<PAGE>
<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K/A
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report: July 29, 1997
THE MNI GROUP INC.
(Exact name of Registrant as specified in charter)
New Jersey 0-18349 22-2380325
(State or other (Commission File No.) (IRS Employer
jurisdiction of Identification
incorporation) Number)
10 West Forest Avenue, Englewood, New Jersey 07631
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (201) 569-1188
<PAGE>
<PAGE>
Item 7. Financial Statements and Exhibits.
(a) Financial Statements of KOS.
(i) Report of Lipner, Gordon & Co. LLP, independent auditors;
(ii) Balance Sheets of K.O.S. Industries, Inc. ("KOS") as of
December 31, 1996 and 1995;
(iii) Statements of Operations of KOS for the years ended
December 31, 1996 and 1995;
(iv) Statements of Stockholders' Deficiency for the years ended
December 31, 1996 and 1995;
(v) Statements of Cash Flows of KOS for the years ended
December 31, 1996 and 1995; and
(vi) Notes to Financial Statements.
(b) Pro Forma Financial Information.
(i) Pro Forma Consolidating Balance Sheet (unaudited) as of
January 31, 1997;
(ii) Pro Forma Consolidating Statement of Operations
(unaudited) for the years ended January 31, 1997 and 1996;
(iii) Pro Forma Consolidating Statement of Stockholders'
Deficiency (unaudited) for the years ending January 31,
1997 and 1996;
(iv) Pro Forma Consolidating Statement of Cash Flows
(unaudited) for the years ended January 31, 1997 and 1996;
(v) Notes (unaudited) to Pro Forma Financial Information;
(vi) Introduction to Pro Forma Financial Statements
(unaudited);
(vii) Pro Forma Consolidating Balance Sheet (unaudited) as of
July 31, 1997; and
2
<PAGE>
<PAGE>
(viii) Pro Forma Consolidating Statement of Operations
(unaudited) for the six months ended July 31, 1997.
(c) Exhibits.
(i) Agreement and Plan of Merger and Reorganization dated as
of July 7, 1997 by and among The MNI Group Inc., MNI
ViaSub Inc. and K.O.S. Industries, Inc.*
(ii) Employment Agreement dated as of July 7, 1997 between The
MNI Group Inc. and Elliot Elrod*
(iii) Option Agreement dated as of July 7, 1997 between The MNI
Group Inc. and Elliot Elrod*
(iv) Voting and Share Disposition Agreement dated as of July 7,
1997 among Arnold Gans, Myra Gans, LN Investment Capital
Limited Partnership, Elliot Elrod, Phillip B. Donenburg
and The MNI Group Inc.*
- -----------------
* Heretofore filed.
3
<PAGE>
<PAGE>
REPORT OF INDEPENDENT AUDITORS
To the Board of Directors
K.O.S. Industries, Inc.
We have audited the accompanying balance sheets of K.O.S. Industries,
Inc. as of December 31, 1996 and 1995, the related comparative statements of
operations, stockholders' deficiency, and cash flows for the years then ended.
These financial statements are the responsibility of the company's management.
Our responsibility is to express an opinion on these financial statements based
on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the 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 K.O.S. Industries,
Inc. as of December 31, 1996 and 1995 and the results of its operations and cash
flows for the years then ended in conformity with generally accepted accounting
principles.
The accompanying financial statements have been prepared on the
assumption that K.O.S. Industries, Inc. will continue as a going concern. The
Company's ongoing losses and limited cash raise substantial doubt about its
ability to continue as a going concern. Management's actions in regard to this
matter are discussed in Note 1 to the financial statements. The financial
statements do not include any adjustments relating to the recoverability or
reclassification of any asset or liability that might result from the outcome of
this uncertainty.
/s/ LIPNER, GORDON & CO. LLP
Great Neck, NY
November 11, 1997
<PAGE>
<PAGE>
K.O.S. INDUSTRIES, INC.
BALANCE SHEET
ASSETS
<TABLE>
<CAPTION>
December 31,
----------------------
1996 1995
---- ----
<S> <C> <C>
Current assets:
Cash $ 7,000 $ 6,000
-------- --------
Accounts receivable 143,400 94,300
Less: allowance for doubtful accounts (5,100) (10,200)
-------- --------
Accounts receivable - net 138,300 84,100
-------- --------
Inventories (Note 2) 117,700 82,900
-------- --------
Total current assets 263,000 173,000
-------- --------
Other assets:
Security deposits 300 300
-------- --------
300 300
-------- --------
$263,300 $173,300
======== ========
LIABILITIES AND STOCKHOLDERS' DEFICIENCY
Current liabilities:
Accounts payable $223,500 $118,700
Accrued expenses and other liabilities 5,700 11,200
Loans payable (Note 3) 71,900 64,400
-------- --------
Total current liabilities 301,100 194,300
-------- --------
Stockholders' deficiency:
Common stock, no par value; 30,000 shares authorized,
1,200 shares issued and outstanding 1,200 1,200
Accumulated deficit (39,000) (22,200)
-------- --------
(37,800) (21,000)
-------- --------
$263,300 $173,300
======== ========
</TABLE>
The accompanying notes are an integral part of the financial statements.
<PAGE>
<PAGE>
K.O.S. INDUSTRIES, INC.
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
Year Ended
December 31,
----------------------
1996 1995
---- ----
<S> <C> <C>
Sales $877,100 $678,200
-------- --------
Cost of sales and operating expenses:
Cost of merchandise sales 567,800 418,200
Selling, general and administrative expenses 320,100 259,300
Advertising expense (Note 2) - 1,500
-------- --------
Total cost of sales and operating expenses 887,900 679,000
-------- --------
Operating (loss) ( 10,800) ( 800)
-------- --------
Other income (expense):
Interest expense ( 6,000) ( 5,200)
-------- --------
Total other income (expense) ( 6,000) ( 5,200)
-------- --------
(Loss) from operations ( 16,800) ( 6,000)
Provision for income taxes (Note 6) - -
-------- ------
Net (loss) ($ 16,800) ($ 6,000)
======== ========
Net (loss)per share ($ 14 00) ($ 5 00)
======== ========
Weighted average number of shares outstanding 1,200 1,200
======= =======
</TABLE>
The accompanying notes are an integral part of the financial statements.
