<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-SB
Amendment No. 2
General Form For Registration of Securities
Of Small Business Issuers Under
Section 12(b) or (g) of
The Securities Exchange Act of 1934
Mighty Mack USA, Ltd.
-------------------------
(Exact Name of Small Business Issuer as specified in its charter)
Colorado 84-1378045
--------------- ------------------------
(State or other (IRS Employer File Number)
Jurisdiction of
Incorporation)
1700 West Government, Suite 102
Brandon, Mississippi 39042
---------------------------------------- ---------
(Address of principal executive offices) (Zip code)
(601) 825-2220
--------------
(Registrant's telephone number, including area code)
Securities to be Registered Pursuant to Section
12(b) of the Act:
None
Securities to be Registered Pursuant to Section
12(g) of the Act:
Common Stock, no par per share par value
<PAGE> 2
References in this document to "us," "we," or "the Company" refer to Mighty Mack
USA, Ltd., its predecessor and its subsidiaries.
PART I
ITEM 1. DESCRIPTION OF BUSINESS.
(a) General Development of Business
We are a Colorado corporation. Our principal business address is 1700 West
Government, Suite 102, Brandon, Mississippi 39042. Our telephone number at that
address is (601) 825-2220.
We were originally incorporated under the laws of the State of Colorado on
July 19, 1996. Our original name was Oxford Financial Holdings, LTD. Since
inception, our primary activity had been directed towards organizational
efforts.
In June, 1999, we acquired all of the issued and outstanding common shares
of Mighty Mack USA, Ltd., a Mississippi corporation (we will refer in this
document specifically to this corporation as the "Mississippi corporation"). We
issued 0.2640366 restricted shares of our common stock for each share of the
Mississippi Corporation. Since a total of 53,022,950 shares of the Mississippi
Corporation were exchanged, we issued 14,000,000 shares in this transaction. As
a part of this transaction, the Mississippi Corporation canceled all of its
outstanding Preferred Stock.
In July 1999, we changed our name from Oxford Financial Holding, Ltd. to
Mighty Mack USA, Ltd.
We have not been subject to any bankruptcy, receivership or similar
proceeding.
(b) Narrative Description of the Business
General
From our original date of incorporation until our transaction with the
Mississippi Corporation, we had no activities and carried no inventories or
accounts receivable. Also, during this period, we carried on no operations and
generated no revenues. Our fiscal year end is June 30th.
Organization
Our Company presently comprises one corporation with one wholly owned
subsidiary.
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(c) Operations
General
Our Company was founded to manufacture, disseminate and further develop
efficient and cost-effective solutions to worldwide environmental pollution
problems. We are committed to the development, manufacture and distribution of
higher quality absorbent technology, developed from recycled, renewable,
agricultural waste materials. In addition, we are committed to the
implementation of cost effective, efficient solutions to industrial
environmental problems.
We manufacture and distribute a line of twelve oil absorbents and
associated products made from non-toxic agricultural waste. These absorbents and
associated products are used for the remediation of hydrocarbons and acids and
effectively absorb and bioremediate oil, grease, and antifreeze, turning
hazardous hydrocarbons into safe, clean byproducts.
Mighty Mack USA, Ltd., our subsidiary, was incorporated in Mississippi in
November 1998. The technology it is utilizing has been prevalent since its
inception in the early 1990's. The products and technology have been used in the
United States as well as in many foreign countries where it has been utilized in
numerous industrial and governmental applications.
Product Services Co., Inc., a Mississippi-based company, originally
developed the technology which we are now utilizing pursuant to a Purchase and
Sale Agreement, with Addenda, which we originally entered into on February 1,
1999. In 1990, the founder of Product Service Co., Inc. had begun searching for
a cost effective and efficient hydrocarbon absorbent and began experimenting
with various cellulose materials and evaluating their use as absorbents. Product
Services Co. developed and patented a process utilizing a by-product, which was
at the time, considered a waste material, from an agricultural processing plant.
The resulting technology yielded a chemically modified cellulose fiber material
with greater absorption and hydrocarbon bio-remediation properties than the
calcined clay products then and currently on the market. Further development led
to the on-site application of the technology for hydrocarbon bio-remediation of
contaminated soil. Product Services manufactured and distributed this technology
in the United States as well as in other countries.
We entered into the Purchase and Sale Agreement with Product Services Co.
and Mr. Ted Dickerson, who has become one of our Directors. Under the terms of
the Purchase and Sale Agreement, we are to acquire substantially all of the
assets of Product Services Co. and Ted Dickerson. This purchase includes the
real estate items of a storage plant and land at Valley Park, Mississippi, as
well as inventory, patents, trademarks, trade names and security interests. The
Purchase and Sale Agreement is for a total of $6,000,000, of which $3,000,000 is
due immediately, and the remaining $3,000,000 is payable as a 3% royalty payment
on the wholesale price of product. The total balance of the royalty payment is
due and payable by January 31, 2002 no matter whether or not sales have
occurred.
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We acquired the defined assets of Products Services Co., Inc. in 1999,
subject to final payment and currently have patent usage rights and the rights
to manufacture and sell certain proprietary products associated with the assets
used to manufacture and develop this technology. Upon full payment pursuant to
the Purchase and Sale Agreement, the full consideration of which has not yet
been fully paid to Product Services Co., Inc, the Mississippi corporation will
have obtained title to the patents, raw materials, equipment, and other assets
of Product Services Co., Inc. We have not been able pay the purchase price of
$3,000,000 to date but have received an extension under Addenda to the Purchase
and Sale Agreement until July 1, 2000 to make this payment. We continue to
operate under these Addenda to the Purchase and Sale Agreement. We plan to raise
funds in a private placement or find a loan to pay the $3,000,000 purchase price
but have no definitive plans at the present time.
Plan of Business
Our goal is to gain brand name recognition and product confidence in the
global retail and industrial markets for our environmental remediation and
hydrocarbon absorption products and to develop and manufacture ecologically
sound and cost-effective solutions to industrial/environmental problems faced by
our world today.
We plan to achieve our goal by focusing on retail and industrial sales of
our products and by establishing a network of manufacturer's representatives and
distributors who will market our products, in addition to making direct sales
initiated by us. We plan to market in Canada as our first international market.
Once we have established a presence in Canada, we will move to Mexico and then
to Europe. We have not begun sales internationally but plan to do so in the
fiscal year ended June 30, 2000.
(d) Markets
Our initial marketing plan will be focused on two market segments: the
retail market; and the industrial wholesale market. The marketing plan has been
developed and is currently being implemented. We are currently marketing our
products through manufacturer's representatives in several parts of the
southeastern United States, who are compensated solely on a commission basis. We
are currently seeking distributors with warehouse capabilities. Manufacturer's
representatives and distributors are chosen based on their business contacts as
well as being highly motivated and showing a strong commitment to our Company
and our product line. We also make direct sales and conduct ongoing marketing
efforts to retail stores and industrial users by attending trade shows,
generating publicity, calling and meeting with customers as well as
demonstrating proper usage and providing technical assistance with respect to
our product line.
At the present time, we are working together with Products Services Co. to
develop a marketing program. Until the assets of Products Services Co. have been
paid for under the Purchase and Sale Agreement, we will purchase all of our
product through Product Services Co. The key requirement of our business plan is
the acquire the assets under the Purchase and Sale Agreement. At that point, we
become the direct manufacturer and the owner of the patents to our products.
Until that time, we will essentially be a manufacturer's representative for
Products Services Co. and its products.
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The Retail Market
Based upon our experience in retail sales of our product, we believe that
the retail market to be the largest individual market for oil absorbent products
throughout the world. Calcined Clay absorbents can absorb up to 50% of their
weight in oil and the byproduct is a toxic waste that must be disposed of in
accordance with local laws.
All of our products are nontoxic, environmentally clean and a safe
agricultural byproduct that can absorb up to six times their own weight in oil
or other contaminants. Our products are nontoxic, biodegradable, safe to humans,
and are environmentally friendly. The market for oil absorbent products has a
large range of distribution in retail automotive part's stores in the United
States. The current market is presently dominated by calcined clay products,
which are strip mined and contain crystalline silica, a known carcinogen.
The Wholesale Market
The U.S. and Canada will be divided into regions. The U.S. will be divided
into multiple regions, with Master Distributors and subdistributors in each
area. Master Distributors work with sub-distributors, making calls, giving
demonstrations, and also giving product familiarization and usage classes. The
Master Distributor will be compensated based on volume of sales. The
sub-distributors deal with the end users; these customers may be oil field
supply houses, environmental clean up companies, military, paper mills and other
various industries. The sub-distributors will be compensated percentage wise,
based on volume of sales by the Master Distributor.
