SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-KSB
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the fiscal year ended: December 31, 1997
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
Commission file number: 0 24736
Midland, Inc.
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(Exact name of registrant as specified in its charter)
Colorado 84 1078201
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(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification number)
1999 Broadway, Ste. 3235, Denver, Colorado 80202
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number: (303) 292 2992
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act:
Common Stock
(Title of class)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports) and (2) has been subject to such filing
requirements for the past 90 days. Yes X No
Indicate by check mark if disclosure of delinquent filers pursuant to Rule 405
of Regulation S-K is not contained herein and will not be contained, to the best
of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [ ]
State the aggregate market value of the voting stock held by non affiliates of
the registrant. The aggregate market value shall be computed by reference to the
price at which the stock was sold, or the average bid and asked prices of such
stock, as of a specified date within 60 days prior to the date of filing: On
November 30, 1998, there were outstanding: (I) 3,489,957 shares of common stock
and (ii) 301,821 shares of Series A Preferred Stock convertible into
approximately 12,782,120 shares of common stock. The Series A Preferred Stock is
considered to be a common stock equivalent for purposes of this calculation.
There were, therefore, 16,272,077 common share equivalents outstanding, of which
affiliates held 143,990, leaving 16,128,087 common share equivalents held by non
affiliates. There were no bid or asked quotations for the common stock on that
date; thus, there was no aggregate market value for the voting stock equivalents
held by non-affiliates on November 30, 1998.
Indicate the number of shares outstanding of each of the registrant's classes of
common stock, as of the latest practicable date: As of November 30, 1998, there
were 3,489,957 shares of common stock outstanding and 16,270,077 common share
equivalents.
DOCUMENTS INCORPORATED BY REFERENCE
List hereunder the documents if incorporated by reference and the Part of this
Form 10-KSB into which the document is incorporated:
None.
<PAGE>
Item 1. Description of Business.
Business until February 18, 1997: The Company, prior to 1997, was engaged in the
sale of gourmet coffee and related products and accessories through service
concessions located in a chain of grocery stores in Southern California, the
most substantial number of which were in Ralph's. In late October, 1996, the
Company began experiencing difficulties in its relationship with Ralph's, the
result of which was that Ralph's refused to pay its invoices. This caused a
default by the Company in payments due its coffee suppliers. The Company was
then unable to provide coffee to its sales outlets. The sales outlets then
terminated their relationship with the Company. The Company and Ralph's entered
into a mutual release in February, 1997. Ralph's kept the slotting fees paid by
the Company, and the Company was relieved of all liabilities claimed by Ralph's.
There were no obligations between the Company and its other sales outlets.
Subsequently, the Company settled outstanding liabilities to many of its other
creditors.
Secondary Offering: The Company, on August 14, 1996, completed a secondary
offering to the public of 54,000 units (Units), each Unit consisting of one
share of Series A Preferred Stock (Series A Preferred Stock) and fifty
Redeemable Common Stock Purchase Warrants (Series A Warrants).
Series A Preferred Stock: The Series A Preferred Stock was to have been
automatically converted into shares of common (Common Stock) on October 1, 1998;
however, there were an insufficient number of shares authorized to provide for
conversion. The Company has allowed preferred shareholders who request
conversion in writing to obtain shares of Common Stock, but there is no
assurance it will continue to be able to do so given the authorized
capitalization of the Company. The Company anticipates calling and holding an
annual meeting of shareholders during April, 1999, and, in addition to the
election of directors, will place on the ballot a proposal to increase its
authorized capitalization to an amount sufficient to provide for conversion.
Until conversion is effected, each share of Series A Preferred Stock is entitled
to 35 votes on each matter submitted to a vote to the Common Stock as if the two
classes, common and preferred, constituted one class. Each share of Preferred
Stock is currently convertible into approximately 42.35 shares of Common Stock.
The Company, on or about May 18, 1998, during the tenure of Mr. Daniel W.
Fisher, declared a stock dividend on its Series A Preferred Stock. The dividend
announced would have resulted in the Company issuing one additional share of
Series A Preferred Stock for each two shares outstanding on the date of
declaration. This would have resulted in their being 50% more shares of Series
Preferred Stock outstanding after the dividend than are actually now
outstanding. The dividend has not been distributed, however, due to the
difficulties which arose between the Company and its former transfer agent,
Signature Stock Transfer. The Company has not determined what, if anything, it
will do so bring this distribution into effect. All statements regarding share
figures in this filing are to pre dividend shares.
Series A Warrants: Each Series A Warrant originally entitled the holder to
purchase one share of Common Stock (Warrant Share) at an exercise price of $1.00
per Warrant Share until August 14, 2001. The strike price was reduced to $.50
per share on or about May 18, 1998. Series A Warrants are subject to redemption
by the Company at a price of $0.05 each on thirty days prior written notice;
provided, however, that the closing sales price per share for the Common Stock
has equaled or exceeded $2.50 for ten consecutive trading days. The Company
presently has no right to call the Series A Warrants.
Mega-Hell and Mill Agro Acquisitions: On February 18, 1997 (MegaHel Closing
Date), the Company closed under a Plan and Agreement of Purchase (MegaHel
Purchase Agreement) with the shareholders (MegaHel Shareholders) of MILL-AGRO
(HELLAS) SA, a Panamanian company, and MEGAHEL NAUTICAL SA, a Greek company
(both of which business entities are collectively referred to as the MegaHel
Subsidiaries). The Company acquired from the MegaHel Shareholders all of the
outstanding proprietary interest of the MegaHel Subsidiaries, which made them
wholly-owned subsidiaries.
<PAGE>
The Company subsequently changed its name from America's Coffee Cup, Inc., to
Midland, Inc., as a result of this acquisition.
The Company issued to the MegaHel Shareholders 74,604 shares of Series A
Preferred Stock and 149,259 shares of a Series B Preferred Stock (Series B
Preferred Stock). The Board of Directors was then expanded to six in number, and
joining Messrs. Marsik and Pierce were Messrs. Christos Traios, Charles Stidham,
Arthur Malcolm and E. Robert Barbee. The newly constituted board then appointed
Mr. Traios Chairman of the Board of Directors, Chief Executive Officer and
President, Mr. Marsik Executive Vice-President, Chief Financial Officer and
Treasurer, Mr. Stidham Executive Vice-President (Managing Director) of North
American Shipping and Trading Operations, (d) Mr. Barbee Vice-President and Mr.
Pierce Secretary.
Series B Preferred Stock: The Series B Preferred Stock consisted of 149,259
shares, with each share (1) to have been automatically converted into 150 shares
of Common Stock on October 1, 1998, or sooner at the election of the holder, (2)
having been entitled to 150 votes on each matter submitted to the shareholders
of the Company, with certain super majority provisions being applicable in
certain instances, (3) having been entitled to a liquidation preference, (4) not
being redeemable and (5) not being entitled to dividends. This series had
certain non dilution provisions applicable to it in the event of stock
dividends, stock splits and other extraordinary corporate events. As of the date
of this report, there were no outstanding shares of this series and it ceased to
exist by its terms due to the Common Stock conversion features.
The Company, the MegaHel Shareholders and the MegaHel Subsidiaries subsequently
rescinded the MegaHel Purchase Agreement under applicable federal securities
laws effective the date of the original acquisition; thus, for legal and
accounting purposes it is as if the acquisition had never taken place. The
recision resulted in (1) the return of all Series A and Series B Preferred Stock
issued in the acquisition of the MegaHel Subsidiaries and (2) the resignation of
Mr. Traios from the Board of Directors and from all officerial positions which
he held with the Company. Mr. Marsik then assumed the positions of Chairman of
the Board of Directors, Chief Executive, Financial and Accounting Officer,
President and Treasurer. Mr. Stidham then resigned from all positions held with
the Company, Mr. Pierce having previously resigned as a director on May 13,
1998.
