SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-KSB
(Mark One)
[X] Annual Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
[ ] Transitional Report Under Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the fiscal year ended December 31, 1999
Commission File No. 000-24447
MULLY CORP.
-----------
(Name of small business issuer in its charter)
Nevada 84-1381946
------ ----------
(State or other jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification Number)
12835 East Arapahoe Road,
Tower I, Penthouse
Englewood, Colorado 80112
(303) 768-9221
--------------
(Address, including zip code and telephone number, including area
code, of registrant's executive offices)
Securities registered under Section 12(b) of the Exchange Act:
none
Securities registered under to Section 12(g) of the Exchange Act:
Common Stock
------------
(Title of class)
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12
months (or for such shorter period that the Company was required to file such
reports), and (2) has been subject to such filing requirements for the past 90
days.
Yes X No
--- ----
Check if disclosure of delinquent filers in response to Item 405 of Regulation
S-B is not contained in this form, and no disclosure will be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-KSB or any amendment to
this Form 10-KSB. x
---
Issuer's revenues for its most recent fiscal year: $ -0-
(Continued on Following Page)
<PAGE>
State the aggregate market value of the voting stock held by non- affiliates,
computed by reference to the price at which the stock was sold, or the average
bid and asked prices of such stock, as of a specified date within the past 60
days: As of December 31, 1999: $0.
State the number of shares outstanding of each of the issuer's classes of common
equity, as of the latest practicable date: As of December 31, 1999 there were
500,000 shares of the Company's common stock issued and outstanding.
Documents Incorporated by Reference: None
This Form 10-KSB consists of Twenty Six Pages.
Exhibit Index is Located at Page Twenty Three.
2
<PAGE>
TABLE OF CONTENTS
FORM 10-KSB ANNUAL REPORT
MULLY CORP.
PAGE
----
Facing Page
Index
PART I
Item 1. Description of Business................................... 4
Item 2. Description of Property................................... 6
Item 3. Legal Proceedings......................................... 6
Item 4. Submission of Matters to a Vote of
Security Holders...................................... 6
PART II
Item 5. Market for the Registrant's Common Equity
and Related Stockholder Matters....................... 6
Item 6. Management's Discussion and Analysis of
Financial Condition and Results of
Operations............................................ 7
Item 7 Financial Statements...................................... 9
Item 8. Changes in and Disagreements on Accounting
and Financial Disclosure.............................. 20
PART III
Item 9. Directors, Executive Officers, Promoters
and Control Persons, Compliance with
Section 16(a) of the Exchange Act..................... 20
Item 10. Executive Compensation.................................... 21
Item 11. Security Ownership of Certain Beneficial
Owners and Management................................. 22
Item 12. Certain Relationships and Related
Transactions.......................................... 23
PART IV
Item 13. Exhibits and Reports of Form 8-K.......................... 23
SIGNATURES........................................................... 24
3
<PAGE>
PART I
ITEM 1. DESCRIPTION OF BUSINESS.
Mully Corp. (the "Company") was incorporated on November 4, 1996 under the
laws of the State of Nevada to engage in any lawful corporate undertaking,
including, but not limited to, selected mergers and acquisitions. The Company
has been in the developmental stage since inception and has no operations to
date. Other than issuing shares to its original shareholders, the Company never
commenced any operational activities. As such, the Company can be defined as a
"shell" company, whose sole purpose at this time is to locate and consummate a
merger or acquisition with a private entity.
The proposed business activities of the Company classify it as a "blank
check" company. Many states have enacted statutes, rules and regulations
limiting the sale of securities of "blank check" companies in their respective
jurisdictions. Management does not intend to undertake any efforts to cause a
market to develop in the Company's securities until such time as the Company has
successfully implemented its business plan described herein. Relevant thereto,
each shareholder of the Company has executed and delivered a "lock-up" letter
agreement, affirming that they shall not sell their respective shares of the
Company's common stock until such time as the Company has successfully
consummated a merger or acquisition and the Company is no longer classified as a
"blank check" company. In order to provide further assurances that no trading
will occur in the Company's securities until a merger or acquisition has been
consummated, each shareholder has agreed to place their respective stock
certificate with the Company's legal counsel, who will not release these
respective certificates until such time as legal counsel has confirmed that a
merger or acquisition has been successfully consummated. However, while
management believes that the procedures established to preclude any sale of the
Company's securities prior to closing of a merger or acquisition will be
sufficient, there can be no assurances that the procedures established relevant
herein will unequivocally limit any shareholder's ability to sell their
respective securities before such closing.