We also plan to use manufacturer's representatives in those areas which we
do not consider to be suitable for Distributors or subdistributors. We will
compensate manufacturer's representatives on a commission basis to be negotiated
with each manufacturer's representative.
We currently have no Master Distributors or subdistributors but are
generating sales internally and through manufacturer's representatives.
(e) Raw Materials
The use of raw materials is a material factor in our operations. Our raw
materials are waste cotton fibers known as "linters." These are fuzzy part of
the cotton seed. These raw materials are a byproduct of the cotton manufacturing
process. We believe that there is an adequate supply of raw materials to meet
all of our requirements under our plan of operation. We do not expect this
situation to change in the near future. Our products are produced from raw
materials which are generally readily available from a number of suppliers. The
main
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component for its oil absorbent products are agricultural waste and byproducts
obtained from a major supplier in the southern United States. We believe that
the loss of this major supplier would have a material effect on our operations.
Delta and Pine Land Company is the largest source of cotton linter in our area.
The loss of this major supplier may cause an increase in incoming freight costs,
the amount of which would depend on the distance to the alternative source and
which source is utilized. A significant increase in our freight costs would
affect our profitability since freight costs are a significant factor in the
pricing of our products. Our operations could be adversely affected if a general
shortage of raw material was to occur and persist, but the likelihood of this
happening is believed to be remote. To date, we have not experienced any serious
production delay because of failure of our supplier to provide raw materials.
There are alternative sources of raw material other than cotton linter, although
these other sources are not as efficient as absorbants.
We utilize raw materials from Delta and Pine Land Company through an
arrangement with Product Services Co., Inc. Although there are other sources of
raw materials, we believe that the inability to utilize raw materials from Delta
and Pine Land Company could have a materially adverse effect upon our ability to
produce finished product. At the present time, Product Services Co., Inc. has a
stockpile of raw materials which we are utilizing and plan to utilize for the
near future. However, over the long term, Delta and Pine Land Company will
remain a significant source of raw materials.
(f) Customers and Competition
The current market is presently dominated by calclined clay products, which
are strip mined and contain crystalline silica, a known carcinogen. In 1986, the
State of California enacted the Safe Drinking Water and Toxic Enforcement Act of
1986, Cal. Health & Safety Code Section 25249.5 et seq., most commonly known as
Proposition 65, listing a number of chemicals, including crystalline silica,
which are known to cause cancer. The calcined clay products therefore must
comply with the requirements of Proposition 65. Proposition 65 requires any
consumer products containing one of the listed chemicals to contain the
following message: "WARNING: This product contains a chemical known to the State
of California to cause cancer." Similarly, the language for occupational
exposure warning signs where employees are working with such products must read
as follows: "WARNING: This area contains a chemical known to the State of
California to cause cancer." We believe that we have a competitive advantage
because our products do not require hazardous warning labels. According to the
Centers for Disease Control and Prevention, overexposure to crystalline silica
can cause lung disease known as silicosis and inhalation has been associated
with other diseases such as bronchitis and tuberculosis.
Calcined clay products are the primary competition in the industrial and
retail marketplace. These Calcined clay products are manufactured from
non-renewable resources and generate unwanted waste streams in both manufacture
and use. Our products are derived from renewable resources and utilize
agricultural waste and byproducts that would otherwise create a disposal volume.
Our products are biodegradable and safe for the environment. We believe that
this environmental sensitivity coupled with our products' better performance in
use
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will take on more importance as environmental groups and state and local
agencies increase environmental regulation and accountability.
At the present time, the industry in which we are competing is broad and
fragmented, with no single company or groups of companies dominating. We
estimate that there are over fifteen companies whose products are in direct or
indirect competition to our products. There are a number of established
companies that are larger and better capitalized than our Company and/or have
greater personnel, resources and technical expertise. In view of our combined
extremely limited financial resources and limited management availability, we
believe that we will be subject to intense competition for market share.
However, while we may have competitive disadvantages compared to many of our
competitors, we believe that we can successfully compete because our products
absorb more efficiently than other competitive products, are biodegradable, and
can biodegrade the contaminants. There can be no guarantee, however, that we
will be able to successfully compete or to become profitable.
(g) Backlog
At June 30, 1999, we had no backlogs.
(h) Employees
As of the date hereof, we had six (6) employees. We plan to hire additional
employees in the future as our business requirements may necessitate.
(i) Proprietary Properties
Our product line constitutes our primary properties, which includes a line
of twelve oil absorbents and associated products made from non-toxic
agricultural waste and byproducts. We have patent and trademark usage rights,
pursuant to the Purchase and Sale Agreement with Product Services Co., Inc. to
manufacture and sell these absorbents and associated products and to use the
"Gator" trade name. These products are as follows:
<TABLE>
<CAPTION>
Product Primary Application
------- -------------------
<S> <C>
Oil Gator soil cleanup/bioremediation; hydrocarbon
spills
Floor Gator spills on hard surfaces
Cell-u-sorb spills on water
Acid Gator acid spills
Gator Booms containment on water or land
</TABLE>
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<TABLE>
<S> <C>
Gator Socks containment on water or land
Cellulose Pads spills on hard surfaces
1%Poly/Cell Pads spills on water or land
Gator Wash industrial all-purpose cleaner
Gator Wash H.D. Heavy duty industrial cleaner
Gator Trap grease trap/waste water applications
Emergency Response Kits oil spills
</TABLE>
Product Services Co. owns US Patent No.5,609,667, issued for twenty years
commencing October 19, 1995. Product Services Co. owns Australia Patent
No.687186, issued for twenty years commencing March 20, 1995. Both of these
patents relate to "a method of treating hydrocarbon contaminated soils
comprising (a) providing a composition comprising a cellulose derived from an
oil-bearing plant, and containing bacteria indigenous to said cellulose and at
least one nutrient; (b) applying said composition of (a) into hydrocarbon
contaminated soil by tilling or disking; (c) wetting the soil subsequent to the
application of (b) to maintain a continuous moist condition in said soil; and
(d) leaving said soil in said continuous moist condition for a period of time."
The patents are being amortized over a forty year period.
Product Services Co. owns US Trademark Registration No. 1,889,514 for Oil
Gator. In addition, Product Services owns the following unregistered trademarks:
Oil Gator, Floor Gator, Acid Gator, Cell-U-Sorb, Gator Wash and Gator Wash HD,
Gator Trap, Oil Gator Stage II, Gator Booms and Socks, Gator Pads, Spill Kits,
Enretech, and all logos relating to the registered and unregistered trademarks.
Our final acquisition of these properties is contingent upon payment of the
full consideration to Product Services Co., Inc. has not yet been fully made
under the terms of that Purchase and Sale Agreement and addenda thereto.
(j) Government Regulation
We are not subject to any material governmental regulation or approvals.
(k) Research and Development
Our current research and development activities include the refining of
current, as well as the development of new, sorbent and bioremediation products
and related manufacturing processes, for both the industrial and retail markets.
Analyzing and testing competitive products,
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and determining new applications and uses for our products, are also functions
of our research and development department. We will expense general research.
Development costs will be expensed, unless certain criteria are met, in which
case they are capitalized. All expenditures incurred for the acquisition of
license rights, patents and trademarks, development of sorbent and
bioremediation processes and products costs are capitalized. When technology is
no longer in use, related unamortized costs are written off. During the period
from inception through June 30, 1999, we incurred no research and development
costs. When we undertake research and development in the future, we plan to
expense as much of the costs as possible.
(l) Environmental Compliance
At the present time, we are not subject to any material costs for
compliance with any environmental laws.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS.
Forward-Looking Statements
The following discussion contains forward-looking statements regarding our
Company, its business, prospects and results of operations that are subject to
certain risks and uncertainties posed by many factors and events that could
cause our actual business, prospects and results of operations to differ
materially from those that may be anticipated by such forward-looking
statements. Factors that may affect such forward-looking statements include,
without limitation: our ability to successfully develop new products for new
markets; the impact of competition on our revenues, changes in law or regulatory
requirements that adversely affect or preclude customers from using our products
for certain applications; delays our introduction of new products or services;
and our failure to keep pace with emerging technologies.
When used in this discussion, words such as "believes", "anticipates",
"expects", "intends" and similar expressions are intended to identify
forward-looking statements, but are not the exclusive means of identifying
forward-looking statements. Readers are cautioned not to place undue reliance on
these forward-looking statements, which speak only as of the date of this
report. Our Company undertakes no obligation to revise any forward-looking
statements in order to reflect events or circumstances that may subsequently
arise. Readers are urged to carefully review and consider the various
disclosures made by us in this report and other reports filed with the
Securities and Exchange Commission that attempt to advise interested parties of
the risks and factors that may affect our business.
