FIRST AMENDED
SCHEDULE 14C INFORMATION
Information Statement Pursuant to Section 14(c)
of the Securities Exchange Act of 1934 (Amendment No. )
Check the appropriate box:
|X| Preliminary Information Statement
|_| Confidential, for Use of the Commission Only (as permitted by Rule
14c-5(d)(2))
|_| Definitive Information Statement
Anza Capital, Inc.
(Name of Registrant as Specified in Charter)
Payment of Filing Fee (Check the appropriate box):
|X| No fee required
|_| Fee computed on table below per Exchange Act Rules 14c-5(g) and O-11
1) Title of each class of securities to which transaction applies:
2) Aggregate number of securities to which transaction applies:
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule O-11 (Set forth the amount on which
the filing fee is calculated and state how it was determined):
4) Proposed maximum aggregate value of transaction:
5) Total fee paid:
|_| Fee paid previously with preliminary materials.
|_| Check box if any part of the fee is offset as provided by Exchange Act
Rule O-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
2) Form Schedule or Registration Statement No.:
3) Filing Party:
4) Date Filed:
WE ARE NOT ASKING YOU FOR A PROXY
AND YOU ARE REQUESTED NOT TO SEND US A PROXY
INFORMATION STATEMENT
INTRODUCTION
This information statement is being mailed or otherwise furnished to
stockholders of Anza Capital, Inc., a Nevada corporation (the "Company") in
connection with the prior receipt by the Board of Directors of the Company and
approval by written consent of the holders of a majority of the Company's voting
stock (the "Voting Capital Stock") of proposals (the "Proposals") to approve (i)
the sale of substantially all of the Company's assets to AMRES Holding, LLC, a
Nevada limited liability company ("AMRES Holding"), including but not limited to
all of the Company's ownership interest in American Residential Funding, Inc., a
Nevada corporation ("AMRES") (the "Asset Sale"); (ii) the sale by AMRES Holding
and Vince Rinehart ("Rinehart"), a shareholder and the sole officer and director
of the Company, of their entire ownership interests in the Company to Viking
Investments USA, Inc., a Delaware corporation ("Viking") (the "Securities
Sale"); and (iii) the election of a new director to the Company's Board of
Directors (the "Director Elections"). This information statement is being first
sent to stockholders on or about October [__], 2005. The Company anticipates
that the Asset Sale, Securities Sale and Director Elections will become
effective on November[__], 2005.
Vote Required
The vote which is required to approve the above Proposals is the affirmative
vote of the holders of a majority of the Company's voting stock. Each holder of
common stock is entitled to One (1) vote for each share held. Each holder of
Series D Convertible Preferred Stock is entitled to One Hundred Twenty Six and
Eighty One Hundredths (126.81) votes for each share held. Each holder of Series
F Convertible Preferred Stock is entitled to One Hundred (100) votes for each
share held.
The record date for purposes of determining the number of outstanding
shares of voting stock of the Company, and for determining stockholders entitled
to vote, is the close of business on October 7, 2005 (the "Record Date"). As of
the Record Date, the Company had outstanding 6,348,898 shares of common stock,
8,201.5 shares of Series D Convertible Preferred Stock and 18,800 shares of
Series F Convertible Preferred Stock. Holders of the Voting Capital Stock have
no preemptive rights. All outstanding shares are fully paid and nonassessable.
The transfer agent for the common stock is Securities Transfer Corporation, 2591
Dallas Parkway, Suite 102, Frisco, Texas 95034, telephone (469) 633-0101.
Vote Obtained - Section 78.320 Nevada Revised Statutes
Section 78.320 of the Nevada Revised Statutes (the "Nevada Law") provides
that the written consent of the holders of the outstanding shares of voting
stock, having not less than the minimum number of votes which would be necessary
to authorize or take such action at a meeting at which all shares entitled to
vote thereon were present and voted, may be substituted for such a meeting. In
order to eliminate the costs and management time involved in obtaining proxies
and in order to effect the Proposals as early as possible in order to accomplish
the purposes of the Company as hereafter described, the Board of Directors of
the Company voted to utilize, and did in fact obtain, the written consent of the
holders of a majority of the voting power of the Company. The consenting
shareholders and their respective approximate ownership percentage of the Voting
Capital Stock of the Company, which total in the aggregate 79.68% of the
outstanding Voting Capital Stock, are as follows: (i) Rinehart (34.86%), Keyway
Investments, Ltd. (28.05%), Cranshire Capital, L.P. (12.92%) and The dotCom
Fund, LLC (3.85%).
2
Pursuant to Section 78.370 of the Nevada Revised Statutes, the Company is
required to provide prompt notice of the taking of the corporate action without
a meeting to the stockholders of record who have not consented in writing to
such action. This Information Statement is intended to provide such notice. No
dissenters' or appraisal rights under the Nevada Law are afforded to the
Company's stockholders as a result of the approval of the Proposals.
