The Company is authorized to issue 100,000,000 shares of Common Stock at no par value per share. There are 9,615,000 shares of Common Stock outstanding on a consolidated basis and on a non-consolidated basis, there are 11,750,000 shares outstanding of which 2,135,000 is eliminated in the consolidation.

We are also authorized to issue 5,000,000 shares of Preferred Stock with no par value. There currently are 696,200 shares of Preferred Stock outstanding. These shares carry a 10% dividend right and were issued at a price of $10.00 per share and can be converted into 1,392,400 shares of Common Stock at $5.00 per share.

The Company is a diversified holding company that currently leases a 3,646 square foot Executive Office in Ewing, New Jersey; and owns office computers and other office equipment, i.e. faxes, photocopiers, desks, etc. All remaining property is owned by our subsidiaries. Through them, we employ 95% of companys employees.

The Company conducts and generates all of its revenue and business through six business segments that have been acquired or formed over three years. These segments are MERL School Stores, FirstAccess Partners, Inc., Essex Industries, MERL Manufacturing, MERL Data and JULICO, Inc.

In May 1996, in a tax-free exchange of stock, the Company acquired Essex Industries: it provides lumber and service lumber products.

In June of 1997, the Company formed Johnsons Universal Life Insurance Company to issue Life Insurance products and applied to be domiciled in the District of Columbia. To meet the capital and surplus requirement, the Company bought 10,000,000 shares of Johnsons Universal Life Insurance Company in exchange for 2,135,000 shares of the Company stock. The Company stock was quoted on the OTCBB at $6.00 per share on the day of the exchange and was valued on Johnsons Universal Life Insurances books at $12,810,000. However, on March 1998, the District of Columbia required that the Company post cash in addition to the stock to meet the requirements to be domiciled in the District of Columbia. The Company, in a private offering of securities, sold to the initial director of Johnsons Universal Life Insurance Company 200,000 shares of Johnsons Universal Life Insurance Company stock for $900,000. Each board member agreed to buy the stock over a five-year term.

The Company established FirstAccess Partners, a division in 1997, which received its service mark, FirstAccess Partners^SM in February 1999 and incorporated in the State of Wisconsin in September 1999. Through September 30, 1999, FirstAccess Partners provided private label credit cards to over 7,000 customers in the MERL School Stores Inc. with plans to market the cards to 200,000 by yearend December 2000.

In the process of reapplying, the Company late in November of 1999, formed under the state of Wisconsin JULICO Inc. and transferred to JULICO Inc. 9,800,000 shares of stock it owns in Johnsons Universal Life Insurance Company for 100% of the common stock issued by JULICO Inc. and is currently planning to raise new capital though a private placement or public offering and reapply to the District of Columbia to be domiciled.

In December 1998, the Company acquired business assets for $9,433,857, which the Company paid $6,962,000 in 10% coupon preferred stock and assumed $2,471,857 in debt. In January of 1999, the Company transferred 85% of those assets and debts assumed to MERL School Stores, Inc, which was incorporated in the state of Wisconsin in April of 1999 in exchange for 100% of MERL School Stores stock with the balance of the assets going to MERL Manufacturing and MERL Data. Through September 30, 1999, MERL School Stores operated as a retailer of textbooks, school uniforms and other apparel, supplies and other services for students and parents in private, parochial and public school.

Through September 30, 1999, the division MERL Manufacturing manufactured private school uniforms and other apparel products for MERL School Stores and approximately 25 outside customer wholesale vendors.

The division, MERL Data through September 30, 1999 provided computer support for MERL School Stores and owns the customer list of 380,000 names.

On December 30, 1998, the day the Company closed on the business assets and liabilities for $9,433,851, the Company took a non-cash write down of $4,890,575 in assets. The Company had to revalue the business assets and liabilities bought on December 30, 1998 at $4,543,276. By September 30, 1999, those assets were valued at $5,616,490 and had produced revenue of $2,803,189 with a profit of $10,781. This non-cash write down of assets did not effect the performance of the assets purchased on December 30, 1998 (see Financial Statements).

The Companys Business Plan for growth in the year 2000 relies very heavily on the new marketing paradigm using the FirstAccess Partners^SM card, which will be marketed as a delivery system for financial service products to help families. We are marketing the cards to 379,874 of our current customers in our database and assume 6% of our customer base (or 22,100) will use the card for basic school needs at $5.00 to $100 per month. The Company will attempt to create alliances with strategic business partners to help distribute their financial products through our four e-commerce sites.

www.merlschoolstores.com

www.firstaccesspartners.com

www.julico.com

www.merlmanufacturing.com

The e-commerce websites will allow the Company to increase the traditional four month per year sales cycle to a potential of producing for a full 12-month cycle. While we are endeavoring to expand those four months to 12 months with the FirstAccess Partners^SM card, we will also be attempting to increase our product line and increase our captive customer base from 379,874 to 2,000,000 through a direct mail program.

Since its inception the Company has worked with a shortage of working capital using stock to acquire assets. In May of 1994, the Company raised private capital in the amount of $300,000 and issued 7,615,000 shares of common stock. It acquired in its first operating business in May 1996, in a tax-free stock exchange. The Company filed a 211 and started to be quoted on the OTCBB under the symbol MRLE in December 1996 and funded Johnson Universal Life Insurance Company with company stock in 1997. In December of 1998 the Company purchased business assets from Hanold Bookstores Inc and Hanold Schoolwear Inc. In January 2000, it filed a SB-2 to raise $25,100,000 to fund the business segments. The Company expended in excess of $150,000 in accounting and legal fees in connection with the offering. On May 30, 2000, the Company withdrew its SB-2 because business assets acquired on December 30, 1998 were not audited for two years by the prior owners, and could not be audited because of events beyond the control of the Company. The Company plans to refile in 2001 with two years audited financial on those business assets acquired. The Company is planning to sell three of the six business segments and settle 100% of the law suit derived from the December 30, 1998 business asset acquisition, and raise needed capital through other third-party funding sources.

The proposed operations of the Company will be dependent entirely upon the Company obtaining sufficient capital to conduct its business and settle current lawsuits (see Financial Statements).

The Company anticipates that it will be required to borrow additional money and may be required to issue additional debt or equity securities to satisfy outstanding payables acquired in December 1998. There is no assurance that available investors or lenders can be found or that the terms of any financing which may be available to the Company would become available to the Company would become available on suitable terms.

As of December 31, 1998, the Company had cash on hand in the amount of $31,811 with $6,124,869 in total assets and $3,418,785 in total liabilities. The Company has sales of $1,223,098 with an income from operations of $8,663 and a one time write off of assets of $4,890,575 producing a net loss of ($4,392,034).

The Company had operational expenses of $486,019 and $428,764 from 1998 and 1997, respectively. The losses include a good will write off of ($4,890,575). See Financial Statement.

The Company sales through September 30, 1999 of $3,645,851 and a loss of ($601,789) with assets of $6,857,902 and $4,753,697 in total liabilities giving support that ($4,890,575) write off did not hurt the performance of the Companys assets. However, to the extent that the Company is able to attain profitable operations, the Company must spin-off one or several of its operating business units to raise new capital and become more focused on its core business (acquisitions). The Company may issue new shares of capital stock to pay creditors in that the Companys current litigation may result in the inability to raise new cash from a public offering of securities.

The amount of revenue, operating profit or loss and identifiable assets attributable to each of the Companys industry segments at the present level of operations would not properly represent the results of the Companys business and are not therefore presently significant to an evaluation of the current and expected business of the Company.

The Company was incorporated in the State of Tennessee on May 3, 1994 for the purpose of acquiring or forming businesses with a focus on financial services. In May 1996, it acquired, Essex Industries, a lumber and service business. In June 1997, the Company formed Johnson Universal Life Insurance Company. In March 1998, the Company formed FirstAccess Partners^SM, an electronic platform for credit cards and launched 8000 credit cards in 1999. In December 1998, the Company acquired business assets and formed MERL School Stores, Inc. a retail operation with stores and a website shopping place, www.merlschoolstores.com, Merl Manufacturing, a manufacturer of private school uniforms and MERL Data, a computer information company. (See "Narrative Description of Business Segments.")

The Companys current offices are located at Parkway Corporate Center, 1230 Parkway Avenue, Suite 311, Ewing, New Jersey, 08653. Its phone number is 609-637-9102. Its office facilities consist of approximately 3700 square feet.

The Companys ability to successfully implement its business plan will depend upon attracting new capital and retaining competent employees and management personnel. The Companys ability to attract competent personnel will be dependent on the ability of the Company to provide competitive salaries, benefits, supports and opportunities. The Companys primary key employee is its president, Ed Johnson. If the Company should lose the services of Mr. Ed Johnson, there are no assurances that the Company would be able to provide suitable compensation and/or benefits to attract and retain such personnel that is necessary to conduct its business.