<PAGE>
<PAGE>
K.O.S. INDUSTRIES, INC.
STATEMENT OF STOCKHOLDERS' DEFICIENCY
YEARS ENDED DECEMBER 31, 1996 AND 1995
<TABLE>
<CAPTION>
Common Stock
------------------------
Shares Amount
------ ------
<S> <C> <C>
Common stock, balance, January 1, 1995 1,200 $ 1,200
-------- --------
Balance, December 31, 1995 1,200 1,200
-------- --------
Balance, December 31, 1996 1,200 $ 1,200
======== ========
<CAPTION>
Accumu-
lated
Deficit
-------
<S> <C>
Balance, January 1, 1995 ($ 16,200)
Net (loss) ( 6,000)
--------
Balance, December 31, 1995 ( 22,200)
Net (loss) ( 16,800)
--------
Balance, December 31, 1996 ($ 39,000)
========
</TABLE>
The accompanying notes are an integral part of the financial statements.
<PAGE>
<PAGE>
K.O.S. INDUSTRIES, INC.
STATEMENT OF CASH FLOWS
<TABLE>
<CAPTION>
Year Ended
December 31,
-----------------------
1996 1995
---- ----
<S> <C> <C>
Cash flows from operating activities:
Net (loss) ($ 16,800) ($ 6,000)
Adjustments to reconcile net (loss) to net cash
provided (used) by operating activities:
Changes in working capital items:
(Increase) decrease in net accounts receivable ( 54,200) 20,700
(Increase) decrease in inventories ( 34,800) 5,700
Increase (decrease) in accounts payable and other
liabilities 99,300 ( 20,600)
-------- --------
Net cash (used) by operating activities ( 6,500) ( 200)
-------- --------
Cash flows from financing activities:
Increase in loan payable - officer (net) 7,500 9,500
-------- --------
Net cash provided by financing activities 7,500 9,500
-------- --------
Increase in cash and cash equivalents 1,000 9,300
Cash, beginning of year 6,000 ( 3,300)
-------- --------
Cash, end of year $ 7,000 $ 6,000
======== ========
Supplemental information:
Cash expended for:
Interest expense $ 6,000 $ 5,200
======== ========
Federal income taxes $ - $ -
======== ========
</TABLE>
The accompanying notes are an integral part of the financial statements.
<PAGE>
<PAGE>
K.O.S. INDUSTRIES, INC.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1996 AND 1995
1. Organization and Business
K.O.S. Industries, Inc. (KOS), a corporation organized in 1984, is engaged
in the development and distribution of pet care items. Rapid growth led the
Company to expand its product line and its distribution channels which now
include pet stores, catalogs, hardware and grocery stores and television
shopping networks.
In July 1997 (effective as of August 1, 1997), the Company consummated a
merger with The MNI Group, Inc. (MNI), a publicly held corporation, whereby
it exchanged all of its outstanding common stock for 600,000 shares of MNI
common stock. MNI files reports under the Securities Act of 1934.
In addition, KOS's key employees were granted a total of 900,000 options to
purchase MNI stock. Such options will vest over a period of five years and
will expire on December 31, 2001.
2. Significant Accounting Policies
Inventories - Inventories, which consist primarily of purchased finished
goods, are stated at the lower of cost or market using the "first-in,
first-out" (FIFO) cost method.
Income taxes - the Company has adopted FASB 109 in accounting for its
income taxes. See Note 6.
Advertising expense - The Company expenses advertising costs as incurred.
Revenue recognition - The Company recognizes revenue when its products are
shipped from the warehouse.
Use of estimates - In preparing financial statements in conformity with
generally accepted accounting principles, management is required to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and the disclosure of contingent assets and liabilities at the
date of the financial statements and revenues and expenses during the
reporting period. Actual results could differ from those estimates.
3. Loans Payable
Loans payable to officers consist of a line of credit obtained through one
of the officers, and subsequently assigned to the Company, and guaranteed
by it. This line of credit expires on June 2, 2004, and carries an annual
interest rate of 8.25%. The Company draws from and repays this line of
credit as cash flows permit. As of December 31, 1996 and 1995, the balances
of this loan were $66,500 and $59,000, respectively.
In addition, officers have made non-interest-bearing advances of $5,400.
<PAGE>
<PAGE>
K.O.S. INDUSTRIES, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1996 AND 1995
4. Lease Commitments
The Company leases its office facility under a noncancellable lease
expiring on March 31, 1998. The lease calls for a minimum annual rent of
$7,020 plus applicable local taxes not presently determinable.
5. Commitments and Contingencies
The Company's pet products are produced by third parties in various plants
under applicable government regulations. The Company depends upon its
vendors to comply with such regulations. Failure by such vendors to comply
with the applicable regulations could result in fines and/or seizure of the
products. The Company is not presently a party to any lawsuits. In
addition, it has no commitments to its vendors for the purchase of either
raw materials or finished product.
6. Income Taxes
The Company has net operating loss carryforwards of approximately $39,000
at December 31, 1996, which are available to reduce income otherwise
subject to federal income tax through 2011. The utilization of these losses
is subject to various limitations imposed by the Internal Revenue Code.
The Company has adopted FASB 109 in accounting for its income taxes.
However, due to the operating losses mentioned above and the uncertainties
regarding their utilization in the future, the implementation of FASB 109
has no effect on the Company's financial statements. A valuation allowance
of 100% has been applied to any possible benefits arising from the use of
such net operating losses in future years.
<PAGE>
<PAGE>
THE MNI GROUP, INC.
