USAsurance Group, Inc.
7345 E. Peakview Avenue
Englewood, Colorado 80111
COMMISSION FILE NUMBER 0-26920
INFORMATION STATEMENT
PURSUANT TO
SECTION 14(f) OF THE
SECURITIES EXCHANGE ACT OF 1934 AND
RULE 14f-1 THEREUNDER
Introduction
This Information Statement is being mailed on or about October 9, 1998,
to holders of record on August 22, 1998 of the shares of Common Stock, par
value $.0001 per share (the "Common Stock") of USAsurance Group, Inc., a
Colorado corporation (the "Company"). It is being furnished in connection
with the change of the Company's Directors to be effected at a Board meeting
to be held at the closing of the transaction discussed below, to be held on
or about October 20, 1998.
Background of Transaction and Change in Control
Pursuant to the terms of an agreement (the "Agreement") between the
Company and AFEW, Inc., a privately held Delaware corporation ("AFEW"), the
Company has agreed to acquire all of the interests of AFEW in exchange for
previously unissued "restricted" Common Stock of the Company. AFEW owns all
of the issued and outstanding interests in 2Xtreme Performance International
LLC.("2Xtreme"), a limited liability company which is a multi-level marketing
and direct network marketing company. This business enterprise combines (i)
the sale and marketing of nutritional supplements; and (ii) retains
independent contractors for the purpose of selling and marketing the 2Xtreme
product line. 2Xtreme currently employs approximately 200 persons and has
110,000 independent distributors distributing its products. During its fiscal
year ended December 31, 1997, 2Xtreme generated approximately $35 million in
revenues.
The terms of the Agreement provide that AFEW will enter into a share
exchange agreement with the Company wherein the Company would issue an
aggregate of 12,670,363 "restricted" shares of the Company's Common Stock to
AFEW in exchange for all of the issued and outstanding shares of AFEW
(the"Transaction"). As of the date of this Information Statement, there are
1,566,000 shares of the Company's Common Stock issued and outstanding.
Accordingly, if all of the issued and outstanding shares of AFEW are exchanged
for the Company's Common Stock, the holders thereof will own approximately 89%
of the Company's 14,236,363 shares of Common Stock which would then be issued
and outstanding.
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<PAGE>
Upon consummation of the Transaction, the Company's current Officers and
Directors will resign and will be replaced by Directors and Officers selected
by AFEW's management. See "Directors and Executive Officers and Related
Transactions" below.
Consummation of the Transaction will result in a change of control. If
the Transaction is not consummated, the Company's current Officers and
Directors will not resign and there will not be a change in control. The
Company anticipates, but cannot assure, that the Agreement will be executed on
or before October 20, 1998, with the closing to occur shortly thereafter.
Reason for Information Statement
Because a majority of its Directors is being changed otherwise than at a
meeting of stockholders, the Company is required pursuant to Rule 14f-1
promulgated under the Securities Exchange Act of 1934, as amended, to provide
its stockholders and the Securities and Exchange Commission (the "Commission")
with certain information not less than ten days prior to the date on which the
change will take place, or such other time period as may be established by the
Commission. This Information Statement is being filed with the Commission and
sent to stockholders in compliance with that Rule. The Company's stockholders
are urged to read this Information Statement carefully but are not required to
take any action.
Information Relating to the Company's Securities
As of the date of this Information Statement, there are outstanding
1,566,000 shares of the Company's Common Stock. Each outstanding share of
Common Stock entitles the record holder thereof to one vote on all matters
which are to be presented to stockholders for their consideration. The Common
Stock is the only issued and outstanding stock of the Company.
Principal Stockholders
The following table sets forth certain information regarding the
beneficial ownership of the Company's Common Stock as of the date of this
Information Statement by each person known to the Company to be the beneficial
owner of more than 5% of the Common Stock, each of the Company's Directors and
named Executive Officers and all Executive Officers as a group.