MERL School Stores, Inc., incorporated in the state of Wisconsin on April 4, 1999, is the result of the acquisition of certain assets and scheduled liabilities from Hanold Schoolwear, Inc., and Hanold Bookstores, Inc., under the terms of an asset purchase agreement dated December 30, 1998. MERL School Stores operates as a retailer of textbooks, school uniforms and other apparel, supplies and services. Its markets are the students, parents and faculty of 236 private, parochial and public schools. These schools are mainly in Texas and the Northeastern and Middle Atlantic regions of the United States. The breadth of its exposure to private schools provides a national presence as a private school retailer throughout the United States. MERL School Stores has serviced 33,000 students with sales of $2,841,000, through September 30, 1999. Its corporate home office is located at the Companys location.

Market: There are over 27,000 private and parochial schools in the United States, representing over 6 million students. MERL School Stores has a database of 206,000 students who represent 3.43% of that market. The vast majority of the schools require their students to wear a uniform. In addition, many of these private or parochial schools out-source the operation of their bookstores and the retailing of their textbooks, uniforms and other supplies.

Competition: The private and parochial school uniform and apparel market is extremely fragmented, primarily characterized by small local or regional providers, which are inefficiently operated and extremely undercapitalized. The larger national store and catalogue based retailers which are present in this market have viewed this market as an accommodation sale and not a primary focus of their operations. At the current time, based upon projected 2000 sales, Management estimates that MERL School Stores market share is 235 schools out of 27,000 schools or 1% of the current market. The lack of a dominant national retailer to the private and parochial school market will enable us as a well-capitalized and effectively managed retailer to carve out a dominant market share estimated of 8% by 2005.

Employees: MERL School Stores currently employs 72 full-time employees through September 30, 1999, located primarily in Texas and Pennsylvania. Management anticipates hiring additional employees to accommodate the growth in MERL School Stores business. The positions Management intends to fill include additional Senior Management, Sales Managers, Merchandise Managers, Marketing Managers, Marketing Assistants, and Administrative Assistants.

Anticipated Operations of MERL Store Sales: MERL School Stores plans to raise funds or use its equity capital to discharge 100% of its payables and long term debt which stood at $2,471,857 on September 30, 1999. Once the payables are discharged, the Company plans to expand the website www.merlschoolstores.com. to increase market share from 1% to 33% by 2004.

MERL School Stores school wear business is seasonal. Over the past nine months, the net sales and a majority of the profits have been realized during the third quarter. If MERL School Stores sales were materially different from seasonal norms during the third quarter, its operating results could be materially affected. In addition, as we continue to refine the marketing efforts by experimenting with combining more popular lines of upscale school wear clothes in our retail stores. We expect the balance of our third quarter sales to be higher than fourth quarter retail sales which is the norm for other retail outlets. This should result in different outcomes. Accordingly, results for the individual quarters are not necessarily indicative of the result to be expected for the entire year.

MERL Manufacturing, formerly known as Tres Bon Manufacturing, is an operating division of the Company acquired on December 30, 1998. Located in Eustace, Texas, MERL Manufacturing produces school uniforms for over 24 retail stores and suppliers of school uniforms in addition to MERL School Stores, which through September 30, 1999 it was its largest customer with $352,477 of its $524,723 sales or 67% of sales. MERL manufacturing employs 6 full-time employees with an additional 15 during peak season.

Management intends to hire a sales staff for additional marketing outside of MERL School Stores. However, staff will be increased and equipment purchased only if the demand for MERL Manufacturings products increases. However, management does expect MERL Manufacturing to expand its operations as a result of the anticipated expansion in the other business segments and the marketing on its website, www.MERLManufacturing.com, the 27,000 schools and its 6,000,000 potential customer base.

Market: The uniforms produced by MERL Manufacturing are distributed to the customers through MERL School Stores Distribution Center located in Dallas, Texas. There is a concentration in one main customer, MERL School Stores, a wholly owned subsidiary of the Company. Fabric mills, jobbers, and distributors of notions and accessories supply the raw materials used by MERL Manufacturing. Raw materials are generally available as needed, with occasional back orders related to order size compared with vendor supplies.

Governmental Regulation: MERL Manufacturing is subject to various state and federal regulations regarding, among other things, fire code regulations regarding fabric flammability. All garments must be tagged with the Companys registration number. There is no cost of compliance with acquiring this number.

Anticipated Operations: MERL Manufacturing will try to raise $1,000,000 independent of the Company to aggressively build its customer base through increased attention to sales outside MERL School Stores. MERL Manufacturing will begin to aggressively market its diverse and growing product line through its new website, www.MERLManufacturing.com and a printed catalogue. Additionally, MERL Manufacturing will market its ability to design and manufacture in quantity to outside vendors; private labeling with these vendors names. Currently, MERL Manufacturing is marketing its designed line of outwear to compliment the uniforms worn throughout the private and parochial school system. Growth will also come through direct mail marketing to the current database of potential customers who have requested information from other websites belonging to the Company or its subsidiaries. MERL Manufacturing expects to realize significant growth in both its customer base and revenues over the next five years.

FirstAccess Partners formed as a division in 1997 and incorporated in the State of Wisconsin on September 3, 1999 and received approval for its service mark prior to that date, launched the FirstAccess Partners ^SM credit cards to a portion of its 176,000-person database of potential customers in November 1999, and hired CDS Ltd. to assist in processing and servicing the FirstAccess Partners credit card for outside customer and computer network market support .

On September 30, 1999, through its website, www.FirstAccessPartners.com issued private label credits cards and on November 28, 1999, FirstAccess Partners^SM mailed 8,000 credit cards to potential customers in its 176,000 database. This 8,000 mailing cost $2.18 per card and to reach 176,000 of our database of customers, we estimate and have budgeted $383,680 for the first mailing to 100% of our current database of customers by the end of 2000.

FirstAccess Partners^SM to Apply for Licenses: FirstAccess Partners^SM will apply for a lending licenses in 40 states or outsource the loan origination of that product whereby it will provide cash management type services and discounted products to cardholders. These products will be cross sold to customers of MERL School Stores, JULICO, MERL Manufacturing, and to new customers through the websites, www.MERLSchoolStores.com, JULICO.com, and MERLManufacturing.com, along with targeted direct mail and group sponsored endorsements. This gives FirstAccess Partners^SM the ability to distribute insurance and financial service products along with the cash management type program.

FirstAccess Partners^SM has a commitment from the Company president to fund $700,000 as working capital to offer FirstAccess Partners ^SM cards to its 176,000 database of customers, whereby it will provide a Tuition Loan program. Under the loan programs, FirstAccess Partners will offer: (1) Credit for use on school books and uniforms purchased from any school uniform business in addition to MERL School Stores and through MERL Manufacturing; (2) A line of credit up to 16 years for payment of school tuition through college; which includes a credit on college cost, investment and insurance package to lighten the financial load, protect the family, and retire tuition debt within the same time the student finishes college; (3) Automatic bill payment and (4) Annuity insurance for retirement. The card can also be used as an information system by our customers, in conjunction with a MERL provided computer, customized for such applications and marketed concurrently with the card. The customer can track their account, pay for products, (including financial products, apparel, and school supplies), and have them delivered to their doorstep. The creation and growth of this base of business will afford us many marketing and selling opportunities for additional products and services. MERL has worked for three years developing an electronic financial delivery system that can support a critical mass of customers. The card was launched on September 30, 1999, when we mailed to 8,000 of the 379,874 names with plans to distribute the balance by the end of the year 2000.

Our customer base is a controlled market through the private school system. We project to use this customer base as an opportunity for growth within this market niche to expand from the current 1% to 33% over five years. Thus, we expect to get contracts in 236 private schools and increase those contracts to over 8,900 out of a market size of 27,000 private schools nationwide over five years.

The current 380,000 database of customers provides MERL with a unique opportunity to support the financial needs of individuals within American families from their birth through retirement, and "beyond" (our life insurance products), all by utilizing delivery systems through and with the FirstAccess Partners^SM card. The Company believes it can provide this needed family support via electronic financial delivery systems at the lowest possible cost.

Competition: The financing industry is highly competitive. Many of FirstAccess Partners^SM competitors have greater financial resources, offer the same rates and have greater marketing resources. However, we believe that FirstAccess Partners^SM will be able to compete due to its existing database of customers and its one of a kind proprietary financial model.

Employees: FirstAccess Partners^SM currently has three employees. Management intends to hire seven (7) full-time employees, including a Chief Operating Officer, Comptroller and Marketing Manager with support staff.

Target Markets for the FirstAccess Partners^SM Card: As noted previously, FirstAccess Partners^SM will market its proprietary Card for use within the MERL School Stores retail locations and its website. Prospective cardholders of the FirstAccess Partners^SM Card come from two target markets: (i) the 379,874 customer database of MERL School Stores, and (ii) homeowners with incomes from $80,000 to $150,000 annually.

First Target Group-Existing Customer Database: We will take this customer group through a pre-approval process with the information from the loan servicer, our processing and servicing company. Once approved, we would issue a credit card with a $1,000 limit that can be used to purchase merchandise and cross sell products on any of our following websites, www.merlschoolstores.com, www.merlmanufacturing.com and participation in www.julico.com.