New Departures Acquisition: On October 10, 1997 (New Departures Closing Date),
the Company closed under a Plan and Agreement of Purchase (New Departures
Purchase Agreement) with the shareholders (New Departures Shareholders) of New
Departure Corporation, a Texas corporation (New Departures), and New Departures
itself. The Company acquired from the New Departures Shareholders all of the
outstanding proprietary interest of New Departures, which made New Departures a
wholly owned subsidiary.
<PAGE>
The Company issued to the New Departures Shareholders 70,000 shares of Series B
Preferred Stock. Mr. R. Wayne Duke then joined Messrs. Marsik, Barbee and
Malcolm on the Board of Directors. The board then appointed (1) Mr. Duke as
Chairman of the Board of Directors, Chief Executive Officer and President, (2)
Mr. Marsik Executive Vice President, and (3) Mr. Pierce Secretary. The board
elected to defer the decision of who would serve as Chief Financial and
Accounting Officer and Treasurer. The New Departures Shareholders and New
Departures undertook to deliver audited financial statements of New Departures
as of and for the period beginning at inception of New Departures up to and
including September 30, 1997, all as required by applicable securities laws. Mr.
Stidham resigned all positions with the Company on October 10, 1997, and Mr.
Marsik did the same on December 18, 1997.
The Company, the New Departures Shareholders and New Departures, on January 22,
1998, rescinded the New Departures Purchase Agreement under applicable federal
securities laws effective the date of the original acquisition; thus, for legal
and accounting purposes it is as if the acquisition had never taken place. The
recision resulted in (1) the return of all Series B Preferred Stock issued in
the acquisition of New Departures and (2) the resignation of all then officers
and directors of the Company, with the exception of Mr. Duke, who remained a
director of the Company.
ArconEnergy Acquisition: On January 22, 1998 (Arcon Closing Date), the Company
closed under a Plan and Agreement of Purchase (Arcon Purchase Agreement) with
the shareholders (Arcon Shareholders) of Arconenergy, Inc., a Texas corporation
(ArconEnergy), and ArconEnergy. The Company acquired from the Arcon Shareholders
all of the outstanding proprietary interest of ArconEnergy, which made
ArconEnergy a wholly owned subsidiary. The Arcon Shareholders received 140,943
shares of Series B Preferred Stock. The Board of Directors was reconstituted and
joining Mr. Duke were Messrs. Daniel W. Fisher, Edward Fisher, John H. Spriggs
and James R. Clark. The newly constituted board then appointed (1) Mr. Daniel W.
Fisher Chairman of the Board of Directors and Chief Executive Officer, (2) Mr.
Spriggs President and Chief Operating and Financial Officer, (3) Mr. Willard G.
McAndrew, III, Senior Vice President/Investments and (4) Mr. Pierce Secretary.
The Arcon Shareholders and ArconEnergy on the Arcon Closing Date undertook to
deliver audited financial statements of ArconEnergy as of and for the period
beginning at the inception of ArconEnergy up to and including November 30, 1997,
all as required by applicable securities laws. Further, the Arcon Shareholders
and ArconEnergy represented and warranted, among other things, that the patents
pertaining to a product referred to as DF 144 would have an audited value of
$16,000,000 (U.S.) and that certain oil and gas assets would have an audited
value of $25,000,000 (U.S.), leaving a minimum shareholders' equity for the
ArconEnergy of approximately $41,000,000 (U.S.).
<PAGE>
On June 15, 1998, the Company rescinded its acquisition of ArconEnergy due to
the fraud perpetrated by Mr. Daniel W. Fisher in obtaining the execution and
delivery of the Arcon Purchase Agreement. In accordance with the recision, all
shares of ArconEnergy held by the Company were returned to the former
shareholders of ArconEnergy and the Company became entitled to obtain the return
of all shares issued to the Arcon Shareholders. Mr. Spriggs returned all 46,831
shares of Series B Preferred Stock held by him to the Company immediately
following June 15, 1998. Mr. Daniel W. Fisher returned the remaining shares of
Series B Preferred Stock issued in the acquisition of ArconEnergy on August 21,
1998.
The recision was based on the: (1) failure of ArconEnergy to deliver the agreed
on financial statements required pursuant to applicable securities regulations,
(2) misrepresentations of ArconEnergy and Mr. Daniel W. Fisher as to the
ownership of the patents and certain oil and gas rights which they claimed to
own through ArconEnergy; (3) misrepresentations of ArconEnergy and Mr. Daniel W.
Fisher as to the value of these patents and oil and gas rights under Generally
Accepted Accounting Principles; (4) misrepresentations of ArconEnergy and Mr.
Daniel W. Fisher as to the outstanding liabilities of ArconEnergy; (5)
misrepresentations of ArconEnergy and Mr. Daniel W. Fisher concerning the
capital structure of ArconEnergy; (6) misrepresentations of ArconEnergy and Mr.
Daniel W. Fisher as to the outstanding liabilities of ArconEnergy; and (7)
various other misrepresentations of ArconEnergy and Mr. Daniel W. Fisher. The
Company learned of these misrepresentations on Friday, June 12, 1998, and acted
on them on Monday, June 15, 1998. Mr. Daniel W. Fisher was given notice of and
an opportunity to defend these matters at a properly called board meeting held
in Dallas, Texas, and was allowed to attend by telephone and be represented by
legal counsel. A majority of the directors of the Company were present at the
meeting and a quorum was established. Mr. Fisher notified the board of his
intention of being present at this meeting; however, he failed to appear, as did
his attorney.
Immediately following the recision, on June 15, 1998, two of the remaining three
members of the Board of Directors resigned, those being Messrs. Spriggs and
Clark. The Board of Directors then consisted of Messrs. Duke and Pierce, the
latter of whom was appointed a director at a second meeting immediately
following the first on this date, and who was then appointed to serve as CEO,
President and Treasurer of the Company. Mr. Duke resigned all positions with the
Company on July 16, 1998.
<PAGE>
On July 9, 1998, the Company filed a complaint (No. 98 D 1495) against
ArconEnergy, St. Andrews, Inc. (an affiliate of Mr. Fisher's), Daniel W. Fisher
and Morgan Guaranty, Ltd. (another affiliate of Mr. Fisher's), in the federal
United States District Court for the District of Colorado. The complaint alleges
that the defendants defrauded the Company and violated federal and state
securities acts and state common law principles (1) in obtaining the Arcon
Purchase Agreement and the issuance of the Series B Preferred Stock thereunder,
(2) in issuing 180,000 shares of Series A Preferred Stock and 9,000,000 Series A
Warrants to affiliates of Mr. Fisher; (3) in the sale of 42,004 shares of Series
A Preferred Stock in exchange for approximate cash proceeds of $570,060 and the
(4) the misappropriation of those funds. As of the date of this report, all of
the defendants had been served and defaults obtained. The Company has made
application for a final judgment against all defendants.
The Company on August 21, 1998, entered into an agreement with Mr. Daniel W.