PROPOSAL ONE
ASSET SALE
General
On September 30, 2005, the Board of Directors approved, subject to
stockholder approval, the sale of substantially all of the Company's assets to
AMRES Holding, including but not limited to all of the Corporation's ownership
interest in AMRES. Effective on September 30, 2005, the Asset Sale was approved
by written consent of a majority of the Company's stockholders.
Asset Sale
On September 30, 2005, the Board of Directors of the Company approved,
declared it advisable and in the Company's best interests and directed that
there be submitted to the holders of a majority of the Company's voting stock
for action by written consent the proposed sale of substantially all of the
Company's assets to AMRES Holding, including but not limited to all of the
Company's ownership interest in AMRES in exchange for (i) the termination by
Rinehart, the managing member of AMRES Holding, of that certain Employment
Agreement dated June 1, 2001, by and between Rinehart and the Company, including
the waiver of $500,000 in severance thereunder and (ii) the assumption by AMRES
of all obligations under that certain real property lease by and between the
Company and Fifth Street Properties-DS, LLC. In conjunction with the
abovementioned exchange, the following transactions will occur: (i) the delivery
by Rinehart, a shareholder and the sole officer and director of the Company, of
his entire ownership interest in the Company, consisting of 988,275 shares of
common stock, and 18,800 shares of Series F Convertible Preferred Stock, to
Viking; (ii) the delivery by AMRES to Viking of its ownership interest in the
Company, consisting of 4,137,500 shares of Company common stock; and (iii)
delivery by AMRES Holding of warrants to acquire 250,000 shares of the Company's
common stock to Viking.
Rinehart, a shareholder and the sole officer and director of the Company,
is the managing member of AMRES Holding and an officer and director of AMRES,
and as such there may have existed a conflict of interest in the related-party
transaction, which conflict of interest was waived by the Board of Directors and
the majority of the voting stockholders of the Company. Viking does not bear a
related-party relationship to the Company or its management.
3
Purpose
The purpose of the Asset Sale, in conjunction with the Securities Sale
described below, is to promote the interests of the Company's stockholders by
selling unprofitable assets to prevent further losses and provide them with a
reasonable exit from their equity holdings in the Company.
Transaction Information
Summary Term Sheet
The material terms of the Asset Sale are as follows:
o The Company will sell substantially all of its assets to AMRES
Holding, including but not limited to all of the Company's ownership
interest in AMRES
o Rinehart will deliver his entire ownership interest in the Company,
consisting of 988,275 shares of common stock, and 18,800 shares of
Series F Convertible Preferred Stock, to Viking
o Rinehart will terminate that certain Employment Agreement dated June
1, 2001, by and between Rinehart and the Company
o AMRES will assume all obligations under that certain real property
lease by and between the Company and Fifth Street Properties-DS, LLC
o AMRES will deliver to Viking its ownership interest in the Company,
consisting of 4,137,500 shares of Company common stock
o AMRES Holding will deliver warrants to acquire 250,000 shares of the
Company's common stock to Viking
Contact Information
AMRES Holding, LLC is located at 3200 Bristol Street, Suite 700 Costa
Mesa, CA 92626, telephone number: (714) 866-2103.
American Residential Funding, Inc. is located at 3200 Bristol Street,
Suite 700 Costa Mesa, CA 92626, telephone number: (714) 866-2103.
Anza Capital, Inc. is located at 3200 Bristol Street, Suite 700 Costa
Mesa, CA 92626, telephone number: (714) 866-2103.
Viking Investments USA, Inc. is located at 1562 First Avenue, New York, NY
10028, telephone number (212) 222-4253.
Business Conducted
AMRES Holding, LLC is a holding company under control of Vince Rinehart.
American Residential Funding, Inc. provides home financing through the
brokerage of residential home loans.
Anza Capital, Inc. is a holding company that currently operates primarily
through one active subsidiary, American Residential Funding, Inc.
4
Viking Investments USA, Inc. is an investment banking firm that
facilitates capital raises and liquidity strategies for its clients.
Terms of the Transaction
(i) A brief description of the transaction.
The Company will sell substantially all of the Company's assets to AMRES
Holding, including but not limited to all of the Company's ownership interest in
AMRES in exchange for (i) the termination by Rinehart, the managing member of
AMRES Holding, of that certain Employment Agreement dated June 1, 2001, by and
between Rinehart and the Company, including the waiver of $500,000 in severance
thereunder and (ii) the assumption by AMRES of all obligations under that
certain real property lease by and between the Company and Fifth Street
Properties-DS, LLC. In conjunction with the abovementioned exchange, the
following transactions will occur: (i) the delivery by Rinehart, a shareholder
and the sole officer and director of the Company, of his entire ownership
interest in the Company, consisting of 988,275 shares of common stock, and
18,800 shares of Series F Convertible Preferred Stock, to Viking; (ii) the
delivery by AMRES to Viking of its ownership interest in the Company, consisting
of 4,137,500 shares of Company common stock; and (iii) delivery by AMRES Holding
of warrants to acquire 250,000 shares of the Company's common stock to Viking.
