22/00. By /s/ Jehu Hand, Esq., President
Dated: 8/22/00. /s/ Jehu Hand, Esq., Personally
ALPINE AVIATION, INC.
Dated: 8/22/00. By /s/ Eugene R. Mallette
ALPINE STOCKHOLDERS
Dated 8/22/00. /s/ Eugene R. Mallette
THE MALLETTE FAMILY LIMITED PARTNERSHIP
Dated: 8/22/00. /s/ Eugene R. Mallette
The Mallette Management Trust,
General Partner
/s/ Eugene R. Mallette
By: Eugene R. Mallette, Trustee
Dated: 8/24/00. /s/ Bill Distefano
Dated: 8/28/00. /s/ Mark Anderson
CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF INCORPORATION
OF
RIVERSIDE VENTURES, INC.
Riverside Ventures, Inc., a corporation organized and existing
under and by virtue of the General Corporation Law of the State of Delaware
(the "Company"),
DOES HEREBY CERTIFY:
FIRST: The name of the Company is Riverside Ventures, Inc.
SECOND: The following amendments were adopted by the Board of
Directors and majority stockholders of the Company as of April 20, 1994, in
the manner prescribed by Sections 141, 228 and 242 of the General Corporation
Law of the State of Delaware and the name assigned by consent of the Board of
Directors on June 12, 2000:
RESOLVED, that the Company amend its Certificate of Incorporation
to change the corporate name to such name as may be selected by
the Board of Directors;
FURTHER, RESOLVED, that the name of the Company be changed to
"Alpine Air Express, Inc."
THIRD: This amendment does not provide for any exchange,
reclassification or cancellation of issued shares.
FOURTH: This amendment does not affect the stated capital of
the Company.
FIFTH: This amendment shall become effective on filing with
the Secretary of State of Delaware.
IN WITNESS WHEREOF, Riverside Ventures, Inc. has caused this
Certificate to be signed by Bill Distefano, its President, and Max A. Hansen,
its Secretary.
RIVERSIDE VENTURES, INC.
Dated: 6/25/00 By /s/ Bill Distefano
Bill Distefano, President
Attest:
Dated: 6/24/00 /s/ Max A. Hansen
Max A. Hansen, Secretary
STOCK PURCHASE AND SALE AGREEMENT
This STOCK PURCHASE AND SALE AGREEMENT is entered into as of the 22nd
day of August, 2000, by and between EUGENE R. MALLETTE, (hereinafter "Seller")
and ALPINE AIR EXPRESS, INC. (hereinafter "Buyer").
A. Seller owns all of the issued and outstanding stock of C.L.B., a
Utah corporation (the "Stock").
B. Seller desires to sell to Buyer, and Buyer is willing to purchase
from the Seller, all of Seller's interest in the Stock.
NOW, THEREFORE, in consideration of the mutual covenants and agreements
herein contained and for other good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
1. PURCHASE AND SALE OF STOCK.
1.1 Option to Purchase. Seller hereby grants to Buyer, for a period of
two (2) years, an option to purchase the Stock on the terms and conditions set
forth below. This option may be exercised at any time within two (2) years of
the date hereof upon the provision of written notice by Buyer to Seller. The
closing (the "Closing") to occur within thirty (30) days of the date such
notice is transmitted to Seller via the United States Mail (the "Closing
Date").
1.2 Description of Stock. The Seller agrees to sell to the Buyer, and
the Buyer agrees to purchase from the Seller, on the terms, conditions, and
provisions herein contained, the Stock.
(a) All of Seller's interest in all of the issued and outstanding
stock of C.L.B., a Utah corporation.
1.3 Purchase Price. The total purchase price which the Buyer shall pay
for the Stock is Seventeen Million Dollars ($17,000,000.00), payable by the
issuance of 5,000,000 shares of the Buyer's common stock to be issued to the
Seller by Buyer, with an agreed value of $3.40 per share, which stock will be
"restricted" pursuant to Rule 144, as adopted by the Securities and Exchange
Commission, with the "holding period" to begin on the Closing Date.
The Purchase Price, in the form of shares of Buyer's common stock, shall
be paid as follows:
(a) A number of shares of Buyer's "restricted" common stock with a
value of Seventeen Million Dollars, calculated as set forth at paragraph 1.3,
above, to be transferred to Seller on the Closing Date of the sale
contemplated by this Agreement.