Fisher and his two affiliates, St. Andrews, Inc., and Morgan Guaranty, Ltd.,
whereby Mr. Daniel W. Fisher returned 134,800 shares of Series A Preferred
Stock, 9,000,000 Series A Warrants and all of the remaining shares of Series B
Preferred Stock then outstanding to the Company, all of which have been
surrendered to treasury. In addition, Mr. Daniel W. Fisher paid to the Company
the sum of approximately $615,964.98, half of which was agreed to be released to
the mediator for resolving the disagreements between the parties. In addition,
Mr. Fisher agreed to surrender to the Company all securities and money held in a
brokerage account in the United States and to surrender the accounting records
of the Company. Subsequently, the Company learned that there were no securities
or cash in the United States brokerage account, and Mr. Fisher refused to return
the accounting records; thus, the Company declared the agreement to be null and
void and is again pursuing judgments against Mr. Fisher and his affiliates.
Other Acquisitions: It has come to the attention of the Company that an
agreement was executed and delivered, but never closed under, with one Mr.
Stephen King and pertaining to Jet View Holdings. Contrary to the assertion of
Mr. King, as he announced to the media without the authority of the Company, Jet
View was never acquired since the agreement lapsed by its terms prior to
closing. Furthermore, Mr. King was never officially appointed to serve on the
Board of Directors. The Company also negotiated for and obtained a commitment to
acquire two separate corporations, DRC, Inc., and Disk Man. Both agreements
failed to close.
<PAGE>
Series A and B Preferred Stock Reconciliations: There were 54,000 shares of
Series A Preferred Stock and no shares of Series B Preferred Stock outstanding
at December 31, 1996. At November 30, 1998, there were 301,821 shares of Series
A Preferred Stock and no shares of Series B Preferred Stock outstanding.
On February 17, 1997, the Company issued 74,604 shares of Series A Preferred
Stock and 149,259 shares of Series B Preferred Stock to the MegaHel
Shareholders. On February 17, 1997, the Company also issued 41,617 shares of
Series A Preferred Stock to officers and directors in recognition of their
services. The MegaHel acquisition was subsequently rescinded, and the 74,604
shares of Series A Preferred Stock and 149,259 shares of Series B Preferred
Stock issued were returned to treasury. Also on August 29, 1997, an officer and
director was issued 29,000 shares of Series A Preferred Stock in recognition of
services prior to that date. On October 10, 1997, the Company issued 70,000
shares of Series B Preferred Stock to the New Departure Shareholders.
Subsequently, on January 22, 1998, this acquisition was rescinded and the 70,000
shares of Series B Preferred Stock were returned to treasury. On January 22,
1998, the Company issued 140,493 shares of Series B Preferred Stock to the Arcon
Shareholders. On February 6, 1998, a former officer and director was issued
90,000 shares of Series A Preferred Stock in recognition of his services from
August 29, 1997, through January 21, 1998. From February through April, 1998, a
former officer and director of the Company, Mr. Daniel W. Fisher, conducted a
private offering of Series A Preferred Stock, the result of which was the
issuance of 42,004 shares for cash of approximately $570,060. In May, 1998, Mr.
Daniel W. Fisher, misappropriated 180,000 shares of Series A Preferred Stock, of
which 134,800 were retrieved and returned to treasury in August and September of
1998; thus, 45,200 shares were irretrievably sold into market. Subsequently, on
June 15, 1998, the ArconEnergy acquisition was rescinded, and the 140,493
outstanding shares of Series B Preferred Stock returned to treasury.
In summary, as of the date of this report, there were 301,821 shares of Series A
Preferred Stock and no shares of Series B Preferred Stock outstanding. The
following tables reconcile the discussion in the foregoing paragraph:
Series A:
54,000 Secondary Offering August 16, 1996
41,617 Officers and Directors February 17, 1997
74,604 MegaHell Acquisition February 17, 1997
(74,604) MegaHell Recission August 29, 1997
29,000 Officer and Director August 29, 1997
90,000 Officer and Director February 6, 1998
42,004 Private Offering February through April, 1998
45,200 Daniel W. Fisher May, 1998
301,821
<PAGE>
Series B:
149,259 MegaHell Acquisition February 17, 1997
(149,259) MegaHell Recission August 29, 1997
70,000 New Departure Acquisition October 10, 1997
(70,000) New Departure Recission January 22, 1998
140,493 ArconEnergy Acquisition January 22, 1998
(140,493) ArconEnergy Recission June 15, 1998
There were 70,617 shares of Series A Preferred Stock issued during 1997; thus,
there were 124,617 shares of Series A Preferred Stock outstanding at December
31, 1997. There were no shares of Series B Preferred Stock outstanding at year
end due to the recission of the MegaHel and New Departures acquisitions. There
were 125,504 shares of Series A Preferred Stock issued during the first quarter
of 1998; thus, there were 250,121 shares of Series A Preferred Stock outstanding
at March 31, 1998. There were no shares of Series B Preferred Stock outstanding
at the end of the first quarter of 1998 due to the recission of the ArconEnergy
acquisition. There were 51,700 shares of Series A Preferred Stock issued during
the second quarter of 1998; thus, there were 301,821 shares of Series A
Preferred Stock outstanding at June 30, 1998. No shares were issued during the
third quarter of 1998; thus, the number of outstanding shares at that date
remained 301,821 in number.
Common Stock Reconciliation: There were 845,567 shares of Common Stock
outstanding at December 31, 1996. At November 30, 1998, there were 3,489,957
shares outstanding.
On February 17, 1997, 552,640 shares of Common Stock were issued to directors.
There were 725,000 shares of Common Stock issued from January 10, 1997, through
December 11, 1997, pursuant to the exercise of previously issued warrants to
bridge loan holders. On July 29, 1997, 500,000 shares of Common Stock were
issued to officers and directors under an Incentive Stock Ownership Plan. The
Company, on March 31, 1998, issued 200,000 shares of Common Stock under a
contract with a third party, Mr. Stephen King, in exchange for an agreement to
pay $100,000. The 200,000 shares were issued, but the $100,000 was never
received and is still owed. During the second quarter of 1998, approximately
449,306 Series A Warrants were exercised. On September 30, 1998, the Company
issued 217,444 shares to an individual in satisfaction of debt.
<PAGE>
In summary, as of the date of this report, there were 3,489,957 shares of Common
Stock outstanding. The following table reconciles the discussion in the
foregoing paragraph:
Common Stock:
845,567 Previously Issued Shares December 31, 1996
552,640 Directors February 17, 1997
725,000 Bridge Loan Holders February through December, 1997
500,000 Officers and Directors July 29, 1997
200,000 Third-Party March 31, 1998
449,306 Series A Warrants Second Quarter of 1998
217,444 Debt Settlement September 30, 1998
3,489,957
There were 1,777,640 shares of Common Stock issued during 1997; thus, there were
2,623,207 shares of Common Stock outstanding at December 31, 1997. There were
200,000 shares of Common Stock issued during the first quarter of 1998; thus,
there were 2,823,207 shares of Common Stock outstanding at March 31, 1998. There
were 449,306 shares of Common Stock issued during the second quarter of 1998;
thus, there were 3,272,513 shares of Common Stock outstanding at June 30, 1998.
There were 217,444 shares of Common Stock issued during the third quarter of
1998; thus, there were 3,489,957 shares of Common Stock outstanding at September
30, 1998. In December, 1998, two holders of Series A Preferred Stock were
allowed to convert their shares into Common Stock since there were sufficient
common shares so as to allow for conversion. The Company is allowing holders of
Series A Preferred Stock who request conversion in writing to convert to Common
Stock; however, there is no assurance that the Company will be able to continue
to allow these requests since there is insufficient capitalization so as to
allow for the conversion of all shares of Series A Preferred Stock at the
present time.
