UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 OR 15(d)
of the Securities Exchange Act of 1934
MAY 16, 2002
-----------------
Date of Report (Date of earliest event reported)
ENVIRO-ENERGY CORPORATION
----------------------------
(Exact name of small business issuer as specified in its charter)
DELAWARE 0-30069 95-452-0761
---------- --------- -------------
(State of (Commission (I.R.S. Employer
incorporation) File Number Identification Number)
4430 Haskell Avenue, Encino, CA 91436
------------------------------------
(Address of principal executive office)(City, State Zip Code)
Registrant's telephone number, including area code: (818) 784-2445
----------------
Page 1
- -----------------------------------------------------------------------
TABLE OF CONTENTS
Item 1. (Not Applicable) page 2
Item 2. Acquisition or Disposition of Assets page 2
Item 3. (Not Applicable) page 2
Item 4. Change in Registrant's Certifying Accountant page 3
Items 5 & 6 page 4
Item 7. Financial Statements & Exhibits page 4
Financial Statements F-1 to F18
Exhibit No. 1 Stock Purchase Agreement page 5
Item 8. (Not Applicable) page 14
Signature/s page 15
- -----------------------------------------------------------------------
Item 1. Changes in Control of Registrant.
Not applicable.
Item 2. Acquisition or Disposition of Assets.
On February 12, 2002, Enviro-Energy Corporation filed an Form 8-K
regarding the stock purchase agreement with Colvico, Inc. ("Colvico"),
a company incorporated in the State of Washington, whereby a wholly
owned subsidiary of the Registrant, Energy Flow Management, Inc.
("EFMI"), acquired 100% of the issued share capital of Colvico.
Pursuant to the agreement dated January 29, 2002, 4,000,000 $1 (one
dollar) redeemable (callable) preferred shares of the registrant were
issued to the sole shareholder of Colvico, Mr. Cory Colvin.
Colvico is a well-established electrical contractor and energy services
company, bonded and licensed throughout the Pacific Northwest. Colvico
gives the Company the ability to install, service and maintain its bio-
waste-to-electricity generation plants. Further, using Colvico's in-
house electrical assembly and manufacturing plant, the Enviro-energy
Corporation will now have the ability to fully manufacture and assemble
its skid mounted plants internally, significantly increasing
deliverables and profit. The addition of Colvico's revenue stream,
profit and asset base will enhance Enviro-Energy's ability to access
traditional lines of asset based financing at competitive terms and
conditions.
Item 3. Bankruptcy or Receivership.
Not applicable.
Page 2
Item 4. Change in Registrant's Certifying Accountant.
(a) Previous Independent Accountant
As of May 8, 2002, the Board has approved the re-appointment of G. BRAD
BECKSTEAD, CPA replacing Singer Lewak Greenbaum and Goldstein LLP as
Enviro-Energy Corporation's Independent Accountants.
G. Brad Beckstead, CPA reported the Company's financial statements for
the past two years. Singer Lewak Greenbaum and Goldstein LLP was
appointed in March 2002 and the Company's relationship with the firm
has ceased as of May 8, 2002 as the Company determined that the cost of
the audit of the Company's financial statements for the year ended
December 31, 2001 which was in progress, had become excessive. On
several occasions, Singer Lewak Greenbaum and Goldstein LLP disclosed
to Management and the Board Members, the difficulties in auditing
equity transactions, due to lack of documentation. As a result of the
initial lack of documentation, Singer Lewak Greenbaum and Goldstein LLP
would have had to perform additional procedures, which would have
required a considerable time and additional fees. Prior to the change
in auditors, there were no disagreements with Singer Lewak Greenbaum
and Goldstein LLP on any matter of accounting principles or practices,
financial statement disclosures or auditing scope of procedure, which
if not resolved to the satisfaction of Singer Lewak Greenbaum and
Goldstein LLP, would have caused it to make reference to the subject
matter of the disagreement in connection with its reports on the
financial statements for such year. During this time period, there
were no "reportable events" as defined in Regulation S-K Item 304
(a)(1)(v).
Enviro-Energy Corporation requested that Singer Lewak Greenbaum and
Goldstein LLP furnish it a letter addressed to the Securities and
Exchange Commission stating whether or not it agrees with the above
statements. A copy of that letter dated May 9, 2002 is filed as
Exhibit 16.1 to this Form 8-K.
(b) New Independent Accountants
Enviro-Energy Corporation engaged G. BRAD BECKSTEAD, CPA as the
Company's principal accountant effective May 8, 2002. G. BRAD
BECKSTEAD is the Registrant's Accountant for the two most recent fiscal
years. Prior to re-appointing G. BRAD BECKSTEAD, CPA, neither the
Company nor anyone on its behalf consulted with G. BRAD BECKSTEAD
regarding either (i) the application of accounting principles to a
specified transaction, either completed or proposed, or the type of
audit opinion that might be rendered on the Company's financial
statements, and neither a written report nor oral advice was provided
to the Company by G. BRAD BECKSTEAD, CPA that was an important factor
considered by the Company in reaching a decision as to any accounting,
auditing or financial reporting issue; or (ii) any matter that was
either the subject of a disagreement, as that term is defined to Item
304 (a) (1) (iv) of Regulation S-K and the related instructions to 304
of Regulation S-K, or a reportable event, as that term is defined in
Item (a) (1) (v) of Regulation S-K.
Page 3
Item 5. Other Events.
Not applicable.
Item 6. Resignation of Registrant's Directors.
Not applicable.
Item 7. Financial Statements and Exhibits.
(a) Financial statements of businesses acquired.
FINANCIAL STATEMENTS
PAGE
----
Independent Auditor's Report F-1
Balance Sheet F-2 to F-3
Statements of Operations F-4
Statements of Shareholders' Equity F-5
Statements of Cash Flows F-6 to F-7
Notes to Financial Statements F-8 to F-18
Page 4
INDEPENDENT AUDITOR'S REPORT
To the Board of Directors
Colvico, Inc.
We have audited the accompanying balance sheet of Colvico, Inc. as of
December 31, 2001, and the related statements of operations,
shareholders' equity, and cash flows for each of the two years in the
period ended December 31, 2001. These financial statements are the
responsibility of the Company's management. Our responsibility is to
express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with auditing standards generally
accepted in the United States of America. Those standards require that
we plan and perform the audit to obtain reasonable assurance about
whether the financial statements are free of material misstatement. An
audit includes examining, on a test basis, evidence supporting the
amounts and disclosures in the financial statements. An audit also
includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the 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 Colvico,
Inc. as of December 31, 2001, and the results of its operations and its
cash flows for each of the two years in the period ended December 31,
2001 in conformity with accounting principles generally accepted in the
United States of America.