PRO-FORMA CONSOLIDATING BALANCE SHEET
JANUARY 31, 1997
(UNAUDITED)
ASSETS
<TABLE>
<CAPTION>
Consoli-
KOS dated
The MNI Indus- Balance
Group, tries Adjust- Sheet
Inc Inc ments (Pro Forma)
------- ----- ------- -----------
<S> <C> <C> <C> <C>
Current assets:
Cash $ 13,000 $ 7,000 $ - $ 20,000
-------- -------- --------
Accounts receivable 127,200 143,400 270,600
Less: allowance for doubtful accounts ( 1,300) ( 5,100) ( 6,400)
-------- -------- --------
Accounts receivable - net 125,900 138,300 264,200
-------- -------- --------
Inventories (Note 2) 61,400 117,700 179,100
Other current assets 11,900 - 11,900
-------- -------- --------
Total current assets 212,200 263,000 475,200
-------- -------- --------
Furniture, fixtures, and leasehold improvements
(Notes 2 and 3):
Furniture and fixtures 116,000 - 116,000
Less: accumulated depreciation ( 113,100) - ( 113,100)
-------- -------- --------
2,900 - 2,900
-------- -------- --------
Other assets:
Security deposits 15,500 300 - 15,800
Investment in subsidiary
- - (1) ( 300,000)
(2) ( 300,000) -
Goodwill - - (2) 315,000 315,000
Less: accumulated amortization - - (3) ( 15,800) ( 15,800)
-------- -------- -------- --------
15,500 300 299,200 315,000
-------- -------- -------- --------
$230,600 $263,300 $299,200 $793,100
======== ======== ======== ========
</TABLE>
<PAGE>
<PAGE>
THE MNI GROUP, INC.
PRO-FORMA CONSOLIDATING BALANCE SHEET
JANUARY 31, 1997
(UNAUDITED)
LIABILITIES AND STOCKHOLDERS' DEFICIENCY
<TABLE>
<CAPTION>
Consoli-
KOS dated
The MNI Indust- Balance
Group, ries Adjust- Sheet
Inc Inc ments (Pro Forma)
-------- -------- ------- ----------
<S> <C> <C> <C> <C>
Current liabilities:
Accounts payable $ 92,600 $223,500 $ - $ 316,100
Accrued expenses and other liabilities 308,300 5,700 - 314,000
Notes payable - short-term portion (Note 4) 35,700 - - 35,700
Loans payable - officers (Note 4) 71,100 71,900 - 143,000
---------- -------- -------- ----------
Total current liabilities 507,700 301,100 - 808,800
---------- -------- -------- ----------
Notes payable (net of short-term portion)(Note 4) 113,700 - - 113,700
Excess of purchase price over basis of assets acquired (net
of amortization) 159,600 - - 159,600
---------- -------- -------- ----------
273,300 - - 273,300
---------- -------- -------- ----------
Stockholders' deficiency (Note 6):
Common stock, no par value, 10,000,000 shares (1) 300,000
authorized; 4,528,643 shares issued and 1,200 (2) ( 1,200) 7,548,900
outstanding at January 31, 1997 7,248,900 (2) 16,200
Accumulated deficit ( 7,799,300) ( 39,000) (3) ( 15,800) ( 7,837,900)
---------- -------- -------- ----------
( 550,400) ( 37,800) 299,200 ( 289,000)
---------- -------- -------- ----------
$ 230,600 $263,300 $299,200 $ 793,100
========== ======== ======== ==========
</TABLE>
<PAGE>
<PAGE>
THE MNI GROUP, INC.
PRO-FORMA CONSOLIDATING STATEMENT OF OPERATIONS
YEARS ENDED JANUARY 31, 1997 AND 1996
(UNAUDITED)
<TABLE>
<CAPTION>
January 31, 1997
---------------------------------------------------------
Consoli-
dated
KOS Statement
The MNI Indus- of Opera-
Group tries Adjust- tions
Inc Inc ments (Pro Forma)
---------- -------- -------- ----------
<S> <C> <C> <C> <C>
Sales $1,032,900 $877,100 $ - $1,910,000
---------- -------- -------- ----------
Cost of sales and operating expenses:
Cost of merchandise sales 600,700 567,800 1,168,500
Selling, general and ad- (3)
ministrative expenses 428,000 320,100 7,900 756,000
Advertising expense - - - -
Research and development (Note 2) - - - -
---------- -------- -------- ----------
Total cost of sales and operating
expenses 1,028,700 887,900 7,900 1,924,500
---------- -------- -------- ----------
Operating income (loss) 4,200 ( 10,800) ( 7,900) ( 14,500)
---------- -------- -------- ----------
Other income (expense):
Interest expense ( 20,400) ( 6,000) - ( 26,400)
---------- -------- -------- -----------
Total other income (expense) ( 20,400) ( 6,000) - ( 26,400)
---------- -------- -------- -----------
Income (loss) from operations ( 16,200) ( 16,800) ( 7,900) ( 40,900)
Provision for income taxes (Note 7) - - - -
---------- -------- -------- ----------
Net income (loss) ($ 16,200) ($ 16,800) ($ 7,900) ($ 40,900)
========== ======== ======== ==========
Net income (loss) per share (Note 8) $ - $ - $ - ($ 01)
========== ======== ======== ===========
Weighted average number of shares
outstanding 3,928,643 - 600,000 4,528,643
========= ======== ======= ===========
<CAPTION>
January 31, 1996
---------------------------------------------------------
Consoli-
dated
KOS Statement
The MNI Indus- of Opera-
Group tries Adjust- tions
Inc Inc ments (Pro Forma)
---------- -------- -------- -----------
<S> <C> <C> <C> <C>
Sales $1,320,500 $678,200 $ - $1,998,700
---------- -------- -------- ----------
Cost of sales and operating expenses: 418,200 1,235,500
Cost of merchandise sales 817,300
Selling, general and ad- (3)
ministrative expenses 472,000 259,300 7,900 739,200
Advertising expense 4,900 1,500 - 6,400
Research and development (Note 2) - - - -
---------- -------- -------- ----------
Total cost of sales and operating
expenses 1,294,200 679,000 7,900 1,981,100
---------- -------- -------- ----------
Operating income (loss) 26,300 ( 800) ( 7,900) 17,600
---------- -------- -------- ----------
Other income (expense):
Interest expense ( 21,000) ( 5,200) - ( 26,200)
---------- -------- -------- ----------
Total other income (expense) ( 21,000) ( 5,200) - ( 26,200)
---------- -------- -------- ----------
Income (loss) from operations 5,300 ( 6,000) ( 7,900) ( 8,600)
Provision for income taxes (Note 7) - - - -
---------- -------- -------- ----------
Net income (loss) $ 5,300 ($ 6,000) ($ 7,900) ($ 8,600)
========== ======== ======== ==========
Net income (loss) per share (Note 8) $ - $ - $ - $ -
========== ======== ======== ==========
Weighted average number of shares
outstanding 3,710,709 - 600,000 4,310,709
========= ======== ======= ==========
</TABLE>
<PAGE>
<PAGE>
THE MNI GROUP, INC.