Results of Operations
In June, 1999, we acquired all of the issued and outstanding common shares
of Mighty Mack USA, Ltd., a Mississippi corporation (the "Mississippi
corporation"). We issued 0.2640366 restricted shares of our common stock for
each share of the Mississippi Corporation. Since a total of 53,022,950 shares of
the Mississippi Corporation were exchanged, we issued
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14,000,000 shares in this transaction. As a part of this transaction, the
Mississippi Corporation canceled all of its outstanding Preferred Stock.
In July 1999, we changed our name from Oxford Financial Holding, Ltd. to
Mighty Mack USA, Ltd.
With the acquisition of the Mississippi Corporation, we have begun
generating revenues from operations. For the period from inception through
fiscal year end, June 30, 1999, these revenues have been minimal. We had total
revenues for the period of $4,736. Our total operating expenses were $263,754
which consisted of $170,804 in operating expenses, $71,616 in general and
administrative expenses, and $21,334 in interest expenses. As a result, we had a
net loss of $260,192 for the period. This was a loss of $0.10 per share. Our
revenues as of the period ended September 30, 1999 were $12,825. Our total
operating expenses were $679,638 which consisted of $416,169 in operating
expenses, $242,135 in general and administrative expenses, and $21,334 in
interest expenses. As a result, we had an net loss of $670,738, or $.03 per
share for the quarter. Since the last fiscal year was our first year of
operations, we have no comparable figures for the previous year.
Product Services Co., Inc., a Mississippi-based company, originally
developed the technology which we are now utilizing pursuant to a Purchase and
Sale Agreement, with Addenda, which we originally entered into on February 1,
1999. We entered into the Purchase and Sale Agreement with Product Services Co.
and Mr. Ted Dickerson, who has become one of our Directors. Under the terms of
the Purchase and Sale Agreement, we are to acquire substantially all of the
assets of Product Services Co. and Ted Dickerson. This purchase includes the
real estate items of a storage plant and land at Valley Park, Mississippi, as
well as inventory, patents, trademarks, trade names and security interests. The
Purchase and Sale Agreement is for a total of $6,000,000, of which $3,000,000 is
due immediately, and the remaining $3,000,000 is payable as a 3% royalty payment
on the wholesale price of product. The total balance of the royalty payment is
due and payable by January 31, 2002 no matter whether or not sales have
occurred.
We acquired the defined assets of Products Services Co., Inc. in 1999,
subject to final payment and currently have patent usage rights and the rights
to manufacture and sell certain proprietary products associated with the assets
used to manufacture and develop this technology. Upon full payment pursuant to
the Purchase and Sale Agreement, the full consideration of which has not yet
been fully paid to Product Services Co., Inc, the Mississippi corporation will
have obtained title to the patents, raw materials, equipment, and other assets
of Product Services Co., Inc. We have not been able pay the purchase price of
$3,000,000 to date but have received an extension under Addenda to the Purchase
and Sale Agreement until July 1, 2000 to make this payment. We continue to
operate under these Addenda to the Purchase and Sale Agreement and plan to do so
until we can raise funds in a private placement or find a loan to pay the
$3,000,000 purchase price. We hope to raise these funds by June 30, 2000.
However, we have no definitive plans at the present time to do so.
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Assuming that we can finally acquire all of the rights and assets under the
Purchase and Sale Agreement which we have entered into, we believe that the
revenues and expenses from operations will remain relatively constant during the
coming fiscal year as we implement our business plan. We believe that it will
take at least one year from the date finally acquire the rights and assets under
Purchase and Sale Agreement see a substantial increase in revenues over the
amounts which we have been able to generate. However, if we are unable to
complete the Purchase and Sale Agreement, our future operations may be seriously
impaired. In any case, we believe that we will not be profitable during the
current fiscal year. Our primary focus for this fiscal year will be to complete
the acquisition under the Purchase and Sale Agreement and to build brand name
recognition and product loyalty.
Our subsidiary, Mighty Mack USA, Ltd., a private Mississippi Corporation,
was recently named a defendant in a lawsuit commenced in Louisiana by Alpha
Distributing Company, Inc. The lawsuit claims breach of contract concerning
certain sales and distribution rights of the Mississippi company's products,
which rights were set forth in a written contract. The case has been continued
without a date for further proceedings. Given this situation, we do not believe
that there is a reasonable probability of a loss to us in this case. This case
was pending in the 22nd Judicial District Court, Parish of St. Tammany, State of
Louisiana.
We have sustained substantial losses since inception. Our accountants have
issued a "going concern" footnote on our financial statements. In order for us
to continue to operate, we must have an infusion of additional capital and a
final closing of the Purchase and Sale Agreement. If we cannot achieve both
goals, we may not be able to continue our operations and would look at some
other type of arrangement, such as a merger, to survive. We cannot guarantee the
success of any of these options.
Liquidity and Capital Resources
As of the end of the fiscal year and the first quarter, we had no cash or
cash equivalents. There was no significant change in working capital during the
fiscal year. In August 1999, we completed a private placement and raised
$691,000 and received loans from two of our affiliates of an additional
$100,000, all of which will be used to fund our operations.
We believe that we still have inadequate working capital to pursue all of
our planned activities other than to internally expand the operations. We plan
to raise additional capital during the coming fiscal year.
We do not intend to pay dividends in the foreseeable future.
Year 2000 Compliance
Background
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In the past, many computers, software programs, and other information
technology ("IT systems"), as well as other equipment relying on microprocessors
or similar circuitry ("non-IT systems"), were written or designed using two
digits, rather than four, to define the applicable year. As a result,
date-sensitive systems (both IT systems and non-IT systems) may recognize a date
identified with "00" as the Year 1900, rather than the year 2000. This is
generally described as the Year 2000 issue. If this situation occurs, the
potential exists for system failures or miscalculations, which could impact
business operations.
The Securities and Exchange Commission ("SEC") has asked public companies
to disclose four general types of information related to Year 2000 preparedness:
our Company's state of readiness, costs, risks, and contingency plans. See SEC
Release No. 33-7558 (July 29, 1998). Accordingly, we have included the following
discussion in this report, in addition to the Year 2000 disclosures previously
filed with the SEC.
State of Readiness
We believe that we have identified and completed all significant IT systems
and non-IT systems that require modification in connection with Year 2000
issues. Internal and external resources have been used to make the required
modifications and test Year 2000 readiness. The required modifications are
complete.
In addition, we have been communicating with customers, suppliers, banks,
vendors and others with whom we do significant business (collectively) our
"business partners") to determine their Year 2000 readiness and the extent to
which we are vulnerable to any other organization's Year 2000 issues. Based on
these communications and related responses, we believe that modifications are
complete. We continue monitoring the Year 2000 preparations and state of
readiness of our business partners.
Costs
The total cost Year 2000 activities has not been and is not anticipated to
be material to our financial position or results of operations in any given
year. Our total costs of addressing Year 2000 issues have been less than
$10,000.
Risks
We utilize IT systems and non-IT systems in various aspects of our
business. Year 2000 problems have not disrupted operations to date, and we do
not expect that any such disruption would have a material adverse impact on our
operating results. We are also exposed to the risk that one or more of its
customers, suppliers or vendors could experience Year 2000 problems that could
impact the ability of such customers to transact business or such suppliers or
vendors to provide goods and services. Although this risk is lessened by the
availability of alternative suppliers, the disruption of certain services, such
as utilities, could, depending upon the extent of the disruption, potentially
have a material adverse impact on our operations.
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Contingency Plans
Given the lack of impact by Year 2000 problems, we do not believe that we
must develop further contingency plans for our IT systems and non-IT systems
requiring Year 2000 modification over what we have already implemented. In the
event of any Year 2000 problems with our backup systems, suppliers, and vendors,
we have identified additional backup systems, suppliers and vendors but do not
believe that we will be required to use them.
ITEM 3. DESCRIPTION OF PROPERTIES
As of December 1, 1999, our business office was located at 1700 West
Government, Suite 102, Brandon Mississippi 39042. We pay $600 per month in rent
for this office space of approximately 1100 square feet to an unaffiliated third
party under a two year lease ending November, 2002. This facility is adequate to
our current needs, including after we close the Purchase and Sale Agreement.
Our manufacturing plant, which is located in Flora, Mississippi, contains
approximately 40,000 square feet, but is not currently being utilized by us
because we are purchasing all of our inventory from Product Services Co. This
plant is currently being rented from Mr. Ted Dickerson, one of our Directors. We
pay no rent on this plant for three years and have no plans to purchase the
facility from Mr. Dickerson. After we close the Purchase and Sale Agreement, we
plan to begin manufacturing at this plant, which should be adequate for our
needs for the foreseeable future. Finally, we own the office furniture, computer
system all manufacturing and packaging equipment in our business. Otherwise, we
own no other properties.