Liquidating Trust: The Company, on June 30, 1998, announced that it had
established a liquidating trust for the purpose of gathering all of the assets
of the Company on that date and then, first, providing for the payment of
administrative and collection expenses, secondly, providing for the payment of
all creditors and, finally, distributing the remainder to shareholders.
Subsequent to the date of the establishment of the liquidating trust it became
apparent that the Company would not have sufficient funds to provide for the
administration costs and expenses and the satisfaction of creditors; therefore,
the Company, as the grantor of the trust, elected not to fund its corpus, the
practical effect of which is that the trust will be dissolved as if it had never
been created.
<PAGE>
Order Suspending Trading: The Securities and Exchange Commission (Commission) on
August 18, 1998, issued an order suspending trading in the securities of the
Company claiming a lack of current and accurate information and because of
questions regarding the accuracy and adequacy of information disseminated by and
about the Company. The concerns related to, among other things: (1) the assets
and liabilities of the Company; (2) the identity and assets of the businesses
the Company had announced plans to acquire; (3) the current operations and
business prospects of the Company; (4) the composition and involvement in
affairs of the Company by management; (5) the possible misappropriation of
assets by officers of the Company; and (6) the failure of the Company to file
the reports required under the Securities Exchange Act of 1934. The order
suspended trading from August 18, 1998, through August 31, 1998. The Company has
been informed by the National Association of Securities Dealers, Inc. (NASD),
that, before trading may resume in its securities, an NASD member must sponsor
the Company for the purpose of publishing a quote. The Company, therefore, has
devoted its efforts towards fully and accurately addressing each issued raised
by the Commission in the issuance of the order suspending trading and is now
current in its reports. At the date of this report, the Company is seeking an
NASD member to sponsor its securities for trading, once again, on the OTC
Bulletin Board maintained by the NASD.
Pending Acquisition: The Company, during August, 1998, announced to the public
that it had reached an agreement in principal to acquire several entities based
in Greece which are involved in shipping and trading in the Mediterranean and
Black Sea regions. These entities are affiliated with Mr. Traios, the individual
discussed above in this item under Mega Hell and Mill Agro Acquisitions. Since
the previous recision of these acquisitions, Mr. Traios has expanded his
businesses and has obtained additional equity funding. Due to the cessation of
trading occasioned by the Commission, the pursuit of this acquisition was placed
in abeyance until such time as the Company could assure Mr. Traios that the
filings by the Company with the Commission under the Securities Exchange Act of
1934 were current and accurate. The Company is now current in its reports and is
again pursuing the announced acquisition, although definitive terms and
conditions have not been reached. There can be no assurance the Company will be
successful in this endeavor.
Year 2000 Issues: The Company has evaluated all internal software against
anticipated Year 2000 concerns, and believes, first, that its business will not
be substantially affected, and, secondly, that it has no significant exposure to
contingencies related to this from past business. The Company has initiated a
project to upgrade all internal software and to conduct testing on its
information technology to further ensure that all aspects of its business will
be Year 2000 compliant. The Company believes that these procedures, which are
expected to be completed by December 31, 1998, will have no material effect on
the Company or its business contacts and will not require any material
expenditures or other material diversion of resources.
<PAGE>
Facilities: The executive offices of the Company, as of November 30, 1998, were
located at 1999 Broadway, Ste. 3235, Denver, Colorado 80202. The space is being
provided free of charge by counsel to the Company. There is no separate
telephone number at this address, but calls are being accepted at (303) 292
2992.
Item 2. Description of Properties.
The Company owns no real property.
Item 3. Litigation.
Fisher Federal Court Litigation: On July 9, 1998, the Company filed a complaint
(No. 98 D 1495) against Mr. Daniel W. Fisher, ArconEnergy, St. Andrews, Inc. (an
affiliate of Mr. Fisher's), and Morgan Guaranty, Ltd. (another affiliate of Mr.
Fisher's), in the United States District Court for the District of Colorado. The
complaint alleges that the defendants defrauded the Company and violated federal
and state securities acts and state common law principles (1) in obtaining the
Arcon Purchase Agreement and the issuance of the Series B Preferred Stock under
that agreement, (2) in issuing 180,000 shares of Series A Preferred Stock and
9,000,000 Series A Warrants to Mr. Fisher indirectly through his affiliates,
those being St. Andrews, Inc, and Morgan Guaranty, Ltd., and (3) in the sale of
42,004 shares of Series A Preferred Stock in exchange for approximate cash
proceeds of $570,060 and the mis appropriation of those funds. As of the date of
this report, all of the defendants had been served, defaults taken and a default
judgment motion made against them.
The Company on August 21, 1998, entered into an agreement with Mr. Daniel W.
Fisher and two of his affiliates, St. Andrews, Inc., and Morgan Guaranty, Ltd.,
whereby Mr. Fisher returned 134,800 shares of Series A Preferred Stock,
9,000,000 Series A Warrants and all of the remaining shares of Series B
Preferred Stock then outstanding to the treasury of the Company. In addition,
Mr. Fisher paid to the Company the sum of $614,164.98, half of which was agreed
to be released to the mediator for resolving the disagreements between the
parties. In addition, Mr. Fisher agreed to surrender to the Company all
securities and money held in a brokerage account in the United States and to
surrender the accounting records of the Company. Subsequently, the Company
learned that there were no securities or cash in the United States brokerage
account, and Mr. Fisher refused to return the accounting records; thus, the
Company declared the agreement to be null and void and is again pursuing
judgments against Mr. Fisher and his affiliates.
<PAGE>
Matossian and Fidiparex S.A.: In December, 1995, counsel for Robert Matossian
and Fidiparex, S.A., demanded the rescission of and subsequent conversion into
Common Stock of promissory notes which the Company had executed and delivered in
favor of certain persons who were then affiliated with the Company, including
Mr. Pierce. The complaint as filled alleged, among other things, breach of
fiduciary duty to the Company. The suit was filed in San Diego, California,
Superior Court (Case No. 704105). Counter-claims were filed by the defendants
alleging breach of contract and fiduciary duty to the Company, securities fraud
and other related claims. The suit was settled during the first quarter of 1998
at no expense to the Company or Mr. Pierce.
Office Park Litigation: In March, 1997, the Company was sued by the owner of the
office park facility in which its Los Angeles operations were located. The suit
claimed that the Company had breached the lease of the premises and sought
damages for rent from the date of the claimed breach through the end of the
lease. The suit was ultimately settled by the Company relinquishing the space
with no additional liability .
DayStar Litigation: On May 14, 1998, Business Growth Fund of Southern
California, LP, and Daystar Partners, Inc., sued the Company in Los Angeles
Superior Court (Case No. BC191159) alleging that the Company failed to deliver
to them Common Stock and warrants which they claim to have been entitled as a
result of their agreements concerning certain bridge loans to the Company during
1996, the proceeds of which were used, in part, to provide for the secondary
offering made by the Company in August, 1996, and further claiming moneys due to
them in regards of their exercise of certain bridge loan warrants issued them.
The Company has not been served with the suit, but has responded by letter to
the plaintiffs informing them that they have no basis for the suit and seeking
to find an accommodation so as to avoid the incurrence of unnecessary legal
fees. If served, the Company intends to vigorously defend the suit.
Abraham & Christiansen, Inc. Judgement: On September 26, 1997, a former creditor
received a judgement in the state of Florida, which it domesticated in the state
of California, against the Company amounting to $55,506. In conjunction with the
judgement, a lien from the state of California was placed on Company property.