PRO-FORMA CONSOLIDATING STATEMENT OF STOCKHOLDERS' DEFICIENCY
YEARS ENDED JANUARY 31, 1997 AND 1996
(UNAUDITED)
<TABLE>
<CAPTION>
The MNI Group, Inc KOS Industries, Inc
------------------------- --------------------
Common Stock Common Stock
------------------------- --------------------
Shares Amount Shares Amount
--------- ---------- ------ --------
<S> <C> <C> <C> <C>
Common stock, balance, February 1, 1995 3,710,709 $7,238,900 1,200 $ 1,200
Issuance of shares to acquire KOS
Industries, Inc. 600,000 300,000 - -
--------- ---------- ------- --------
Balance, January 31, 1996 4,310,709 7,538,900 1,200 1,200
Adjustment for conversion of pre-IPO shares 117,934 - - -
Issuance of shares for services 100,000 10,000 - -
--------- ---------- ------- --------
Balance, January 31, 1997 4,528,643 $7,548,900 1,200 $ 1,200
========= ========== ======= ========
<CAPTION>
Accumulated Accumulated
Deficit Deficit
------------ -----------
Balance, February 1, 1995 ($7,788,400) ($ 16,200)
Elimination due to acquisition by MNI Group, Inc.:
Net income (loss) 5,300 ( 6,000)
---------- --------
Balance, January 31, 1996 ( 7,783,100) ( 22,200)
Net (loss) ( 16,200) ( 16,800)
---------- --------
Balance, January 31, 1997 ($7,799,300) ($ 39,000)
========== ========
<CAPTION>
Consolidated Statement
of Stockholders'
Adjustments Deficiency
------------------------- -----------------------
Common Stock Common Stock
------------------------- -----------------------
Shares Amount Shares Amount
--------- ---------- --------- ----------
<S> <C> <C> <C> <C>
Common stock, balance, February 1, 1995 ( 1,200) ($ 1,200) 3,710,709 $7,238,900
Issuance of shares to acquire KOS
Industries, Inc. - - 600,000 300,000
-------- -------- --------- ----------
Balance, January 31, 1996 ( 1,200) ( 1,200) 4,310,709 7,538,900
Adjustment for conversion of pre-IPO shares - - 117,934 -
Issuance of shares for services - - 100,000 10,000
-------- -------- --------- ----------
Balance, January 31, 1997 ( 1,200) ($ 1,200) 4,528,643 $7,548,900
======== ======== ========= ==========
Accumulated
Adjustments Deficit
----------- ------------
Balance, February 1, 1995 $ 16,200 ($7,788,400)
Elimination due to acquisition by MNI Group, Inc.:
Net income (loss) ( 7,900) ( 8,600)
-------- ----------
Balance, January 31, 1996 8,300 ( 7,797,000)
Net (loss) ( 7,900) ( 40,900)
-------- ----------
Balance, January 31, 1997 $ 400 ($7,837,900)
======== ==========
</TABLE>
<PAGE>
<PAGE>
THE MNI GROUP, INC.
PRO-FORMA CONSOLIDATING STATEMENT OF CASH FLOWS
YEARS ENDED JANUARY 31, 1997 AND 1996
(UNAUDITED)
<TABLE>
<CAPTION>
January 31, 1997
------------------------------------------------------------
Consoli-
dated
KOS Statement
The MNI Indus- of Opera-
Group tries Adjust- tions
Inc Inc ments (Pro Forma)
------------ --------- --------- ------------
<S> <C> <C> <C> <C>
Cash flows from operating activities:
Net income (3)
(loss) ($ 16,200) ($ 16,800) ($ 7,900) ($ 40,900)
Adjustments to reconcile net income
(loss) to net cash provided (used) by
operating activities:
Depreciation and (3)
amortization ( 2,600) - 7,900 5,300
Changes in working capital items:
(Increase) decrease in accounts
receivable 300 ( 54,200) - ( 53,900)
(Increase) decrease in
inventories 22,700 ( 34,900) - ( 12,200)
(Increase) decrease in other
current assets 4,500 - - 4,500
(Increase) decrease in security
deposits - - - -
Increase (decrease) in accounts
payable and other liabilities ( 35,800) 99,400 - 63,600
---------- -------- -------- ----------
Net cash provided (used) by operating
activities ( 27,100) ( 6,500) - ( 33,600)
---------- -------- -------- ----------
Cash flows from financing activities:
Repayment of notes payable ( 52,100) - - ( 52,100)
Increase in loan payable - officer 71,100 7,500 - 78,600
Shares issued for services 10,000 - - 10,000
---------- -------- -------- ----------
Net cash provided (used) by financing
activities 29,000 7,500 - 36,500
---------- -------- -------- ----------
Increase (decrease) in cash and cash
equivalents 1,900 1,000 - 2,900
Cash, beginning of year 11,100 6,000 - 17,100
---------- -------- -------- ----------
Cash, end of year $ 13,000 $ 7,000 $ - $ 20,000
========== ======== ======== ==========
Supplemental information:
Cash expended for:
Interest expense $ 20,400 $ 6,000 $ - $ 26,400
========== ======== ======== ==========
Federal income taxes $ - $ - $ - $ -
========== ======== ======== ==========
<CAPTION>
January 31, 1996
----------------------------------------------------------
Consoli-
dated
KOS Statement
The MNI Indus- of Opera-
Group tries Adjust- tions
Inc Inc ments (Pro Forma)
----------- ---------- --------- ----------
<S> <C> <C> <C> <C>
Cash flows from operating activities:
Net income (3)
(loss) $ 5,300 ($ 6,000) ($ 7,900) ($ 8,600)
Adjustments to reconcile net income
(loss) to net cash provided (used) by
operating activities:
Depreciation and (3)
amortization ( 2,000) - 7,900 5,900
Changes in working capital items:
(Increase) decrease in accounts
receivable ( 78,700) 20,700) - ( 58,000)
(Increase) decrease in
inventories 6,600 5,700 - 12,300
(Increase) decrease in other
current assets ( 1,000) - - ( 1,000)
(Increase) decrease in security
deposits ( 500) - - ( 500)
Increase (decrease) in accounts
payable and other liabilities 68,000 ( 20,600) - 47,400
---------- -------- -------- ----------
Net cash provided (used) by operating
activities ( 2,300) ( 200) - ( 2,500)
---------- -------- -------- ----------
Cash flows from financing activities:
Repayment of notes payable ( 17,900) - - ( 17,900)
Increase in loan payable - officer 19,400 9,500 - 28,900
Shares issued for services - - - -
---------- -------- -------- ---------
Net cash provided (used) by financing
activities 1,500 9,500 - 11,000
---------- -------- -------- ---------
Increase (decrease) in cash and cash
equivalents ( 800) 9,300 - 8,500
Cash, beginning of year 11,900 ( 3,300) - 8,600
---------- -------- -------- ----------
Cash, end of year $ 11,100 $ 6,000 $ - $ 17,100
========== ======== ======== ==========
Supplemental information:
Cash expended for:
Interest expense $ 12,600 $ 5,200 $ - $ 17,800
========== ======== ======== ==========
Federal income taxes $ - $ - $ - $ -
========== ======== ======== ==========
</TABLE>
<PAGE>
<PAGE>
THE MNI GROUP, INC.