We currently perform no research and development activities but plan to
limited research and development at the Flora, Mississippi plant after we close
the Purchase and Sale Agreement.
Item 4. Security Ownership of Certain Beneficial Owners and Management
The following sets forth the number of our shares of no par value common
stock beneficially owned by (i) each person who, as of September 30, 1999, was
known by us to own beneficially more than five percent (5%) of our common stock;
(ii) our individual Directors and (iii) our Officers and Directors as a group.
On September 30, 1999, there were a total of 16,400,262 Common shares issued and
outstanding.
<TABLE>
<CAPTION>
NAME AND ADDRESS AMOUNT AND NATURE OF PERCENT OF
OF BENEFICIAL OWNER BENEFICIAL OWNERSHIP (1)(2) CLASS
- ------------------- --------------------------- ----------
<S> <C> <C>
Robert C. Furrer 6,908,335(3) 42%
1700 West Government
Suite 102
Brandon, Mississippi 39042
</TABLE>
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<TABLE>
<S> <C> <C>
Martin F. Schneider 6,656,795(4) 40.5%
1700 West Government
Suite 102
Brandon, Mississippi 39042
Charles K. Washburn 28,000 .2%
1700 West Government
Suite 102
Brandon, Mississippi 39042
Joseph B. LaRocco 150,000(5) .9%
149 Locust Ave.
Suite 107
New Canaan, Connecticut
06840
Theodore H. Dickerson -0- -0-
1700 West Government
Suite 102
Brandon, Mississippi 39042
Billie C. Furrer -0-(4) -0-
1700 West Government
Suite 102
Brandon, Mississippi 39042
All Officers and Directors
as a Group (Six persons) 13,743,130 83.6%
</TABLE>
(1) All ownership is beneficial and on record, unless indicated otherwise.
(2) Beneficial owners listed above have sole voting and investment power with
respect to the shares shown, unless otherwise indicated.
(3) Owned of record by Mr. Furrer. Does not include 66,010 shares owned of
record by Mr. Richard W. Furrer, for which Mr. Robert C. Furrer and Mrs.
Billie C. Furrer disclaim any beneficial ownership and do not believe that
they are deemed beneficial owners under Rule 13d-3 of the Securities
Exchange Act of 1934, as amended.
(4) Owned of record by Mr. Schneider. Does not include 26,404 shares owned by
Marilyn Schneider, 13,202 shares owned in Joint Tenancy by Marilyn
Schneider and Jeremy Blaufarb, and 13,202 shares owned in Joint Tenancy by
Marilyn Schneider and Jason Blaufarb, for which Mr. Martin Schneider
disclaims any beneficial ownership and does
14
<PAGE> 15
not believe that he is deemed a beneficial owner under Rule 13d-3 of the
Securities Exchange Act of 1934, as amended.
(5) Mr. LaRocco resigned from all offices on December 7, 1999.
ITEM 5 DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS.
Our Directors and Executive Officers, their ages and present positions held
in the Company are as follows:
<TABLE>
<CAPTION>
NAME AGE POSITION HELD
-------------------------- --- ------------------------
<S> <C> <C>
Robert C. Furrer 53 Chairman, CEO, and Director
Martin F. Schneider 48 Vice Chairman, CFO, and Director
Charles K. Washburn 29 President and Director
Theodore Dickerson 60 Director
Billie C. Furrer 53 Secretary-Treasurer
</TABLE>
Our Directors will serve in such capacity until the next annual meeting of
our Company's shareholders and until their successors have been elected and
qualified. The officers serve at the discretion of our Directors. Robert C.
Furrer and Billie C. Furrer are husband and wife. Otherwise, there are no family
relationships among our officers and directors, nor are there any arrangements
or understandings between any of the directors or officers of the Company and
any other person pursuant to which any officer or director was or is to be
selected as an officer or director.
Robert C. Furrer has been the Chief Executive Officer since June, 1999. Mr.
Furrer is the former CEO of Furrer and Associates Consolidated Services, Inc. an
insurance marketing and development company. Mr. Furrer has over 20 years in
market development and sales. He is a member of the Permanent President Club and
recipient of the 10th degree Grand Diamond award in sales marketing and is a
member of the Million Dollar Round Table. Mr. Furrer was the CEO and owner of
Lake Slip Away Raceway and Resort, a two hundred-acre facility in Lena, MS. On
May 14, 1998, Mr. Furrer filed for reorganization under Chapter 11 of the
Bankruptcy Code in the U.S. District Court for the Southern Mississippi, Case
#98-02448JEE. The United States Bankruptcy Court of the Southern District of
Mississippi has confirmed the plan of reorganization for Mr. Furrer..
Charles K. Washburn has been our President since June, 1999. Mr. Washburn
is an Environmental / Industrial Microbiologist and a graduate of Mississippi
State University, where he received a Bachelor of Science in Applied
Microbiology and a minor in Chemistry.
15
<PAGE> 16
Immediately following graduation, he dedicated two years of postgraduate
research, focused primarily around the microbial utilization of hydrocarbons and
the bioremediation of hydrocarbons in soils, towards completion of a Masters of
Science degree at Mississippi State University. From 1994 to 1997 Mr. Washburn
was employed by Environmental Remediation Technology as an Environmental
Microbiologist and Director of Technical Services where he developed and
implemented applications for the implementation of the products developed by Mr.
Dickerson, specializing in "in-situ" biological remediation of contaminated
soils, bio-augmentation, land farming and other bioremediation technologies. He
was formerly employed by Pfizer Pharmaceuticals as a Sales Representative from
1997 to 1998. From 1998 to June, 1999, Mr. Washburn was employed by Companion
Technologies as a Computer Systems Sales Representative.
Martin F. Schneider has been the Chief Financial Officer since June, 1999.
Mr. Schneider, in addition to having a Ph.D. Degree from Columbia University in
Economics, taught Economics at the London School of Economics in 1977 through
1978. Mr. Schneider has extensive merger and acquisition and investment banking
experience and was employed by Smith Barney as a Vice President from 1994 to
1996. From 1996 to 1997 PaineWeber employed him as a Vice President. Mr.
Schneider left PaineWeber to form Trans-Global Financial Holdings, LLC. , a
private investment company, where he served as its President and CEO until he
joined us.
Theodore "Ted" Dickerson has been one of our Directors since June, 1999. He
is the original inventor of the process by which our products for the
remediation of hydrocarbons and acids are manufactured. Under the terms of a
Purchase and Sale Agreement, with Addenda, we are purchasing the patent, land,
buildings, raw materials and trademarks from Mr. Dickerson and his company,
Product Services Company, Inc. Mr. Dickerson received a Bachelor of Science in
Chemical Engineering from The University of Mississippi in 1961. He was employed
by Colombian Carbon Company / Cities Service Company and worked twenty-three
years in various managerial positions. He retired in 1984 as Senior
Vice-president of worldwide manufacturing operations to pursue his private
business. He holds both product and process patents in fields of electromagnetic
separation, carbon blacks, iron oxides, drilling mud additives and a line of
environmentally friendly products produced from agricultural by-product streams.
Billie C. Furrer has been our Secretary since June, 1999. Mrs. Furrer has
over twenty years experience in bookkeeping and office management. Prior to her
appointment as Secretary, she served as Vice-president and General Manager for
Furrer & Associates Consolidated Services, Inc. Mrs. Furrer was the General
Manager of Lake Slip Away Raceway and Resort, a two hundred-acre facility in
Lena, MS. On May 14, 1998, Mrs. Furrer filed for reorganization under Chapter 11
of the Bankruptcy Code in the U.S. District Court for the Southern Mississippi,
Case #98-02448JEE. The United States Bankruptcy Court of the Southern District
of Mississippi has confirmed the plan of reorganization for Mrs. Furrer..
16
<PAGE> 17
ITEM 6. EXECUTIVE COMPENSATION
None of our executive officers received compensation in excess of $100,000
during the fiscal years ended June 30, 1998 or 1999. Compensation does not
include minor business-related and other expenses paid by us. Such amounts in
the aggregate do not exceed $10,000. None of our executive officers received any
compensation for the fiscal year ended June 30, 1998. For the fiscal year ended
June 30, 1999, Our Chairman, Robert C. Furrer, received a salary of $24,000 per
annum. For the fiscal year ended June 30, 1999, Martin F. Schneider, our
Vice-Chairman and Director, received a salary of $24,000 per annum, Charles K.