2. WARRANTIES.
2.1 Seller's Warranties. The Seller represents and warrants to the
Buyer as of the date hereof and as of the Closing Date as follows:
(a) The Seller has all requisite power and authority to enter into
this Agreement and to perform all of its obligations hereunder.
(b) The Seller owns all of the issued and outstanding stock of
C.L.B., a Utah corporation.
(c) The Stock is not encumbered and is not subject to any liens,
attachments or claims.
2.2 Buyer's Warranties.
(a) Buyer is a corporation.
(b) The Buyer has all requisite power and authority to enter into
this Agreement and to perform all of its obligations hereunder.
(c) The Buyer has duly authorized the execution, delivery, and
performance of this Agreement, and no other approval or authorization is
required by or on behalf of the Buyer.
(d) This Agreement has been duly executed by the Buyer, and upon
execution and delivery hereof by the Buyer, this Agreement will constitute a
legal, valid, and binding obligation of the Buyer enforceable against Buyer,
jointly and severally, in accordance with its terms.
(e) Execution and performance of this Agreement will not violate
any provisions of the Articles of Incorporation or By-Laws of Seller.
3. CLOSING.
3.1 Closing. The Closing of the subject transaction shall be held at
Salt Lake County, Utah, at the hour of 10:00 a.m. on a date within thirty (30)
days of the date on which Buyer provides notice of its intent to exercise this
option to purchase the Stock. The date on which the Closing actually takes
place is the "Closing Date". At the Closing, the following shall occur, and
all being considered as taking place simultaneously, and each party
covenanting to perform or cause to be performed each such action to be
performed on its part:
(a) The Seller shall execute and deliver to the Buyer a Bill of
Sale for the Stock which is the subject of this Agreement.
(b) The Seller will take all reasonable and necessary actions to
secure a transfer of the Stock on the books and records of C.L.B. to the
Buyer.
(c) Each party shall execute, acknowledge, and deliver such other
documents and instruments and take such other action as the other party or its
legal counsel may reasonably require in order to document and carry out the
transactions contemplated in this Agreement.
(d) The transfer of Seller's interest to Buyer in the Stock shall
be deemed effective at such time as Closing of the subject transaction is
complete.
4. DEFAULT AND REMEDIES.
4.1 Buyer's Remedies on Default. In the event of a default by the
Seller in the performance of its obligations hereunder, the Buyer shall give
written notice to the Seller designating such default. The Seller shall have
a period of ten (10) days following the effective date of said notice within
which to correct the default of which the Seller has received notice. In the
event that the Seller shall fail to correct such default within said ten (10)
day period, the Buyer shall have the right, at its option: (i) if such default
occurs prior to the Closing Date, to terminate this Agreement and all rights,
duties, and obligations of the parties hereunder, by giving written notice
thereof to the Seller; or (ii) if such default occurs before or after the
Closing Date, by legal action to compel performance by the Seller of his
obligations hereunder, or (iii) if such default occurs before or after
Closing, to recover damages from Seller resulting from said default.
4.2 Seller's Remedies on Default. In the event of a default by the
Buyer in the performance of its obligations hereunder, the Seller shall give
written notice to the Buyer designating such default. The Buyer shall have a
period of ten (10) days following the effective date of said notice within
which to correct the default of which the Buyer has received notice. In the
event that the Buyer shall fail to correct such default within said ten (10)
day period, the Seller shall have the right, at its option: (i) If such
default occurs prior to the Closing Date, to terminate this Agreement and all
rights, duties, and obligations of the parties hereunder, by giving written
notice thereof to the Buyer; or (ii) if such default occurs before or after
the Closing Date, by legal action to compel performance by the Buyer of its
obligations hereunder.
4.3 Exclusive Remedies. The rights and remedies of any of the parties
hereto shall be exclusive, and no other remedies shall be available at law.
Further, each of the parties confirms that damages at law may be an
inadequate remedy for a breach of any provision hereof. The respective rights
and obligations of the parties hereunder shall be enforceable by specific
performance, injunction, or other equitable remedy. It is the intention by
this provision to make clear the agreement of the parties that the respective
rights and obligations of the parties are limited by this Agreement and shall
be enforceable in equity as well as at law or otherwise.