SINGER LEWAK GREENBAUM & GOLDSTEIN LLP
Los Angeles, California
March 15, 2002
F-1
COLVICO, INC.
BALANCE SHEET
DECEMBER 31, 2001
ASSETS
Current assets
Contracts receivable, including retentions of $496,256 $ 3,009,922
Unbilled receivables 264,152
Accounts receivable - related parties 78,700
Costs and estimated earnings on contracts in
progress in excess of billings 390,856
Note receivable - related party 50,000
Prepaid expenses and deposits 213,328
-----------
Total current assets 4,006,958
Property and equipment, net 787,354
-----------
Total assets $ 4,794,312
===========
The accompanying notes are an integral part of these financial
statements.
F-2
COLVICO, INC.
BALANCE SHEET
DECEMBER 31, 2001
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Book overdraft $ 24,145
Current portion of notes payable 289,030
Line of credit 284,868
Accounts payable, including retentions of $25,217 1,687,022
Accounts payable - related parties 25,665
Accrued expenses 284,979
Income tax payable 44,970
Billings in excess of costs and estimated earnings
on contracts in progress 416,357
-------------.
Total current liabilities 3,057,036
Notes payable, net of current portion 437,624
Deferred tax liability 65,000
-------------
Total liabilities 3,559,660
Commitments and contingencies,
Shareholders' equity
Common stock, $1 par value
1,000 shares authorized
900 shares issued and outstanding 900
Treasury stock, 100 shares, at cost 100
Retained earnings 1,233,652
-------------
Total shareholders' equity 1,234,652
-------------
Total liabilities and shareholders' equity $ 4,794,312
=============
The accompanying notes are an integral part of these financial
statements.
F-3
COLVICO, INC.
STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED
DECEMBER 31,
2001 2000
-------------- -------------
Contract revenue $ 16,151,600 $ 17,123,695
-------------- -------------
Contract costs
Payroll and payroll related expenses 6,000,325 6,551,540
Material costs 5,244,708 6,700,367
Subcontractor costs 1,723,947 747,785
Other costs 949,227 1,784,148
-------------- -------------
Total contract costs 13,918,207 15,783,840
Gross profit 2,233,393 1,339,855
General and administrative expenses 1,593,667 1,556,814
-------------- -------------
Income (loss) from operations 639,726 (216,959)
-------------- -------------
Other income (expense)
Forgiveness of debt - related party (1,057,941) (362,041)
Interest expense (45,194) (53,607)
Interest income 16,469 9,586
Miscellaneous income 115,384 94,322
Rental income 55,819 79,000
Loss on disposal of property and equipment (1,410) (17,309)
------------- -------------
Total other income (expense) (916,873) (250,049)
Loss before benefit from income taxes (277,147) (467,008)
Benefit from income taxes (93,000) (163,000)
--------------- --------------
Net loss $ (184,147) $ (304,008)
=============== ===============
The accompanying notes are an integral part of these financial
statements.
F-4
COLVICO, INC.
STATEMENTS OF SHAREHOLDERS' EQUITY
FOR THE YEARS ENDED
DECEMBER 31,
Common Stock Treasury Retained
------------------
Shares Amount Stock Earnings Total
------ ------ -------- ---------- ----------
Balance,
December 31,
1999 900 $ 900 $ 100 $1,721,807 $1,722,807
Net loss (304,008) (304,008)
------ ------ -------- ---------- -----------
Balance,
December 31,
2000 900 900 100 1,417,799 1,418,799
Net loss 184,147) (184,147)
------ ------ -------- ----------- -----------
Balance,
December 31,
2001 900 $ 900 $ 100 $1,233,652 $1,234,652
====== ====== ======== ========== ===========
The accompanying notes are an integral part of these financial
statements.
F-5
COLVICO, INC.
STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED
DECEMBER 31,
2001 2000
----------- -------------
Cash flows from operating activities
Net loss $ (184,147) $ (304,008)
Adjustments to reconcile net loss
to net cash provided by (used in)
operating activities
Depreciation and amortization 311,108 299,148
Loss on disposal of property
and equipment 1,410 17,309
Non-cash compensation to officer 200,000 -
(Increase) decrease in
Contracts receivable 425,335 2,034,331
Accounts receivable -
related parties 100,145 (378,845)
Costs and estimated earnings
on contracts in progress in
excess of billings 555,354 (606,518)
Prepaid expenses and deposits 128,237 11,652
Increase (decrease) in
Accounts payable 225,948 311,527
Accounts payable - related parties (103,591) 129,259
Accrued expenses (840,352) (400,162)
Billings in excess of costs and
estimated earnings on contracts
in progress (417,702) (1,085,944)
Income tax payable (116,707) (221,141)
Deferred income taxes 7,000 50,139
----------- -----------
Net cash provided by (used in)
operating activities 292,038 (143,253)
----------- -----------
The accompanying notes are an integral part of these financial
statements.
F-6
COLVICO, INC.
STATEMENT OF CASH FLOWS
FOR THE YEARS ENDED
DECEMBER 31,
2001 2000
------------- -------------
Cash flows from investing activities
Notes receivable - related party $ (50,000) $ -
Purchases of property and equipment (47,457) (40,841)
------------- -------------
Net cash used in
investing activities (97,457) (40,841)
------------- -------------
Cash flows from financing activities
Increase (decrease) in book overdraft (139,371) 163,516
Principal payments on notes payable (340,078) (180,127)
Net borrowings on line of credit 284,868 -
------------- -------------
Net cash used in
financing activities (194,581) (16,611)
------------- -------------
Net decrease in cash
and cash equivalents - (200,705)
Cash and cash equivalents,
beginning of year - 200,705
-------------- -------------
Cash and cash equivalents,
end of year $ - $ -
============== =============
Supplemental disclosures of
cash flow information
Interest paid $ 45,194 $ 53,607
Income taxes paid $ 3,757 $ 2,821
Supplemental schedule of non-cash investing and financing activities
During the years ended December 31, 2001 and 2000, the Company issued
various notes payable to purchase equipment in the amounts of $162,985
and $191,360, respectively.
During the year ended December 31, 2000, the Company issued a note
payable in the amount of $295,512 for the purchase of a three-year
insurance policy.
The accompanying notes are an integral part of these financial
statements.
F-7
NOTE 1 - NATURE OF BUSINESS
Colvico, Inc. (the "Company') is primarily an electrical contractor.