Washburn, our President and Director, received a salary of $28,461.52 per annum,
Billie C. Furrer, our Secretary, received a salary of $12,000 per annum, and
Joseph Brown, a former Officer and Director, received a salary of $40,384.57 per
annum.
We have granted no shares of our capital stock as additional compensation
for the fiscal years ended 1998 and 1999.
For the fiscal years 1998 and 1999, we did not pay our health care for our
officers and directors. We have no pension plan. We have no plans or agreements
which provide compensation on the event of termination of employment or change
in our control.
We do not pay members of our Board of Directors any fees for attendance or
similar remuneration, but reimburse them for any out-of-pocket expenses incurred
by them in connection with our business. We may compensate them in the future
with common stock, but have no definite plans at this time.
ITEM 7. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
As of September 30, 1999 we were renting our office space from Robert C.
Furrer and Billie C. Furrer. Robert C. Furrer is the CEO and a Director. Billie
C. Furrer is the Secretary -Treasurer. We ceased renting this space as of
November 1, 1999 and no longer rent our office space from Robert C. Furrer and
Billie C. Furrer. During this period, we paid approximately $9,000 in rental.
Our manufacturing plant, which is located in Flora, Mississippi, contains
approximately 40,000 square feet, but is not currently being utilized by us
because we are purchasing all of our inventory from Product Services Co., which
is owned by Mr. Ted Dickerson, one of our Directors. This plant is currently
being rented from Mr. Ted Dickerson. We pay no rent on this plant for three
years and have no plans to purchase the facility from Mr. Dickerson.
As of September 30, 1999, we have a Note Payable to Robert C, Furrer, an
Officer & Director, at an annual rate of 8% interest for compensation owed in
the amount of $100,000.
As of September 30, 1999, we have a Note Payable to Robert C. Furrer,
Officer & Director, at an annual rate of 8% interest for money put into the
Company from the sale of personal stock in the amount of $50,000.
17
<PAGE> 18
As of September 30, 1999, we had a Note Payable to Martin F. Schneider,
Officer and Director, at an annual rate of 8% interest for money put into the
Company from the sale of personal stock in the amount of $50,000.
As of September 30, 1999, we have a Note Payable to Martin F. Schneider,
Officer & Director, at an annual rate of 8% interest for compensation owed in
the amount of $100,000.
As of September 30, 1999, we have a Note payable to Theodore H. Dickerson,
a Director, at an annual rate of 8% interest for an Asset Purchase Agreement in
the amount of $2,700,000. Mr. Dickerson is the person who sold us our assets
under the Purchase and Sale Agreement, dated February 1, 1999. Under Addenda,
the latest of which is dated December 1, 1999, we have until March 1, 2000 to
pay for the acquisition.
ITEM 8. DESCRIPTION OF SECURITIES.
We are authorized to issue 50,000,000 shares of Common Stock, par value no
par per share, and 5,000,000 shares of non-voting Preferred Stock, par value no
par per share. As of September 30, 1999, 16,400,262 shares of Common Stock were
outstanding. As of the same date, no Preferred Stock was issued or outstanding.
COMMON STOCK
The holders of Common Stock have one vote per share on all matters
(including election of Directors) without provision for cumulative voting. Thus,
holders of more than 50% of the shares voting for the election of directors can
elect all of the directors, if they choose to do so. The Common Stock is not
redeemable and has no conversion or preemptive rights.
The Common Stock currently outstanding is validly issued, fully paid and
non-assessable. In the event of liquidation of our Company, the holders of
Common Stock will share equally in any balance of our Company's assets available
for distribution to them after satisfaction of creditors and the holders of our
Company's senior securities, whatever they may be. We may pay dividends, in cash
or in securities or other property when and as declared by the Board of
Directors from funds legally available therefor, but has paid no cash dividends
on its Common Stock.
PREFERRED STOCK
Under the Articles of Incorporation, the Board of Directors has the
authority to issue non-voting Preferred Stock and to fix and determine its
series, relative rights and preferences to the fullest extent permitted by the
laws of the State of Colorado and such Articles of Incorporation. As of the date
of this Registration Statement, no shares of Preferred Stock are issued or
outstanding. The Board of Directors has plans to issue Preferred Stock in the
2000 fiscal year pursuant to its capital raising efforts, although no specific
plans have been finalized at this time.
18
<PAGE> 19
DEBENTURES
We authorized a total of $2,000,000 worth of 10% Convertible Debentures and
have issued a total of $691,000 for a minimum of $25,000 per Debenture. The
Debentures bear interest at the rate of 10% per annum, payable at the time of
each conversion into cash or our common shares, at our option. The Debentures
mature one year after date of issuance, subject to prior conversion. We may
convert the Debentures into our common shares under terms established by us. We
may also redeem the Debentures at any time under terms established by us.
PART II
ITEM 1. MARKET PRICE OF AND DIVIDENDS ON THE REGISTRANT'S COMMON SHARES AND
OTHER SHAREHOLDER MATTERS.
(a) Principal Market or Markets
Our common shares began trading under the symbol "MMUS" in July 1999. Prior
to that time, the securities traded under the name of Oxford Financial Holdings,
Ltd. "OXFH." There are no quotes available for this period. Market makers and
other dealers provide bid and ask quotations of our Common Stock under the
symbol "MMUS". Trading is conducted in the over-the-counter market on the NASD's
"Electronic Bulletin Board,"
The table below represents the range of high and low bid quotations of our
common shares as reported during the reporting period herein. The following bid
price market quotations represent prices between dealers and does not include
retail markup, markdown, or commissions; hence, they may not represent actual
transactions.
<TABLE>
<CAPTION>
Fiscal Year 1999 High Low
------- --------
<S> <C> <C>
Third Quarter $ 1.01 $ 0.25
Common Shares
Fourth Quarter $ 3.125 $0.78125
Common Shares
</TABLE>
(b) Approximate Number of Holders of Common Stock
As of September 30, 1999, a total of 16,400,262 of our Common Shares were
outstanding and the number of holders of record of the Company's Common Stock at
that date was approximately 45.
19
<PAGE> 20
However, we estimate that it has a significantly greater number of
shareholders because a substantial number of our shares are held in nominee
names by our market makers.
(c) Dividends
Holders of common stock are entitled to receive such dividends as may be
declared by our Board of Directors. We paid no dividends on the common stock
during the periods reported herein nor do we anticipate paying dividends at any
time in the foreseeable future.
ITEM 2. LEGAL PROCEEDINGS;
Our subsidiary, Mighty Mack USA, Ltd., a private Mississippi Corporation,
was recently named a defendant in a lawsuit commenced in Louisiana by Alpha
Distributing Company, Inc. The lawsuit claims breach of contract concerning
certain sales and distribution rights of the Mississippi company's products,
which rights were set forth in a written contract. The plaintiff sought a
permanent injunction as to the sales and distribution rights but did not ask for
damages. The case has been continued without a date for further proceedings.
Given this situation, we do not believe that there is a reasonable probability
of a loss to us in this case. This case was pending in the 22nd Judicial
District Court, Parish of St. Tammany, State of Louisiana.
Otherwise, we know of no legal proceedings of a material nature pending or
threatened or judgments entered against any director or officer of our Company
in his/her capacity as such.
ITEM 3. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
We did not have any disagreements on accounting and financial disclosures
with our accounting firm during the reporting period.
ITEM 4. RECENT SALES OF UNREGISTERED SECURITIES.
The following shareholders acquired their respective shares in our Company
in June 1999 as a result of our acquisition of Mighty Mack USA, Ltd., a
Mississippi corporation.
<TABLE>
<CAPTION>
Name Number of Shares
---- ----------------
<S> <C>
ROBERT C. FURRER 6,881,931
MARTIN F. SCHNEIDER 6,656,795
JOSEPH M. BROWN 26,404
CHARLES WASHBURN 28,000
WINSTON WOOD 28
GARY JOHNSON 112
JOHN G. WILLIAMS 50,000
ROBERT LEVENTHAL 6,608
STACEY SCHNEIDER 100,000
</TABLE>
20
<PAGE> 21
<TABLE>
<S> <C>
RICHARD BELL 266
PAUL P. LIUCCI 798
RICHARD W. FURRER 66,010
ROBERT T. FURRER 26,404
HELEN ANN MILES 266
DEBBIE RUSK 266
MICHAEL LOUVIER 56
LYNN & HOWARD KLEIN 56
MARILYN SCHNEIDER 26,404
MARILYN SCHNEIDER & JEREMY BLAUFARB 13,202
MARILYN SCHNEIDER & JASON BLAUFARB 13,202
DAVID W. COOK 2,898
RUBIN ACKMAN 28
KAREN OWENS 266
JOSEPH B. LA ROCCO 100,000
TOTAL SHARES 14,000,000
</TABLE>
All of the issued and outstanding shares of our common stock were issued in
accordance with the exemption from registration afforded by Section 4(2) of the
Securities Act of 1933, as amended. All of the investors are considered to be
sophisticated investors because of their previous investment experience and
access to information on us necessary to make an informed investment decision.