Specifically, FirstAccess Partners^SM intends to be licensed as a lender and operate in the following states: Alabama, Alaska, Arizona, Arkansas, California, Colorado, Connecticut, Delaware, Florida, Georgia, Idaho, Illinois, Indiana, Iowa, Kentucky, Louisiana, Maryland, Massachusetts, Michigan, Minnesota, Mississippi, Montana, Nebraska, Nevada, New Mexico, North Carolina, North Dakota, Ohio, Oklahoma, Oregon, Rhode Island, South Carolina, South Dakota, Tennessee, Texas, Utah, Virginia, Washington, West Virginia, Wisconsin and the District of Columbia.

The Second Target Group Homeowners: The Companys research indicates there are 4,323,601 homeowners in our market. We can determine their credit worthiness using MERL Datas proprietary software in conjunction with the loan servicer's processing procedures and extend them access to our credit under our program.

In addition FirstAccess Partners^SM intends to establish Group Sales and Direct Marketing efforts to concentrate on institutional and organizational groups. It may be appropriate and necessary to pay a royalty to these groups, whose memberships are consistent with our target markets, for their participation in FirstAccess Partners^SM sales efforts. The groups will also be offered a corporate version of FirstAccess Partners^SM commercial Platinum card. This commercial Platinum Card will enable groups to receive lines of credit, working capital, and customized insurance products to meet their associations needs. In return, FirstAccess Partners^SM will have access to the associations membership list for future marketing of our products.

Business Risks: FirstAccess Partners^SM and its operations are subject to varying business risks. These include both state and federal regulatory requirements. In addition, the FirstAccess Partner s^SM is sensitive to capital availability, management fluctuations, and underwriting issues. We plan to package all loans for resale to a larger lender. The Company may also suffer from a shortage of qualified sales staff or lack of access to outside servicing of financial products. Because FirstAccess Partners^SM has a limited history of operations, there is no assurance that FirstAccess Partners^SM will be successful in the implementation of its plans. Additionally, there is no assurance that the public will accept the product or that revenue will ever be generated.

JULICO, Inc. was incorporated in Wisconsin in November 1999 and acquired 9,800,000 shares of Johnsons Universal Life Insurance Company from MERL Holdings Inc.Com in exchange for 9,000 shares of JULICO Inc. thereby giving the Company 100% of the stock issued to JULICO Inc. JULICO Inc. plans to refile Johnsons Universal Life Insurance Company as a Life Insurance company for a certificate of authority from the District of Columbia Department of Insurance and Securities Regulation to act as a life insurance company under the laws of the District of Columbia. Management reserves the right based upon its review of the regulations and capital requirements to apply for a certificate of authority from a different jurisdiction and intends to file applications in 39 states to enable JULICO to provide a variety of insurance products to the existing customer base of the Company as well as new targeted customers in these jurisdictions. JULICO is a Wisconsin corporation and intends to operate from offices located in Washington, DC and Wisconsin.

JULICOs existing capital and surplus, which currently consists of marketable securities of the Company valued at $2,668,750 on a consolidated basis as of September 30, 1999. JULICO will seek to raise additional funds to meet the capital and surplus requirements of the District of Columbia or another selected jurisdiction. By raising an additional $1.5 to $2.0 million JULICO will apply to obtain a certificate of authority in the identified states to secure license authority to operate within those states, to underwrite the sale of its insurance products, and enable the hiring of management and staff to oversee its operations.

Employees: JULICO currently has no employees. All management is currently being provided by the Company.

Competition: The insurance industry is extremely competitive. JULICO plans to target existing Company customers as its primary market. JULICOs secondary market will be households with a net aggregate income between $30,000 and $87,000.

Many of the companies that will be competing with JULICO are larger and have a greater volume of business. Some of these companies offer more diversified lines of insurance and have greater financial resources. In addition, certain competitors have greater distribution capacity than JULICO. While these competitors may be significant on a national level, the Company believes that they will not materially impact JULICOs ability to operate profitably in its target market.

Anticipated Operations of JULICO: As stated above, we intend to raise additional funds to meet the capital and surplus requirements necessary to write insurance to the current 379,874 customers of the Company. JULICO intends to offer life insurance products and an group annuity contract with face amounts of approximately $25,000 to $100,000. Also, we intend to offer these products through the FirstAccess Partners^SM Card or through other electronic or direct billing arrangements with the customer. This should enable JULICO to provide insurance products on a cost-effective basis.

After successful submission and receipt of its certificate of authority, the 39 states in which management intends for JULICO to apply for licensure are: Alabama, Alaska, Arizona, Arkansas, California, Colorado, Connecticut, Delaware, Florida, Georgia, Idaho, Illinois, Indiana, Iowa, Kentucky, Louisiana, Maryland, Massachusetts, Michigan, Minnesota, Mississippi, Montana, Nebraska, Nevada, New Mexico, North Carolina, North Dakota, Ohio, Oklahoma, Oregon, Rhode Island, South Carolina, South Dakota, Tennessee, Texas, Utah, Virginia, Washington, West Virginia, and Wisconsin.

JULICO plans to actively market its products through a Group Sales unit and a Direct Marketing unit. The Group Sales unit will focus on religious groups, educational institutions, professional associations and other groups with a membership primarily comprised of families with aggregated household incomes between $30,000 and $87,000 per year. The Direct Marketing unit will market JULICOs financial services by mail and other direct marketing techniques to potential customers.

Training Programs: We intend to establish training programs for its marketing professionals, managers and sales agents. The Company intends for administrative managers and sales managers to enroll in the National Insurance Association School, the National Marketing Research Association, and the Underwriters Training Council.

Investments: JULICOs investment guidelines shall be consistent with the requirements of the District of Columbia and the states in which it intends to operate subject to those requirements. JULICO will invest the majority of its portfolio in cash or cash equivalents. Currently, JULICO is invested 100% in Company stock, which is on deposit at a national bank.

The Company stock is thinly traded under the symbol "MRLE" and provides little liquidity at this time.

Reinsurance Treaties: We intend to reinsure part of the risk to which it is exposed by its policies. It is customary in the insurance industry for insurance to be ceded through reinsurance treaties. This is to reduce the liability on individual risks and protects against catastrophic losses. Further, reinsurance treaties enable insurers to write greater amounts of business because of the reduction of risk.

JULICO plans to negotiate reinsurance treaties to gain protection against losses in excess of its surplus requirements. We plan to select our reinsurance provider based upon its ratings, prices, and service. JULICO will continue to be liable for losses, as reinsurance does not discharge JULICO from the responsibility of making payments of the full amount of any covered loss. However, reinsurance providers are liable only to the insurer and only for the portion they have assumed.

State Regulation of Insurance Companies: JULICO will be subject to extensive governmental regulation and supervision in each state in which it transacts business. The primary purpose of such regulation and supervision is to provide safeguards for JULICOs policyholders, rather than to protect the interests of its shareholders. Generally, regulation has its foundation in statutes that establish regulatory agencies and delegate to them broad regularity, supervisory and administrative authority.

As part of their routine regulatory oversight process, state insurance departments conduct detailed examinations periodically of the books, records and accounts of insurance companies domiciled in their states. These examinations generally occur once every three years. Such examinations are generally conducted in cooperation with the departments of two or three other states under guidelines set forth by the NAIC. Since JULICO is not yet operating, and thus not reporting, it has no such examinations stated at this time.

State Assessments on Insurers: Typically, state regulatory agencies mandate participation by insurance companies in state insurance guaranty associations. These associations assess solvent insurance companies in order to fund claims of policyholders of insolvent insurance companies. Under this arrangement, insurance companies pay up to 2% of the premiums written for insurance in a given state each year to pay for such claims. In certain states, insurance companies recoup such assessments from policyholders, while in other states these assessments are offset against premium taxes. States experiencing large insolvencies occasionally assess additional fees. The insurance company cannot reflect these fees in its reserves since the likelihood and the amount of any such additional assessment cannot be estimated.

State Regulation of Insurance Holding Companies: Most states have legislation that requires insurance holding companies to register with their state of domiciles insurance regulatory authority. Each insurance company held by an insurance holding company must also follow the same procedures as the insurance company. These laws also require insurance holding companies to provide information annually concerning the operations of the subsidiaries companies within the holding company.

State holding company laws also regulate changes in control of insurance holding companies, notably transactions and dividends between an insurance company and its majority shareholder or affiliates. Although the specific provisions vary, holding company laws generally prohibit a person from acquiring a controlling interest in an insurer unless the insurance authority has approved the proposed acquisition pursuant to applicable regulations. In many states, including the District of Columbia, "control" exists if 10% or more of the voting securities of the insurance holding company are owned or controlled by one person or entity. In addition, the insurance regulatory authority may find that "control" in fact does or does not exist where one person or entity owns or controls either a lesser or a greater amount of such securities. The holding company laws also impose standards on certain transactions with related companies and individuals. This includes, among other requirements, that all transactions be fair and reasonable and that transactions exceeding specified limits receive prior regulatory approval.

Regulation of Dividends and Other Payments from Insurance Subsidiaries: Upon issuance of a certificate of authority to JULICO, we will be an insurance holding company. As such, our ability to meet debt service obligations and pay operating expenses and dividends depends primarily on the receipt of sufficient funds from its operations. The inability to pay dividends in an amount sufficient to meet such obligations would have a material adverse impact on us in general.