<TABLE>
<CAPTION>
Shares Beneficially Owned
------------------------------------
Name and Address of Amount and Nature of Percent of
Title of Class Beneficial Owner Beneficial Ownership (2) Class
- -------------- ------------------------ ------------------------ ----------
<S> <C> <C> <C>
Common Terry Whiteside 775,000 49.5%
7345 E. Peakview Avenue
Englewood, CO 80111
Common Thomas J. Chase (1) 5,000 *
7345 E. Peakview Avenue
Englewood, CO 80111
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<PAGE>
<CAPTION>
Shares Beneficially Owned
------------------------------------
Name and Address of Amount and Nature of Percent of
Title of Class Beneficial Owner Beneficial Ownership (2) Class
- -------------- ------------------------ ------------------------ ----------
<S> <C> <C> <C>
Common Matthew Kavanagh(1) 4,000 *
3140 S. Peoria, #230
Aurora, CO 80014
Common All Executive Officers and 9,000 *
Directors as a Group
(2 persons)
_________________________
* Less than 1%
<F1>
(1) Officer and/or Director of the Company.
<F2>
(2) The information relating to beneficial ownership of the Company's Common
Stock is based on information furnished by them using the definition of
"beneficial ownership" set forth in rules promulgated by the Securities
and Exchange Commission under Section 13(d) of the Securities Exchange
Act of 1934. Except where there may be special relationships with other
persons, including share voting or investment power, the Directors and
nominees possess sole voting and investment power with respect to the
shares set forth beside their names.
</TABLE>
The following table sets forth as of the date hereof, certain information
with respect to all those known by the Company who, retroactively assuming
consummation of the Transaction, would be the record or beneficial owners of
more than 5% of its outstanding Common Stock, each newly-appointed Director
and Executive Officer of the Company and all newly-appointed Directors as a
group. Except as indicated in the footnotes to the table, the listed
stockholders hold sole voting and investment power over their respective
shares.
<TABLE>
<CAPTION>
Shares of Common Stock to
be owned upon consummation Approximate
Name and Address Offices to be Held of the Transaction Percent of Class
- --------------------- --------------------- -------------------------- ----------------
<S> <C> <C> <C>
John Polk Chairman of the Board
3400 Cedar Falls Lane and President 7,776,000 54.6%
Plano, TX 75093
Patrick Farah Director 50,000 *
3812 Norwich Lane
Plano, TX 75025
John Lovelace - 4,804,363 33.8%
5719 Still Forest
Dallas, TX 75244
All Proposed Directors - 7,826,000 55.0%
and Executive Officers
as a Group (2 persons)
__________________________
* Less than 1%.
</TABLE>
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<PAGE>
Directors and Executive Officers and Related Transactions
Directors and Executive Officers
The present Officers and Directors of the Company are as follows:
Name Age Position
---- --- --------
Thomas J. Chase 58 President and Director
Matthew J. Kavanagh 63 Secretary and Director
Resumes:
Thomas J. Chase, President and a Director. Mr. Chase has been a Director
of the Company since its inception. Also, from inception through May 31,
1997, Mr. Chase held the position of Secretary of the Company. He was
appointed President of the Company on May 31, 1997. Since March 1988, Mr.
Chase has been President and sole owner of Tom Chase & Co., Inc., a privately
held Colorado corporation engaged as a broker of insurance and financial
services. Primarily, this company functions as a broker for property and
casualty insurance, life insurance and commercial mortgages. Mr. Chase
received a Bachelor of Science degree in business administration from Miami
University (Ohio) in 1963. He devotes only such time as necessary to the
business of the Company.
Matthew J. Kavanagh III, Secretary and a Director. Mr. Kavanagh was
appointed to his positions with the Company on May 31, 1997. Since September
1982, Mr. Kavanagh has been the President of The Amherst Group Ltd., a
privately held corporation located in Englewood, Colorado, engaged in
consulting services, including sales, marketing, franchising, real estate
development and fund raising to growth and development stage companies. Mr.
Kavanagh holds a Bachelor of Arts degree from Southern Methodist University in
Dallas, Texas. Mr. Kavanagh received a professional certification as a
Chartered Life Underwriter in 1969. Additionally, he is a licensed real
estate broker and insurance broker in the State of Colorado. Mr. Kavanagh
devotes only such time as is necessary to the business of the Company.