During the fiscal year ended December 31, 1999, the Company filed a
registration statement with the Securities and Exchange Commission on Form 10-SB
pursuant to the rules and regulations included under the Securities Exchange Act
of 1934, as amended, wherein the Company caused to be registered its common
stock. This registration statement became effective on or about June 7, 1999.
The purpose of the registration statement was management's belief that the
primary attraction of the Company as a merger partner or acquisition vehicle
will be its status as a public company. Any business combination or transaction
will likely result in a
4
<PAGE>
significant issuance of shares and substantial dilution to present stockholders
of the Company.
Subsequent Event
Management has continued to review prospective merger or acquisition
candidates during the past fiscal year, but as of the date of this report, there
is no definitive agreement between the Company and any third party providing for
the Company to merge or acquire any assets. However, applicable thereto, on
February 4, 2000, the Company entered into a letter of intent with the Baby's
Best Infant Formula, Inc. ("BBI"), a privately held Florida corporation, whereby
the Company has agreed in principle to acquire all of the issued and outstanding
shares of BBI, in exchange for issuance by the Company of previously unissued
"restricted" common stock. The relevant terms of the proposed transaction
require the Company to (i) undertake a forward split whereby 4 shares of common
stock shall be issued in exchange for each share of common stock then issued and
outstanding, in order to establish the number of issued and outstanding common
shares at closing to be 2,000,000; and (ii) thereafter, issue to the BBI
shareholders an aggregate of 18,000,000 "restricted" common shares, representing
90% of the Company's then outstanding common stock, in exchange for all of the
issued and outstanding shares of BBI.
The proposed share exchange is subject to satisfaction of certain
conditions, including completion of due diligence activities, the approval of
the transaction by the BBI shareholders and the approval of the proposed
transaction by the shareholders of the Company. If the proposed transaction with
BBI is consummated, the present officers and directors of the Company are
expected to resign their respective positions with the Company, to be replaced
by the present management of BBI. If these conditions are met, it is expected
that the proposed transaction with BBI will close by the end of March 2000.
However, there are no assurances that the proposed transaction will close on the
aforesaid date, or that any unforeseen delay will occur.
Employees
During the fiscal year ended December 31, 1999, the Company had no full
time employees. The Company's President, Secretary and Treasurer has agreed to
allocate a portion of his time to the activities of the Company, without
compensation. This officer anticipates that the business plan of the Company can
be implemented by his devoting approximately 20 hours per month to the business
affairs of the Company and, consequently, conflicts of interest may arise with
respect to the limited time commitment by such officer.
5
<PAGE>
ITEM 2. DESCRIPTION OF PROPERTY
Facilities. During the fiscal year ended December 31, 1999, the Company
operated from its offices at 2851 South Parker Road, Suite 720, Aurora, Colorado
80014, which space was provided to the Company on a rent free basis by Andrew I.
Telsey, a shareholder, director and officer of the Company. In February 2000,
the Company moved to 12835 E. Arapahoe Road, Tower I, Penthouse, Englewood,
Colorado 80112, which space is also provided by Mr. Telsey on a rent free basis
and it is anticipated that this arrangement will remain until such time as the
Company successfully consummates a merger or acquisition. Management believes
that this space will meet the Company's needs for the foreseeable future.
Other Property. The Company has no properties and at this time has no
agreements to acquire any properties. The Company intends to attempt to acquire
assets or a business in exchange for its securities which assets or business is
determined to be desirable for its objectives.
ITEM 3. LEGAL PROCEEDINGS
There are no material legal proceedings which are pending or have been
threatened against the Company of which management is aware.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED
SHAREHOLDER MATTERS
(a) Market Information. There is presently no trading market for the common
equity of the Company.
(b) Holders. There are eleven (11) holders of the Company's Common Stock.
(c) Dividends.