PRO-FORMA CONSOLIDATING STATEMENT OF CASH FLOWS
YEARS ENDED JANUARY 31, 1997 AND 1996
(UNAUDITED)
<TABLE>
<CAPTION>
January 31, 1997
--------------------------------------------------
Consoli-
KOS dated
The MNI Indus- Statement
Group tries Adjust- of Cash
Inc Inc ments Flows
------- ------ ------- ----------
<S> <C> <C> <C> <C>
Supplemental information (continued):
Non-cash transactions:
Pro-forma adjustment re acquisition
of KOS Industries, Inc.
Goodwill $ -
Capital stock retired - KOS
Industries, Inc. -
Retained earnings (deficit), KOS
Industries, Inc. -
Capital stock issued - The MNI
Group, Inc. -
--------
Total $ -
========
<CAPTION>
January 31, 1996
--------------------------------------------------
Consoli-
KOS dated
The MNI Indus- Statement
Group tries Adjust- of Cash
Inc Inc ments Flows
------- ------ ------- ----------
<S> <C> <C> <C> <C>
Supplemental information (continued):
Non-cash transactions:
Pro-forma adjustment re acquisition
of KOS Industries, Inc.
Goodwill $315,000
Capital stock retired - KOS
Industries, Inc. 1,200
Retained earnings (deficit), KOS
Industries, Inc. ( 16,200)
Capital stock issued - The MNI
Group, Inc. ( 300,000)
--------
Total $ -
========
</TABLE>
<PAGE>
<PAGE>
THE MNI GROUP, INC.
NOTES TO PRO-FORMA CONSOLIDATING FINANCIAL STATEMENTS
JANUARY 31, 1997
1. Organization and Business:
The MNI Group, Inc. (the "Company"), a New Jersey corporation organized
in 1981, and its subsidiaries, are engaged in the development, marketing
and distribution of a variety of health-related products and programs. The
Company and its subsidiaries distribute nutritional support products and
programs for weight control, a line of nutritionally-oriented pet products,
and over-the-counter household remedies. In February 1992, the company
changed its name from Medical Nutrition Inc. to The MNI Group, Inc.
In May 1993, the Company organized NutraPet Labs, Inc. (NutraPet) for
the purpose of developing and marketing pet products. The Company
subsequently issued 313,000 shares of NutraPet for $313,000 in a private
placement (see details discussed in Note 6).
The Company's management is continuously seeking additional financing in
order to meet its working capital needs and expansion. It is also seeking
to expand its exposure in the shop-at-home marketplace and has received
initial orders from the Home Shopping Network.
In July 1997 (effective as of August 1, 1997), the Company consummated a
merger with K.O.S. Industries, Inc. (KOS), whereby it exchanged 600,000
shares of its common stock for all of the outstanding shares of KO2S. KOS
is a distributor of pet-related products. In addition, KOS's key employees
were granted a total of 900,000 options to purchase MNI stock. Such options
will vest over a period of five years and will expire on December 31, 2001.
2. Significant Accounting Policies:
Principles of consolidation - The consolidated financial statements
include the accounts of the Company and its wholly-owned and majority-owned
subsidiaries after elimination of intercompany accounts and transactions.
The Company has prepared consolidating financial statements pursuant to
Regulation S-X, whereby the results of MNI Group, Inc. have been combined
with those of K.O.S. Industries, Inc. All intercompany transactions have
been eliminated.
Inventories - Inventories, which consist primarily of purchased finished
goods, are stated at the lower of cost or market using the "first-in,
first-out" (FIFO) cost method.
Furniture, fixtures and leasehold improvements - Furniture, fixtures and
leasehold improvements are stated at cost and depreciated over their
estimated useful lives using the straight-line method for financial
reporting purposes and accelerated methods for income tax purposes.
Expenditures for repairs and maintenance which do not extend the useful
life of the property are expensed as incurred. The estimated useful lives
of the assets are as follows:
Furniture and fixtures 5-10 years
Computers 5 years
Leasehold improvement 3-7 years
Research and development - The Company and its subsidiaries utilize
independent third parties to design and test certain products. These
expenditures are accounted for as research and development costs and are
expensed as incurred.
Income taxes - The Company has adopted FASB 109 in accounting for its
income taxes. See Note 7.
<PAGE>
<PAGE>
THE MNI GROUP, INC.
NOTES TO PRO-FORMA CONSOLIDATING FINANCIAL STATEMENTS (CONTINUED)
JANUARY 31, 1997
2. Significant Accounting Policies (continued):
Revenue recognition - The Company recognizes revenue when its products
are shipped from the warehouse.
Use of estimates - In preparing financial statements in conformity with
generally accepted accounting principles, management is required to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and the disclosures of contingent assets and liabilities at the
date of the financial statements and revenues and expenses during the
reporting period. Actual results could differ from those estimates.