As of the date of the judgement and lien, the Company held no property in the
State of California. Management believes for the judgement and lien to be
effective, they must first litigate the case in the state where the services
claimed were performed, which did not occur. If such an action were to be
commenced, the Company intends to vigorously defend the matter.
<PAGE>
StockstoWatch.Com Threat: The Company has been informed that it is currently the
defendant in a suit by Stockstowatch.com, Inc., filed in the Twelfth Judicial
Circuit Court in Sarasota County, Florida (Case No. 98 5426 CA 01), although no
service of process has yet been effected. Management has spoken to a
representative of the plaintiff, Mr. Stephen King, and has been informed that
the plaintiff does not currently intend to pursue litigation. The complaint, as
presented to the Company, claims that plaintiff entered into a consulting
contract with the Company pursuant to which the Company inexplicably issued
200,000 shares of Common Stock without receiving the agreed on cash therefor and
then somehow breached the contract by refusing to deliver an additional 400,000
shares of Common Stock and 10,000 shares of Series A Preferred Stock. There is
no record of there ever having been a demand of the Company for payment under
the contract, nor is there any indication the plaintiff performed its end of the
bargain. The Company had, prior to the initiation of the suit, demanded payment
for the 200,000 shares of Common Stock given to the plaintiff without
consideration, and had agreed to the surrender of approximately 160,000 of the
200,000 shares issued and the payment of $20,000 cash; however, plaintiff
breached this oral agreement and elected to file the complaint instead. The
Company has informed counsel to plaintiff that Florida has no basis for
entertaining the matter and that the Company will vigorously defend against the
claims made. Subsequent to the initiation of the complaint, Stockstowatch.com,
Inc., and Mr. King were named in a civil securities fraud suit brought by the
Securities and Exchange Commission in Florida alleging that Stockstowatch.com,
Inc., and Mr. King engaged in scalping in their promotion of the securities of
several corporations, including those of the Company.
Item 4. Submission of Matters to a Vote of Security Holders.
No matters were submitted to a vote of security holders during the fourth
quarter of 1997.
Part II
Item 5. Market for Common Equity and Related Stockholder Matters.
Market: The Common Stock, until August 18, 1998, was traded on the Bulletin
Board maintained by the National Association of Securities Dealers, Inc. (NASD),
under the symbol MIDL. On that date, the U.S. Securities and Exchange Commission
suspended trading in all securities of the Company until August 31, 1998. The
Company has been informed by the NASD that trading on the Bulletin Board will
not recommence until such time as the Company is again current in its reports
under applicable securities laws and resubmits the filed reports to the NASD for
review and comment. The Company is now current in its reports under applicable
securities laws and is attempting to find an NASD member firm to sponsor
resubmission and qualification of the securities of the Company with the NASD on
the Bulletin Board.
<PAGE>
The following table sets forth the range of high and low bid prices per share of
Common Stock, as reported by the NASD, for the periods indicated.
Year Ended December 31, 1996:
1st Quarter $1.00 $0.875
2nd Quarter 2.375 1.00
3rd Quarter 1.50 0.50
4th Quarter 1.0625 0.125
Year Ended December 31, 1997:
1st Quarter $1.25 $0.25
2nd Quarter 0.5625 0.3125
3rd Quarter 0.75 0.125
4th Quarter 0.71875 0.1875
Year Ended December 31, 1998
1st Quarter 0.875 0.30
2nd Quarter 2.46875 0.25
The above prices represent inter-dealer quotations without retail mark-up,
mark-down or commission, and may not necessarily represent actual transactions.
On November 30, 1998, there were no quotations for the securities of the Company
due to the order of the Securities and Exchange Commission discussed above. As
of November 30, 1998, there were 3,489,957 shares of Common Stock issued and
outstanding, and 301,821 shares of Series A Preferred Stock issued and
outstanding. The preferred shares were then convertible into approximately
12,782,120 shares of Common Stock; thus, there were, for purposes of this
filing, approximate common share equivalents of 16,272,077 issued and
outstanding on November 30, 1998.
Dividends: Since inception the Company has not paid any cash dividends on the
Common Stock. Any declaration in the future of any cash or stock dividends will
be at the discretion of the Board of Directors and will depend upon, among other
things, earnings, the operating and financial condition of the Company, capital
expenditure requirements, and general business conditions. There are no
restrictions currently in effect which preclude the Company from granting
dividends. It is the current intention of the Company, however, to retain any
earnings in the foreseeable future to finance the development of its business.
<PAGE>
Series A Preferred Stock Dividend: The Company, on or about May 18, 1998, during
the tenure of Mr. Daniel W. Fisher, declared a stock dividend on its Series A
Preferred Stock. The dividend announced would have resulted in the Company
issuing one additional share of Series A Preferred Stock for each two shares
outstanding on the date of declaration. This would have resulted in their being
50% more shares of Series Preferred Stock outstanding after the dividend than
are actually now outstanding. The dividend has not been distributed, however,
due to the difficulties which arose between the Company and its former transfer
agent, Signature Stock Transfer. The Company has not determined what, if
anything, it will do to bring this distribution into effect. All statements
regarding share figures in this filing are to pre dividend shares.
Item 6. Management's Discussion and Analysis of Financial Condition and Results
of Operations.
The following discussion of financial condition and results of operations should
be read in conjunction with the Company's audited financial statements and notes
thereto appearing elsewhere in this report.
The Company has had recurring losses from operations since inception and had a
net capital deficiency at December 31, 1997, each of which raise substantial
doubts about the ability of the Company to continue as a going concern.
Accordingly, the auditors' report and opinion included in this report contain an
explanatory paragraph about these uncertainties.
Results of Operations: The Company, as a result of the cessation of its coffee
business and the recision of two separate acquisitions and the failure of its
other reported acquisitions, had no operations during 1997; thus, no meaningful
comparison can be made to prior years since the Company was then engaged in the
coffee business.
Liquidity and Capital Resources: The Company, from inception and until August
14, 1996, the date on which a secondary offering of stock was concluded, had two
sources of working capital for its operations and expansion, those being the
cash flow generated from existing operations and the extension of credit by its
coffee supplier. The Company, during the final quarter of 1995 and until August
14, 1996, relied on a series of bridge loans to provide for the expenses
incurred in conducting the secondary public offering. The secondary offering
closed on August 14, 1996, and a substantial portion of the proceeds received
from the offering were used to repay the bridge loans incurred. During the
fourth quarter of 1996, the Company negotiated a release of its contract with
Ralph's and subsequently received the release of liabilities aggregating
$707,234 from creditors following the cessation of its coffee business in
exchange for partial payments against the debt owed. The Company, subsequent to
August 14, 1996, and through December, 1997, relied on the proceeds received
from the exercise of outstanding bridge loan warrants registered under the
secondary offering to provide liquidity. Since December, 1997, the Company has
principally relied on the cash proceeds resulting from the Fisher settlement and
the exercise of Series A Warrants to provide operating capital. On November 19,
1998, the Company made a loan to an unaffiliated entity of approximately
$90,000. The advance was made on a short term basis at an above market rate,
with the Company receiving common shares of the entity as a loan fee. The loan
is presently a performing asset.
<PAGE>
Item 7. Financial Statements.