The District of Columbias laws require that insurance companies domiciled therein seek regulatory approval prior to paying a dividend, a distribution of cash, or other property if the fair market value thereof, together with that of other dividends or distributions made in the preceding 12 months, exceeds the greater of (i) 10% of the policyholders surplus as of the prior December 31 or (ii) the net income of the insurer of the 12 month period ending as of the prior December 31. The District of Columbias laws also require insurers to seek prior regulatory approval for any dividend paid from other than earned surplus. The District of Columbias statutes define "earned surplus" as the amount equal to the insurers unassigned funds as set forth in its most recent statutory financial statements, including net unrealized capital gains and losses or revaluation of assets. Additionally, following any dividend, an insurers policyholder surplus must be reasonable in relation to the insurers outstanding liabilities and adequate for its financial needs. We currently do not expect such regulatory requirements to impair the ability of JULICO to pay dividends to the Company starting in 2000.

The Company created MERL Data, an operating division of the Company, on December 30, 1998. This division provides all the information and technological support for the Company, and its subsidiaries and divisions. MERL Data is located at the Companys principal office in Ewing, New Jersey. MERL Data operates the large computer system which houses and computes information gathered by the other business segments.

Management believes MERL Datas workload will dramatically increase with the expansion of the business segments made possible through funds from this Prospectus. Therefore, Management plans to purchase a faster, more efficient computer system to handle the anticipated growth of the Company.

Management plans for MERL Data to process all information relating to the expansion of the Company without the necessity of manual data entry. Management anticipates using the MERL Data computer to compute and cross-reference the financial information gathered on each potential customer of JULICO and First Access Partners. Management also plans to share all inventory data for Essex, MERL School Stores and MERL Manufacturing.

Market: There is currently a customer concentration in the Company and its subsidiaries and divisions. Management intends to aggressively market the services of MERL Data to other school uniform businesses, small retail stores, and private and public companies.

Competition: MERL Data may have competition in its market of services to other companies. There are many technological support firms providing similar services. In order to compete in this market, MERL Data will rely upon its extensive knowledge of the clothing industry to set up the MERL Data computers to be user-friendly for retail customers.

Employees: Currently, there are 5 full-time employees assigned to MERL Data. Management intends to hire a Network Administrator, an Account Assistant and an Administrative Assistant.

Capital Improvements: MERL Data will need $1,834,722, whereby $1,480,938 will be used to purchase an IBM AS/400e computer system and $353,784 will be used to purchase software for the system. This system will allow keyless data entry, which we anticipate will triple the data computation of the system.The IBM system will store inventory figures, record purchases made on First Access Cards and tabulate all financial information gathered on JULICOs customers and potential customers.

Training Programs: We intend to hire experienced computer staff to operate the main MERL Data computer. In order to train business segment employees on the IBM system, Management plans to increase the number of computer programmers who will be cross-trained to provide the necessary employee training as well as provide the technical expertise necessary to facilitate growth.

We completed the acquisition of Essex Industries, Inc., ("Essex") a Virginia corporation, on May 31, 1996, which control of is subject to the terms of the Security Agreement Pledge dated May, 1998, to which the Company, as of December 30, 1999 is a party and is in dispute (See, "Financial Statement and Litigation", Section 18). Essex operates a lumber and planing mill located on 78 acres of leased property. Essex processes and re-manufactures logs and rough lumber into finished lumber. Essex primarily markets and sells three products: lumber, shavings and a re-manufacturing service. Essex sells the lumber to treatment plants, the shavings to paper mills and provides re-manufacturing services for over 30 lumber companies.

Essex principal products and services consist of the re-manufacturing and selling of softwood lumber. Essex purchases raw material from companies that sell second grade lumber and timber pursuant to timber contracts and buy spot logs in the market. Its principal supplier is Falling Creek Log Company.

Essex has served customers in the lumber market for ten years operating principally as a planing mill on a fee-for-service basis. It has processed and remanufactured approximately 30 million board feet annually as a service for approximately thirty customers. In June 1996, Essex leased a small sawmill that allowed it to diversify into the resale of lumber. Since that time, we added lumber sales, purchasing timber and reproducing timber into grade "B" and better lumber.

Essex developed a market that consists of several purchasers, mainly treating plants and other lumber companies. During the 1996-year, the percentages of sales for each of Essex product were 81.35% in re-manufacturing services, 14.50% in lumber sales, and 4.15% in shaving sales.

Competition: Several companies with capabilities similar to those of Essex operate within a 300-mile radius of the Essex mill. The lumber industry is highly competitive, and Essex competes mainly with companies that have greater financial resources. Many of these competitors own several operating mills that can produce more products at a lower cost. However, Essex operates a niche business by providing its re-manufacturing services to other lumber companies that do not have such capabilities. Further, Essex has a relatively low cost structure, allowing it to market its services and its products at extremely competitive prices.

Governmental Regulation: Essex operations are subject to a wide range of environmental laws and regulations relating to air emissions, wastewater discharges, landfill operations and hazardous waste management, among others. Compliance with these laws and regulations is an increasingly important factor in the forestry business, and Essex may incur capital and operating costs to maintain such compliance.

Employees: There are currently 28 full-time employees working for Essex. Six of the employees are qualified lumber graders, certified by Timber Products Inspection, Inc., a state agency. With the exception of the office personnel, all of the labor force is cross-trained to operate the various pieces of manufacturing equipment.

Raw Materials: Essex owns 60 acres of land in the same county as the mill. This land has approximately 100,000 board feet of timber. Management estimates the timber is worth approximately $25,000. Essex does not have rights to harvest the timber on the 78 acres it leases

Management also anticipates purchasing the log inventory from within a 100-mile radius of the mill by purchasing daily in the spot market. The combined log inventory purchase should give Essex estimated 12 million board feet of rough lumber to supply to the market at market rates.

Anticipated Operations of Essex: Essex intends to enhance its product line and substantially increase the volume of lumber sales through installation of dry kilns, expanding the saw mill and purchasing more storage space through operating cash flow. We expect production to increase from 1,719,000 board feet processed in 1998 to 17,140,000 in 2000. We estimate that production would increase future lumber sales by 78.37%. However, the Companys outcome in the current lawsuit is unknown.

Subsequently, Essex will decrease the volume of re-manufacturing services in order to capture the significantly higher profit margins associated with the sale of lumber products. For example, in 1998 year to date, profits for re-manufacturing services were $4.62 per 1,000 board feet and lumber sales profits were approximately $278.00 per 1,000 board feet.

The Company at present conducts no foreign operations and has no export sales.

The following is managements discussion of certain significant factors which have affected the Companys financial position and operating results during the periods included in the accompanying audited and unaudited financial statements, and should be read in conjunction with such statements.

In an effort to give investors a well-rounded view of the Companys current financial condition and future opportunities, managements discussion and analysis of the results of operations and financial condition and other sections of this Form 10SB contain "forward-looking statements" about its prospects for the future. Such statements are subject to certain risks and uncertainties that would cause actual results to differ materially from those projected.

The Companys revenues consist of Essex Industries, MERL School Stores and MERL Manufacturing. Through September 30, 1999, the Companys strategy has been to use the Companys capital stock for acquisition and the operating revenues of those companies acquired as operating capital. Since 1997, the Company revenues have grown from $947,348 to $3,654,851 through September 30, 1999. The Company expects to incur significant capital required in all six business units.

Net sales for the year ended December 31, 1998 totaled $1,223,098 up 29% from sales of $947,348 for the year ended December 1997. The increase was due to buying and selling more lumber inventory in 1998 than in 1997. Essex Industries has historically not bought lumber as inventory for resale. However, in 1998 Essex Industries bought 1.7 million board feet of lumber for resale and the results of the resale increased sales by 29%.

Gross profit for the year ended December 31, 1998 was $494,682 or 40.45% of net sales, compared with $436,860, or 46.11% of net sales, at year-end December 31, 1997. The increase in gross profit margin was primarily due to a higher level of lumber sales.

The selling, general and administrative expensed increased 13.4 % to $486,019 or 39.749% of net sales for the year ending December 31, 1998, compared to $428,764 or 45.26% of net sales for the year ending December 1997. The increase in the selling, general and administrative expenses was primarily the result of the acquisition and staffing for increased lumber sales.

Interest expense was $19,308 for the year ending December 31, 1998, compared with $11,606 for the year ending December 31, 1997. Increased borrowing to purchase equipment resulted in an increase in interest cost along with the short-term borrowing through lines of credit, which stood at $41,500 against a $50,000 credit facility as of December 31, 1998 compared with $23,800 at December 31, 1997.

Lumber inventory was $114,812 and apparel inventory was $2,071,972, and raw material was $137,211totaling $2,323,995 for the year ending December 31, 1998, up 2251% from $98,855 year ending December 31, 1997 inventory. The Company through an asset purchase agreement on December 30, 1998 bought $2,071,425 in assets including inventory from Hanold Bookstore and Hanold School Stores in exchange for 692,300 shares of the Companys 10% cumulative preferred stock.