(ii) The consideration offered to security holders.
Not Applicable
(iii) The reasons for engaging in the transaction.
The reason for engaging in the Asset Sale, in conjunction with the
Securities Sale described below, is to promote the interests of the Company's
stockholders by selling unprofitable assets to prevent further losses and
provide them with a reasonable exit from their equity holdings in the Company.
(iv) The vote required for approval of the transaction.
The vote which is required to approve the Asset Sale is the affirmative
vote of the holders of a majority of the Company's voting stock.
(v) An explanation of any material differences in the rights of security
holders as a result of the transaction, if material.
The differences in the rights of security holders as a result of the
transaction are not material.
(vi) A brief statement as to the accounting treatment of the transaction,
if material.
The accounting treatment of the transaction is not material.
(vii) The federal income tax consequences of the transaction, if material.
The federal income tax consequences of the transaction are not material.
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Regulatory approvals
No federal or state regulatory requirements must be complied with or
approval obtained in connection with the Asset Sale.
Reports, opinions. appraisals
No reports, opinions or appraisals materially relating to the Asset Sale
have been received from an outside party or are referred to in the proxy
statement.
Past contacts, transactions or negotiations
Not Applicable
Selected financial data
Not Applicable
Pro forma selected financial data
Not Applicable
Pro forma information
Not Applicable
Financial information
The information required by Article 11 of Regulation S-X with respect to
the Asset Sale is not material.
PROPOSAL TWO
SECURITIES SALE
General
On September 19, 2005, the Board of Directors approved, subject to
stockholder approval, the sale by AMRES Holding and Rinehart, a shareholder and
the sole officer and director of the Company, of their entire ownership
interests in the Company to Viking. Approval of the Securities Sale by a
majority of the Company's stockholders was not required, nonetheless, effective
on September 30, 2005, the Securities Sale was approved by written consent of a
majority of the Company's stockholders.
Securities Sale
On September 19, 2005, the Board of Directors of the Company approved,
declared it advisable and in the Company's best interests and directed that
there be submitted to the holders of a majority of the Company's voting stock
for action by written consent the proposed sale by AMRES Holding and Rinehart to
Viking of their entire ownership interests in the Company consisting of an
aggregate of approximately 10,379,731 shares of common stock, par value $0.001
and warrants to purchase a total of 3,450,000 shares of the Company's common
stock (collectively, the "Securities") in exchange for an aggregate purchase
price of $375,000 (the "Purchase Price").
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The Company will distribute $150,000 of the Purchase Price as a cash
dividend to the Company shareholders as of the Closing Date. The dividend will
be paid on approximately 3,026,688 shares and be equal to approximately $0.0495
per share. The balance of the funds will be used to resolve all outstanding
obligations of the Company and AMRES prior to the consummation of the Securities
Sale (the "Closing").
Rinehart, a shareholder and the sole officer and director of the Company,
is the managing member of AMRES Holding and an officer and director of AMRES,
and as such there may have existed a conflict of interest in the related-party
transaction, which conflict of interest was waived by the Board of Directors of
the Company. Viking does not bear a related-party relationship to the Company or
its management.
Purpose
The purpose of the Securities Sale, in conjunction with the Asset Sale
described above, was to promote the interests of the Company's stockholders by
providing them with a reasonable exit from their equity holdings in the Company.
PROPOSAL THREE
DIRECTOR ELECTIONS
Pursuant to Section 78.330 of the Nevada Revised Statutes, Directors may
be elected by written consent signed by stockholders holding at least a majority
of the voting power to hold office until their respective successors are elected
and qualified, or until they resign or are removed and need not be shareholders
of the Company or residents of the State of Nevada. Directors may receive
compensation for their services as determined by the Board of Directors. See
"Compensation of Directors." The number of Directors shall be set by the Board
of Directors. Presently, the Board consists of one (1) member, namely Mr.
Vincent Rinehart. In connection with the Asset Sale and the Securities Sale, the
Board has nominated one additional individual, Tom Simeo, for election to the
Board subject to the closing of the Asset Sale and the Securities Sale.
Voting for the election of directors is non-cumulative, which means that a
simple majority of the shares voting may elect all of the directors. Each share
of common stock is entitled to One (1) vote and, therefore, has a number of
votes equal to the number of authorized directors. Each holder of Series D
Convertible Preferred Stock is entitled to One Hundred Twenty Six and Eighty One
Hundredths (126.81) votes for each share held. Each holder of Series F
Convertible Preferred Stock is entitled to One Hundred (100) votes for each
share held.
Although management of the Company expects that the following nominee will
be available to serve as a director, in the event that he should become
unavailable prior to the shareholders meeting, a replacement will be appointed
by a majority of the then-existing Board of Directors. Management has no reason
to believe that its nominee, if elected, will be unavailable to serve. All
nominees are expected to serve until the next Annual Meeting of Shareholders or
until their successors are duly elected and qualified.