3. Fixed Assets:
The fixed assets consisted of the following:
Furniture, fixtures and equipment $ 69,300
Leasehold improvements 17,700
Promotional video 29,000
--------
116,000
Less: accumulated depreciation
and amortization 113,100
--------
$ 2,900
========
4. Notes Payable:
In December 1992, LN Investment Capital Limited Partnership (LNIC)
advanced $75,000 to the Company. This loan was originally due on July 31,
1993, and, in accordance with the terms of the loan agreement, has
subsequently been extended and converted to a demand note, with interest at
10% per annum. In addition, LNIC originally received warrants (which expire
in December 2002) to purchase 300,000 shares of the Company's common stock
at an exercise price of $.25 per share. Upon the Company's election to
extend the note, the warrant exercise prices were reduced and the number of
warrants increased as follows:
Loan
Extension Date Warrants Per share
-------------- -------- ---------
7/31/93 300,000 $.20
1/31/94 500,000 .15
7/31/94 750,000 .10
The Company has been accruing interest on this debt at $7,500 per year.
The chief operating officers of MNI and KOS have made short-term
advances to their respective companies totalling $143,000. Interest on
these advances has being charged at various rates ranging between 8-1/4%
and 18%.
In November 1991, Family Weight Loss Centers, Inc., (FWLC), (a former
subsidiary of MNI), filed a petition for bankruptcy proceedings pursuant to
Chapter 7 of the federal bankruptcy statutes. This petition provided for
complete liquidation of all of the corporate assets and liabilities.
<PAGE>
<PAGE>
THE MNI GROUP, INC.
NOTES TO PRO-FORMA CONSOLIDATING FINANCIAL STATEMENTS (CONTINUED)
JANUARY 31, 1997
4. Notes Payable (continued):
Subsequent to the bankruptcy filing, the Company agreed to satisfy an
outstanding $4,000,000 obligation, which it had guaranteed as part of the
FWLC acquisition, in the form of a term note to a financial institution
that is an affiliate of a stockholder of the company by the payment of
$125,000, issuance of a three year note in the amount of $125,000, with
interest at the bank's prime rate, and the issuance of warrants to purchase
750,000 shares of the Company's common stock at a price of $.01 per share,
expiring in February 2002. In February 1995, the Company agreed to
liquidate the three year note in the amount of $125,000 by the payment of
42 monthly payments in the amount of $2,976 each plus interest at the prime
rate commencing in August 1995. The original three year note bore interest
only through that date. Interest on this debt was $7,200 and $10,600 for
the years ended January 31, 1997 and 1996.
A summary of the Company's debt is as follows:
Short-term Long-term
---------- ---------
Due to LN Investment Capital
Ltd. Partnership $ - $ 75,000
Due to bank 35,700 38,700
--------- --------
$ 35,700 $113,700
========= ========
5. Lease Commitments:
The Company leases its office and warehouse facility under a
noncancellable lease expiring in December 1999. The minimum annual rental
is $60,000 plus applicable escalations and other charges. KOS has entered
into a lease for its office located in Scottsdale, AZ expiring on March 31,
1998. The lease calls for a minimum annual rental of $7,020 plus applicable
escalations.
In addition, there may be applicable escalation and other charges not
presently determinable.
Total gross rental expense was approximately $84,200 in 1996, and
$81,500 in 1995. In addition, the Company has sub-leased (on a month to
month basis) a portion of its facility to various entities at an annual
rental income of approximately $56,000 in 1996 and $50,000 in 1995.
6. Stockholders' Equity:
In January 1990, the Company adopted its Incentive and Nonqualified
Stock Option Plan (the "Plan"), to which options for an aggregate of
175,000 shares of common stock may be granted to key employees and certain
other persons. Incentive stock options granted under the Plan must be at a
price per share not less than 100% (110% in the case of stockholders who
own more than 10% of the outstanding shares) of the fair market value, as
defined by the Plan, of the Company's common stock on the date of the
grant. The value of incentive stock options granted to one employee may not
exceed $100,000 per year. Options cannot be exercised prior to one year or
after ten years (five years in the case of a 10% or more stockholder) from
the date of the grant. During 1993, the Company issued 50,000 options under
this plan, exercisable at $.10 per share. These were subsequently replaced
with new options in 1994.
<PAGE>
<PAGE>
THE MNI GROUP, INC.
NOTES TO PRO-FORMA CONSOLIDATING FINANCIAL STATEMENTS (CONTINUED)
JANUARY 31, 1997
6. Stockholders' Equity (continued):
In March 1990, the Company concluded an initial public offering of
750,000 additional shares, at a price of $3.25 per share. In April 1990,
the Company sold an additional 120,000 shares at a price of $3.25 per share
under the overallotment provisions of the offering. The Company received
$2,332,702 (net of underwriter's fees and registration costs) from this
offering. As part of the offering, the underwriter received warrants to
purchase 80,000 shares of the Company's common stock which expired in March
1995.
In March 1992, three officers and directors of the Company were granted
options to immediately purchase 125,000 shares each and an additional
150,000 options each to be granted over the next 60 months at a rate of
2,500 per month per officer and director. The options are exercisable at
$.10 per share and expire in March 2002. Upon the resignation of one of the
officers, 150,000 of the aforementioned additional options were cancelled.
In September 1992, Michael Connelly was elected chairman of the board
and chief executive officer of the Company. His compensation was to have
been $7,500 per month, which was to be accrued until such time as funds
were available to make payment. During 1994, Mr. Connelly agreed to reduce
his annual compensation to $45,000 per annum. Mr. Connelly terminated his
compensation agreement with the Company as of January 31, 1995. He assigned
his rights to such compensation to Lepercq Capital Management Inc. In
addition, he has been granted options and rights identical to those issued
in March 1992 to the other officers, which he assigned to LN Investment
Capital Limited Partnership (LNIC). LNIC also received an option to
purchase 125,000 shares at $.10 per share, which it exercised in October
1992.
During 1993, the Company issued warrants to purchase 125,000 shares of
its common stock in exchange for the elimination of approximately $41,000
of accounts payable. These warrants are exercisable at $.10 per share and
expire in February 1999. In addition, 156,500 warrants were issued to a
financial advisor as compensation for services rendered in conjunction with
the private placement offering of NutraPet. These warrants are exercisable
at $.125 per share, and expire in March 1999.
In May 1993, the Company transferred certain assets related to its pet
products business into the subsidiary known as NutraPet, in exchange for
500,000 shares of NutraPet common stock. Subsequently, NutraPet raised
$313,000 (before expenses) by the sale of 313,000 common shares (at a price
of $1.00 per share) in a private placement offering. Upon completion of the
sale of these shares, MNI entered into a management agreement with
NutraPet.