The Company purchased business assets and scheduled liabilities from Hanold Schoolwear Inc. and Hanold Bookstores on December 30, 1998 through the exchange of 696,200 shares of Company 10% cumulative preferred stock with a face value of $10.00 per share being the purchase to $6,962,000, plus the assumption of debt of $2,471,857 bringing the total purchase to $9,433,857. However, the Company December 31, 1998 audit which were finished December 17, 1999, 11 months and 17 days after the acquisition, had to write down the business assets by $4,890,575 and the Company had to revalue the business assets to $6,497,316 from a purchase price of $9,433,857, which produces no impact on operations through September 30, 1999. These $6,497,316 in business assets produced a gross profit of $1,983,561 through September 30, 1999, and income before depreciation and amortization of $159,516.

This write down of assets were taken as an extraordinary one time expense for one day within the year ending 1998 in the amount of $4,890,575 producing a year loss of 4,392,034 for 1998 compared to a net loss of $89,021 for the year ending December 31,1997.

Nine Months Ending September 30, 1999 Compared with Nine Months Ending September 30, 1998

By the nine months of 1999 sales were $3,645,801, which is 365% higher than the first nine months sales of $992,936 for 1998.

Gross profit for the nine months ending September 30, 1999 was $1,983,511 or 54.0% of net sales, compared with $479,729 or 58.38% of net sales for nine months ending September 30, 1998. The increase in gross profit was primarily due to Merl School Stores, First Access Partners, and MERL Manufacturing.

Selling, general and administrative expenses for the nine months ending September 30, 1999 increased 332% to $1,824,045, compared with $422,408 for the nine months ending September 30, 1998. As a percentage of net sales, selling, general and administrative expenses were 50.03% at September 30, 1999 compared with 42.54% in the similar period at September 30, 1998. The increase in selling, general and administrative expenses was primarily the result of the increase in the cost to manage the business segments and legal costs related to the acquisition of December 30, 1998. (See "Legal Proceedings".)

Interest expense for the nine months ending September 30, 1999 was $16,690, compared with $13,914 for the nine months ending September 30, 1998. Increased borrowing through a line of credit stood at $19,500 against a $50,000 credit facility as of September 30, 1999 compared with $41,500 at September 30, 1998.

Net income for the nine months ending September 30, 1999 was a loss of ($601,789) compared with the $18,382 for the nine months ending September 30, 1998. Diluted earnings per share for the nine months ended was ($.06) per share compared with $0.002 per share for the same period. Net loss for the nine months included a non-recurring expense of $301,281 through nine months ending September 30, 1999. (See Note 10, "Other Expenses".)

Account Receivables and Inventory at December 31, 1998, totaled $2,479,675, or 44.4% of the Companys assets. At September 30, 1999, Accounts Receivables and Inventory totaled $2,722,895 or 39.71% of the Companys assets. The liquidation value of these assets is estimated by Management to be approximately $1,361,448.

Cash decreased from $34,072 at December 31, 1997 to $31,812 at December 31, 1998, a change of $2,260. This decrease was due to $233,151 net cash used for operating activities relative to property and equipment, and $93,119 net cash provided by financing activities, from long term financing provided by Southside Bank in Virginia. See "Financial Statement." At September 30, 1999, cash increased from $31,812 at December 31, 1998, to $100,419.

To increase liquidity, the Company plans to raise funds privately through the issue of new shares of stock. We intend to use the funds from the sale of stock in the following order of priority. The first is the pay off of payables as of December 30, 1998 and the second is the long-term liabilities. After this first and second pay out, we will use some funds for working capital and begin to make funds available to the five operating business segments: With the first priority going to FirstAccess Partners^SM. The second priority is MERL School Stores. The third priority is MERL Manufacturing. The fourth priority is MERL Data and the fifth priority going to JULICO, Inc. The new shares, if sold would increase the Companys stockholder equity and increase the book value. As a result, the Company will be able to meet future capital requirements for the next 12 months and into the foreseeable future.

There were no sales in 1997 or 1998, with which to compare.

The selling, general and administrative expenses were $2875 for the year ending December 31, 1998 compared to $140,172 at year ending December 31, 1997. The decrease in the selling, general and administrative expense was a result of post filing costs of application to be licensed.

JULICOs year-end December 31, 1998 balance sheet value was $1,739,210 compared to $12,810,000 at year-end December 31, 1997. The decrease was in value of the Companys stock price quoted and the trade value at closing of each year.

There were no sales for the period September 30, 1998 to September 3, 1999, therefore, there is no comparison.

JULICOs September 30, 1999 balance sheet value was $2,668,750. The increase in value was due to the Companys stock trading price on the close of the period ending September 30, 1999.

It is our intention to combine marketable securities in the Company valued at $2,668,750 on September 30, 1999 with the proceeds of the sale of new stock issued by JULICO Inc. The additional cash capital, plus the plan to liquidate the portfolio securities (2,135,000 shares of common stock of "MRLE") over time, would greatly increase the liquidity of JULICO. Such capitalization would provide not only operating capital, but would provide JULICO the liquidity necessary to cover initial policy claims, working capital, surplus and liquidity needs for the foreseeable future, as well as seek insurance licenses in 39 states.

Should the planned sale of the 2,135,000 shares of MRLE stock not be successful and new stocks issued by JULICO Inc. not be completed by the Company, we may decide to wait to pursue JULICO until such time as capital can be raised, or "activate" JULICO targeted for a smaller market, with a smaller portfolio or create an alliance with another insurance company to co-develop specialty products utilizing that companys licenses. We cannot determine the best course for JULICO at this time. No company has been identified as a possible acquisition or alliance partner at this time.

Inventory in Merl School Stores was $2,071,972 for the year ending December 31, 1998. The Company through an asset purchase agreement on December 30, 1998 bought $9,433,857 in assets and liabilities from Hanold Bookstore and Hanold School Stores in exchange for 692,300 shares of the Companys 10% cumulative preferred stock.

The Companys 1998 audited financial statements have an adjustment in the December 30, 1998 purchase price of $9,433,857 by taking a $4,890,575 write down on these assets as a one time expense at the year ending December 31, 1998. This result is a one-day loss before income taxes of $4,895,575 for the year ending December 31, 1998, as a result the December 30, 1998 purchase. This one time adjustment in the purchase price produced a loss of ($4,318,953) which includes a one time adjustment of ($4,811,768) and a tax credit of $546,292 compared to a net loss of income of ($89,021) at the year ending December 31, 1997. When adding the $4,890,575, $2,400,000 in debt leaves assets at $2,143,282 which includes the customer list value at $1,575,944 leaving long life assets at $567,338 which would be the value of the assets acquired on December 30, 1998 which gives support as to why this one time write down of assets had an affect on the business assets acquired and MERL School Stores in a subsequent event filed for Chapter 11 protection bankruptcy and is in the process of reorganizing the Company.

By the nine months of 1999 sales were $2,830,943.

Gross profit for the nine months ending September 30, 1999 was $1,445,998 or 51% of net sales.

Selling, general and administrative expenses for the nine months ending September 30, 1999 were $775,994 or 27% of net sales.

Net income for the nine months ending September 30, 1999 was $266,166 or 10% of net sales.

Account Receivables and Inventory at the time of acquisition (December 31, 1998) are $2,227,652. At September 30, 1999, Account Receivables and Inventory are $2,467,154, approximately 75.4% of the segments assets based on the performance of MERL School Stores during the first nine months of 1999. The liquidation value (within a 12-month period) of these assets is estimated by Management at 50% or approximately $1,233,577.

Cash at December 31, 1998 were $0 compared to ($50,846) on September 30, 1999. The trade receivables have been paying 60 days late which has caused ($50,846) cash.

The purchase of the MERL School Stores assets resulted from the acquisition of an ongoing business. However, the operations needed capital, which through September 30, 1999 was provided through operating cash flow. MERL School Stores is looking to raise $2,500,000 in proceeds from a private offering to provide the liquidity needed for MERL School Stores.

To help liquidity, MERL School Stores has implemented the FirstAccess Partners^SM credit card to market to its customers for faster access to capital. The card can be used to purchase MERL School Stores products. The card is a device which will provide parents control of their childrens spending habits, while enabling the children to conveniently purchase the supplies they need for school. We anticipate that this will increase the revenue base of the MERL School Stores business segment.

We believe that the current level of inventory that stood at $1,917,862 on September 30,1999 and the acquired equipment is sufficient to meet the needs of our targeted market. The assets and the revenues could be increased without significantly increasing the operating costs of providing the product to the market. However, additional personnel required in the future could necessitate further capitalization.

The seasonality of the business of MERL School Stores limits its operating results to the third quarter of the year when school is beginning. We are adjusting our marketing to add a variety of school wearing apparel in our retail stores. We expect an increase in the fourth quarter by the year 2000, which is the norm for other retail outlets. This should result in a different gross profit income. Results for the last two quarters of the year may not be similar to the first half of the year.

We believe that MERL School Stores will need to raise funding of $2,500,000 to be a going concern and provide its current inventory to meet demands for current sales. Currently it is doubtful it can be a going concern business without the new funds raised.

Since inception FirstAccess Partners^SM has generated no revenue and no expenses to speak of, and there is no comparison for 1998 or 1997. The only revenue and expenses were recorded in 1999.