The work is performed primarily under fixed price contracts
concentrated in the Pacific Northwest. The operating cycle of the
Company's contracts varies, but is typically less than one year.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Method of Accounting for Long-Term Construction Contracts
- ---------------------------------------------------------
The accompanying financial statements have been prepared using the
percentage-of-completion method of accounting and, therefore, take into
account the cost, estimated earnings, and revenue to date on fixed-fee
and cost-plus-fee contracts not yet completed.
The amount of revenue recognized at the statement date is the portion
of the total contract price that the cost expended to date bears to the
anticipated final cost based on current estimates of cost to complete.
It is not related to the progress billings to customers. The method is
used because management considers total cost to be the best available
measure of progress on the contracts. Because of inherent
uncertainties in estimating costs, it is at least reasonably possible
that the estimates used will change within the near term.
Because long-term contracts extend over one or more years, changes in
job performance, changes in job conditions, and revisions in estimates
of cost and earnings during the course of the work are reflected in the
accounting period in which the facts that require the revision become
known. Claims for additional contract revenue are recognized when
realization of the claim is assured and the amount can reasonably be
determined.
At the time a loss on a contract becomes known, the entire amount of
the estimated ultimate loss is recognized in the financial statements.
Contracts that are substantially complete are considered closed for
financial statement purposes. Revenue earned on contracts in progress
in excess of billings (underbillings) is classified as a current asset.
Amounts billed in excess of revenue earned (overbillings) are
classified as current liabilities.
Comprehensive Income
- --------------------
The Company utilizes Statement of Financial Accounting Standards
("SFAS") No. 130, "Reporting Comprehensive Income." This statement
establishes standards for reporting comprehensive income and its
components in a financial statement. Comprehensive income as defined
includes all changes in equity (net assets) during a period from non-
owner sources. Examples of items to be included in comprehensive
income, which are excluded from net income, include foreign currency
F-8
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Comprehensive Income (Continued)
- --------------------------------
translation adjustments and unrealized gains and losses on available-
for-sale securities. Comprehensive income is not presented in the
Company's financial statements since the Company did not have any of
the items of comprehensive income in any period presented.
Property and Equipment
- ----------------------
Property and equipment are recorded at cost, less accumulated
depreciation and amortization. Depreciation and amortization are
provided using the straight-line method over the estimated useful lives
of the respective assets as follows:
Construction equipment - 5 years
Vehicles - 5 years
Office furniture and fixtures - 7 years
Leasehold improvements - the lesser of the life of the lease or the
life of the improvements
Amortization expense on assets acquired under capital leases is
included with depreciation and amortization expense on owned assets.
Impairment of Long-Lived Assets
- -------------------------------
The Company reviews its long-lived assets for impairment whenever
events or changes in circumstances indicate that the carrying amount of
an asset may not be recoverable. Recoverability of assets to be held
and used is measured by a comparison of the carrying amount of the
assets to future net cash flows expected to be generated by the assets.
If the assets are considered to be impaired, the impairment to be
recognized is measured by the amount by which the carrying amount
exceeds the fair value of the assets.
Fair Value of Financial Instruments
- -----------------------------------
The Company measures its financial assets and liabilities in accordance
with generally accepted accounting principles. For certain of the
Company's financial instruments, including cash and cash equivalents,
contracts receivable, accounts receivable - related parties, note
receivable - related party, accounts payable, and accrued expenses, the
carrying amounts approximate fair value due to their short maturities.
The amounts shown for notes payable also approximate fair value because
current interest rates offered to the Company for debt of similar
maturities are substantially the same.
Advertising Costs
- -----------------
The Company expenses advertising costs as incurred. Advertising costs
for the years ended December 31, 2001 and 2000 were $4,378 and $13,718,
respectively.
F-9
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Income Taxes
- ------------
Income taxes are provided for the tax effects of transactions reported
in the financial statements and consist of taxes currently due, plus
deferred taxes. Deferred taxes represent the future tax return
consequences of those differences which will either be taxable or
deductible based upon enacted tax laws and rates applicable to the
periods in which the differences are expected to affect taxable income.
The deferred tax liability at December 31, 2001 primarily related to
the deferred gross profit on certain contracts due to differences in
revenue recognition for income tax purposes versus financial statement
purposes.
Estimates
- ---------
The preparation of financial statements requires management to make
estimates and assumptions that affect the reported amounts of assets
and liabilities and disclosure of contingent assets and liabilities at
the date of the financial statements and the reported amounts of
revenue and expenses during the reporting period. Actual results could
differ from those estimates.
Significant Customers
- ---------------------
The Company grants credit to customers, substantially all of whom are
located in the Pacific Northwest. For all projects where collection
problems are anticipated, the Company follows the practice of filing
statutory liens, which serve as collateral on the receivables.
During the years ended December 31, 2001 and 2000, the Company
transacted a significant amount of business with one and two customers,
respectively. Revenues from these customers were 11% of the Company's
total revenues for the year ended December 31, 2001 and 11% and 10% of
the Company's total revenues for the year ended December 31, 2000.
Recently Issued Accounting Pronouncements
- -----------------------------------------
In June 2001, the Financial Accounting Standards Board ("FASB") issued
SFAS No. 141, "Business Combinations." This statement addresses
financial accounting and reporting for business combinations and
supersedes Accounting Principles Board ("APB") Opinion No. 16,
"Business Combinations," and SFAS No. 38, "Accounting for Pre-
Acquisition Contingencies of Purchased Enterprises." All business
combinations in the scope of this statement are to be accounted for
using one method, the purchase method. The provisions of this
statement apply to all business combinations initiated after June 30,
2001. Use of the pooling-of-interests method for those business
combinations is prohibited. This statement also applies to all
business combinations accounted for using the purchase method for which
F-10
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Recently Issued Accounting Pronouncements (Continued)
- -----------------------------------------------------
the date of acquisition is July 1, 2001 or later. The Company does not
expect adoption of SFAS No. 141 to have a material impact, if any, on
its financial position or results of operations.
In June 2001, the FASB issued SFAS No. 142, "Goodwill and Other
Intangible Assets." This statement addresses financial accounting and
reporting for acquired goodwill and other intangible assets and
supersedes APB Opinion No. 17, "Intangible Assets." It addresses how
intangible assets that are acquired individually or with a group of
other assets (but not those acquired in a business combination) should
be accounted for in financial statements upon their acquisition. This
statement also addresses how goodwill and other intangible assets
should be accounted for after they have been initially recognized in
the financial statements. It is effective for fiscal years beginning
after December 15, 2001. Early application is permitted for entities
with fiscal years beginning after March 15, 2001, provided that the
first interim financial statements have not been issued previously.