7
Nominees For Election As Director
The following table sets forth certain information with respect to persons
nominated by the Board of Directors of the Company for election as Directors of
the Company and who will be elected subject to the closing of the Asset Sale and
the Securities Sale:
Name Age Position(s)
----------------------- ------- --------------------------------------
Tom Simeo 54 Director Nominee
Tom Simeo is the President of Viking Investments USA, Inc., a boutique
Investment Banking firm focused on reverse mergers, international corporate
finance and investor relations for publicly listed companies. During the past 12
years, Mr. Simeo has initiated and/or participated as a principal in numerous
investment banking transactions. Viking Investments is not a parent, subsidiary
or other affiliate of the Company.
To the Company's knowledge, Mr. Simeo is currently not a director,
nominated or chosen to become a director, in any public corporation other than
Anza Capital, Inc.
Compensation of Directors
There are currently no agreements with any of the directors, or director
nominees for additional compensation, and the Company does not anticipate paying
any additional compensation. Directors of the Company are entitled to
reimbursement for their travel expenses. The Company does not pay additional
amounts for committee participation or special assignments of the Board of
Directors.
Board Meetings and Committees
During the fiscal year ended April 30, 2005, the Board of Directors met on
numerous occasions and took written action on numerous other occasions. All the
members of the Board attended the meetings. The written actions were by
unanimous consent.
On April 11, 2003, an Audit Committee of the Board of Directors was
formed. During the fiscal year ended April 30, 2004, the Audit Committee met on
one occasion. In accordance with a written charter adopted by the Company's
Board of Directors, the Audit Committee assists the Board of Directors in
fulfilling its responsibility for oversight of the quality and integrity of the
Company's financial reporting process, including the system of internal
controls. In connection with the audit of our financial statements for the
fiscal year ended April 30, 2004, the Audit Committee (i) reviewed and discussed
the audited financial statements with management, (ii) discussed with the
independent auditors the matters required to be discussed by SAS 61, (iii)
received the written disclosures and the letter from the independent accountants
required by Independence Standards Board Standard No. 1, (iv) discussed with the
independent accountant the independent accountant's independence, and (v) made
appropriate recommendations to the Company's Board of Directors concerning
inclusion of the audited financial statements in the Company's annual report on
Form 10-K. Mr. Arevalo and Mr. Svicarovich were members of the Audit Committee,
and as a result of the resignation of all of our directors except for Mr.
Rinehart, the Audit Committee has disbanded in July 2004.
8
On April 11, 2003, a Compensation Committee of the Board of Directors was
formed, consisting of Vincent Rinehart and Scott A. Presta. During the fiscal
year ended April 30, 2004, the Compensation Committee took action by unanimous
written consent on one occasion. Following Mr. Presta's resignation from the
Board of Directors effective April 1, 2004, the Compensation Committee was
disbanded.
OTHER INFORMATION
Directors and Executive Officers
The following table sets forth the names and ages of our current directors
and executive officers, the principal offices and positions held by each person,
and the date such person became a director or executive officer. Our executive
officers are elected annually by the Board of Directors. The directors serve one
year terms until their successors are elected. The executive officers serve
terms of one year or until their death, resignation or removal by the Board of
Directors. Unless described below, there are no family relationships among any
of the directors and officers.
Name Age Position(s)
----------------------- ------- --------------------------------------
Vincent Rinehart (1) 55 Director, President, Chief Executive
Officer, Secretary, and Principal
Accounting Officer
(1) Upon closing of the Asset Sale and the Securities Sale, Vincent Rinehart
will resign as a member of the Company's Board of Directors.
Vincent Rinehart has been a director and the President and Chief Executive
Officer of the Company since April 12, 2000, and its Chairman since January 1,
2001. He also serves in the following capacities: Chairman of the Board,
President, and CEO of AMRES (commencing in 1997); California Department of Real
Estate Broker for Firstline Mortgage, Inc., a HUD-approved originator of FHA,
VA, and Title 1 loans (commencing in 1985); and a director of Firstline
Relocation Services, Inc., a three-office enterprise that provides real estate
sales, financing, destination, and departure services to Fortune 500 companies
(commencing in 1995). Mr. Rinehart received his B.A. in Business Administration
from California State University at Long Beach in 1972.
To the Company's knowledge, none of the directors presently serve as
directors of public corporations other than Anza Capital, Inc.
Board Meetings and Committees
During the fiscal year ended April 30, 2005, the Board of Directors met on
numerous occasions and took written action on numerous other occasions. All the
members of the Board attended the meetings. The written actions were by
unanimous consent.