(1) The Company has not paid any dividends on its Common Stock. The Company
does not foresee that the Company will have the ability to pay a dividend on its
Common Stock in the fiscal year ended December 31, 2000, unless the Company
successfully consummates a merger or acquisition and the relevant candidate has
sufficient assets available to undertake issuance of such a dividend and
management elects to do so, of which there can be no assurance.
6
<PAGE>
ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
The following discussion should be read in conjunction with the Company's
audited financial statements and notes thereto included herein. In connection
with, and because it desires to take advantage of, the "safe harbor" provisions
of the Private Securities Litigation Reform Act of 1995, the Company cautions
readers regarding certain forward looking statements in the following discussion
and elsewhere in this report and in any other statement made by, or on the
behalf of the Company, whether or not in future filings with the Securities and
Exchange Commission. Forward looking statements are statements not based on
historical information and which relate to future operations, strategies,
financial results or other developments. Forward looking statements are
necessarily based upon estimates and assumptions that are inherently subject to
significant business, economic and competitive uncertainties and contingencies,
many of which are beyond the Company's control and many of which, with respect
to future business decisions, are subject to change. These uncertainties and
contingencies can affect actual results and could cause actual results to differ
materially from those expressed in any forward looking statements made by, or on
behalf of, the Company. The Company disclaims any obligation to update forward
looking statements.
(a) Plan of Operation.
-----------------
The Company intends to seek to acquire assets or shares of an entity
actively engaged in business, in exchange for its securities. Applicable thereto
and as of the date of this report, effective February 7, 2000, the Company
entered into a letter of intent with the BBI, whereby the Company has agreed in
principle to acquire all of the issued and outstanding shares of BBI, in
exchange for issuance by the Company of previously unissued "restricted" common
stock. The relevant terms of the proposed transaction require the Company to (i)
undertake a forward split of its issued and outstanding common shares, whereby 4
shares of common stock are proposed to be issued in exchange for each share of
common stock then issued and outstanding; and (ii) thereafter, issue to the BBI
shareholders an aggregate of 18,000,000 "restricted" common shares, representing
90% of the Company's then outstanding common stock, in exchange for all of the
issued and outstanding shares of BBI.
The proposed share exchange is subject to satisfaction of certain
conditions, including completion of due diligence activities, the approval of
the transaction by the BBI shareholders and the approval of the proposed
transaction by the shareholders of the Company. If the proposed transaction with
BBI is consummated, the present officers and directors of the Company are
expected to resign their respective positions with the Company, to be replaced
7
<PAGE>
by the present management of BBI. If these conditions are met, it is expected
that the proposed transaction with BBI will close by the end of March 2000.
However, there are no assurances that the proposed transaction will close or
that any unforeseen delay will occur.
In the event the aforesaid transaction does not close, management of the
Company will continue to have discussions with other potential merger or
acquisition candidates. In the event the Company does enter into an agreement
with such a third party, the Board of Directors does intend to obtain certain
assurances of value of the target entity assets prior to consummating such a
transaction, with further assurances that an audited financial statement would
be provided within sixty days after closing of such a transaction. Closing
documents relative thereto will include representations that the value of the
assets conveyed to or otherwise so transferred will not materially differ from
the representations included in such closing documents, or the transaction will
be voidable.
The Company has no full time employees. The Company's President, Secretary
and Treasurer has agreed to allocate a portion of his time to the activities of
the Company, without compensation. This officer anticipates that the business
plan of the Company can be implemented by his devoting approximately 20 hours
per month to the business affairs of the Company and, consequently, conflicts of
interest may arise with respect to the limited time commitment by such officer.
Because the Company presently has nominal overhead or other material
financial obligations, management of the Company believes that the Company's
short term cash requirements can be satisfied by management injecting whatever
nominal amounts of cash into the Company to cover these incidental expenses.
There are no assurances whatsoever that any additional cash will be made
available to the Company through any means.
Year 2000 Disclosure
Many existing computer programs use only two digits to identify a year in
the date field. These programs were designed and developed without considering
the impact of the upcoming change in the century. If not corrected, many
computer applications could fail or create erroneous results by or at the Year
2000. As a result, many companies will be required to undertake major projects
to address the Year 2000 issue. Because the Company has no assets, including any
personal property such as computers, it is not anticipated that the Company will
incur any negative impact as a result of this potential problem. However, it is
possible that this issue may have an impact on the Company after the Company
successfully consummates a merger or acquisition. Management intends to address
this potential problem with any prospective
8
<PAGE>
merger or acquisition candidate. There can be no assurances that new management
of the Company will be able to avoid a problem in this regard after a merger or
acquisition is so consummated.