This statement is not applicable to the Company.
In June 2001, the FASB issued SFAS No. 143, "Accounting for Asset
Retirement Obligations." This statement applies to legal obligations
associated with the retirement of long-lived assets that result from
the acquisition, construction, development, and/or the normal operation
of long-lived assets, except for certain obligations of lessees. The
Company does not expect adoption of SFAS No. 143 to have a material
impact, if any, on its financial position or results of operations.
In August 2001, the FASB issued SFAS No. 144, "Accounting for the
Impairment or Disposal of Long-Lived Assets." This statement addresses
financial accounting and reporting for the impairment or disposal of
long-lived assets. This statement replaces SFAS No. 121, "Accounting
for the Impairment of Long-Lived Assets and for Long-Lived Assets to be
Disposed of," the accounting and reporting provisions of APB No. 30,
"Reporting the Results of Operations - Reporting the Effects of
Disposal of a Segment of a Business, and Extraordinary, Unusual, and
Infrequently Occurring Events and Transactions," for the disposal of a
segment of a business, and amends Accounting Research Bulletin No. 51,
"Financial Statements," to eliminate the exception to consolidation for
a subsidiary for which control is likely to be temporary. The
Company does not expect adoption of SFAS No. 144 to have a material
impact, if any, on its financial position or results of operations.
NOTE 3 - CASH AND CASH EQUIVALENTS
The Company maintains its cash balances at one bank located in Eastern
Washington. The balances are insured by the Federal Deposit Insurance
Corporation up to $100,000. As of December 31, 2001, the Company did
not have any uninsured cash.
F-11
NOTE 4 - CONTRACTS IN PROGRESS
For the years ended December 31, 2001 and 2000, contract amounts,
costs, estimated earnings, and the related billings to date on
completed contracts and contracts in progress were as follows:
2001
----------------------------------------
Contract Contract Gross
Revenues Cost Profit
-----------------------------------------
Total construction activity $ 16,151,600 $ 13,918,207 $ 2,233,393
Construction contracts
completed during the year 10,967,522 9,456,156 1,511,366
-------------- ----------- ----------
Construction contracts in
progress at December 31,
2001 $ 5,184,078 $ 4,462,051 $ 722,027
============== =========== ==========
2000
----------------------------------------
Contract Contract Gross
Revenues Cost Profit
-----------------------------------------
Total construction activity $ 17,123,695 $ 15,783,840 $ 1,339,855
Construction contracts
completed during the year 8,079,712 8,253,922 (174,210)
-------------- ----------- ----------
Construction contracts in
progress at December 31,
2000 $ 9,043,983 $ 7,529,918 $1,514,065
============== =========== ==========
F-12
NOTE 4 - CONTRACTS IN PROGRESS (Continued)
Contracts in progress as of December 31, 2001 were as follows:
Cumulative costs to date $ 4,528,067
Cumulative gross profit to date 732,095
-----------
Cumulative revenue earned 5,260,162
Less progress billings to date 5,285,663
-----------
Net overbillings $ (25,501)
===========
The following is included in the accompanying balance sheet under these
captions as of December 31, 2001:
Costs and estimated earnings on contracts in
progress in excess of billings $ 390,856
Billings in excess of costs and estimated earnings
on contracts in progress 416,357
-----------
Net overbillings $ (25,501)
===========
NOTE 5 - NOTE RECEIVABLE - RELATED PARTY
During the year ended December 31, 2001, the Company maintained an
unsecured note receivable from a related party in the amount of
$50,000. The note bears interest at 8% per annum and is due on demand.
NOTE 6 - PROPERTY AND EQUIPMENT
Property and equipment at December 31, 2001 consisted of the following:
Construction equipment $ 602,040
Vehicles 1,822,528
Office furniture and fixtures 87,128
Leasehold improvements 60,185
-----------
2,571,881
Less accumulated depreciation and amortization 1,784,527
-----------
Total $ 787,354
===========
Depreciation and amortization expense was $311,108 and $299,148 for the
years ended December 31, 2001 and 2000, respectively.
F-13
NOTE 7 - LINE OF CREDIT
The Company maintained a $1,000,000 revolving line of credit agreement
with a local bank. The line expires in July 2002. Borrowings on the
line bear interest at the bank's prime rate (4.75% at December 31,
2001), plus 0.25%. Any borrowings are personally guaranteed by the
president/sole shareholder of the Company. As of December 31, 2001,
the outstanding balance was $284,868.
NOTE 8 - NOTES PAYABLE
Notes payable at December 31, 2001 consisted of the following:
Note payable, dated December 1, 2000,
non-interest-bearing, with an original
principal of $295,512. The note payable
requires 33 monthly payments of $8,955
through September 2003. $ 188,053
Seventeen notes payable, due various dates
before February 2007, secured by vehicles
and equipment. Interest rates range from
5.9% to 9.6%, and the notes payable require
monthly payments of $23,495. 538,601
-----------
726,654
Less current portion 289,030
-----------
Long-term portion $ 437,624
===========
Future minimum payments under the notes payable at December 31, 2001
were as follows:
Year Ending December 31,
- -----------------------
2002 $ 289,030
2003 256,978
2004 73,168
2005 72,360
2006 35,118
----------
Total $ 726,654
==========
F-14
NOTE 9 - COMMITMENTS AND CONTINGENCIES
Leases
- ------
The Company entered into two lease agreements for rental of office and
warehouse space in the state of Washington with terms ranging from
three to five years. These leases require payments of taxes,
insurance, and maintenance costs by the Company. The leases have either
month-to-month rental clauses or no specified renewal options upon the
expiration of the term. In addition, the Company subleases portions of
its office and warehouse facilities under a month-to-month lease
agreement for $3,500 per month.
Future minimum lease payments under non-cancelable operating leases as
of December 31, 2001 were as follows:
Year Ending December 31,
- -----------------------
2002 $ 148,032
2003 151,032
2004 27,000
----------
Total $ 326,064
==========
For the years ended December 31, 2001 and 2000, total rent expense
amounted to $126,951 and $99,587, respectively, net of sublease income
of $55,819 and $79,000, respectively.
Penalties
- ---------
The Company is subject to various penalties and liquidated damages in
the event that certain jobs are not completed by the contracted
completion date. Management does not believe that the outcome of these
matters will have a material effect on the Company's financial position
or results of operations.