INDEPENDENT AUDITOR'S REPORT
To the Board of Directors and Shareholders of
MIDLAND, INC. (Formerly America's Coffee Cup, Inc.):
We have audited the accompanying balance sheet of Midland, Inc. (formerly
America's Coffee Cup, Inc.) (a Colorado corporation) as of December 31, 1997 and
the related statements of operations, changes in shareholders' deficit and cash
flows for the years ended December 31, 1997 and 1996. 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 audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Midland, Inc. (formerly
America's Coffee Cup, Inc.) as of December 31, 1997 and the results of its
operations and its cash flows for the years ended December 31, 1997 and 1996 in
conformity with generally accepted accounting principles.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note L to the
financial statements, the Company has suffered recurring losses from operations
and has a net capital deficiency that raise substantial doubt about its ability
to continue as a going concern. The financial statements do not include any
adjustments that might result from the outcome of this uncertainty.
San Diego, California
October 30, 1998
<PAGE>
MIDLAND, INC.
(Formerly America's Coffee Cup, Inc.)
BALANCE SHEET
DECEMBER 31, 1997
-----------------
ASSETS
------
CURRENT ASSETS
Cash
$ 7,984
TOTAL CURRENT ASSETS
7,984
TOTAL ASSETS $ 7,984
LIABILITIES AND SHAREHOLDERS' DEFICIT
-------------------------------------
CURRENT LIABILITIES
Accounts payable (Note B) $ 245,223
Accounts payable related
parties (Note C) 274,000
Notes payable (Note D) 45,000
Accrued interest 21,991
Accrued payroll taxes 8,510
TOTAL CURRENT LIABILITIES 594,724
COMMITMENTS AND CONTINGENCIES
(Note B, F, G, L, M) --
SHAREHOLDERS' DEFICIT
Series A preferred stock, $0.40 par value,
360,000 shares authorized,
124,617 issued and outstanding (Note G) 49,847
Series B preferred stock $0.40 par value,
149,259 authorized, no shares issued
or outstanding --
Common stock, $0.40 par value,
10,000,000 shares authorized, 2,623,207
shares issued and outstanding (Note G) 753,494
Additional paid-in-capital 1,125,504
Accumulated deficit (2,515,585)
TOTAL SHAREHOLDERS' DEFICIT (586,740)
TOTAL LIABILITIES AND SHAREHOLDERS' DEFICI $ 7,984
The accompanying notes are an integral part of these financial statements.
<PAGE>
MIDLAND, INC.
(Formerly America's Coffee Cup, Inc.)
STATEMENTS OF OPERATIONS
For the years ended
December 31, December 31,
1997 1996
---- ----
REVENUES $ 13,422 $ 2,087,694
COST OF SALES 5,937 2,278,618
GROSS PROFIT (LOSS) 7,485 (190,924)
OPERATING EXPENSES
General and administrative
expenses 993,530 857,807
Depreciation 3,550 56,000
TOTAL OPERATING EXPENSES 997,080 913,807
LOSS FROM OPERATIONS (989,595) (1,104,731)
OTHER INCOME (EXPENSES)
Interest expense (4,057) (78,691)
Finance expense (17,500) --
Loss on disposition of
equipment (Note N) (17,681) (305,818)
Other -- 17,533
TOTAL OTHER INCOME (EXPENSES) (39,238) (366,976)
LOSS BEFORE INCOME TAXES
AND EXTRAORDINARY ITEM (1,028,833) (1,471,707)
Income Taxes (Note E) 1,600 800
NET LOSS BEFORE
EXTRAORDINARY ITEM (1,030,433) (1,472,507)
Extraordinary item,
net of tax (Note K) 486,453 707,234
NET LOSS $ (543,980) $ (765,273)
NET LOSS PER COMMON SHARE
BEFORE EXTRAORDINARY ITEM $ (0.50) $ (1.76)
Extraordinary item .24 .84
NET LOSS PER COMMON SHARE $ (0.26) $ (.92)
WEIGHTED AVERAGE NUMBER OF SHARES
OUTSTANDING 2,073,820 838,313
The accompanying notes are an integral part of these financial statements.
<PAGE>
<TABLE>
<CAPTION>
MIDLAND, INC.
(Formerly America's Coffee Cup, Inc.)
STATEMENTS OF CHANGES IN SHAREHOLDERS' DEFICIT
Additional Total
Preferred Stock Common Stock Paid-in Accumulated Shareholders
Shares Amount Shares Amount Capital Deficit Deficit
------ ------ ------ ------ ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance, December 31, 1995 -- $ -- 802,043 $ 320,816 $ 366,373 $(1,206,332) $ (519,143)
Issuance of common stock
for convertible debt (Note J) -- -- 43,524 17,410 61,340 -- 78,750
Issuance of preferred stock as
part of initial public offering 54,000 21,600 -- -- 512,653 -- 534,253
Net loss -- -- -- -- -- (765,273) (765,273)
Balance, December 31, 1996 54,000 $ 21,600 845,567 $ 338,226 $ 940,366 $(1,971,605) $ (671,413)
Issuance of stock for services 70,617 28,247 1,052,640 131,580 108,146 -- 267,973
Issuance of stock for cash -- -- 725,000 283,688 76,992 -- 360,680
Net loss -- -- -- -- -- (543,980) (543,980)
Balance, December 31, 1997 124,617 $ 49,847 2,623,207 $ 753,494 $ 1,125,504 $(2,515,585) $ (586,740)
The accompanying notes are an integral part of these financial statements.
</TABLE>
<PAGE>
MIDLAND, INC.
(Formerly America's Coffee Cup, Inc.)
STATEMENTS OF CASH FLOWS
For the years ended
December 31, December 31,
1997 1996
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss $(543,980) $(765,273)
Adjustments to reconcile
net loss to net cash used
in operating activities:
Depreciation and amortization 3,550 56,000
Loss on disposition of equipment 17,681 305,818
Write off of intangibles 172,698 --
Issuance of stock
for services (Note J) 267,973 --
Extraordinary item -
extinguishment of
debt (Note K) (486,453) (707,234)
Changes in assets and liabilities:
Accounts receivable 58,424 72,031
Inventories 5,000 130,776
Prepaid expense and other 27,487 (11,491)
Other assets -- 172,698
Accounts payable 403,187 253,043
Bank overdraft (74,134) 74,134
Accrued expenses (208,693) 47,376
NET CASH USED IN
OPERATING ACTIVITIES (357,260) (372,122)
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of property and equipment (7,781) --
Proceeds from disposal of
property and equipment 12,345 (76,553)
NET CASH PROVIDED BY (USED IN)
INVESTING ACTIVITIES 4,564 (76,553)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from conversion of debt
to common stock -- 78,750
Proceeds from issuance of
preferred stock -- 534,253
Payments on long-term debt -- (197,055)
Proceeds from issuance
of common stock 360,680 --
NET CASH PROVIDED BY
FINANCING ACTIVITIES 360,680 415,948
NET INCREASE (DECREASE) IN CASH 7,984 (32,727)
CASH, BEGINNING OF YEAR -- 32,727
CASH, END OF YEAR $ 7,984 $ --
The accompanying notes are an integral part of these financial statements.
<PAGE>
MIDLAND, INC.
(Formerly America's Coffee Cup, Inc.)
NOTES TO FINANCIAL STATEMENTS
A. Organization and Summary of Significant Accounting Policies:
Organization: The Company was incorporated as FOA Industries, Inc. (FOA) under
the laws of the State of Delaware on February 10, 1988. On June 19, 1989, FOA
acquired all of the assets and liabilities of A.C.C., a California limited
partnership engaged in the retail gourmet coffee business. In conjunction with
this transaction, A.C.C. and its general partner, America's Coffee Cup, Inc. (a
California corporation), were dissolved and the Company changed its name to
America's Coffee Cup, Inc. During November 1995, the Company changed its state
of incorporation from Delaware to Colorado. On January 30, 1997, the Company
changed its name to Wayward Ventures, Inc. On February 17, 1997, the Company
changed its name from Wayward Ventures, Inc. to Midland, Inc., in conjunction
with an acquisition which was subsequently rescinded. During 1997, the Company
ceased operating in the retail coffee business.