ITEM 7. FINANCIAL STATEMENTS
<PAGE>
MULLY CORP.
Audited Financial Statements
For the Years Ended December 31, 1999 and 1998
and the Period November 4, 1996 (Inception)
through December 31, 1999
10
<PAGE>
Mully Corp.
TABLE OF CONTENTS
Page
----
Independent Auditors' Report F-1
Financial Statements
Balance Sheet F-2
Statement of Operations F-3
Statement of Cash Flow F-4
Statement of Shareholders' Equity (Deficit) F-5
Notes to the Financial Statements F-6 to F-8
11
<PAGE>
HORTON & COMPANY
Certified Public Accountants and Business Consultants, L.L.C.
INDEPENDENT AUDITORS' REPORT
The Board of Directors
Mully Corp.
Aurora, Colorado
We have audited the accompanying consolidated balance sheets of Mully Corp. as
of December 31, 1999 and 1998, and the related statements of operations,
stockholders' equity and cash flows for the years then ended and for the period
November 4, 1996 (inception) through December 31, 1999. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits to obtain
reasonable assurance about whether the financial statements are free of material
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 Mully Corp. as of December 31,
1999 and 1998, and the results of its operations and its cash flows for years
then ended, and for the period November 4, 1996 (inception) through December 31,
1999, in conformity with generally accepted accounting principles.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note 5 to the
financial statements, the Company has suffered losses from operations and has a
lack of net capital that raise substantial doubt about its ability to continue
as a going concern. Management's plans in regard to these matters are also
described in Note 5. The financial statements do not include any adjustments
that might result from the outcome of this uncertainty.
s/Horton & Company, LLC
HORTON & COMPANY, L.L.C.
March 2, 2000
1680 ROUTE 23, SUITE 110, WAYNE, NEW JERSEY 07470
TEL: 973-305-9800, FAX: 973-305-8213
A Member of the Division for CPA firms;
American Institute of Certified Public Accountants
F-1
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<TABLE>
Mully Corp.
(A Development Stage Company)
Balance Sheet
- ------------------------------------------------------------------------------
<CAPTION>
December
31, 1999
--------
<S> <C>
ASSETS $ 0
========
LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIT)
LIABILITIES - Due to Shareholder 500
--------
SHAREHOLDERS' EQUITY (DEFICIT)
Preferred Stock, .001 Par Value
Authorized 25,000,000 Shares; Issued 0
And Outstanding -0- Shares
Common Stock, $.0001 Par Value
Authorized 100,000,000 Shares; Issued
And Outstanding 500,000 Shares 50
Additional Paid In Capital On Common Stock 450
Deficit Accumulated During The Development Stage (1,000)
--------
TOTAL SHAREHOLDERS' EQUITY (DEFICIT) (500)
--------
TOTAL LIABILITIES AND SHAREHOLDERS'
EQUITY (DEFICIT) $ 0
========
The Accompanying Notes Are An Integral Part Of These Financial
Statements.
</TABLE>
F-2
13
<PAGE>
<TABLE>
Mully Corp.
(A Development Stage Company)
Statement Of Operations
- ------------------------------------------------------------------------------
<CAPTION>
November
4, 1996
(Inception)
Through
December December December
31, 1999 31, 1998 31, 1999
-------- -------- --------
<S> <C> <C> <C>
Revenue $ 0 $ 0 $ 0
-------- -------- --------
Expenses:
Office 0 0 500
Legal and Accounting 500 0 500
-------- -------- --------
Total 500 0 1,000
-------- -------- --------
Net (Loss) $ (500) $ 0 $ (1,000)
======== ======== ========
Basic (Loss) Per Common Share $ 0.00 $ 0.00 $ (0.00)
======== ======== ========
Basic Common Shares Outstanding 500,000 500,000 500,000
======== ======== ========
The Accompanying Notes Are An Integral Part Of These Financial
Statements.