9
On April 11, 2003, an Audit Committee of the Board of Directors was
formed. During the fiscal year ended April 30, 2004, the Audit Committee met on
one occasion. In accordance with a written charter adopted by the Company's
Board of Directors, the Audit Committee assists the Board of Directors in
fulfilling its responsibility for oversight of the quality and integrity of the
Company's financial reporting process, including the system of internal
controls. In connection with the audit of our financial statements for the
fiscal year ended April 30, 2004, the Audit Committee (i) reviewed and discussed
the audited financial statements with management, (ii) discussed with the
independent auditors the matters required to be discussed by SAS 61, (iii)
received the written disclosures and the letter from the independent accountants
required by Independence Standards Board Standard No. 1, (iv) discussed with the
independent accountant the independent accountant's independence, and (v) made
appropriate recommendations to the Company's Board of Directors concerning
inclusion of the audited financial statements in the Company's annual report on
Form 10-K. Mr. Arevalo and Mr. Svicarovich were members of the Audit Committee,
and as a result of the resignation of all of our directors except for Mr.
Rinehart, the Audit Committee has disbanded in July 2004.
On April 11, 2003, a Compensation Committee of the Board of Directors was
formed, consisting of Vincent Rinehart and Scott A. Presta. During the fiscal
year ended April 30, 2004, the Compensation Committee took action by unanimous
written consent on one occasion. Following Mr. Presta's resignation from the
Board of Directors effective April 1, 2004, the Compensation Committee was
disbanded.
Compliance with Section 16(a) of the Securities Exchange Act of 1934
Section 16(a) of the Securities Exchange Act of 1934 requires the
Company's directors and executive officers and persons who own more than ten
percent of a registered class of the Company's equity securities to file with
the SEC initial reports of ownership and reports of changes in ownership of
Common Stock and other equity securities of the Company. Officers, directors and
greater than ten percent shareholders are required by SEC regulations to furnish
the Company with copies of all Section 16(a) forms they file.
During the two most recent fiscal years, to the Company's knowledge, the
following delinquencies occurred:
-------------------------------------------------------------------
No. of No. of
Name No. of Late Transactions Failures to
Reports Reported Late File
-------------------------------------------------------------------
Vincent Rinehart 5 5 -0-
-------------------------------------------------------------------
Mitchell P. Kopin 3 3 -0-
(Cranshire Capital,
L.P.)
-------------------------------------------------------------------
Kenneth Arevalo 1 1 -0-
-------------------------------------------------------------------
Executive Officer and Director Compensation
On June 1, 2001, we entered into an Employment Agreement with Vincent
Rinehart. Under the terms of the agreement, we are to pay to Mr. Rinehart a
salary equal to $275,000 per year, subject to an annual increase of 10%
commencing January 1, 2002, plus an automobile allowance of $1,200 per month and
other benefits, including life insurance. The agreement is for a term of 5 years
and provides for a severance payment in the amount of $500,000 and immediate
vesting of all stock options in the event his employment is terminated for any
reason, including cause. Mr. Rinehart's Employment Agreement was ratified by the
shareholders of the Company at our 2001 Annual Shareholders Meeting.
10
2000 Stock Compensation Program
In December 1999, our Board of Directors approved the 2000 Stock
Compensation Program (the "2000 Plan"), as amended. A total of 440,000 shares
(after giving effect to the 1-for-20 reverse stock split effective April 21,
2003) of common stock are reserved for issuance under the 2000 Plan, all of
which have been issued. The 2000 Plan terminated automatically in December of
2004.
2003 Omnibus Securities Plan
On February 28, 2003, our Board of Directors approved the Anza Capital,
Inc. 2003 Omnibus Securities Plan, which was approved by our shareholders on
April 11, 2003. The Plan offers selected employees, directors, and consultants
an opportunity to acquire our common stock, and serves to encourage such persons
to remain employed by us and to attract new employees. The plan allows for the
award of stock and options, up to 750,000 shares (after giving effect to the
1-for-20 reverse stock split effective April 21, 2003) of our common stock. On
May 1 of each year, the number of shares in the 2003 Securities Plan shall
automatically be adjusted to an amount equal to ten percent (10%) of the
outstanding stock of the Company on April 30 of the immediately preceding year.
On May 4, 2004, pursuant to this provision, our Board of Directors increased the
number of shares available under the plan by 936,746 shares. During the fiscal
year ended April 30, 2004, we issued 400,000 shares under the plan, and
subsequent to the year-end 260,000 of the shares were returned. As of the date
of this Annual Report, there are 796,746 shares available for issuance under the
plan.
Board Compensation
In November 2002, Scott Presta received 42,500 shares (after giving effect
to the 1-for-20 reverse stock split effective April 21, 2003) of our common
stock for past services as a director and for agreeing to stand for re-election
as a director, and Kenneth Arevalo and L. Wade Svicarovich each received 25,000
shares (after giving effect to the 1-for-20 reverse stock split effective April
21, 2003) of common stock for agreeing to stand for election as a director. In
connection with his resignation from the Board of Directors on July 23, 2004,
Mr. Arevalo returned the 25,000 shares. There are currently no agreements with
any of the directors, or director nominees for additional compensation, and the
Company does not anticipate paying any additional compensation. Directors of the
Company are entitled to reimbursement for their travel expenses. The Company
does not pay additional amounts for committee participation or special
assignments of the Board of Directors.