In September, 1999, we sold $691,000 worth of 10% Convertible Debentures
for $25,000 per Debenture to the entities indicated below:
<TABLE>
<CAPTION>
Name Amount
<S> <C>
Calp II Limited Partnership $250,000
Moro, Inc. $ 50,000
John F. Marsden $100,000
Norman Goldstein $ 66,000
Barry Allan Fleck $ 75,000
Gary Fleck $ 50,000
Arab Commerce Bank, Ltd. $ 75,000
Lufeng Investments, Ltd. $ 25,000
</TABLE>
All of the Debentures were issued in accordance with the exemption from
registration afforded by Sections 4(2) and 4(6) of the Securities Act of 1933,
as amended and Rule 506 thereunder. All of the investors are considered to be
sophisticated and/or accredited investors because of their previous investment
experience and access to information on us necessary to make an informed
investment decision.
21
<PAGE> 22
ITEM 5. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Our Articles of Incorporation authorize the Board of Directors, on behalf
of us and without shareholder action, to exercise all of our powers of
indemnification to the maximum extent permitted under the applicable statute.
Title 7 of the Colorado Revised Statutes, 1986 Replacement Volume ("CRS"), as
amended, permits us to indemnify its directors, officers, employees,
fiduciaries, and agents as follows:
Section 7-109-102 of CRS permits a corporation to indemnify such persons
for reasonable expenses in defending against liability incurred in any legal
proceeding if:
(a) The person conducted himself or herself in good faith;
(b) The person reasonably believed:
(1) In the case of conduct in an official capacity with the
corporation, that his or her conduct was in the corporation's best interests;
and
(2) In all other cases, that his or her conduct was at least not
opposed to the corporation's best interests; and
(c) In the case of any criminal proceeding, the person had no reasonable
cause to believe that his or her conduct was unlawful.
A Corporation may not indemnify such person under this Section 7-109-102 of
CRS:
(a) In connection with a proceeding by or in the right of the corporation
in which such person was adjudged liable to the corporation; or
(b) In connection with any other proceeding charging that such person
derived an improper benefit, whether or not involving action in an official
capacity, in which proceeding such person was adjudged liable on the basis that
he or she derived an improper personal benefit.
Unless limited by the Articles of Incorporation, and there are not such
limitations with respect to the Company, Section 7-109-103 of CRS requires that
the corporation shall indemnify such a person against reasonable expenses who
was wholly successful, on the merits or otherwise, in the defense of any
proceeding to which the person was a party because of his status with the
corporation.
Under Section 7-109-104 of CRS, the corporation may pay reasonable fees in
advance of final disposition of the proceeding if:
(a) Such person furnishes to the corporation a written affirmation of the
such person's good faith belief that he or she has met the Standard of Conduct
described in Section 7-109-102 of CRS;
22
<PAGE> 23
(b) Such person furnishes the corporation a written undertaking, executed
personally or on person's behalf, to repay the advance if it is ultimately
determined that he or she did not meet the Standard of Conduct in Section
7-109-102 of CRS; and
(c) A determination is made that the facts then known to those making the
determination would not preclude indemnification.
Under Section 7-109-106 of CRS, a corporation may not indemnify such
person, including advanced payments, unless authorized in the specific case
after a determination has been made that indemnification of such person is
permissible in the circumstances because he met the Standard of Conduct under
Section 7-109-102 of CRS and such person has made the specific affirmation and
undertaking required under the statute. The required determinations are to be
made by a majority vote of a quorum of the Board of Directors, utilizing only
directors who are not parties to the proceeding. If a quorum cannot be obtained,
the determination can be made by a majority vote of a committee of the Board,
which consists of at least two directors who are not parties to the proceeding.
If neither a quorum of the Board nor a committee of the Board can be
established, then the determination can be made either by the Shareholders or by
independent legal counsel selected by majority vote of the Board of Directors.
The corporation is required by Section 7-109-110 of CRS to notify the
shareholders in writing of any indemnification of a director with or before
notice of the next shareholders' meeting.
Under Section 7-109-105 of CRS, such person may apply to any court of
competent jurisdiction for a determination that such person is entitled under
the statute to be indemnified from reasonable expenses.
Under Section 7-107(1)(c) of CRS, a corporation may also indemnify and
advance expenses to an officer, employee, fiduciary, or agent who is not a
director to a greater extent than the foregoing indemnification provisions, if
not inconsistent with public policy, and if provided for in the corporation's
bylaw, general or specific action of the Board of Directors, or shareholders, or
contract.
Section 7-109-108 of CRS permits the corporation to purchase and maintain
insurance to pay for any indemnification of reasonable expenses as discussed
herein.
The indemnification discussed herein shall not be deemed exclusive of any
other rights to which those indemnified may be entitled under the Articles of
Incorporation, any Bylaw, agreement, vote of shareholders, or disinterested
directors, or otherwise, and any procedure provided for by any of the foregoing,
both as to action in his official capacity and as to action in another capacity
while holding such office, and shall continue as to a person who has ceased to
be a director, officer, employee or agent and shall inure to the benefit of
heirs, executors, and administrators of such a person.
23
<PAGE> 24
Insofar as indemnification for liabilities under the Securities Act of 1933
may be permitted to directors, officers, and controlling persons of the
Registrant pursuant to the foregoing provisions, or otherwise, the Registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the Registrant of expense incurred
or paid by a director, officer, or controlling person of the registrant in the
successful defense of any action, suit, or proceeding) is asserted by such
director, officer, or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.
24
<PAGE> 25
PART F/S
MIGHTY MACK USA, LTD
FINANCIAL STATEMENTS
FOR THE PERIOD FROM INCEPTION NOVEMBER 9, 1998 TO JUNE 30, 1999
<PAGE> 26
INDEPENDENT AUDITOR'S REPORT
To the Board of Directors of
Mighty Mack USA, LTD
Lena, MS
We have audited the accompanying balance sheet of Mighty Mack USA, LTD as of
June 30, 1999 and the related statements of operations, stockholders' equity,
and cash flows for the for the period from inception November 9, 1998 to June
30, 1999. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audit in accordance with generally accepted auditing standards.
These standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Mighty Mack USA, LTD as of June
30, 1999, and the results of their operations and their cash flows for the year
then ended in conformity with generally accepted accounting principles.
As shown in the financial statements, the company incurred a net loss of
$260,192 for 1999. At June 30, 1999, current liabilities exceed current assets
by $1,338,556. These factors indicate that the company has substantial doubt
about its ability to continue as a going concern. The financial statements do
not include any adjustments relating to the recoverability and classification of
recorded assets, or the amounts and classification of liabilities that might be
necessary in the event the company cannot continue in existence.
Denver, Colorado
August 11, 1999
<PAGE> 27
MIGHTY MACK USA, LTD
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1999
NOTE 1 - ORGANIZATION AND PRESENTATION:
Organization:
On July 19, 1996, Oxford Financial Holdings, Ltd. (the Company) was
incorporated under the laws of Colorado to engage in all aspects of
business consulting and information retrieval. Mighty Mack USA, LTD was
incorporated in the state of Mississippi on November 9, 1998. Mighty Mack
USA, LTD, a Mississippi Company, and Oxford Financial Holdings, LTD., a
Colorado corporation, merged on June 15, 1999. The merger was treated as
a reverse acquisition for accounting purposes with Mighty Mack USA, LTD.
as the acquirer and Oxford Financial Holdings, LTD as the acquiree based
upon Mighty Mack USA, LTD then current officers and directors assuming
management control of the resulting entity and the value and ownership
interest being received by current Mighty Mack USA, LTD. stockholders
exceeding that received by Oxford Financial Holdings, LTD stockholders.
The Company changed its name to Mighty Mack USA, LTD.
The Mississippi Corporation, Mighty Mack exchanged 53,022,950 shares or
100% of its common stock for 14,000,000 shares of common stock in the
Company. The Company may be issuing 1,600,000 additional shares to
various consultants as part of the transaction. Also the Company canceled
the 335,000 shares of preferred stock that was outstanding leaving no
shares of preferred stock outstanding after the consummation of the
merger.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
These financial statements are presented on the accrual method of
accounting in accordance with generally accepted accounting principles.