</TABLE>
F-3
14
<PAGE>
<TABLE>
Mully Corp.
(A Development Stage Company)
Statement Of Cash Flows
- ------------------------------------------------------------------------------
<CAPTION>
November
4, 1996
(Inception)
Through
December December December
31, 1999 31, 1998 31, 1999
-------- -------- --------
<S> <C> <C> <C>
Net (Loss) Accumulated During
The Development Stage $ (500) $ 0 $ (1,000)
-------- -------- --------
Issuance of Common Stock for
Cash Advances & Services 0 0 500
Expenses Paid by Shareholder 500 0 500
-------- -------- --------
Net Cash Flows From Operations 0 0 0
-------- -------- --------
Cash Flows From Financing
Activities:
0 0 0
-------- -------- --------
Net Cash Flows From Financing 0 0 0
-------- -------- --------
Net Increase In Cash 0 0 0
Cash At Beginning Of Period 0 0 0
-------- -------- --------
Cash At End Of Period $ 0 $ 0 $ 0
======== ======== ========
Non - Cash Activities:
Stock Issued For Cash Advances & Services $ 0 $ 0 $ 500
======== ======== ========
Expenses Paid by Shareholder $ 500 $ 0 $ 500
======== ======== ========
The Accompanying Notes Are An Integral Part Of These Financial
Statements.
</TABLE>
F-4
15
<PAGE>
<TABLE>
Mully Corp.
(A Development Stage Company)
Statement Of Shareholders' Equity
- -----------------------------------------------------------------------------------------------
<CAPTION>
Deficit
Accumulated
Number Of Number Of Additional During The
Common Preferred Common Preferred Paid-In Development
Shares Shares Stock Stock Capital Stage Total
------- ------ ------ ----- ------- ------- -----
<S> <C> <C> <C> <C> <C> <C> <C>
Balance At
November 4, 1996 0 0 $ 0 $ 0 $ 0 $ 0 $ 0
Issuance Of Common Stock:
November 4, 1996 for Cash
Advances Made on Behalf
of the Company &
Services at $.001
Per Share 500,000 0 50 0 450 0 500
Net (Loss) (500) (500)
------- ------ ------ ----- ------- ------- -----
Balance At December 31,
1996, 1997, and 1998 500,000 0 $ 50 $ 0 $ 450 $ (500) $ 0
Net (Loss) (500) (500)
------- ------ ------ ----- ------- ------- -----
Balance At December 31,
1999 500,000 0 $ 50 $ 0 $ 450 $(1,000) $(500)
======= ====== ====== ===== ======= ======= =====
The Accompanying Notes Are An Integral Part Of These Financial Statements.
</TABLE>
F-5
16
<PAGE>
Mully Corp.
(A Development Stage Company)
Notes to Financial Statements
For The Fiscal Years Ended December 31, 1999 and 1998
- -----------------------------------------------------
Note 1 - Organization and Summary of Significant Accounting Policies
- --------------------------------------------------------------------
Organization:
On November 4, 1996, Mully Corp. (the "Company") was incorporated under the laws
of Nevada to engage in any lawful business or activity for which corporations
may be organized under the laws of the State of Nevada.
Development Stage:
The Company entered the Development stage in accordance with SFAS No. 7 on
November 4, 1996. Its purpose is to evaluate, structure and complete a merger
with, or acquisition a privately owned corporation.
Statement of Cash Flows:
For the purpose of the statement of cash flows, the Company considers demand
deposits and highly liquid-debt instruments purchased with a maturity of three
months or less to be cash equivalents.
Cash paid for interest in fiscal years ended December 31, 1999 and 1998 was
$-0-. Cash paid for income taxes in fiscal years ended December 31, 1999 and
1998 was $-0-.
Basic (Loss) per Common Share:
Basic (Loss) per common share is computed by dividing the net loss for the
period by the weighted average number of shares outstanding at December 31,
1999 and December 31, 1998. (See Note 6)
Use of Estimates:
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts. Actual results could differ from those estimates.
F-6
17
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Mully Corp.