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 reported amounts of revenues and expenses during the reporting
periods. Actual results could differ from those estimates.
Cash: For purposes of the statements of cash flows, the Company considers all
highly liquid debt instruments purchased with a maturity of three months or less
and money market funds to be cash equivalents.
Revenue Recognition: The Company recognizes revenue from product sales upon
shipment to the service concessions located within the stores.
Loss Per Share: Net loss per share is provided in accordance with Statement of
Financial Accounting Standards No. 128 (SFAS No. 128) Earnings Per Share. Basic
loss per share is computed by dividing losses available to common shareholders
by the weighted average number of common shares outstanding during the period.
Diluted loss per share reflects per share amounts that would have resulted if
dilutive common stock equivalents had been converted to common stock. At
December 31, 1997 and 1996, basic and dilutive loss per share are the same. The
net loss per share calculations reflect the effect of stock dividends and stock
splits. As required by SFAS No. 128, prior year loss per share amounts have been
restated. Loss per share for the years ended December 31, 1996 did not change as
a result of this restatement.
Income Taxes: Income taxes provide for the tax effects of transactions reported
in the financial statements and consist of taxes currently due plus deferred
taxes related primarily to net operating loss carryforwards and differences
between the basis of various assets 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.
<PAGE>
Concentration of Credit Risk: The Company's sales are substantially all from one
large grocery retailer located in Southern California.
Fair Value of Financial Instruments: The carrying amount for cash approximates
the fair value due to the short period to maturity of the instruments. The fair
value of notes payable is estimated based on interest rates for the same or
similar debt offered to the Company having the same or similar remaining
maturities and collateral requirements. Carrying amounts of notes payable
approximates fair value.
B. Accounts Payable: At December 31, 1997, the majority of accounts payable
consist of balances due on settlement of previous accounts payable balances. A
majority of the agreements were entered into in March 1997 and called for
payment of 10% of the previous outstanding balance in consideration for the
entire balance. Vendors may consider the agreements null and void due to the
Company's failure to pay the obligations, and therefore, the Company is
contingently liable for $697,616 of previously forgiven accounts payable.
C. Accounts Payable Related Parties: At December 31, 1997, the Company has an
accounts payable balance of $121,000 to Mark Pierce, President, Director and CEO
of the Company, for legal services provided to the Company. Additionally, the
Company has accounts payable at December 31, 1997 totaling $153,000 for
consulting services, to Charles Stidham, a former director, which was paid with
common stock in 1998 (Note J).
D. Notes Payable: The Company has notes payable to a group of foreign investors
totaling $45,000 which are unsecured. Interest is payable at 9% and all unpaid
principal and interest was due December 31, 1997. Notes are convertible in whole
or in part at any time on or before maturity for "restricted" common shares at a
conversion rate of $9 per share. In 1996, the Company modified the conversion
price to $2 per share. The notes are past due.
E. Income Taxes: The provision for income taxes for the years ended December 31,
1997, and 1996 consisted solely of the $800 minimum California franchise tax.
<PAGE>
The Company's total deferred tax assets as of December 31 were as follows:
1997 1996
---- ----
Net operating loss carryforward $ 1,319,000 $ 850,000
Valuation allowance (1,319,000) (850,000)
Net deferred tax assets $ -- $ --
A valuation allowance has been established for the entire amount of the deferred
tax asset. The likelihood of full utilization by the Company of the net
operating losses incurred to date over the available carryover period is highly
unlikely based upon the change of ownership tax rules and on the current
operations of the Company. The increase in the valuation allowance from December
31, 1996 to December 31, 1997 was $469,000.
The Companies net operating loss carryforwards expire as follows:
Year Ending
December 31, Federal California
- ------------ ------- ----------
1998 $ - $ 102,400
1999 - 34,100
2000 - 361,500
2001 - 573,700
2002 - 544,000
2003 38,400 -
2004 183,700 -
2005 327,600 -
2006 252,200 -
2007 205,600 -
2008 34,900 -
2009 721,200 -
2010 1,149,200 -
2011 544,000 -
Total $3,456,800 $1,615,700
The realization of any future income tax benefits from the utilization of net
operating losses has been determined to be limited. Federal and state tax laws
provide that when a more than 50% change in ownership of a company occurs within
a three year period, the net operating loss is limited. As a result of the
conversion of the one year convertible notes into common stock, the Company has
determined that the net operating losses are limited.
<PAGE>
The net operating loss carryfowards have been limited to approximately $60,000
per year until expiration. Losses generated after the conversion date will not
be limited by any change that resulted from the conversion of the one year
convertible notes.
F. License Fees and Other Commitments: Effective December 31, 1995, the Company
entered into a four year license agreement with Ralphs Grocery Company
("Ralphs"), in which the Company was charged a $100,000 license renewal fee for
the right to use and occupy approximately 40 square feet at each of the licensed
locations for its retail service concessions and any future locations.
The Company recorded its portion of the license fee at cost and amortized the
fee over four years. Amortization expense for the year ended December 31, 1996
was $87,500, which was included in cost of sales. Due to the cancellation of the
agreement, the balance of the fees were written off in 1997.
In addition to the renewal fee, the Company paid rent to Ralphs an amount equal
to $1,000 for each four week period per location or 10% of total retail sales,
whichever is greater. The Company incurred rent expense of $0 and $757,412, for
the years ended December 31, 1997 and 1996, respectively. The rental agreement
with Ralphs was canceled during 1997.
G. Shareholders' Deficit:
Series A Preferred Stock: Of the 1,000,000 shares of preferred stock, the
Company designated 360,000 shares as Series A preferred stock. Each share of
Series A preferred stock will automatically convert into 42.35 shares of common
stock on October 1, 1998. Each share of Series A preferred stock is entitled to
thirty five votes with the Series A preferred stock and common stock voting
together as though they constitute one class.
Series A Warrants : In connection with the secondary offering concluded August
16, 1996, the Company authorized the issuance of up to 5,205,650 Series A
Warrants (including 405,000 Series A Warrants that may be issued upon exercise
of the Underwriters' over allotment option, 270,000 Warrants which are issuable
pursuant to the Underwriters Warrants and 652,050 Warrants together with an
equivalent number of shares of common stock for issuance upon the conversion of
the Series A preferred stock) and has reserved an equivalent number of shares of
common stock for issuance upon exercise of the Series A warrants actually
issued. Each warrant will entitle the holder to purchase one share of common
stock at a price of $.50 per share. The warrants are currently exercisable and
are separately traded until August 14, 2001, unless earlier redeemed. The Series
A warrants are redeemable by the Company at $.05 per warrant, upon 30 days'
notice, at any time after February 14, 1997, if the closing bid price per share
of the common stock for ten consecutive trading days' prior to the date of
notice of redemption is given equals or exceeds $2.50 per share. In the event
the Company gives notice of its intention to redeem, a holder would be forced
either to exercise their Series A warrant within 30 days after the date of
notice or accept the redemption price.
<PAGE>
The exercise price of the Series A warrants may be reduced at any time and from
time to time at the discretion of the Board of Directions when it appears to be
in the best interests of the Company to do so. Any such reduction would impair
the value to holders exercising their warrants prior to the effective date of
the reduction.