There were sales for the period September 30, 1999 of $50.00.

There were expenses ending September 30, 1999 of $565.

$700,000 in funding from Ed Johnson would benefit the implementation of FirstAccess Partners to give support to its Tuition Loan Programs of FirstAccess Partners. This working capital and the anticipated cash flow from cardholders would give FirstAccess Partners^SM liquidity deemed sufficient by Management to implement the continued marketing and distribution of its products into the foreseeable future.

Net sales for the year ended December 31, 1998 totaled $1,223,098 up 29% from sales of $947,348 for the year ended December 31, 1997. This increase was due to the purchase and sale of 1.7 million board feet of lumber that was processed and sold in 1998 compared to less than 800,000 board feet of lumber processed and sold in 1997.

Gross profit for the year ended December 31, 1998 was $494,682 or 40.45% of net sales, compared with $436,860 or 46.11% of net sales at year-end December 31, 1997. The increase in the gross profit margin was due to a higher level of lumber sales in 1998.

The selling, general and administrative expense decreased 0.48% to 533,166 or 43.59% of net sales for the year ending December 1997. The decrease in the selling, general and administrative expense was the result of the elimination of consultant expenses.

Interest expense was $19,308 for the year ending December 31, 1998, compared with $11,606 for the year ending December 31, 1997. Increased borrowing to purchase equipment resulted in an increase in interest cost along with the short-term borrowing through lines of credit, which stood at $41,500 against a $50,000 credit facility as of December 31, 1998 compared with $23,800 at December 31, 1997.

Lumber inventory was $114,812 in 1998 compared to $98,855 in 1997. This increase in lumber inventory was due to increased production in lumber.

As of December 31, 1998, Essex has total assets of $460,620 and total liabilities of $299,797. Stockholders Assets at December 31, 1998, is $160,823. At December 31, 1997, Essex has total assets of $387,291 and total liabilities of $239,061, resulting in stockholders equity of $148,228. At September 30, 1999, total assets are $548,727 and liabilities of $252,776 compared to third quarter September 30, 1998 $508,568 assets and $269,544 liabilities. Stockholders Equity at September 30, 1999 is $295,951 compared to $239,024 at September 30, 1998.

The slight increase in assets is due to the acquisition of certain equipment. The purpose of the equipment is to shorten the period of time necessary to temper wood timber before it can be sold.

Net income from operations for the 12 months ending December 31, 1998 was $72,264 in, compared to $55,134 in net income from operations during the 12 months ended December 31, 1997. At September 30, 1999, Essex realized $131,799 in net income from operations, compared to $90,794 at September 30, 1998. Net sales by the Company for the 12 months ended December 31, 1998 were $1,222,097 compared to $947,348 for the 12 months ended December 31, 1997.

For the nine months ended September 30, 1998, Essex realized $263,406 in net income from operations, compared to $41,350 in net income from operations during the nine-month period ended September 30, 1997. Net sales by Essex for the nine months ended September 30, 1998, were $992,937. This compares to $710,511 for the nine months ended September 30, 1997.

During the period of January 1999 to September 1999, Essex sales increased by $282,426. Lumber sales accounted for 90% of this increase. Profit margins for operations increased from $41,350 to $263,406.

From January 1998 to September 30, 1998, production and sales decreased due to a delay in financing the purchase of and installing a wood dry kiln facility. The dry kiln facility would allow Essex to decrease its lumber drying time from 2,880 hours per 1,000 board feet to 24 hours per 1,000 board feet thereby using its current facility to its capacity.

Further, we believe that Essex could be more profitable milling lumber from raw material purchased by Essex, rather than for lumber owned by customers. This vertical integration should enable the Company to mark up the price of the lumber more than the cost of the lumber and the milling costs. We would like to continue purchasing lumber, milling it in the Essex mill, and selling it. To do this, however, Essex will be required to keep more liquid cash on hand for the purchase of the raw timber. Essex may also need additional resources for shipment and delivery and additional personnel.

If fully subscribed, Essex is not scheduled to receive any funds from this Prospectus, in that the Essex Stock is in question of ownership between Charles Weeden and the Company. Until such ownership has been resolved, the Company will not allocate any funds from this Prospectus. However, if the Company is successful in its litigation, it will attempt to use funds from operations to (i) acquire dry kilns and a boiler, (ii) purchase the 78 acres of property that it has been leasing for ten years, and (iii) meet inventory (lumber) needs for the foreseeable future. Essex currently leases a 78-acre mill facility plus operating equipment. The property lease is on a month-to-month basis. Essex owns 60 acres contiguous to the leased property. With sufficient capital, Essex could negotiate a new lease, negotiate the purchase of the 78-acre facility, or build a mill on its own 60-acre lot. Any of these three alternatives could potentially improve the production and profitability of Essex.

Essex primary source of revenues, when acquired, was the milling of customers lumber. We determined that the process could be expedited if a dry kiln were used. The estimated cost of a dry kiln is $1,200,000 and the Company estimates that two dry kilns will be required, and the funds to purchase those dry kilns will come from operating cash flows.

For these periods (December 1996 until December 1997), net income was generated principally from servicing contracts whereby Essex would dry a customers rough lumber, re-saw it and plane it for a fee. After this process the lumber would receive a higher grade, which allows the customer to sell the lumber at a higher price. This service generated 85% of the revenue between December 1996 and December 1997. In December 1997, Essex added a sawmill and purchased logs to be converted to rough lumber. Once converted to rough lumber, it took a long period of time for the rough lumber to dry. The drying process was accomplished by allowing the lumber to set in the open air and dry for 90 to 120 days. At the end of the drying period, the lumber was re-sawed and planed into finished lumber for sale.

Essex only source of liquidity and capital is from operating cash flows, which, with the purchase of equipment to make it more efficient, and inventory to make it more profitable, Essex could run into a cash shortfall unless outside financing is obtained.

Since inception on January 1, 1999 as a division of the Company, MERL Manufacturing has generated revenue through the period September 30, 1999. However, there is no comparison to September 30, 1998.

By the nine months of 1999 sales were $524,723.

Gross profit for the nine months ending September 30, 1999 was $122,162.

Selling, general and administrative expenses for the nine months ending September 30, 1999 were $31,215. As a percentage of net sales, selling, general and administrative expenses were 6% at September 30, 1999.

Net income for the nine months ending September 30, 1999 was $80,314 or 15% of net sales.

MERL Manufacturing operates as a division of the Company in the State of Texas where it manufactures school uniforms and apparel for MERL School Stores.

MERL Manufacturing was acquired as part of the business assets under the Asset Purchase Agreement on December 30, 1998 from Hanold Bookstores, Inc., and Hanold Schoolwear, Inc.

Its physical plant and 12 employees are located in Eustace, near Dallas, Texas. The manufacturing company executes customers orders to manufacture school uniforms for MERL School Stores as well as for 24 other customers. The service is provided to other competitors of MERL School Stores on a cost competitive basis. The Company expects MERL Manufacturing to continue providing manufacturing services for MERL School Stores and others as its primary sources of revenue.

Based on the performance of MERL Manufacturing during the first three quarters of 1999, we believe that the liquidation value (within a 12 month period of time) of these assets is estimated by us to be approximately $87,640. Account Receivables and Inventory at the time of acquisition (December 30, 1998) are $225,112. At September 30, 1999, Account Receivables and Inventory are $243,161, approximately 53% of their assets.

As of September 30, 1999, MERL Manufacturing has total assets of $457,660 and total liabilities of $0.00. Stockholders Equity at September 30, 1999 was $457,660.

We plan to fund $1,100,000 from raising funds privately to the purchase of inventory and for expansion of staff for the purpose of meeting anticipated demands from our marketing efforts.

Since inception on January 1, 1999 as a division of the Company, MERL Data Services has not generated revenue through the period September 30, 1999 and there is no comparison to September 30, 1998.

Selling, general and administrative expenses for the nine months ending September 30, 1999 were $69,531. There were no selling, general and administrative expenses for the nine months ending September 30, 1998; therefore, there is no comparison.

Net income (loss) for the nine months ending September 30, 1999 was ($108,487).

MERL Data is a division of the Company that operates as a provider of information systems technology and support for the Companys subsidiaries and divisions. It provides these services under a contract effective March 31, 1999. As a result, it is its own cost and profit center, but has only one quarter of history.

We would dedicate $1,834,722 to the purchase of equipment and software, and the hiring of additional personnel to staff the expansion of this division. The Company will seek third party debt financing, or an alliance partner to fulfill those functions necessary for the funding of the MERL Data programs.

A high priority of ours is the purchase software. This software, as well as the hardware and consulting services necessary to implement the software, are necessary to track the FirstAccess Partners^SM program. In addition, it will greatly facilitate the provision of other data services to all the divisions and the subsidiaries.

We believe that this division will expand considerably with new capital before year-end and before year-end 2000. We have discussed the provision of MERL Datas services to schools in the MERL Stores network, and even, if possible, extending certain MERL Data services, like technical support, to the families in the MERL School Stores network.