(A Development Stage Company)
Notes to Financial Statements
For The Fiscal Years Ended December 31, 1999 and 1998
- -----------------------------------------------------
Note 2 - Capital Stock and Capital in Excess of Par Value
- ---------------------------------------------------------
The Company initially authorized 100,000,000 shares of $.0001 par value common
stock and 25,000,000 shares of $.001 par value preferred stock. On November 4,
1996, the Company issued 500,000 shares of common stock for services valued at
$350, and for cash advances paid on behalf of the Company of $150, for a total
of $500.
Note 3 - Related Party Events
- -----------------------------
The Company maintains a mailing address at an officer's place of business. This
address is located at 12835 E. Arapahoe Road, Tower I, Penthouse, Englewood,
Colorado 80112. At this time the Company has no need for an office. As of
December 31, 1999 management has incurred a minimal amount of time and expense
on behalf of the Company.
Also, during the fiscal year ended December 31, 1999, Andrew I. Telsey, a
shareholder and officer of the Company, advanced the Company the principal
amount of $500 to cover expenses. This loan is non-interest bearing and due upon
demand. It is anticipated that Mr. Telsey will forgive this loan upon the
closing of a merger or acquisition, or the balance will be paid by the surviving
company.
Note 4 - Income Taxes
- ---------------------
At December 31, 1999, the Company had net operating loss carryforwards available
for financial statement and Federal income tax purposes of approximately $1,000
which, if not used, will expire in the years 2011 through 2019.
The Company follows Financial Accounting Standards Board Statement No. 109,
"Accounting for Income Taxes" (SFAS #109), which requires, among other things,
an asset and liability approach to calculating deferred income taxes. As of
December 31, 1999, the Company has a deferred tax asset of $10 primarily for its
net operating loss carryforward which has been fully reserved through a
valuation allowance. The increase in the valuation allowance for 1999 is $150.
Note 5 - Basis of Presentation
- ------------------------------
In the course of its development activities the Company has sustained continuing
losses and expects such losses to continue for the foreseeable future. The
Company's management plans on advancing funds on an as needed basis and in the
longer term, revenues from the operations of a merger candidate, if found. The
Company's ability to continue as a going concern is dependent on these
additional management advances, and, ultimately, upon achieving profitable
operations through a merger candidate.
F-7
18
<PAGE>
Mully Corp.
(A Development Stage Company)
Notes to Financial Statements
For The Fiscal Years Ended December 31, 1999 and 1998
- -----------------------------------------------------
Note 6 - New Accounting Pronouncement
- -------------------------------------
In February 1997, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 128, Earnings Per Share ("SFAS No. 128").
SFAS No. 128 specifies the computation, presentation, and disclosure
requirements of earnings per share and supersedes Accounting Principles Board
Opinion No. 15, Earnings Per Share. SFAS No. 128 requires dual presentation of
basic and diluted earnings per share. Basic earnings per share, which excludes
the impact of common stock equivalents, replaces primary earnings per share.
Diluted earnings per share, which utilizes the average market price per share as
opposed to the greater of the average market price per share or ending market
price per share when applying the treasury stock method in determining common
stock equivalents, replaces fully-diluted earnings per share. SFAS No. 128 is
effective for the Company for periods ending after December 15, 1997. However,
the Company has a simple capital structure for the periods presented and
therefore, there is no effect on the earnings per share presented due to the
Company's adoption of SFAS No. 128.
Note 7 - Subsequent Events
- --------------------------
Effective February 7, 2000, the Company entered into a letter of intent with the
Baby's Best Infant Formula, Inc. ("BBI"), a privately held Florida corporation,
whereby the Company has agreed in principle to acquire all of the issued and
outstanding shares of BBI, in exchange for issuance by the Company of previously
unissued "restricted" common stock. The relevant terms of the proposed
transaction require the Company to (i) undertake a forward split whereby 4
shares of common stock shall be issued in exchange for each share of common
stock then issued and outstanding, in order to establish the number of issued
and outstanding common shares at closing to be 2,000,000; and (ii) thereafter,
issue to the BBI shareholders an aggregate of 18,000,000 "restricted" common
shares, representing 90% of the Company's then outstanding common stock, in
exchange for all of the issued and outstanding shares of BBI.