Lease Guarantees
- ----------------
During the year ended December 31, 2001, the Company guaranteed certain
non-cancelable operating leases on behalf of a related party. As of
December 31, 2001, the future minimum lease payments under the non-
cancelable operating leases were $463,687.
Bonding Agreements
- ------------------
The Company has a bonding agreement with a surety company for its
projects. As part of the bonding agreement, the surety has recourse
against all of the Company's assets, and the surety's obligations are
indemnified by the Company's president/sole shareholder.
F-15
NOTE 10 - BACKLOG
The following schedule summarizes changes in backlog on contracts
during the year ended December 31, 2001. Backlog represents the amount
of revenue the Company expects to realize from work to be performed on
uncompleted contracts in progress at December 31, 2001 and from
contractual agreements on which work has not yet begun:
Backlog balance at December 31, 2000 $ 4,695,031
New contracts and contract adjustments during the year 20,493,306
-----------
Sub-total 25,188,337
Less contract revenue earned during the year 16,151,600
-----------
Backlog balance at December 31, 2001 $ 9,036,737
===========
NOTE 11 - INCOME TAXES
The following table presents the current and deferred United States
income tax provision for (benefit from) federal and state income taxes
for the years ended December 31, 2001 and 2000:
2001 2000
---------- ------------
Current
Federal $ (106,000) $ (222,000)
State 1,000 1,000
---------- -----------
(105,000) (221,000)
---------- -----------
Deferred
Federal 16,000 65,000
State (4,000) (7,000)
---------- -----------
12,000 58,000
---------- -----------
Total $ (93,000) $ (163,000)
========== ===========
F-16
NOTE 11 - INCOME TAXES (Continued)
The tax effect of temporary differences that give rise to significant
portions of deferred tax assets and deferred tax liabilities at
December 31, 2001 were as follows:
Deferred tax assets
State net operating loss $ 20,000
Contribution carryover 10,000
Capital loss carryover 1,000
----------
Total deferred tax assets 31,000
----------
Deferred tax liabilities
State taxes (3,000)
Accumulated depreciation and amortization (93,000)
----------
Total deferred tax liabilities (96,000)
----------
Net deferred tax liability $ (65,000)
==========
As of December 31, 2001, the Company had state net operating loss
carryforwards of approximately $500,000, which expire through 2006.
NOTE 12 - RELATED PARTY TRANSACTIONS
The Company rents its shop and office building from the president/sole
shareholder on a monthly basis. Rent expense for the years ended
December 31, 2001 and 2000 was $128,400 and $128,400, respectively. In
1993, the Company spun off a harness assembly operation, transferring
inventory, machinery, and other assumed related business liabilities to
a related company. The related company paid $24,000 in administrative
fees and rent to the Company during each of the years ended December
31, 2001 and 2000.
In addition, the Company has accounts receivable - related parties of
$78,700 and accounts payable - related parties of $25,665 at December
31, 2001.
During the years ended December 31, 2001 and 2000, the Company forgave
certain advances and costs for services rendered to a company owned by
its president/sole shareholder in the amounts of $1,057,941 and
$141,559, respectively. These amounts are included in forgiveness of
debt - related parties in the accompanying statements of operations.
F-17
NOTE 12 - RELATED PARTY TRANSACTIONS (Continued)
During the year ended December 31, 2000, the Company forgave certain
costs for services rendered to its president/sole shareholder in the
amount of $220,482. This amount is included in forgiveness of debt -
related parties in the accompanying statement of operations.
During the years ended December 31, 2001 and 2000, the Company forgave
certain costs for services rendered to its president/sole shareholder
in the amounts of $200,000 and $216,988, respectively. These amounts
are included in general and administrative expenses as the amounts were
treated as salary and wages to the Company's president/sole
shareholder.
NOTE 13 - RETIREMENT PLAN
The Company maintains a profit sharing plan which covers all nonunion
employees who have met the specific requirements as to age and length
of service. Employees are eligible upon completing one year of service
and attaining the age of 21. An employee must work at least 1,000
hours during a 12-month period for purposes of eligibility. The
contribution each year is determined by the Company, and each
participant receives an allocation of the annual contribution in
proportion to his/her compensation for the plan year. Profit sharing
expense for the years ended December 31, 2001 and 2000 was $125,475 and
$121,258, respectively.
In addition, the Company pays union retirement benefits for workers
covered under collective bargaining agreements. The Company does not
administer these retirement plans and includes the benefit costs in job
costs.
NOTE 14 - SUBSEQUENT EVENT
In January 2002, the Company's president/sole shareholder agreed to
sell his holdings in the Company for 4,000,000 redeemable convertible
preferred shares in Enviro-Energy Corporation. The preferred shares
were valued at $1 per share. Each unredeemed preferred share may be
converted to four common shares of Enviro-Energy Corporation any time
after January 2002.
F-18
(b) Pro forma financial information.
The pro forma financial information with respect to the acquisition of
Colvico required by this Item shall be incorporated in the 10-QSB for
the period ending March 31, 2002 to be filed by the Company within the
next 5 days.
(c) Exhibit
On February 12, 2002, Enviro-Energy filed a Form 8-K with the
Securities and Exchange Commission on the Agreement between Energy Flow
Management Inc., Colvico, Inc. and Cory Colvin which includes the
following:
Exhibit No. 1. Stock Purchase Agreement by and between Energy Flow
- -------------------------------------------------------------------
Management, Inc., Colvico, Inc., and Cory Colvin.
- ------------------------------------------------
STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT (the "Agreement") dated the 29th day of
January, 2002, by and between ENERGY FLOW MANAGEMENT, INC. (the
"Buyer"), a Washington Corporation and wholly owned subsidiary of its
Parent, ENVIRO-ENERGY CORPORATION, a Delaware corporation, and COLVICO,
INC ("Company"), a Washington corporation, and its Sole Shareholder,
Cory Colvin (the "Seller").
WHEREAS, Seller owns beneficially and of record 1,000 shares of Common
Stock of the Company (the "Shares");
WHEREAS, the Shares are one hundred percent (100%) of the only issued
and outstanding capital stock of the Company, and
WHEREAS, Buyer desires to purchase from Seller and Seller desires to
sell to Buyer all of these Shares on the terms and subject to the
conditions set forth herein; said transactions herein referred to as
the "Purchase."
NOW THEREFORE, the parties hereto agree as follows:
Seller owns beneficially and of record 1,000 shares of Common Stock of
the Company (the "Shares"). The Shares are one hundred percent (100%)
of the only issued and outstanding capital stock of the Company. Buyer
desires to purchase from Seller and Seller desire to sell to Buyer all
of these Shares on the terms and subject to the conditions set forth
herein. The transactions contemplated in this Agreement are herein
referred to as the "Purchase."