The Company has a website at www.merlholdingsinc.com and is physically located and has its executive offices at 1230 Parkway Avenue, suite 311, Ewing, NJ, where they occupy approximately 3,646 square feet. The Executive Offices are occupied under a lease agreement, which provides for total monthly rental of $6,000 and will expire June 2001.

The following chart shows all persons and groups known to be the beneficial owners and management of more than five percent of issued and outstanding common shares of stock.

Name and Address Amount and Nature Percent

Title of of Beneficial of Beneficial of

Class Owner Owner Class

Common Ed Johnson 8,276,021 73.29%

100 Old York Road

Suite 823

Jenkintown, PA 19046

Common Merle Wood 5,000 .04%

Common Susan Fast 5,000 .04%

No shares of the Company are presently delivered as security to third parties. There are no outstanding options or agreements that would affect control of the Company

Directors are elected by the shareholders to hold office for a one year term or until a successor is elected and qualified.

Executive Officers serve in their capacities at the pleasure of the Board of Directors of the Company.

The Companys controlling shareholder is the CEO and President

The Companys CEO and President is married to G. Carol Johnson, Director and Secretary/Treasurer.

Ed Johnson, Chairman and Chief Executive Officer. Mr. Johnson is the founder, Chairman, President and Chief Executive Officer of the Company, President and Chief Executive Officer of MERL Financial Group and Chairman of Johnsons Universal Life Insurance Company.

Mr. Johnson has served in chief executive positions, since 1971, and has been engaged in a number of significant events. In 1996, he worked with market makers to take Merl Industries of Tennessee, the Companys predecessor, into the public market on the OTC Bulletin Board, where it currently trades under the symbol MRLE.

In 1997, MERL had a capitalization value of $85 million. In 1994, he created the first timber securitization structure along with designing the bond software program for that structure, which was rated AA by Standard and Poors. In 1987, he initiated the first insurance company demutualization procedure in the state of New York that was later used by Equitable Life Assurance Company to convert from a mutual to a stock company. In 1986, he designed the first cash flow bond model that was used for securitizing multifamily mortgages, which was rated AAA by Standard and Poors. In 1984, he served as Chief Executive Officer of Magnolia Savings and Loan.

From 1978-1984, he was Chairman and major stockholder of Johnson-Nelson, an investment banking firm that is currently inactive. From 1983-1989, he was chairman and major stockholder of First Independent Holding Corporation, a holding company which focused on insurance, financing, and structuring collateralized mortgage obligations, as well as providing mortgage banking services for Government National Mortgage Association (GNMA) multifamily lenders. In 1971, he was a co-founder of COE Corporation, a multifamily development and syndication firm that developed over 4,000 apartment units nationwide.

He developed the term forestry recycling in January 1992, while doing research at a mulch company. During his stay he developed business relationships with Chesapeake Paper Company and International Paper. From June 1992, to the present, he has raised $1,200,000 for initial capital and negotiated contracts for more than $41 million for other companies. [Address: 100 Old York Road, Suite 823, Jenkintown, PA 19046, 215-885-2899]

G. Carol Johnson, Director and Secretary/Treasurer. Ms. Johnson is currently, a Senior Vice President at GMAC Mortgage Corporation. Prior to this position, she served as Vice President of the Federal Home Loan Bank of Cincinnati for 13 years, spent two years at the Federal Home Loan Mortgage Corporation and five years with FIHC Financial Corporation as its Corporate Secretary and Chief of Staff. She was appointed by Ohios Governor Celeste to the first Board of the Ohio Housing Finance Agency to represent lending institutions. Ms. Johnson received her Bachelor of Science and Masters Degrees from the University of Cincinnati. She also received a graduate key in Savings and Loans Business from Indiana University. [Address: 100 Old York Road, Suite 823, Jenkintown, PA 19046, 215-885-2899]

Gordon W. Hall, M.D., Director: Dr. Hall joined the Board in August 1999. He graduated from The Johns Hopkins University and McGill University Faculty of Medicine. Following service in the U. S. Army as a flight surgeon, he entered the practice of emergency medicine in Rockford, Illinois. In 1972, he joined the faculty of the University of Illinois College of Medicine at Rockford in the Family Practice Department. He served on the executive committee of the school and the admissions committee of the College of Medicine. He also serves on the Colleges Company Committee and the Employee Compensation Committee.

From 1975 to 1988, Dr. Hall practiced Emergency Medicine. In 1988, he joined Cigna Medical Group in Los Angeles where he became Chairman of the Department of Emergency Medicine. He retired from active practice in August 1996.

Dr. Halls business experience includes ownership of two California yacht sales offices from 1978 to 1985. Since retiring from medicine, he manages his investments full-time. He is a FAA certified flight instructor, with fifteen years experience, and actively teaches. [Address: 7231 Boulder Avenue #808, Highland, CA 92346, 909-862-8238]

Gregory V. Spina, Director: Mr. Spina joined the Board in August 1999. Mr. Spina graduated from Indiana University with BS in Business Administration. Mr. Spina started his present business, Spinas, Inc., in 1987. Spinas, Inc., is a sales and service store for ATVs, personal watercraft and power equipment. The annual sales volume is $4,000,000. He also owns several rental investment properties, and invests on a full-time basis. [Address: 390 State Road, 37 North, Martinsville, IN 46151, 765

342-6335]

Susan Fast, Vice President. Ms. Fast serves as a member of the Senior Management Team of the Company and is V.P. of Sales and Marketing of FirstAccess Partners^SM. Her responsibilities include aiding, implementing and executing the Three-Year Business Plan of the Company in order to reach annual projected earnings. She also maintains internal organizational structure and employee standards. She is implementing a strategy for products to be delivered through the FirstAccess Partners^SM Program, and a sales and marketing plan for the FirstAccess Partners^SM Card. Ms. Fast keeps track of competitors in the debit and credit card service industry. Ms. Fast is also an integral part in development of new products. Working under the terms of agreements with suppliers and vendors, Ms. Fast is responsible for implementing the FirstAccess Partners^SM Card Program.

Ms. Fast was an Account Representative for Olsten Corporation where she increased sales volume, gave sales presentations to major corporations and established the record number of appointments set among all New Jersey Account Representatives. She has won various awards for exceptional sales quotas including, Winner of Sales Contest in June 1998, Winner of Sales Blitz Contest for the State of New Jersey and placed seventh among 139 Account Representatives nationally in July 1998. Ms. Fast was also responsible for the expansion of Olstens new account base, coordinating the recruitment and retention of a professional employee base, preparing and presenting proposals to clients and creating promotional incentive programs for new and inactive accounts.

In 1997, Ms. Fast was also Partnership Supervisor for Union Fidelity Insurance Company, where she supervised Accounts Receivable. In her first year with Union Fidelity, Ms. Fast accomplished a 60% growth in revenue. Ms. Fast also developed new business.

For fifteen years, Ms. Fast was the Sales and Production Manager for Arthurs Interiors in New Jersey. Arthurs Interiors had annual sales revenues of $1,000,000. She recruited and trained administrative staff, achieved an average of 50% growth in sales and revenue yearly and supervised all daily operations. These daily operations included inventory control, manufacture and delivery of products, advertising and promotional development. [Address: 61 Tinder Road, Levittown, Pennsylvania 19056.]

Charles E. Weeden, Sr., Director and President of Essex Industries. Mr. Weeden has been the President of Essex Industries since 1988. Prior to joining Essex, he worked in the lumber and forestry industry for 21 years. He managed several mills including Olde Dominion Timber Products, Holland Forest Products and Walker Land & Lumber Company. Prior to these management positions, he began his career as a trainee at S.R. Walker & Son. Mr. Weeden is certified by the Timber Products Institute as a Lumber Grader for Pine and Hardwood. He is also a certified Hardwood Inspector, L.M.A. Under the terms of the Security Agreement Pledge, to which the Company is a party, Mr. Weeden may not be discharged as President and Chief Executive Officer of Essex, or his compensation or fringe benefits changed without his consent, unless he is terminated for cause as defined in his existing employment agreement. [Address: P.O. Box 248, Millers Tavern, VA 23115, (804) 443-5380.]

There are no assurances that the Company will be able to retain the services of the current members of the Board of Directors or that it will be able to attract other members to serve as directors should vacancies develop.

The Company has conducted due diligence and has no record of existing officers or directors that currently have, and does not believe that they have been involved in, any legal proceedings material to an evaluation of the ability or integrity of any director of officer.

The following table sets certain information with respect to annual compensation paid in 1994 through September 30, 1999 to the Companys only executive officer.

Name and Principal Other Annual Other Annual

Position Year Salary Bonus Compensation Compensation

Ed Johnson, President 1994 None None None None

1995 None None None None

1996 None None None None

Company currently has no plans for compensation, key man insurance, pension, or stock options stock appreciation rights plans.

The Company has made various loans to the officers of the Company totaling $50,000 as of September 1999. Interest on these loans was imputed at the applicable federal rate. Interest due from these loans has been computed to December 31, 1999, and amounts to $3,500.

The Company has made notes to Charles E. Weeden totaling $67,184 as of September 1999. Interest on these loans was imputed at the applicable federal rate. Interest due from these loans has been computed to December 31, 1999, and amounts to $4,702.