The proposed share exchange is subject to satisfaction of certain
conditions, including completion of due diligence activities, the approval of
the transaction by the BBI shareholders and the approval of the proposed
transaction by the shareholders of the Company. If the proposed transaction with
BBI is consummated, the present officers and directors of the Company are
expected to resign their respective positions with the Company, to be replaced
by the present management of BBI. If these conditions are met, it is expected
that the proposed transaction with BBI will close by the end of March 2000.
However, there are no assurances that the proposed transaction will close on the
aforesaid date, or that any unforeseen delay will occur.
F-8
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ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE.
None
PART III
ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL
PERSONS; COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT.
Directors are elected for one-year terms or until the next annual meeting
of shareholders and until their successors are duly elected and qualified.
Officers continue in office at the pleasure of the Board of Directors.
The Directors and Officers of the Company as of the date of this report are
as follows:
Name Age Position
- ---------------- --- -------------------------
Andrew I. Telsey 46 President, Secretary,
Treasurer and Director
All Directors of the Company will hold office until the next annual meeting
of the shareholders and until successors have been elected and qualified.
Officers of the Company are elected by the Board of Directors and hold office
until their death or until they resign or are removed from office.
There are no family relationships among the officers and directors. There
is no arrangement or understanding between the Company (or any of its directors
or officers) and any other person pursuant to which such person was or is to be
selected as a director or officer.
(b) Resumes:
Andrew I. Telsey, President, Secretary, Treasurer and a director. Mr.
Telsey has held his positions with the Company since its inception. From 1984
through the present, Mr. Telsey has been employed by Andrew I. Telsey, P.C.,
Aurora, Colorado, a professional corporation engaged in the practice of law,
emphasizing securities law, mergers, acquisitions and general business matters.
This firm is legal counsel to the Company. Also, Mr. Telsey is a director of
Cavion Technologies, Inc., a publicly held Colorado corporation which completed
its initial public offering in November 1999. Mr. Telsey received a Juris Doctor
degree from Syracuse University College of Law in 1979 and a Bachelor of Arts
degree from Ithaca College in 1975. He devotes
20
<PAGE>
only such time as necessary to the business of the Company, which is not
expected to exceed 20 hours per month.
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
officers, directors and person who own more than 10% of the Company's Common
Stock to file reports of ownership and changes in ownership with the Securities
and Exchange Commission, provided that there were any changes to such persons
respective stock holdings in the Company during the previous fiscal year. Based
upon information provided to the Company, there have been no changes in the
securities holdings of any person during the past fiscal year.
ITEM 10. EXECUTIVE COMPENSATION.
Remuneration
The following table reflects all forms of compensation for services to the
Company for the fiscal years ended December 31, 1999 and 1998 of the chief
executive officer of the Company.
<TABLE>
SUMMARY COMPENSATION TABLE
<CAPTION>
Long Term Compensation
----------------------------
Annual Compensation Awards Payouts
--------------------- -------------------- -------
Securities
Other Under- All
Name Annual Restricted lying Other
and Compen- Stock Options/ LTIP Compen-
Principal Salary Bonus sation Award(s) SARs Payouts sation
Position Year ($) ($) ($) ($) (#) ($) ($)
- ---------- ---- ------ ----- ------ -------- ------- ------- ------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Andrew I.
Telsey,
President & (1)(2)
Director 1999 $ 0 $ 0 $ 0 $ 0 0 $ 0 $ 0
1998 0 0 0 0 0 0 0
- -------------------------
<F1>
(1) Mr. Telsey did not receive any salary during the fiscal years ended December
31, 1999 and 1998 from the Company.
<F2>
(2) It is not anticipated that any executive officer of the Company will
receive compensation exceeding $100,000 during the fiscal year ended
December 31, 2000, except in the event the Company successfully
consummates a business combination.
</TABLE>
21
<PAGE>
The Company maintains a policy whereby the directors of the Company may be
compensated for out of pocket expenses incurred by each of them in the
performance of their relevant duties. The Company did not reimburse any director
for such expenses during the fiscal year ended December 31, 1999.
In addition to the cash compensation set forth above, the Company
reimburses each executive officer for expenses incurred on behalf of the Company
on an out-of-pocket basis. The Company cannot determine, without undue expense,
the exact amount of such expense reimbursement. However, the Company believes
that such reimbursements did not exceed, in the aggregate, $1,000 during fiscal
year 1999.