Significant principles followed by the Company and the methods of
applying those principles, which materially affect the determination of
financial position and cash flows, are summarized below:
DESCRIPTION OF BUSINESS
Mighty Mack USA, LTD markets, manufactures & wholesales HydroCarbon
Absorbents & Environmental Remediation Products. The Company develops
marketing and distribution outlets for its' products through established
retail and wholesale distributors through out the country.
REVENUE RECOGNITION
Product Sales are sales of bag and bulk product manufactured by the
company. Revenue is recognized at the time of sale when delivery is made
and accepted.
INVENTORY
Inventory at June 30, 1999 by major classification is:
<TABLE>
<S> <C>
Raw Materials and Work-in-Process $ 4,176,020
Finished Goods $ 485,980
------------
Total Inventory $ 4,662,000
============
</TABLE>
There has been no change in the inventory due to the sales of samples
only and no inventory items sold.
<PAGE> 28
MIGHTY MACK USA, LTD
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1999
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued):
CASH AND CASH EQUIVALENTS
The Company considers all highly liquid debt instruments, purchased
with an original maturity of three months or less, to be cash
equivalents.
ACCOUNTING FOR IMPAIRMENTS IN LONG-LIVED ASSETS:
Long-lived assets and identifiable intangibles are reviewed for
impairment whenever events or changes in circumstances indicate that
the carrying amounts of assets may not be recoverable. Management
periodically evaluates the carrying value and the economic useful life
of its long-lived assets based on the Company's operating performance
and the expected future undiscounted cash flows and will adjust the
carrying amount of assets which may not be recoverable. Management
believes that long-lived assets in the balance sheet are appropriately
valued.
PROPERTY AND EQUIPMENT
Property and equipment is stated at cost. The cost of ordinary
maintenance and repairs is charged to operations while renewals and
replacements are capitalized. Depreciation is computed on the
straight-line method over the following estimated useful lives:
<TABLE>
<S> <C>
Furniture and fixtures 7 years
Computer equipment and software 3-years
Plant equipment 5 year
Buildings 40 years
</TABLE>
FEDERAL INCOME TAX:
The Company accounts for income taxes under SFAS No. 109, which
requires the asset and liability approach to accounting for income
taxes. Under this approach, deferred income taxes are determined based
upon differences between the financial statement and tax bases of the
Company's assets and liabilities and operating loss carryforwards using
enacted tax rates in effect for the years in which the differences are
expected to reverse. Deferred tax assets are recognized if it is more
likely than not that the future tax benefit will be realized.
USE OF ESTIMATES:
The preparation of financial statements, in conformity with generally
accepted accounting principles, requires management to make estimates
and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the
date of the financial statements and the reported amounts of revenue
and expenses during the reporting period. Actual results could differ
from those estimates.
TRADE NAMES AND PATENTS
The Company has valued its trade names and patents at $100,000. These
items are being amortized over a forty-year period.
<PAGE> 29
MIGHTY MACK USA, LTD
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1999
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued):
FAIR VALUE OF FINANCIAL INSTRUMENTS
The Company's financial instruments include cash, cash equivalents and
notes payable. Estimates of fair value of these instruments are as
follows:
Cash and cash equivalents - The carrying amount of cash and
cash equivalents approximates fair value due to the relatively
short maturity of these instruments.
Notes payable - The carrying amount of the Company's notes
payable approximate fair value based on borrowing rates
currently available to the Company for borrowings with
comparable terms and conditions.
NOTE 3 - PROPERTY AND EQUIPMENT:
Property and equipment consist of the following as of June 30, 1999.
<TABLE>
<S> <C>
Land $ 105,000
Furniture and fixtures 55,919
Computer equipment and software 7,102
Plant equipment 453,448
Building 869,000
----------
Subtotal 1,490,469
Less: Accumulated depreciation (10,232)
----------
$1,480,237
==========
</TABLE>
NOTE 4 - INCOME TAXES
Income taxes are provided for the tax effects of transactions reported
in the financial statements and consist of taxes currently due plus
deferred taxes related primarily to differences between the recorded
book basis and tax basis of assets and liabilities for financial and
income tax reporting. The deferred tax assets and liabilities represent
the future tax return consequences of those differences, which will
either be taxable or deductible when the assets and liabilities are
recovered or settled. Deferred taxes are also recognized for operating
losses that are available to offset future taxable income and tax
credits that are available to offset federal income taxes. Due to the
Company's net operating loss there are no income taxes currently due.
Also, there were no material differences between recorded book basis
and tax basis at June 30, 1999.
The Company follows Financial Accounting Standards Board Statement No.
109, "Accounting for Income Taxes" (SFAS #109), which requires, among
other things, an asset and liability approach to calculating deferred
income taxes. As of June 30, 1999, the Company has a deferred tax asset
of $62,500 primarily for its net operating loss carry forward which has
been fully reserved through a valuation allowance.
<PAGE> 30
MIGHTY MACK USA, LTD
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1999
NOTE 4 - INCOME TAXES (cont.)
As of June 30, 1999, the Company had a net operating loss carry forward for
federal income tax purposes approximately equal to the accumulated deficit
recognized for book purposes, which will be available to reduce future taxable
income. The full realization of the tax benefit associated with the carry
forward depends predominantly upon the Company's ability to generate taxable
income during the carry forward period. Because of the current uncertainty of
realizing such tax assets in the future, a valuation allowance has been recorded
equal to the amount of the net deferred tax asset, which caused the Company's
effective tax rate to differ from the statutory income tax rate. The net
operating loss carry forward, if not utilized, will begin to expire in the year
2010.
NOTE 5 - NOTES PAYABLE
Notes payable consist of the following at June 30, 1999:
<TABLE>
<S> <C>
Note - Robert C. Furrer, Officer & Director, at 8% annual interest rate,
due on demand $ 100,000
Note - Martin F. Schneider, Officer & Director, at 8% annual interest rate,
due on demand $ 100,000
Note - Product Services Co., Inc. for assets purchase agreement
at 8% annual interest rate, remaining balance $2,700,000
----------
$2,900,000
==========
</TABLE>
NOTE 6 - PRODUCT AND ASSET PURCHASE AGREEMENT
The Company entered into an agreement on February 1, 1999 to acquire
substantially all of the products of Product Services Co., Inc. a
Mississippi Corporation and Theodore Dickerson. This purchase also
includes the real estate items of a storage plant and land at Valley
Park, Mississippi. This purchase includes certain intellectual property
assets made up of patents, trademarks, trade names and security
interests. This purchase agreement is for $6,000,000 made up of
$3,000,000 due up front and $3,000,000 due as a royalty payment
comprised of three percent of the wholesale price of product up to a
maximum of $3,000,000. The total balance of the royalty payment is due
and payable by January 31, 2002 no matter whether the sales have
occurred or not.
The breakdown of the purchase price is as follows:
<TABLE>
<S> <C>
Inventory $4,409,531
Property & Equipment 1,490,469
Patents & Trademarks 100,000
----------
Total Purchase Price $6,000,000
==========
</TABLE>
NOTE 7 - REALIZATION OF ASSETS
The accompanying financial statements have been prepared in conformity
with generally accepted accounting principles, which contemplates
continuation of the Company as a going concern. However, the Company
has sustained a substantial operation loss this year. As shown in the
financial statements, the Company incurred a net loss of $260,192 for
1999. At June 30, 1999, current liabilities exceed current assets by
$1,338,556. These factors indicate that the company has substantial
doubt about its ability to continue as a going concern. The financial
statements do not include any adjustments relating to the
recoverability and classification of recorded assets, or the amounts
and classification of liabilities that might be necessary in the event
the Company cannot continue in existence.
In view of these matters, realization of a major portion of the assets
in the accompanying balance sheet is dependent upon continued
operations of the Company, which in turn is dependent upon the
Company's ability to meet its financial requirements, and the success
of its future operations. Management believes that actions presently
being taken to revise the Company's operating and financial
requirements provide the opportunity for the Company to continue as a
going concern.
<PAGE> 31
MIGHTY MACK USA, LTD
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1999
NOTE 8 - RELATED PARTY TRANSACTION
The officers and directors of the Company are involved in other
business activities and may, in the future, become involved in other
business opportunities. If a specific business opportunity becomes
available, such persons may face a conflict in selecting between the
Company and their other business interests. The Company is formulating
a policy for the resolution of such conflicts.