If and when the Transaction is consummated, the Company's current
Officers and Directors will resign and will be replaced, without stockholder
action, by the following Officers and Directors:
Name Age Position
---- --- --------
John T. Polk 38 Chairman of the Board
and President
Patrick W. Farah 28 Director
Resumes:
John T. Polk will assume the positions of Chairman of the Board and
President of the Company upon closing of the Transaction (of which there is no
assurance). Mr. Polk is presently President of AFEW, Inc., a position he has
held since December 1995. From September 1995 through November 1995, Mr. Polk
was engaged in development activities relating to 2Xtreme. Mr. Polk was the
founder of both AFEW, Inc. and
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2Xtreme. From September 1991 through August 1995, Mr. Polk was Chief
Executive Officer of Peak Performance International, Inc., a Delaware
corporation engaged in marketing of business formats. It is expected that,
upon closing of the Transaction, Mr. Polk will devote substantially all of his
time to the business of the Company.
Patrick W. Farah will assume the position of a Director of the Company
upon closing of the transaction. As of the date of this Information Statement
and since December 1996, Mr. Farah has been Chief Operating Officer of
2Xtreme, overseeing all aspects of its operations. From August 1993 through
December 1996, Mr. Farah was employed by Pediatric and Adolescent Medicine,
P.A., Hagertown, Maryland, where he managed all of the operations of this
primary adolescent care center. Mr. Farah obtained a Bachelor of Science
degree in 1995 from Shepard College. Upon closing of the Transaction, it is
expected that Mr. Farah will devote substantially all of his time to the
business of the Company, in the role as an employee of the Company.
Related Party Transactions
In June 1995, Terry Whiteside, the Company's former President, loaned the
Company the principal sum of $42,340, which the Company utilized to purchase
its initial insurance policy with a face value of $58,000. In August 1995,
Ms. Whiteside loaned the Company the principal sum of $58,000. Additionally
in August 1995, a minority shareholder of the Company loaned the Company the
principal sum of $75,000. Each of these aforesaid loans are unsecured and all
have been amended to reflect that the former two loans are due on June 30,
1999, the latter loan is due August 31, 1999 and all of the loans have
interest accruing at the rate of 7% per annum. The Company utilized the
proceeds of these loans to purchase insurance policies. Management believes
that because the Company had no assets or other collateral at the time such
loans were made, no established financial institution would have undertaken to
make any loans to the Company. Further, management believes that the terms of
these loans are more favorable to the Company than could have been provided by
any other financing entity, had such a financing entity been amenable to
undertaking such lending activities.
During the fiscal year ended May 31, 1997, the Company purchased life
insurance policies totalling $146,000 at the face value of the policy from an
entity which is approximately a 2% stockholder of the Company.
Relevant to AFEW, a company which is owned by a trust whose beneficiaries
are the children of John Polk, sells leads to 2Xtreme. Management of AFEW
believes that the compensation paid to this company is comparable to
compensation which AFEW would be obligated to tender to any unrelated party,
if these leads could be provided by such a third party.
Standing Audit, Nominating and Compensation Committees
The Board of Directors of the Company has no standing audit, nominating
or compensation committees.
Information Relating to Board of Directors Meetings
The Company presently has two Directors. During the fiscal year ended
May 31, 1998, the Directors held five meetings.
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Compensation of Directors and Executive Officers
The Company's Officers and Directors have not been paid a salary during
the fiscal year ended May 31, 1998. The Company maintains a policy whereby
the Directors and Executive Officers of the Company may be reimbursed for
out-of-pocket expenses incurred in the performance of their duties. The
Company did not reimburse any Director or Officer for such expenses during
the 1998 fiscal year.
The Company has no bonus or incentive plans in effect, nor are there any
understandings in place concerning additional compensation to the Company's
Officers or Directors.
In the event the proposed Transaction described hereinabove closes, Mr.
John Polk is expected to receive an annual salary of $250,000 per annum and
Mr. John Lovelace is expected to receive an annual salary of $216,000 per
annum. No other person is expected to receive annual compensation in excess
of $100,000 per annum.
Section 16(a) Beneficial Ownership
Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934, as amended,
requires the Company's Officers and Directors, and persons who beneficially
own more than 10% of a registered class of the Company's equity securities,
to file reports of ownership and changes in ownership with the SEC. Officers,
Directors and greater than 10% stockholders are required by Commission
regulation to furnish the Company with copies of all Section 16(a) forms they
file.
Based solely on its review of the copies of such forms received by it, or
written representations from certain reporting persons that no forms were
required for those persons, the Company believes that during the 1998 fiscal
year all filing requirements applicable to Officers, Directors and greater
than 10% beneficial owners were complied with.
Dated: October 9, 1998.
USAsurance Group, Inc.
s/Thomas J. Chase
Thomas Chase, President