Page 5
- -----------------------(Stock Purchase Agreement continued)
1. Purchase of Shares and Related Matters.
1.1 Purchase of Shares. Subject to the terms and conditions set forth
herein, at the "Closing" (as defined below) Seller will sell all of the
Shares to Buyer and Buyer will purchase all of the Shares from Seller,
the Shares constituting all of the issued and outstanding capital stock
of the Company as of the Closing.
1.2 Purchase Price. Buyer will pay to Seller for 100% of the Shares
Four Million Dollars ($4,000,000) (the "Purchase Price").
1.3 Payment of Purchase Price. The Purchase Price will be paid to
Seller as follows:
4,000,000 redeemable (callable), convertible preferred shares, valued
at One Dollar ($1.00) per share, of the Parent payable to Seller
shareholder. Each unredeemed preferred share may be converted to four
(4) common shares of the Parent any time after one year of the date of
this Agreement.
2. Representations and Warranties of Company and Seller. As a
material inducement to Buyer to enter into this Agreement and purchase
the Shares, Seller and the Company, jointly and severally, represent
and warrant the following statements in this Section 2 are correct and
complete as of the date of this Agreement and will be correct and
complete as of the date of the Closing:
2.1 Organization and Corporate Power. The Company is a corporation
duly incorporated and validly existing under the laws of the State of
Washington, and the Company is qualified to do business in every
jurisdiction in which its ownership of property or the conduct of its
business requires it to qualify. The Company has all requisite
corporate power and authority and all material licenses, permits, and
authorizations necessary to own and operate its properties and to carry
on its businesses as now conducted
2.2 Capital Stock and Related Matters. The authorized capital stock
of the Company consists of 1,000 Shares of Common Stock, 1,000 are
issued and outstanding and are owned, beneficially and of record, by
Seller and no other capital stock of the Company is issued and
outstanding. The Company does not have outstanding and has not agreed,
orally or in writing, to issue any stock or securities convertible or
exchangeable for any shares of its capital stock, nor does it have
outstanding nor has it agreed, orally or in writing, to issue any
options or rights to purchase or otherwise acquire its capital stock.
The Company is not subject to any obligation (contingent or otherwise)
to repurchase or otherwise acquire or retire any shares of its capital
stock.
2.3 Authorization; No Breach. The execution, delivery, and
performance of this Agreement and all other agreements contemplated
Page 6
- -----------------------(Stock Purchase Agreement continued)
hereby to which the Company or Seller is a party have been duly
authorized by the Company or Seller, as the case may be. This Agreement
and each other agreement contemplated hereby, when executed and
delivered by the parties thereto, will constitute the legal, valid, and
binding obligation of the Company, Seller, or both as the case may be,
enforceable against Seller or the Company
2.4 Conduct of Business/ Liabilities. The Company is not in default
under, and no condition exists that with notice or lapse of time or
both would constitute a default of the Company under (i) any mortgage,
loan agreement, indenture, evidence of indebtedness or other instrument
evidencing borrowed money to which the Company is a party or by which
the Company or the properties of the Company is bound or (ii) any
judgment, order or injunction of any court, arbitrator or governmental
agency that would reasonably be expected to affect materially and
adversely the business, financial condition or results of operations
of the Company.
2.5 Financial Statements. The reviewed, consolidated balance sheet
and income statement of the Company as of December 31, 2000, fairly
present the consolidated financial, and the results of operations for
the twelve (12) months then ended and have been prepared in accordance
with generally accepted accounting principles consistently applied and
in a manner substantially consistent with the Unaudited Financial
Statements, except for differences resulting from normally occurring
audit adjustments, including, but not limited to, income tax and tax
accrual adjustments or as noted in the Unaudited Statements or the
notes thereto. Except as contemplated by or permitted under this
Agreement, there are no adjustments that would be required on audit of
the Unaudited Financial Statements that would, individually or in the
aggregate, have a material negative effect upon the Company's reported
financial condition.
2.6 No Undisclosed Liabilities. Neither the Company nor any of the
property of the Company has or is subject to any liabilities,
commitments or obligations of any nature, whether absolute, accrued,
contingent, known or unknown, due or to become due or otherwise.
2.7 Absence of Certain Changes. Except as contemplated or permitted
by this Agreement, since the Statement Date there has not been:
(i) Any materially adverse change in the business, financial
condition, operations or assets of the Company;
(ii) Any damage, destruction or loss, whether covered by insurance
or not materially adversely affecting the properties or business of the
Company;
(iii) Any sale or transfer by the Company of any tangible or
intangible asset other than in the ordinary course of business, any
mortgage or pledge or the creation of any security interest, lien or
encumbrance on any asset, or any lease of property, including
equipment, other than tax liens with respect to taxes not yet due and
contract rights of customers in inventory;
Page 7
- -----------------------(Stock Purchase Agreement continued)
(iv) Any declaration, setting aside or payment of a dividend or
other distribution to its shareholders or in respect of or the
redemption or other repurchase by the Company of any capital stock of
the Company;
(v) Any transaction not in the ordinary course of business of the
Company;
(vi) The lapse of any material trademark, assumed name, trade
name, service mark, copyright or license or any application with
respect to the foregoing;
(vii) The grant of any general increase in the compensation of
officers or employees (including any such increase pursuant to any
bonus, pension, profit sharing or other plan or commitment) other than
customary increases on a periodic basis or required by agreement or
understanding in the ordinary course of business and in accordance with
past practice;
(viii) The discharge or satisfaction of any material lien or
encumbrance or the payment of any material liability other than current
liabilities in the ordinary course of business;
(ix) The making of any loan, advance or guaranty to or for the
benefit of any person other than a wholly owned subsidiary except the
creation of accounts receivable in the ordinary course of business or
(x) An agreement to do any of the foregoing.
2.8 Title and Related Matters. The Company has good and marketable
title to all of its properties and assets included in the Unaudited
Financial Statements (except properties and assets sold or otherwise
disposed of subsequent to the Statement Date in the ordinary course of
business or as contemplated in this Agreement), free and clear of all
security interests, mortgages, liens, pledges, charges, claims or
encumbrances of any kind or character, except (i) statutory liens for
property taxes not yet delinquent or payable subsequent to the date of
this Agreement and statutory or common law liens securing the payment
or performance of any obligation of the Company, the payment or
performance of which is not delinquent or that is payable without
interest or penalty subsequent to the date on which this representation
is given, or the validity of which is being contested in good faith by
the Company; (ii) the rights of customers of the Company with respect
to inventory under orders or contracts entered into by the Company in
the ordinary course of business; (iii) claims, easements, liens and
other encumbrances of record pursuant to filings under real property
recording statutes, and (iv) as described in the Unaudited Financial
Statements or the notes thereto.