During 1994, an officer of the Company was issued 35,000 fully-vested
options at an exercise price of $.10 per share. In addition, 15,000
previously issued options exercisable at a price of $2.00 were cancelled
(see above), and 15,000 options subject to a three-year vesting and
exercisable at a price of $.10 per share were issued. In addition,
consultants to the Company were issued 40,000 options exercisable at $.10
per share which expire March and September 1999.
<PAGE>
<PAGE>
THE MNI GROUP, INC.
NOTES TO PRO-FORMA CONSOLIDATING FINANCIAL STATEMENTS (CONTINUED)
JANUARY 31, 1997
6. Stockholders' Equity (continued):
The following is a summary of the outstanding options and warrants:
Exercise
Expiration Date Price Options Warrants
--------------- -------- ------- --------
September 17, 1997 $.10 275,000
February 1, 1999 .10 125,000
March 1, 1999 .125 156,500
March 1, 1999 .10 50,000
March 8, 1999 .10 24,000
September 1, 1999 .10 16,000
December 31, 2001 .50 900,000
February 1, 2002 .10 750,000
March 26, 2002 .10 1,300,000
December 1, 2002 .10 750,000
--------- ---------
2,290,000 2,056,500
========= =========
7. Income Taxes:
The Company and its subsidiaries have net operating loss carryforwards
of approximately $4,910,000 at January 31, 1997, which are available to
reduce income otherwise subject to federal income tax through 2011. The
utilization of these losses is subject to various limitations as imposed by
the Internal Revenue Code.
The effective tax rate for the Company and its subsidiaries differs from
the maximum Federal statutory tax rate of 34% due primarily to the
Company's inability to carry back operating losses and state income taxes.
The company has adopted FASB 109 in accounting for its income taxes.
However, due to the operating losses mentioned above and the uncertainties
regarding their utilization in the future, the implementation of FASB 109
has no effect on the Company's financial statements. A valuation allowance
of 100% has been applied to any possible benefits arising from the use of
such net operating losses in future years.
8. Earnings Per Share:
The Company has not given any consideration to the outstanding options
and warrants of its common shares in computing its earnings per share, as
the effect would be anti-dilutive.
The number of shares outstanding have been restated to retroactively
include the 600,000 shares issued for the acquisition of KOS. In addition,
some of the Company's pre-public offering shareholders never converted
their original stock. Such conversions resulted in the issuance of an
additional 117,934 shares. All of these shares have been retroactively
restated in the computation of earnings per share.
9. Commitments and Contingencies:
The Company's food and pet products are produced by third parties in
various plants under applicable government regulations. The Company depends
upon its vendors to comply with such regulations. Failure by such vendors
to comply with the applicable regulations could result in fines and/or
seizure of the food products. The Company is not presently a party to any
lawsuits. In addition, it has no commitments to its vendors for the
purchase of either raw materials or finished product.
<PAGE>
<PAGE>
THE MNI GROUP, INC.
NOTES TO PRO-FORMA CONSOLIDATING FINANCIAL STATEMENTS (CONTINUED)
JANUARY 31, 1997
10. Major Customers:
One customer was responsible for approximately $568,200 and $744,000 in
sales for the years ended January 31, 1997 and 1996, representing
approximately 30%, and 37% of total sales, respectively. The loss of this
customer could have a material adverse impact on the Company.
<PAGE>
<PAGE>
INTRODUCTION TO PRO FORMA FINANCIAL STATEMENTS
(UNAUDITED)
In July 1997, The MNI Group, Inc. (MNI) consummated a merger with K.O.S.
Industries, Inc. (KOS), whereby it exchanged 600,000 shares of its common stock
for all of the outstanding shares of KOS. KOS is a distributor of pet-related
products. In addition, KOS's key employees were granted a total of 900,000
options to purchase MNI stock. Such options will vest over a period of five
years and will expire on December 31, 2001.
The following unaudited proforma financial statements are presented:
Pro-forma consolidating balance sheet as of July 31, 1997 and January 31, 1997,
pro-forma consolidating statement of operations for the six months ended
July 31, 1997 and for the year ended January 31, 1997, as if the merger had
occurred in 1996 and the consolidated proforma balance sheet had occurred on
January 31, 1997.
KOS has a different fiscal year end that does not substantially differ from that
of MNI. In compliance with Rule 3A-02 of Regulation S-X issued by the Securities
and Exchange Commission, the consolidating statements are presented based on the
fiscal year of MNI. No material intervening events occurred to materially affect
the financial position or results of operations.
The unaudited consolidating proforma financial information is not necessarily
indicative of what MNI's actual results of operations or financial position
would have been had the merger been consummated on the dates indicated, nor does
it purport to represent MNI's results of operations or financial position for
any future period. The results of operations for the period ended July 31, 1997
are not necessarily indicative of the operating results for the full year.
The unaudited proforma financial information should be read in conjunction with
the financial statements and notes thereto included in MNI's annual report on
Form 10-K for the year ended January 31, 1997, its quarterly report on Form 10-Q
for the period ended July 31, 1997, and its report on Form 8-K incorporated
herein by reference. In management's opinion, all adjustments necessary to
reflect the transactions have been made, and the financial statements and notes
thereto included in MNI's annual report on Form 10-K for the year ended January
31, 1997 and its quarterly report on Form 10-Q for the period ended July 31,
1997 are incorporated herein by reference.
<PAGE>
<PAGE>
THE MNI GROUP, INC.