5. GENERAL PROVISIONS.
5.1 Commissions. The Seller represents and warrants to the Buyer, and
the Buyer represents and warrants to the Seller, that no broker or finder has
been engaged by the respective party in connection with this Agreement or any
of the transactions contemplated by this Agreement, is in any way connected
with this Agreement or any of such transactions, or is entitled to any fee or
commission as a result of this Agreement or any of the transactions
contemplated hereby. In the event of a claim for a broker's or finder's fee
or commission in connection with this Agreement or any of the transactions
contemplated hereby: The Buyer shall indemnify, save harmless and defend the
Seller from and against such claims if it is based upon any statement,
representation or agreement alleged to have been made by the Buyer; and the
Seller shall indemnify, save harmless and defend the Buyer from and against
such claim if it is based upon any statement, representation or agreement
alleged to have been made by the Seller.
5.2 Notices. All notices and other communications provided for in this
Agreement shall be in writing and shall be sufficient for all purposes if
personally delivered or if sent by certified or registered U.S. mail, return
receipt requested, postage prepaid, and addressed to the respective party at
the address set forth below or at such other address as such party may
hereafter designate by written notice to the other party as herein provided.
To Seller: C.L.B. Corporation
3450 Mike Jense Parkway
Provo, UT 84601
To Buyer: Alpine Air Express, Inc.
3450 Mike Jense Parkway
Provo, UT 84601
If personally delivered, notices and other communications under this
Agreement shall be deemed to have been given and received and shall be
effective when personally delivered. If sent by mail in the form specified in
this section, notices and other communications under this Agreement shall be
deemed to have been given and received and shall be effective when deposited
in the U.S. mail.
5.3 Costs. The Seller and the Buyer each shall pay their own costs and
expenses incurred in preparation and execution of and performance under this
Agreement, except as otherwise expressly provided herein.
5.4 Entire Agreement. This Agreement, including the exhibits attached
hereto, constitutes the entire agreement between the parties hereto, relative
to the subject matter hereof. Any prior negotiations, correspondence, or
understandings relative to the subject matter hereof shall be deemed to be
merged in this Agreement and shall be of no further force or effect. This
Agreement may not be amended or modified except in writing executed by both of
the parties hereto.
5.5 Interpretation. Whenever the context requires, the singular shall
include the plural, the plural shall include the singular, the whole shall
include any part thereof, any gender shall include both other genders, and the
term "person" shall include an individual, partnership (general or limited),
corporation, trust, limited liability company or other entity or association,
or any combination thereof. The section headings contained in this Agreement
are for purposes of reference only and shall not limit, expand, or otherwise
affect the construction of any provision of this Agreement. This Agreement
shall bind and inure to the benefit of the parties hereto and their respective
successors and assigns. Time is of the essence. The provisions of this
Agreement shall be construed both as covenants and conditions in the same
manner as though the words importing such covenants and conditions were used
in each separate provision hereof.
5.6 Counterparts. This Agreement may be executed in any number of
counterparts, each of which when executed and delivered shall be deemed to be
an original, and all of which shall together constitute one and the same
instrument.
5.7 No Waiver. Acceptance by either party of any performance less than
required hereby shall not be deemed to be a waiver of the rights of such party
to enforce all of the terms and conditions hereof. No waiver of any such
right hereunder shall be binding unless reduced to writing and signed by the
party to be charged therewith.
5.8 Invalidity of Provision. If any provisions of this Agreement as
applied to any party or to any circumstance shall be adjudged to be void or
unenforceable for any reason, the same shall in no way affect (to the maximum
extent permitted by applicable law) any other provision of this Agreement, the
application of any such provision under circumstances different from those
adjudicated or the validity or enforceability of the Agreement as a whole.
5.9 Survival. All representations, warranties, covenants, and
agreements contained in this Agreement shall survive the Closing Date for a
period of one (1) year, after which date they shall be of no further force of
effect; provided, however, that this provision shall not affect the covenants
and agreements contained in documents executed and delivered at the Closing.
5.10 Attorneys' Fees. If any action is brought because of any breach of
or to enforce or interpret any of the provisions of this Agreement, the party
prevailing in such action shall be entitled to recover from the other party
reasonable attorneys' fees and court costs incurred in connection with such
action, the amount of which shall be fixed by the court and made a part of any
judgment rendered.