3. Representations and Warranties of Buyer. As a material inducement
to Seller to enter into this Agreement and sell the Shares, Buyer
hereby represents and warrants to Seller that the following statements
in this Section 3 are correct and complete as of the date of this
Agreement and will be correct and complete as of the date of Closing:
3.1 Organization; Power. Buyer is a corporation duly incorporated and
validly existing under the laws of the State of Delaware, and has all
requisite corporate power and authority to enter into this Agreement
and perform its obligations hereunder.
Page 8
- -----------------------(Stock Purchase Agreement continued)
3.2 Authorization. The execution, delivery, and performance by Buyer
of this Agreement, and all other agreements contemplated hereby to
which Buyer is a party have been duly and validly authorized by all
necessary corporate action of Buyer, and this Agreement and each such
other agreement, when executed and delivered by the parties thereto,
will constitute the legal, valid, and binding obligations of Buyer
enforceable against it in accordance with its terms, except as
enforceability may be limited by applicable bankruptcy, insolvency, and
similar statutes affecting creditors' rights generally and judicial
limits on equitable remedies.
3.3 No Conflict with Other Instruments or Agreements. The execution,
delivery and performance by Buyer of this Agreement and all other
agreements contemplated hereby to which Buyer is a party will not
result in a breach or violation of or constitute a default under its
Articles of Incorporation or Bylaws or any material agreement to which
Buyer is a party or by which Buyer is bound.
4. Conduct of the Company's Business Pending the Closing. From the
date hereof until the Closing, and except as otherwise consented to or
approved by Buyer, Seller, and the Company covenant and agree with
Buyer as follows:
4.1 Regular Course of Business. The Company will operate its business
in accordance with the reasonable judgment of its management diligently
and in good faith, consistent with past management practices, and the
Company will continue to use its reasonable efforts to keep available
the services of present officers and employees (other than planned
retirements) and to preserve its present relationships with persons
having business dealings with it.
4.2 Dividends. The Company will not declare, pay or set aside for
payment any dividend or other distribution in respect of its capital
stock.
4.3 Capital Changes. The Company will not issue any shares of its
capital stock or issue or sell any securities convertible into or
exchangeable for or options, warrants to purchase or rights to
subscribe to, any shares of its capital stock or subdivide or in any
way reclassify any shares of its capital stock or repurchase,
reacquire, cancel or redeem, any such shares.
4.4 Property and Assets. The assets, property, and rights now owned
by the Company will be used, preserved and maintained, as far as
practicable, in the ordinary course of business, to the same extent and
in the same condition as said assets, property, and rights are on the
date of this Agreement, and no unusual or novel methods of manufacture,
purchase, sale, management or operation of said properties or business
or accumulation or valuation of inventory will be made or instituted.
Without the prior consent of Buyer, the Company will not encumber any
of its assets or make any commitments relating to such assets, property
or business, except in the ordinary course of its business.
Page 9
- -----------------------(Stock Purchase Agreement continued)
4.5 Insurance. The Company will keep or cause to be kept in effect
and undiminished the insurance now in effect on its various properties
and assets, and will purchase such additional insurance, at Buyer's
cost, as Buyer may reasonably request.
4.6 Employees. The Company will not grant to any employee any
promotion, any increase in compensation or any bonus, or other award,
other staff promotions, increases or awards that are regularly
scheduled in the ordinary course of business or contemplated on the
date of this Agreement or that are, in the reasonable judgment of the
management of the Company, in the Company's best interest.
4.7 No Violations. The Company will comply in all material respects
with all statutes, laws, ordinances, rules, and regulations applicable
to it in the ordinary course of business.
4.8 Public Announcements. No press release or other announcement to
the employees, customers or suppliers of the Company related to this
Agreement or the Purchase will be issued without the joint approval of
Buyer and Seller, unless required by law, in which case Buyer and
Seller will consult with each other regarding the announcement.
5. Covenants of the Company and Seller. The Company and Seller
covenant and agree as follows:
5.1 Satisfaction of Conditions. The Company will use reasonable
efforts to obtain as promptly as practicable the satisfaction of the
conditions to Closing set forth in Section 7 and any necessary consents
or waivers under or amendments to agreements by which the Company is
bound.
5.2 Exhibits. From time to time prior to the Closing, Seller and the
Company will promptly supplement or amend any Exhibits with respect to
any matter hereafter arising that, if existing or occurring at the date
of this Agreement, would have been required to be set forth or
described in any Exhibit and will promptly notify Buyer of any breach
by either of them that either of them discovers of any representation,
warranty or covenant contained in this Agreement. No supplement or
amendment of any Exhibit made pursuant to this Section will be deemed
to cure any breach of any representation of or warranty made in this
Agreement unless Buyer specifically agrees thereto in writing;
provided, however, that if the Purchase is closed, Buyer will be deemed
to have waived its rights with respect to any breach of a
representation, warranty or covenant or any supplement to any Exhibit
of which it shall have been notified pursuant to this Section 5.2.
5.3 No Solicitation. Until the Closing or termination pursuant to
Section 10 of this Agreement, neither Seller nor the Company, nor any
of its directors, officers, employees or agents shall, directly or
indirectly, encourage, solicit, initiate, or enter into any discussions
or negotiations concerning any disposition of any of the Capital Stock
Page 10
- -----------------------(Stock Purchase Agreement continued)
or of all or substantially all of the assets of the Company (other than
pursuant to this Agreement), or any proposal therefore, or furnish or
cause to be furnished any information concerning the Company to any
party in connection with any transaction involving the acquisition of
the Capital Stock or assets of the Company by any person other than
Buyer. Seller or the Company will promptly inform Buyer of any inquiry
(including the terms thereof and the person making such inquiry)
received by any responsible officer or director of the Company or
Seller after the date hereof and believed by such person to be a bona
fide, serious inquiry relating to any such proposal.
5.4 Action After the Closing. Upon the reasonable request of Buyer or
the Company after the Closing, Seller will take all action and will
execute all documents and instruments necessary or desirable to
consummate and give effect to the Purchase.