Summary Compensation Table
The Summary Compensation Table shows certain compensation information for
services rendered in all capacities for the fiscal years ended April 30, 2005,
2004, and 2003. Other than as set forth herein, no executive officer's salary
and bonus exceeded $100,000 in any of the applicable years. The following
information includes the dollar value of base salaries, bonus awards, the number
of stock options granted and certain other compensation (adjusted to reflect the
1-for-20 reverse stock split effective April 21, 2003), if any, whether paid or
deferred.
11
Annual Compensation Long Term Compensation
------------------------------------ -------------------------------------------------------------
Awards Payouts
----------------------------- -- -----------
Restricted Securities
Other Annual Stock Underlying LTIP All Other
Name and Salary Bonus Compensation Awards Options SARs Payouts Compensation
Principal Position Year ($) ($) ($) ($) (#) ($) ($)
Vincent Rinehart 2005 362,397 -0- 14,400 -0- -0- -0- -0-
Pres., CEO, Chairman 2004 329,452 -0- 14,400 -0- -0- -0- -0-
2003 312,583 5,000 14,400 -0- -0- -0- -0-
Scott A. Presta (1) 2005 -0- -0- -0- -0- -0- -0- -0-
Director 2004 -0- -0- -0- -0- -0- -0- -0-
2003 -0- -0- -0- 22,950 -0- -0- -0-
Kenneth Arevalo (2) 2005 -0- -0- -0- -0- -0- -0- -0-
Director 2004 -0- -0- -0- -0- -0- -0- -0-
2003 -0- -0- -0- 13,500 -0- -0- -0-
L. Wade Svicarovich 2005 -0- -0- -0- -0- -0- -0- -0-
(3)
Director 2004 -0- -0- -0- -0- -0- -0- -0-
2003 -0- -0- -0- 13,500 -0- -0- -0-
2002 -0- -0- -0- -0- -0- -0- -0-
(1) Mr. Scott Presta resigned as an officer and director of the company
effective April 1, 2004.
(2) Mr. Ken Arevalo resigned as a director of the company effective July
23, 2004.
(3) Mr. L. Wade Svicarovich resigned as a director of the company
effective September 17, 2004.
OPTION/SAR GRANTS IN LAST FISCAL YEAR
(Individual Grants)
Number of Securities Percent of Total
Underlying Options/SARs Granted Exercise or
Options/SARs Granted to Employees In Fiscal Base Price
Name (#) Year ($/Sh) Expiration Date
Vincent Rinehart -0- N/A N/A N/A
Scott A. Presta -0- N/A N/A N/A
Kenneth Arevalo -0- N/A N/A N/A
L. Wade Svicarovich -0- N/A N/A N/A
12
AGGREGATED OPTIONS/SAR EXERCISES IN LAST FISCAL YEAR
AND FY-END OPTION/SAR VALUES
Value of Unexercised
Number of Unexercised In-The-Money
Shares Acquired Securities Underlying Option/SARs
On Value Options/SARs at FY-End at FY-End
Exercise Realized (#) ($)
Name (#) ($) Exercisable/Unexercisable Exercisable/Unexercisable
Vincent Rinehart N/A N/A N/A N/A
Scott A. Presta N/A N/A N/A N/A
Kenneth Arevalo N/A N/A N/A N/A
L. Wade Svicarovich N/A N/A N/A N/A
Certain Relationships and Related Transactions
On July 1, 2001, the Company entered into an Employment Agreement with
Vincent Rinehart. Under the terms of the agreement, the Company is to pay to Mr.
Rinehart a salary equal to $275,000 per year, subject to an annual increase of
10% commencing January 1, 2002, plus an automobile allowance of $1,200 per month
and other benefits, including life insurance. The agreement is for a term of 5
years and provides for a severance payment in the amount of $500,000 and
immediate vesting of all stock options in the event his employment is terminated
for any reason, including cause. Mr. Rinehart's Employment Agreement was
ratified by the shareholders of the Company at the 2001 Annual Shareholders
Meeting.
In November 2002, Scott Presta received 42,500 shares (after giving effect
to the 1-for-20 reverse stock split effective April 21, 2003) of our common
stock for past services as a director and for agreeing to stand for re-election
as a director, and Kenneth Arevalo and L. Wade Svicarovich each received 25,000
shares (after giving effect to the 1-for-20 reverse stock split effective April
21, 2003) of common stock for agreeing to stand for election as a director. In
connection with his resignation from the Board of Directors on July 23, 2004,
Mr. Arevalo returned the 25,000 shares.
On February 28, 2003, the Company entered into a Debt Exchange Agreement
with Vincent Rinehart, Chairman, CEO, Secretary, and Chief Financial Officer.
Under the terms of the agreement, Rinehart (i) cancelled options to acquire
2,500,000 shares of common stock previously acquired as part of his Employment
Agreement, and (ii) converted an aggregate of $433,489.06 in principal and
interest under a promissory into (y) 6,000,000 shares of common stock and (z)
18,800 shares of newly created Series F Convertible Preferred Stock.