PRO-FORMA CONSOLIDATING BALANCE SHEET
JULY 31, 1997
(UNAUDITED)
ASSETS
<TABLE>
<CAPTION>
Consoli-
KOS dated
The MNI Indus- Balance
Group, tries Adjust- Sheet
Inc Inc ments (Pro Forma)
-------- --------- -------- -----------
<S> <C> <C> <C> <C>
Current assets:
Cash $ 32,200 ($ 700) $ - $ 31,500
-------- -------- --------
Accounts receivable 31,600 108,900 140,500
Less: allowance for doubtful accounts - ( 8,100) ( 8,100)
-------- -------- --------
Accounts receivable - net 31,600 100,800 132,400
-------- -------- --------
Inventories 71,500 79,800 151,300
Other current assets 4,100 - 4,100
-------- -------- --------
Total current assets 139,400 179,900 319,300
-------- ------- --------
Furniture, fixtures, and leasehold improvements 116,000 - 116,000
Less: accumulated depreciation ( 114,100) - ( 114,100)
-------- -------- --------
1,900 - 1,900
-------- -------- --------
Other assets:
Security deposits 15,500 300 - 15,800
Investment in subsidiary - - -
Goodwill - - 315,000 315,000
Less: accumulated amortization - - ( 19,800) ( 19,800)
-------- -------- -------- --------
15,500 300 295,200 311,000
-------- -------- -------- --------
$156,800 $180,200 $295,200 $632,200
======== ======== ======== ========
</TABLE>
<PAGE>
<PAGE>
THE MNI GROUP, INC.
PRO-FORMA CONSOLIDATING BALANCE SHEET
JULY 31, 1997
(UNAUDITED)
LIABILITIES AND STOCKHOLDERS' DEFICIENCY
<TABLE>
<CAPTION>
Consoli-
KOS dated
The MNI Indus- Balance
Group, tries Adjust- Sheet
Inc Inc ments (Pro Forma)
---------- -------- --------- -----------
<S> <C> <C> <C> <C>
Current liabilities:
Accounts payable $ 107,500 $146,300 $ - $ 253,800
Accrued expenses and other liabilities 51,900 5,900 57,800
Notes payable - short-term portion 35,700 74,500 110,200
Loan payable - officer 22,100 5,400 27,500
---------- -------- ----------
Total current liabilities 217,200 232,100 449,300
---------- -------- ----------
Accrued expenses (non-current) 275,000 - 275,000
Notes payable (net of short-term portion) 92,900 - 92,900
Excess of basis of assets acquired over purchase price, net
of amortization 157,400 - 157,400
---------- -------- ----------
525,300 - 525,300
---------- -------- ----------
Stockholders' deficiency:
Common stock, no par value; 10,000,000 shares authorized, 300,000
4,528,643 shares issued and outstanding 7,248,900 1,200 ( 1,200) 7,548,900
Accumulated 16,200
deficit ( 7,834,600) ( 53,100) ( 19,800) ( 7,891,300)
---------- -------- -------- ----------
( 585,700) ( 51,900) 295,200 ( 342,400)
---------- -------- --------
$ 156,800 $180,200 $295,200 $ 632,200
========== ======== ======== ==========
</TABLE>
<PAGE>
<PAGE>
THE MNI GROUP, INC.
PRO-FORMA CONSOLIDATING STATEMENT OF OPERATIONS
SIX MONTHS ENDED JULY 31, 1997
(UNAUDITED)
<TABLE>
<CAPTION>
Consoli-
dated
KOS Statement
The MNI Indus- of Opera-
Group, tries Adjust- tions
Inc Inc ments (Pro Forma)
---------- -------- --------- -----------
<S> <C> <C> <C> <C>
Sales $ 638,600 $338,200 $ - $ 976,800
---------- -------- ----------
Cost of sales and operating expenses:
Cost of merchandise sales 390,800 235,800 - 626,600
Selling, general and administrative expenses 273,000 113,800 4,000 390,800
---------- -------- -------- ----------
663,800 349,600 4,000 1,017,400
---------- -------- -------- ----------
Income (loss) from operations ( 25,200) ( 11,400) ( 4,000) ( 40,600)
---------- -------- -------- ----------
Other income (expense):
Interest expense ( 10,200) ( 2,700) - ( 12,900)
---------- -------- -------- ----------
( 10,200) ( 2,700) - ( 12,900)
---------- -------- -------- ----------
Net income (loss) before provision for income taxes ( 35,400) ( 14,100) ( 4,000) ( 53,500)
Provision for income taxes - - - -
---------- -------- -------- ----------
Net income (loss) ($ 35,400) ($ 14,100) ($ 4,000) ($ 53,500)
========== ======== ======== ==========
Net income (loss) per share ($.01) ($11.75) - ($.01)
==== ====== ======== ==========
( 1,200)
Weighted average number 600,000
of shares -------
outstanding 3,928,643 1,200 598,800 4,528,643
========== ======== ======= =========
</TABLE>
<PAGE>
<PAGE>
THE MNI GROUP, INC.
PRO-FORMA CONSOLIDATING STATEMENT OF OPERATIONS
YEAR ENDED JANUARY 31, 1997
(UNAUDITED)
<TABLE>
<CAPTION>
Consoli-
dated
KOS Statement
The MNI Indus- of Opera-
Group, tries Adjust- tions
Inc Inc ments (Pro Forma)
---------- --------- --------- -----------
<S> <C> <C> <C> <C>
Sales $1,032,900 $877,100 $ - $1,910,000
---------- -------- ----------
Cost of sales and operating expenses:
Cost of merchandise sales 600,700 567,800 - 1,168,500
Selling, general and administrative expenses 428,000 320,100 7,900 756,000
---------- -------- -------- ----------
1,028,700 887,900 7,900 1,924,500
---------- -------- -------- ----------
Income (loss) from operations 4,200 ( 10,800) ( 7,900) ( 14,500)
---------- -------- -------- ----------
Other income (expense):
Interest expense ( 20,400) ( 6,000) - ( 26,400)
---------- -------- -------- ----------
( 20,400) ( 6,000) - ( 26,400)
---------- -------- -------- ----------
Net income (loss) before provision for income taxes ( 16,200) ( 16,800) ( 7,900) ( 40,900)
Provision for income taxes - - - -
---------- -------- -------- ---------
Net income (loss) ($ 16,200) ($ 16,800) ($ 7,900) ($ 40,900)
========== ======== ======== ==========
Net income (loss) per share $ - ($14.00) $ - ($.01)
===== ====== ===== =====
Weighted average number of ( 1,200)
shares 600,000
outstanding 3,928,643 1,200 598,800 4,528,643
========== ======== ======= =========
</TABLE>
<PAGE>
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report or amendment thereto to be signed on
its behalf by the undersigned thereunto duly authorized.
Dated: December 22, 1997 THE MNI GROUP INC.
(Registrant)
By: /s/ Arnold Gans
Arnold Gans
President