5.11 Advise of Independent Counsel. The parties hereto acknowledge that
each of them have independently consulted with legal counsel concerning the
rights and liabilities created by this Agreement and have been fully appraised
concerning the same and enter into this Agreement with full knowledge of the
legal consequences thereof. The parties hereto agree that this contract or
any provision herein shall not be construed against either of the parties, for
any reason whatsoever, including but not limited to on account of either party
being the draftsman of any particular provision hereof.
IN WITNESS WHEREOF, the Seller and the Buyer, have executed this
Agreement as of the day and year first above written.
SELLER:
/s/ Eugene R. Mallette
BUYER:
ALPINE AIR EXPRESS, INC.
By /s/ Eugene R. Mallette, President
[SCS letterhead]
October 5, 1999
Alpine Aviation, Inc.
3450 West Mike Jense Parkway
Provo, Utah 84601
Attention: Mr. Eugene R. Mallette
Chief Executive Officer
Re: Consulting Services Agreement respecting a proposal to take
Alpine Aviation, Inc., a Utah corporation ("Alpine
Aviation"), public pursuant to a "reverse" acquisition,
reorganization or merger (the "Reorganization") with a
publicly-held corporation (the "Public Company")
Dear Mr. Mallette:
The following will express the general terms upon which
Smith Consulting Services, Inc., ("SCS") will represent you in connection with
the proposed "reverse" Reorganization whereby Alpine Aviation will become a
publicly-held company.
SCS will, subject to your approval:
1. Identify a Public Company as a potential Reorganization
candidate into which Alpine Aviation shall merger or by which it shall be
acquired, with not less than 87% of the Public Company to be owned or
controlled by the stockholders of Alpine Aviation following closing of the
Reorganization. The Public Company shall have no liabilities.
2. Pay all costs associated with the Reorganization,
including legal and accounting expenses.
3. Engage securities counsel to gather and review all
material documentation respecting the Public Company and to advise SCS and
Alpine Aviation regarding its status and its viability as a candidate for the
Reorganization, and its past compliance with applicable federal and state
securities laws, rules and regulations (the "Rules and Regulations").
4. Subject to the acceptance of a Public Company selected,
to engage counsel at the expense of SCS to prepare all necessary documentation
to effect the Reorganization and to file all necessary documents required for
compliance with applicable federal and state Rules and Regulations.
5. If the Reorganization is closed as contemplated, to
assist the Public Company, at the expense of SCS, in locating broker/dealers
interested in "making a market" in the shares of the reorganized Public
Company; and to assist it in listing in Standard & Poor's Corporations Records
or Moody's, two nationally recognized financial manuals, with SCS to pay all
legal expenses and related costs, with the exception of the filing or listing
fees charged by these manuals.
SCS will expect the prior deposit of $150,000 as acceptance
of this proposal, and if for any reason you desire to terminate this
relationship prior to the closing of any Reorganization involving Alpine
Aviation and the Public Company, the amount remaining after the deduction of
prior expenses detailed herein, shall be refunded to you, together with an
accounting of such expenses. The total refund not to be less than $140,000.
If the Reorganization is completed, not less than 87% of the
reorganized Public Company shall be owned by the stockholders of Alpine
Aviation, and of the remaining 13%, 8.5% shall be owned by SCS and 4.5 % shall
be owned by the public stockholders.
You and your representatives shall fully cooperate with SCS
to the end that the Reorganization can be timely completed, and you shall
provide counsel to review all documentation requested or provided in
connection with the Reorganization on behalf of Alpine Aviation.
We would like to have the opportunity to bring CLB, Inc.
("CLB") into the reorganized Public Company for "restricted securities" in the
near future, and we would like the documentation concerning the Reorganization
to reflect this, on agreed terms. "Restricted securities" can be "registered"
for resale, subject to the approval of the reorganized Public Company, which
would be controlled by you. If you desire, CLB can be brought in now, along
with Alpine Aviation, with less dilution to you, and we would be happy to
discuss the advantages and disadvantages of this, along with some potential
tax benefits.
If the Reorganization is completed as contemplated, we would
like a first refusal to fund any new offerings or private placements singly or
by designation of duly registered broker/dealers.
If the foregoing meets with your approval, please sign below
or contact us so we can discuss this proposal.
Thank you very much.
Yours very sincerely,
/s/Karl Smith
Karl Smith, President
Agreed to this 20th day of October, 1999.
ALPINE AVIATION, Inc.
By/s/Eugene R. Mallette
Eugene R. Mallette, Chief Executive Officer