On April 30, 2004, and again on June 20, 2005, we issued to Vincent
Rinehart a total of 164,500 shares of our common stock as payment of dividends
accrued through that date on the Series F Convertible Preferred Stock.
On October 11, 2004, we entered into a Note and Warrant Purchase Agreement
whereby our subsidiary, American Residential Funding, Inc., borrowed $125,000
from Amres Holding, LLC, a related party partially owned and controlled by our
sole officer and director, Vincent Rinehart. American Residential Funding, Inc.
issued a secured convertible note to the borrower, convertible into our common
stock at 75% of the average closing bid price for the five trading days before
conversion. As additional consideration, we issued a warrant to the borrower to
purchaser 250,000 shares of our common stock at $0.10 per share.
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In April, 2005, Bravorealty.com and Bravo Real Estate, Inc. were sold to
an entity controlled by David Villareal, an officer and director of our
subsidiary, AMRES, in exchange for the assets and interests in American Union
Escrow.
Security Ownership of Certain Beneficial Owners and Management (Before
Effectiveness of Proposals)
The following table sets forth, as of September 22, 2005, certain
information with respect to the Company's equity securities owned of record or
beneficially by (i) each Officer and Director of the Company; (ii) each person
who owns beneficially more than 5% of each class of the Company's outstanding
equity securities; and (iii) all Directors and Executive Officers as a group.
COMMON STOCK
Name and Address of Amount and Nature of Percent
Title of Class Beneficial Owner (1) Beneficial Ownership of Class (2)
-------------- -------------------- -------------------- ------------
Common Vincent Rinehart 3,118,275 (3)(9) 36.8%
Stock
Common Keyway Investments, Ltd. 2,292,363 (4)(7)(8) 31.7%
Stock 19 Mount Havlock
Douglas, Isle of Man
United Kingdom 1M1 2QG
Common Cranshire Capital, L.P. 1,151,593 (5)(8) 16.4%
Stock c/o Downsview Capital, Inc.
666 Dundee Road, Suite 1901
Northbrook, Illinois 60062
Common The dotCom Fund, LLC 349,989 (6)(8) 5.3%
Stock 666 Dundee Road, Suite 1901
Northbrook, Illinois 60062
Common All officers and directors as a group 3,118,275 (3) 36.8%
Stock (1 person)
(1) Unless otherwise noted, the address of each beneficial owner is c/o Anza
Capital, Inc., 3200 Bristol Street, Suite 700, Costa Mesa, California 92626.
(2) Unless otherwise indicated, based on 6,348,898 shares of common stock
outstanding. Shares of common stock subject to options or warrants currently
exercisable, or exercisable within 60 days, are deemed outstanding for purposes
of computing the percentage of the person holding such options or warrants, but
are not deemed outstanding for purposes of computing the percentage of any other
person.
(3) Includes 1,880,000 shares of common stock which may be acquired by Rinehart
upon the conversion of 18,800 shares of Series F Convertible Preferred Stock.
The shares of Series F Convertible Preferred Stock shall be voted equally with
the common stock on all matters submitted to the shareholders, with the holder
thereof having 100 votes per share of Series F. Also includes 250,000 shares
which may be acquired upon the exercise of warrants issued to AMRES Holding,
LLC.
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(4) Includes 510,854 shares of common stock which may be acquired by Keyway upon
the conversion of 4,028.5 shares of Series D Convertible Preferred Stock. The
shares of Series D Convertible Preferred Stock shall be voted equally with the
common stock on all matters submitted to the shareholders, with the holder
thereof having 126.81 votes per share of Series D. Also includes 368,394 shares
of common stock which may be acquired upon the exercise of warrants.
(5) Includes 390,004 shares of common stock which may be acquired by Cranshire
upon the conversion of 3,075.5 shares of Series D Convertible Preferred Stock.
The shares of Series D Convertible Preferred Stock shall be voted equally with
the common stock on all matters submitted to the shareholders, with the holder
thereof having 126.81 votes per share of Series D. Also includes 281,244 shares
which may be acquired upon the exercise of warrants.
(6) Includes 139,174 shares of common stock which may be acquired by dotCom Fund
upon the conversion of 1,097.5 shares of Series D Convertible Preferred Stock.
The shares of Series D Convertible Preferred Stock shall be voted equally with
the common stock on all matters submitted to the shareholders, with the holder
thereof having 126.81 votes per share of Series D. Also includes 100,362 shares
of common stock which may be acquired upon the exercise of warrants.
(7) Keyway Investments Ltd. has advised us that they beneficially own all of our
securities owned of record by EURAM Cap Strat "A" Fund Limited.
(8) Upon closing of the Asset Sale and the Securities Sale, Keyway Investments
Ltd., Cranshire Capital, L.P. and The dotCom Fund, LLC will sell a total of
1,923,969; 870,349; and 249,627 shares of common stock, respectively, (the
"Lakeshore Shares"), to AMRES Holding who will then sell the Lakeshore Shares to
Viking.
(9) Upon closing of the Asset Sale and the Securities Sale, Vincent Rinehart
will sell a total of 2,868,275 shares of common stock to Viking pursuant to the
terms of the Asset Sale.