The Company has made loans in the amount of $2,000 to its past and present employees. Interest on these loans was imputed at the applicable federal rate. Interest due from these loans has been computed to December 31, 1999, and amounts to $104.

There are no business relationships with officers of directors of the Company

There is no indebtedness of officers or directors to the Company.

The Company is a defendant in a lawsuit filed by the Seller in an Asset Purchase Agreement, seeking recovery of $200,000 as liquidated damages under the terms of the Asset Purchase Agreement. The Companys retained counsel has advised that the matter can be settled for $50,000, which has been accrued by the Company in its financial statement for 1998. If the settlement offer is not accepted and the case goes to trial, the amount of the ultimate loss to the Company, if any, may equal the amount of the liquidated damages sought by the plaintiff.

The Company is a defendant in a lawsuit filed by the Seller and certain other persons associated with the Seller under an Asset Purchase Agreement seeking recovery of certain assets and recovery of unspecified damages for wrongful conduct of the Company. The Company believes that the suit is completely without merit and intends to vigorously defend its position and the Company has not established a reserve. In addition, the Company has brought a counterclaim for $1.6 million against the Plaintiffs for the damages suffered by reason of fraud and breach of contract.

The Company is a defendant along with Educational Sales Company (ESC) in a lawsuit which arose from a dispute as to the amount owed to ESC, a supplier of textbooks, and the amount of the liability assumed, if any, by the Company under an Asset Purchase Agreement. Although the Company believes that the allegations in this suit against the Company are without merit and intends to vigorously defend its position, the Company has established a contingency reserve for litigation of $788,299 in the accompanying financial statement for 1998.

The Company is a defendant in a lawsuit by a creditor of the Seller in the Asset Purchase Agreement dated December 30, 1998. The suit asks recovery of the amount alleged to be owing, plus interest and costs. At this stage, counsel has been engaged to represent the Companys interest in this action and the probable outcome of this action, while undetermined, does not appear overwhelming favorable. Accordingly, a provision for loss in an amount equal to the full amount being sought has been accrued in the accompanying financial statement for 1998.

The Company is a defendant in a lawsuit by a creditor of the Seller in the Asset Purchase Agreement dated December 30, 1998. The suit asks of recovery of $110,467.69, plus interest. At this stage, counsel has not been engaged to represent the Company in this action and the probable outcome of this action, while undetermined, does not appear favorable. Accordingly, a provision for loss of $110,000 has been accrued in the accompanying financial statement for 1998.

The Company is a party defendant to an arbitration proceeding commenced by the Sellers in the Asset Purchase Agreement dated December 30, 1998, alleging breach by the Company of certain obligations in the Asset Purchase Agreement. A preliminary hearing has been held and an order entered setting a schedule for the hearing of this matter in late January 2000 and, in the interim, permitting management to operate the Company in the usual course, but may not pay any special dividends or make any loans to its officers or directors or otherwise dispose of its assets without notification, and the shares of preferred stock issued by the Company to the Buyers shall not be transferred by the Buyers to any person or entity. The parties are to split the costs incurred in the arbitration proceeding. The Company believes that such proceedings and allegations are completely and utterly without substance or merit and intends to vigorously defend its position.

Other

On June 24, 1998, the Chairman of MERL Financial Group, who is also the Chairman of the Company, purchased 125,000 shares of the Companys stock from Charles Weeden in a settlement agreement. The Chairman, at closing of the settlement agreement, signed a promissory note for $ 750,000 to Charles Weeden. However, Weeden did not deliver the 125,000 shares of the Company stock and on November 24, 1999, Charles Weeden made demand for his first payment of $31,250. The Chairman and the Company file suit on December 30, 1999 to rescind the transaction which has put the Essex stock that was pledged as collateral for the note in jeopardy.

To the best of the Companys knowledge, it is not involved in any other litigation.

The Companys common stock has no par value and is quoted in the Over-The-Counter market under the OTC Bulletin Board symbol "MRLE" and the trading markets actual transactions are infrequent. The following table sets forth the range of high and low closing bid quotations by calendar quarters as reported by the National Quotation Bureau, Inc. from December 4, 1996 through September 30, 1999. Bid quotations represent prices between dealers and do not include retail mark-ups, markdowns or other fees or commissions, and do not necessarily represent actual transactions.

There is no bid price on the 10% Coupon Convertible Preferred Stock

The Company believes that there are presently 9,615,000 shares of common equity and 696,200 shares of preferred stock issued and outstanding. The Company believes that the Company has less than 100 stockholders living throughout the United States holding Shares of the Company. The Company does not believe that it has any foreign Shareholders of the Companys Common Shares or Preferred.

To the present, the Company has paid no cash dividends on its Shares. The Company has no present intention of paying cash dividends in the foreseeable future. It is the present policy of the Board of Directors to retain any earnings to provide funds for the growth of the Company. The Board of Directors at its discretion, may decide to change such policy in the future, but the future payments of cash dividends will depend, among other things, upon the Companys future earnings, capital requirements, financial condition and restrictions on the payment of dividends in future loan agreements, if any.

The following table sets out, for all sales within the three years last preceding this Registration Statement by the Registrant of its securities without registration under the Securities Act of 1933, (i) the date, title and amount of securities sold (ii) names of underwriters, if any (iii) the persons to whom the securities were sold (iv) the consideration paid for the securities, whether cash or non-cash and (v) the exemption under the Securities Act of 1933 relief on:

All investors had the opportunity to ask questions and receive answers from all of our officers, directors and employees. In addition, they had access to review all of our corporate records and material contracts and agreements.

The Company is not currently registering any stock under this Form 10.

1. Brief outline of Common Stock and Preferred Stock

1. Dividend Rights

i. Common Stock. Subject to any preferential rights of the Preferred Shares, the holders of the Common Stock are entitled to receive to the extent permitted by law, such dividends as may be declared from time to time by the Board of Directors of the Corporation. There is no obligation to declare dividends of any kind.

ii. Preferred Stock. Pursuant to the Certificate of Incorporation and the Bylaws of the Company, and the resolution of the Board dated May 1, 1999, the holders of the Preferred Shares are entitled to receive the following dividends.

2. Voting Rights

i. Common Stock

ii. Preferred Stock

3. Liquidation
4. Preemptive Rights
5. Liability to further calls or to assessment.

2. The Companys Certificate of Incorporation or Bylaws presently have no provisions which would have an effect on delaying, deferring or preventing a change in control of the Company or that would operate with respect to any extraordinary corporation transaction involving the Company.

1. Debt Securities

No debt securities are being registered at this time.

2. Further Information

The Certificate of Incorporation and Bylaws of the Company authorize the indemnification of all officers and directors and agents of the Corporation. The Company presently does not have officers and directors insurance, although when it becomes commercially available at a reasonable cost, it is expected that it will be purchased as authorized by the Certificate of Incorporation.

MERL HOLDINGS INC.com

For Nine Months Ended, September 30, 1999

Compared to September 30, 1998

The accompanying notes are an integral part of the financial statements.

The accompanying notes are an integral part of the financial statements.

The accompanying notes are an integral part of the financial statements.

The accompanying notes are an integral part of the financial statements.

3. INVENTORY

3. RELATED PARTY TRANSACTIONS

6. INTANGIBLE ASSETS

8. NOTES PAYABLE (continued)

9. CAPITAL LEASES (continued)

10. OTHER EXPENSES

14. INCOME TAXES (continued)

15. PENSION LIABILITY TO FORMER OWNER

18. COMMITMENTS AND CONTINGENCIES (continued)

None.

List of all financial statements filed.

None other than in Item 13 above.

Exhibit Index

The Exhibit Index immediately follows the signature page.

To the Stockholders

MERL Holdings Inc.com

We have audited the accompanying consolidated balance sheets of MERL Holdings Inc.com (the "Company") as of December 31, 1998 and 1997 and the related consolidated statements of income, changes in stockholders equity, and cash flows for the years then ended. These financial statements are the responsibility of the Companys management. Our responsibility is to express an opinion on these financial statements based on our audits.

Except as discussed in the following paragraph, 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.

We were unable to observe the ending inventory at December 31, 1997 and we were unable to otherwise satisfy ourselves as to the quantities on hand at that date. Any misstatement of these balances would affect the financial position at December 31, 1997, the results of operations and cash flows for the years ended December 31, 1998 and 1997.

As discussed in Note 17 of the financial statements, the Company was named a defendant in a lawsuit, which arose from a dispute involving a vendor of an entity acquired by the Company. The Company has recorded a contingency reserve for litigation of $788,299.

As discussed in Note 19 of the financial statements, Essex stock has been pledged as collateral for a promissory note, which is considered to be in default by the holder of the note.

In our opinion, except for the effects of such adjustments, if any, that might have resulted had we been able to observe the physical inventory or otherwise satisfy ourselves as to quantities on hand at December 31, 1997, the financial statements referred to above present fairly, in all material respects, the financial position of Merl Holdings Inc.Com as of December 31, 1998 and 1997 and the results of its operations and its cash flows for the years then ended in conformity with generally accepted accounting principles.

December 17, 1999

Philadelphia, Pennsylvania

/s/
Mitchell and Titus