6. Closing.
6.1 Time, Place, and Manner of Closing. Unless this Agreement has
been terminated and the Purchase has been abandoned pursuant to the
provisions of Section 10, the closing (the "Closing") will be held at
the offices of the Seller in Spokane, Washington or at such other place
as the parties may agree, on the 30th day of January, 2002 or as soon
as practicable after the satisfaction of the various conditions
precedent to the Closing set forth herein. At the Closing the parties
to this Agreement will exchange certificates and other instruments and
documents in order to determine whether the terms and conditions of
this Agreement have been satisfied. Upon the determination of each
party that its conditions to consummate the Purchase have been
satisfied or waived, Seller shall deliver to Buyer the certificate(s)
evidencing the Shares, duly endorsed for transfer, and the shall
deliver to Seller the purchase price. From time to time after the
Closing, Seller, at Buyer's cost, will execute, deliver, and
acknowledge all such further instruments of transfer and conveyance and
will perform all such other acts as Buyer may reasonable request to
more effectively transfer Shares.
6.2 Consummation of Closing. All acts, deliveries, and confirmations
comprising the Closing, regardless of chronological sequence shall be
deemed to occur contemporaneously and simultaneously upon the
occurrence of the last act, delivery or confirmation of the Closing and
none of such acts, deliveries or confirmations shall be effective
unless and until the last of the same shall have occurred. The time of
the Closing has been scheduled to correspond to the close of business
at the principal office of the Company and, regardless of when the last
act, delivery or confirmation of the Closing shall take place, the
transfer of the Shares shall be deemed to occur as of the close of
business at the principal office of the Company on the date of the
Closing.
Page 11
- -----------------------(Stock Purchase Agreement continued)
7.Miscellaneous Provisions.
7.1 Amendment and Modification. Subject to applicable law, this
Agreement may be amended, modified or supplemented only by a written
agreement signed by Buyer and Seller.
7.2 Waiver of Compliance; Consents.
(i) Any failure of any party to comply with any obligation,
covenant, agreement or condition herein may be waived by a written
waiver executed by the party entitled to the performance of such
obligation, covenant or agreement or who has the benefit of such
condition, but such waiver or failure to insist upon strict compliance
with such obligation, covenant, agreement or condition will not operate
as a waiver of or estoppel with respect to any subsequent or other
failure.
(ii) Whenever this Agreement requires or permits consent by or on
behalf of any party hereto, such consent will be given in a manner
consistent with the requirements for a waiver of compliance as set
forth above.
7.3 Notices. All notices, requests, demands, and other communications
required or permitted hereunder will be in writing and will be deemed
to have been duly given when delivered by hand or two (2) days after
being mailed by certified or registered mail, return receipt requested,
with postage prepaid:
(i) If to Buyer, Parent, Seller, or to the Company after the
Closing, to:
Enviro-Energy Corporation.
15015 S. Dunn Road
Valleyford, WA 99036
Energy Flow Management, Inc.
21316 N. Antler Ridge Lane
Colbert, WA 99005
or to such other person or address as Buyer furnishes to Seller
pursuant to the above.
(ii) If to Seller or the Company:
Attn. Cory Colvin
2121 N. Waterworks St.
Spokane, WA
or to such other person or address as Seller furnishes to Buyer
pursuant to the above.
Page 12
- -----------------------(Stock Purchase Agreement continued)
7.4 Assignment. This Agreement will not be assigned by a party hereto
without the prior written consent of the other party(s) hereto. No
permitted assignment will release the assignor from its obligations
hereunder. Subject to the foregoing, this Agreement and all of the
provisions hereof will be binding upon and inure to the benefit of the
parties hereto and their respective successors, assigns, heirs,
executors, and personal representatives. Nothing in this Agreement,
express or implied, is intended to confer on any person other than the
parties hereto or their respective successors, any rights, remedies,
obligations or liabilities under or by reason of this Agreement.
7.5 Governing Law. All matters with respect to this Agreement,
including but not limited to matters of validity, construction, effect
and performance, will be governed by the laws of the State of
Washington applicable to contracts made and to be performed therein
between residents thereof, regardless of the laws that might be
applicable under principles of conflicts of law.
7.6 Counterparts. This Agreement may be executed in two (2) or more
fully or partially executed counterparts, each of which will be deemed
an original binding the signer thereof against the other signing
party(s), but all counterparts together will constitute one and the
same instrument.
7.7 Certain Rules of Constructions. The provisions of this Agreement
have been examined, negotiated and revised by counsel for each party,
and no implication will be drawn against any party hereto by virtue of
the drafting of this Agreement.
7.8 Entire Agreement. This Agreement and any other document to be
furnished pursuant to the provisions hereof embody the entire agreement
and understanding of the parties hereto as to the subject matter
contained herein. There are no restrictions, promises, representations,
warranties, covenants or undertakings other than those expressly set
forth or referred to in such documents. This Agreement and such
documents supersede all prior agreements and understandings between and
among the parties with respect to the subject matter hereof.
7.9 Severability. Any term or provision of this Agreement that is
invalid or unenforceable in any jurisdiction, will be ineffective to
the extent of such invalidity or unenforceability without rendering
invalid or unenforceable the remaining terms and provisions of this
Agreement or affecting the validity or enforceability of any of the
terms or provisions of this Agreement.
7.10 Attorney Fees. If any action is brought by any party to this
Agreement to enforce or interpret its terms or provisions, the
prevailing party will be entitled to reasonable attorneys' fees and
costs incurred in connection with such action prior to and at trial and
on any appeal therefrom.
Page 13
- -----------------------(Stock Purchase Agreement continued)
7.11 Payment of Fees and Expenses. Each party to this Agreement will
be responsible for, and will pay, all of its own fees and expenses,
including those of its counsel and accountants, incurred in the
negotiation, preparation, and consummation of the Agreement and the
Purchase.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the day and year first above written.
SELLER
Cory Colvin
COMPANY
Colvico, Inc.
By: /s/ Cory Colvin
----------------
President
BUYER
Energy Flow Management, Inc.
By: /s/ Mike Funk
---------------
President
PARENT
Enviro-Energy Corporation
By: /s/ Galen Loven
-----------------
Chairman
- -----------------------------End of Agreement--------------------------
Item 8. Change in Fiscal Year.
Not applicable.
Page 14
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES EXCHANGE ACT OF 1934,
THE REGISTRANT HAS DULY CAUSED THIS REPORT TO BE SIGNED ON ITS BEHALF
BY THE UNDERSIGNED HEREUNTO DULY AUTHORIZED.
ENVIRO-ENERGY CORPORATION
- -------------------------
(Registrant)
/s/ GALEN LOVEN
- -----------------
Chairman
DATE: May 16, 2002
-----------------
Page 15