There are no bonus or incentive plans in effect, nor are there any
understandings in place concerning additional compensation to the Company's
officers.
ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT.
(a) and (b) Security Ownership of Certain Beneficial Owners and Management.
The table below lists the beneficial ownership of the Company's voting
securities by each person known by the Company to be the beneficial owner of
more than 5% of such securities, as well as by all directors and officers of the
issuer. Unless otherwise indicated, the shareholders listed possess sole voting
and investment power with respect to the shares shown.
Name and Amount and
Address of Nature of
Title Beneficial Beneficial Percent of
of Class Owner Owner Class
- -------- ------------------------- ---------- ----------
Common Andrew I. Telsey 260,000 52%
2851 South Parker Road
Suite 720
Aurora, CO 80014
Common All Officers and 260,000 52%
Directors as a
Group (1 person)
The balance of the Company's outstanding Common Shares are held by 10
persons.
22
<PAGE>
ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
The Company currently operates from its offices at 12835 E. Arapahoe Road,
Tower I, Penthouse, Englewood, Colorado 80112. This space, as well as the space
utilized by the Company during the fiscal year ended December 31, 1999, is and
was provided to the Company on a rent free basis by Andrew I. Telsey, an officer
and director of the Company, and it is anticipated that this arrangement will
remain until such time as the Company successfully consummates a merger or
acquisition.
Also, during the fiscal year ended December 31, 1999, Mr. Telsey loaned the
Company the principal balance of $500 to cover expenses. This loan is
non-interest bearing and due upon demand. It is anticipated that Mr. Telsey will
forgive this loan upon the closing of a merger or acquisition, or the balance
will be paid by the surviving company.
There have been no other related party transactions, or any other
transactions or relationships required to be disclosed pursuant to Item 404 of
Regulation S-B.
PART IV
Item 13. EXHIBITS AND REPORTS ON FORM 8-K.
(a) Exhibits
3.1* Certificate and Articles of Incorporation
3.2* Bylaws
EX-27 Financial Data Schedule
* Filed with the Securities and Exchange Commission in the Exhibits to Form
10-SB, filed on March 19, 1999, and are incorporated by reference herein.
(b) Reports on Form 8-K
The Company filed a report on Form 8-K dated February 7, 2000, advising
that the Company entered into a letter of intent with BBI, a privately held
Florida corporation, whereby the Company has agreed in principle to acquire all
of the issued and outstanding shares of BBI, in exchange for issuance by the
Company of previously unissued "restricted" common stock. The relevant terms of
the proposed transaction are described elsewhere herein. The contents of this
Form 8-K are incorporated herein as if set forth. The Company did not file any
other reports on Form 8-K during the last quarter of the fiscal year ended
December 31, 1999.
23
<PAGE>
SIGNATURES
In accordance with Section 13 or 15(d) of the Securities Exchange Act of
1934, the Company caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized, on March 2, 2000.
MULLY CORP.
(Registrant)
By: s/Andrew I. Telsey
-------------------
Andrew I. Telsey, President
Secretary and Treasurer
In accordance with the Exchange Act, this report has been signed below by
the following persons on behalf of the registrant and in the capacities
indicated on March 2, 2000.
s/Andrew I. Telsey
- --------------------
Andrew I. Telsey,
President, Secretary,
Treasurer and Director
24
<PAGE>
MULLY CORP.
EXHIBIT INDEX TO ANNUAL REPORT ON FORM 10-KSB
FOR THE FISCAL YEAR ENDED DECEMBER 31, 1999
EXHIBITS Page No.
EX-27 Financial Data Schedule.............................................26
25
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE AUDITED
FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED DECEMBER 31, 1999, AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> DEC-31-1999
<CASH> 0
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 0
<CURRENT-LIABILITIES> 500
<BONDS> 0
0
0
<COMMON> 50
<OTHER-SE> (550)
<TOTAL-LIABILITY-AND-EQUITY> 0
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 500
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (500)
<INCOME-TAX> 0
<INCOME-CONTINUING> (500)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (500)
<EPS-BASIC> 0
<EPS-DILUTED> 0
</TABLE>