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PREFERRED STOCK
Name and Address of Amount and Nature of Percent
Title of Class Beneficial Owner Beneficial Ownership of Class
-------------- ---------------- -------------------- --------
Series D Keyway Investments, Ltd. 4,028.5 (7) 49.1% (2)
Preferred (1) 19 Mount Havlock
Douglas, Isle of Man
United Kingdom 1M1 2QG
Series D Cranshire Capital, L.P. 3,075.5 (7) 37.5% (2)
Preferred (1) c/o Downsview Capital, Inc.
666 Dundee Road, Suite 1901
Northbrook, Illinois 60062
Series D The dotCom Fund, LLC 1,097.5 (7) 13.4% (2)
Preferred (1) 666 Dundee Road, Suite 1901
Northbrook, Illinois 60062
Series F Vincent Rinehart 18,800 (8) 100% (4)
Preferred (3) c/o Anza Capital, Inc.
3200 Bristol Street, Suite 700
Costa Mesa, California 92626
All officers and directors as a group 18,800 (5) 100% (5)
(1 person)
(1) Each share of Series D Convertible Preferred Stock (after giving effect to
the 1-for-20 reverse stock split) (i) has a liquidation preference equal to
$126.81 per share, (ii) is entitled to receive a quarterly non-cumulative
dividend equal to 7% per annum, which may be paid in cash or in common stock at
the discretion of the Company based on the average of the closing bid price for
the last ten trading days of the applicable quarter, (iii) may be converted,
after February 28, 2004, into 126.81 shares of Company common stock at the
option of the holder, and (iv) is entitled to 126.81 votes on all matters
submitted to the shareholders for approval.
(2) Based on 8,201.5 shares of Series D Convertible Preferred Stock outstanding.
(3) Each share of Series F Convertible Preferred Stock (after giving effect to
the 1-for-20 reverse stock split) (i) has a liquidation preference (after the
Series D and Series E Convertible Preferred Stock) equal to $16.675 per share,
(ii) is entitled to a quarterly, non-cumulative dividend of 1.75 shares of
Company common stock, which may be paid in cash at the Company's discretion
based on the average of the closing bid price for the last ten trading days of
the applicable quarter, (iii) may be converted, after February 28, 2004, into
100 shares of Company common stock at the option of the holder, and (iv) is
entitled to 100 votes on all matters submitted to the shareholders for approval.
(4) Based on 18,800 shares of Series F Convertible Preferred Stock outstanding.
(5) Represents Series F Convertible Preferred Stock only.
(6) Keyway Investments Ltd. has advised us that they beneficially own all of our
securities owned of record by EURAM Cap Strat "A" Fund Limited.
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(7) Upon closing of the Asset Sale and the Securities Sale, Keyway Investments
Ltd., Cranshire Capital, L.P. and The dotCom Fund, LLC will convert all of their
shares of Series D Convertible Preferred Stock into 510,854, 390,004 and 139,174
shares of common stock, respectively (the "Lakeshore Converted Shares") and sell
the Lakeshore Converted Shares to AMRES Holding who will then sell the Lakeshore
Converted Shares to Viking.
(8) Upon closing of the Asset Sale and the Securities Sale, Vincent Rinehart
will convert all of his shares of Series F Convertible Preferred Stock into
1,880,000 shares of common stock (the "Rinehart Converted Shares") and transfer
the Rinehart Converted Shares to Viking pursuant to the terms of the Asset Sale.
Security Ownership of Certain Beneficial Owners and Management
(After Effectiveness of Proposals)
The following table sets forth, as of a date after giving effect to each
of the Proposals set forth herein, certain information with respect to the
Company's equity securities owned of record or beneficially by (i) each officer
and director of the Company; (ii) each person who owns beneficially more than 5%
of each class of the Company's outstanding equity securities; and (iii) all
directors and executive officers as a group.
COMMON STOCK
Name and Address of Amount and Nature of Percent
Title of Class Beneficial Owner (1) Beneficial Ownership of Class (2)
-------------- -------------------- -------------------- ------------
Common Viking Investments USA, Inc. 13,499,720 (1) 80.09% (2)
Stock
(1) Upon closing of the Asset Sale and the Securities Sale, Viking Investments
USA, Inc. will purchase common stock from Vincent Rinehart and AMRES Holding, in
the amounts of 2,868,275 shares and 3,043,945, respectively. The amount
purchased from AMRES Holding comprises shares which will be purchased from
Keyway Investments Ltd., Cranshire Capital, L.P. and The dotCom Fund, LLC in the
amounts of 1,923,969 shares, 870,349 shares and 249,627 shares, respectively.
Includes 4,137,500 shares which will be purchased from AMRES. Includes warrants
to purchase 3,450,000 shares of common stock.
(2) Based on 13,406,419 shares of common stock outstanding.
By order of the Board of Directors
Vincent Rinehart, President
Costa Mesa, California
October[__], 2005
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