<PAGE> 32
MIGHTY MACK USA, LTD
Balance Sheet
June 30, 1999
<TABLE>
<S> <C>
ASSETS
CURRENT ASSETS:
Accounts receivable $ 674
Inventory 4,662,000
---------------
TOTAL CURRENT ASSETS 4,662,674
PROPERTY AND EQUIPMENT:
Property and Equipment, net of accumulated 1,480,237
---------------
Depreciation of $10,232
OTHER ASSETS:
Trade Names, Patents, Net of Accumulated 99,792
---------------
Amortization of $208
TOTAL ASSETS: $ 6,242,703
===============
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $ 68,344
Accrued expenses 32,886
Notes payable 2,900,000
Royalty Fee Payable 3,000,000
---------------
TOTAL CURRENT LIABILITIES 6,001,230
TOTAL LIABILITIES 6,001,230
STOCKHOLDERS' EQUITY:
Preferred Stock, Class A Preferred, 5,000,000
Shares Authorized, No Par Value, None Outstanding
Common stock, No Par Value, 50,000,000 Shares
Authorized, No Par Value, Issued and Outstanding 16,400,262 507,015
Retained earnings (deficit) (265,542)
---------------
TOTAL STOCKHOLDERS' EQUITY 241,473
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 6,242,703
===============
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE> 33
MIGHTY MACK USA, LTD
Statement of Operations
From Inception November 9, 1998 to June 30, 1999
<TABLE>
<S> <C>
REVENUE:
Product sales $ 4,736
COST OF GOODS SOLD (1,174)
---------------
GROSS MARGIN 3,562
---------------
OPERATING EXPENSES
Interest Expense 21,334
Operating costs 170,804
General and administrative 71,616
---------------
TOTAL OPERATING EXPENSES 263,754
---------------
NET INCOME (LOSS) $ (260,192)
===============
BASIC (LOSS) PER SHARE $ (0.10)
===============
BASIC WEIGHTED AVERAGE SHARES OUTSTANDING 2,600,011
===============
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE> 34
MIGHTY MACK USA, LTD
Stockholders' Equity
June 30, 1999
<TABLE>
<CAPTION>
PREFERRED STOCK COMMON STOCK RETAINED TOTAL
-------------------------- ------------------------- EARNING STOCKHOLDERS'
SHARES AMOUNT SHARES AMOUNT (DEFICIT) EQUITY
---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
BALANCE: NOVEMBER 9, 1998 335,000 $ 3,350 2,400,000 $ 2,000 $ (5,350) $ --
Cancellation and Issuance
Of Stock for Acquisition (335,000) (3,350) 14,000,262 505,015 -- 501,665
Net Loss June 30, 1999 (260,192) (260,192)
---------- ---------- ---------- ---------- ---------- ----------
BALANCE-JUNE 30, 1999 -- $ -- 16,400,262 $ 507,015 $ (265,542) $ 241,473
========== ========== ========== ========== ========== ==========
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE> 35
MIGHTY MACK USA, LTD
Statement of Cash Flow
From Inception November 9, 1998 to June 30, 1999
<TABLE>
<S> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
NET INCOME (LOSS) $ (260,192)
Reconciliation of Net Income (Loss) to Net Cash
Provided by (Used In) Operating Activities
Depreciation and Amortization 10,440
(INCREASE) DECREASE IN:
Accounts Receivable (674)
INCREASE (DECEASE) IN:
Accounts Payable 65,844
Accrued Expenses 29,537
---------------
NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES (155,045)
CASH FLOWS USED FOR INVESTING ACTIVITIES
Investment in Property & Equipment (549,970)
---------------
---------------
NET CASH PROVIDED BY INVESTING ACTIVITIES (549,970)
---------------
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from Notes Payable 200,000
Common Stock 505,015
---------------
---------------
Net Cash Provided by Financing Activities 705,015
---------------
NET INCREASE IN CASH AND CASH EQUIVALENTS --
Cash and Cash Equivalents - Beginning of Period --
Cash and Cash Equivalents - End of Period $ --
---------------
SUPPLEMENTAL DISCLOSURE
CASH PAID DURING THE YEAR FOR:
Interest $ --
Income Taxes $ --
Inventory Acquisition Through Notes and Royalty Fee Payable 4,362,000
Property and Equipment Acquisition Through Notes Payable 1,190,469
Trade Names and Patents Acquisition Through Notes Payable 100,000
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE> 36
PART III
ITEM 1. INDEX TO EXHIBITS.
Exhibit
Number Description
3A* Articles of Incorporation
3B* Amendment to Articles of Incorporation
3C* Bylaws
10A* Stock Purchase Agreement
10B* Purchase and Sale Agreement, with Addenda
10C March 1, 2000 Addenda to Purchase and Sale Agreement
* Previously filed.
ITEM 2. DESCRIPTION OF EXHIBITS.
3A Articles of Incorporation filed on July 19, 1996.
3B Amendment to Articles of Incorporation filed on
July 16, 1999.
3C Bylaws approved on June 5, 1997.
10A Stock Purchase Agreement dated June, 1999.
10B Purchase and Sale Agreement dated February 1, 1999,
with Addenda dated June 2, 1999, August 3, 1999,
September 17, 1999, October 11, 1999, and December 1,
1999
10C March 1, 2000 Addenda to Purchase and Sale Agreement
<PAGE> 37
SIGNATURES
In accordance with Section 12 of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
Mighty Mack USA, Ltd.
Dated: 4/17/00 By: /s/ ROBERT C. FURRER
--------------- -----------------------------------
Robert C. Furrer
Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.
CHIEF FINANCIAL OFFICER
Dated: 4/17/00 By: /s/ MARTIN F. SCHNEIDER
--------------- -----------------------------------
Martin F. Schneider
Chief Financial Officer
Dated: 4/17/00 By: /s/ CHARLES K. WASHBURN
--------------- -----------------------------------
Charles K. Washburn
Director
Dated: 4/17/00 By: /s/ THEODORE H. DICKERSON
--------------- -----------------------------------
Theodore H. Dickerson
Director
25
<PAGE> 38
EXHIBITS TO MIGHTY MACK USA, LTD.
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- -------- -----------
<S> <C>
3A* Articles of Incorporation
3B* Amendment to Articles of Incorporation
3C* Bylaws
10A* Stock Purchase Agreement
10B* Purchase and Sale Agreement, with Addenda
10C March 1, 2000 Addenda to Purchase and Sale Agreement
</TABLE>
* Previously filed.
26
<PAGE> 1
EXHIBIT 10C
ADDENDUM TO PURCHASE AND SALE AGREEMENT
This Addendum is entered into the 20th day of March, 2000, by the undersigned
parties to the Purchase and Sale Agreement (the "Agreement") between Mighty Mack
USA, Ltd. ("Mighty Mack") and Product Services Co., Inc. and/or Theodore
Dickerson ("Dickerson") (collectively referred to as the "Parties").
WHEREAS, The Parties entered into a Purchase and Sale Agreement dated February
1, 1999. Pursuant to which Dickerson has received $300,000.00 to date: and
WHEREAS, in consideration of the failure of Mighty Mack to meet the required
conditions of the previous addendum dated December 1, 1999, and in consideration
of other agreements of the Parties set forth herein, the Parties agree as
follows:
THAT, each party agrees that the Closing Date for payment of the balance of the
$3,000,000 shall be extended until July 1, 2000. The Parties grant this
extension so they may explore the feasibility of merging Product Services Co.,
Inc. with "Mighty Mack" or combing to do a Joint Venture together. It is further
agreed that addendum can and will be further extended if necessary.
Dickerson hereby grants and conveys to Mighty Mack the right to Manufacture and
sell products, under the Mighty Mack Brand, under U.S. Patent No. 5,609,667 and
Australia Patent No. 687186 as well as the right to use U. S. Trademark
Registration No. 1,889,514 for Oil Gator and the unregistered Trademarks for all
the Gator Products set forth in Exhibit A of the Sale Purchase Agreement up to
the July 1, 2000 deadline.
THAT, the Parties hereby agree to an extension of July 1, 2000 for the balance
of the $3,000,000 to be paid or an acceptable acquisition program is set forth
by the Parties. If neither of these conditions is met by July 1, 2000, all
Moines paid to Dickerson prior to July 1, 2000 deadline are non-refundable. In
addition, Mighty Mack USA, LTD shall forfeit all manufacturing and marketing
rights set forth above.
THAT all other terms of the Agreement remain unchanged.
THAT, neither party relinquishes any other rights under this Agreement.
AGREED TO AND ENTERED INTO this 20th day of March, 2000
PRODUCT SERVICES CO., INC.
By: /s/
---------------------------------------
Theodore Dickerson its President
By: /s/
---------------------------------------
Theodore Dickerson individually as a
Natural Person and an Adult Resident
Citizen of the State of Mississippi
MIGHTY MACK USA, LTD.
By: /s/
---------------------------------------
Robert C. Furrer its CEO
27