The following is a summary of activity involving Series A Warrants:
Warrants outstanding at December 31, 1995 --
Warrants issued 2,700,000
Warrants exercised --
Warrants outstanding and December 31, 1996 2,700,000
Warrants issued to officers for services 2,080,850
Warrants exercised --
Warrants outstanding at December 31, 1997 4,780,850
Series B Preferred Stock:
In connection with acquisitions, the Company issued 149,259, 70,000, and 140,493
shares of Series B preferred stock. The shares of preferred stock may be
immediately converted into 150 shares of common stock for each share of Series B
preferred stock at any time at the option of the Holder. The stockholders are
entitled to 150 votes and are not entitled to liquidation preferences or
dividends. The acquisitions were rescinded and the stock was returned in 1997
and 1998, and therefore, no shares are reported as outstanding at December 31,
1997.
Incentive Stock Option Plan: During 1995, the Company adopted an employee
incentive stock option (ISO) plan authorizing the issuance of common stock
options for up to 500,000 shares of common stock over a 10 year period beginning
September 1, 1995. On July 31, 1997, the Board of Directors issued all options
available under the plan. During 1997, the options where exercised and common
stock was issued at $.125 per share in exchange for services. Accordingly,
$62,500 is included in operating expenses for the year ended December 31, 1997.
<PAGE>
Bridge Loan Warrants: In conjunction with certain bridge loans obtained for the
purpose of completing the public offering in 1996, the Company issued warrants
to purchase 1,809,955 units, each unit consisting of one share of common stock
and two warrants at a price of $.39 per unit. During 1997, warrants were
exercised and 707,000 shares of common stock were issued at $.50 per share which
generated capital of $353,500. In accordance with the issuances, the Company
agreed to pay $.11 per share to the bridgeholders. However, management contends
the bridgeholders did not meet their obligations under the transaction and
therefore, is not obligated to pay $.11 per share to the bridgeholders (Note M).
H. Supplemental Cash Flow Information: Cash paid for interest and income taxes
for the years ended December 31, 1997 and 1996:
December 31, December 31,
1997 1996
---- ----
Interest $ -- $78,691
Income taxes $ 800 $ 800
I. Termination Agreement: On August 23, 1995, the Company entered into an
agreement (the Supply Termination Agreement) with BGC. Under the terms of the
Supply Termination Agreement, the Company and BGC terminated the obligation of
the Company to purchase its supply of coffee exclusively from BGC and further
agreed to the restructuring and repayment of certain debt with BGC. During 1997,
the Company and BGC renegotiated the debt to $160,000 which is included in
accounts payable.
J. Related Party Transactions: On February 17, 1997, the Company issued 41,617
shares of Series A preferred stock, totaling $68,791, 1,830,500 Series A
warrants and 552,640 shares of common stock totaling $69,080 to officers and
directors of the Company. On July 31, 1997, another 500,000 shares of common
stock were issued to officers and directors under the ISO totaling $62,500. On
August 29, 1997, the Company issued 29,000 shares of Series A preferred stock
amounting to $58,000 to a former director in exchange for his services as an
officer and director of the Company from February 17, 1997 through August 29,
1997. On February 6, 1998, the Company issued another 90,000 shares of Series A
preferred stock amounting to $180,000 and 4,500,000 Series A warrants to this
former officer and director in exchange for his services rendered from August
29, 1997, through January 22, 1998 (Note C). During 1997, the Company paid
consulting fees amounting to $19,500 to officers and directors of the Company.
Additionally, the Company paid Mark Pierce 14,826 shares of common stock valued
at $24,508 and cash of $9,040 for legal services performed. Common stock issued
in exchange for services were valued at the market price of the stock on the
date of issuance.
<PAGE>
K. Extraordinary Item: Under terms of certain settlement agreements entered into
with creditors, the Company, through a negotiator, has reduced its liabilities
and debt related to its coffee operations by $486,453 and $707,234 for the years
ended December 31, 1997 and 1996, respectively.
L. Going Concern: As shown in the accompanying financial statements, the Company
incurred net operating losses of $543,980 and $765,273 for the years ended
December 31, 1997 and 1996, respectively. As of December 31, 1997, current
liabilities exceed current assets by $586,740. These factors as well as the
uncertainty regarding the Company's ability to continue to raise capital through
the sale of equity securities creates substantial doubt about the Company's
ability to continue as a going concern.
Subsequent to year end, the Company received working capital from two sources:
(1) the receipt of proceeds from the sale of securities by Mr. Fisher and his
affiliates (Note M), which was to have been in settlement of those claims which
the Company had against Mr. Fisher and his affiliates, each of whom subsequently
breached the settlement agreement; and (2) the exercise of Series A Warrants.
The funds received are not sufficient to provide for the satisfaction of all
liabilities, including contingent liabilities, which are currently outstanding
or which are being asserted against the Company; however, management believes
that the Company will be able to obtain full and complete settlements with its
creditors, whether contingent or otherwise, and that, subsequent to these
settlements, it will have sufficient working capital reserves in which to pursue
its business plan. Further, the Company anticipates that it will be able to
effectuate its business plan and make an acquisition which will allow it to move
forward as a going concern. However, there can be no assurance that any of the
foregoing will occur.
The ability of the Company to continue as a going concern is dependent upon its
ability to obtain additional working capital and obtain profitable operations.
The financial statements do not include any adjustments that might be necessary
should the Company be unable to continue as a going concern.
M. Contingencies:
Fisher: On July 9, 1998, the Company filed a compliant (No. 98 D 1495) against
Mr. Daniel W. Fisher, Arcon Energy, St. Andrews, Inc. (an affiliate of Mr.
Fisher's), and Morgan Guaranty, Ltd. (another affiliate of Mr. Fisher's), in the
United States District Court for the District of Colorado. The compliant alleges
that the defendants defrauded the Company and violated federal and state
securities acts and state common law principles (I) in obtaining the Arcon
Purchase Agreement and the issuance of the Series B preferred stock thereunder,
(ii) in issuing 180,000 shares of Series A preferred stock and 9,000,000 Series
A warrants to Mr. Fisher indirectly through his affiliates, those being St.
Andrews, Inc. and Morgan Guaranty, Ltd., and (iii) in the sale of 42,044 shares
of Series A preferred stock in exchange for approximate cash proceeds of
$570,060 and the misappropriation of those funds.
<PAGE>
On August 21, 1998, the Company entered into an agreement with Mr. Daniel W.
Fisher and two of his affiliates, St. Andrews Inc. and Morgan Guaranty Ltd.
whereby Mr. Fisher returned 134,800 shares of Series A preferred stock,
9,000,000 Series A warrants and all of the remaining shares of Series B
preferred stock then outstanding to the treasury of the Company. In addition, in
September, 1998 Mr. Fisher paid the Company the sum of $614,165, half of which
was agreed to be released to the mediator for resolving the disagreements
between the parties. In addition, Mr. Fisher agreed to surrender to the Company
all securities and money held in a brokage account in the United States and to
surrender the accounting records of the Company. Subsequently, the Company
learned that there were no securities or cash in the United States brokage
account, and Mr. Fisher refused to return the accounting records; thus, the
Company declared the agreement to be null and void and is again pursuing
judgements against Mr. Fisher and his affiliates in the Federal District Court
action discussed in the preceding paragraph.
Matossian and Fidiparex S.A.: In December 1995, counsel for Robert Matossian and
Fidiparex S.A. demanded recession of and subsequent conversion into common stock
of notes which the Company had entered into with certain affiliates, alleging
among the claims, breach of fiduciary duty to the Company. The suit was filed in
San Diego, California, Superior Court (Case No. 704105). Counter claims were
filed alleging breach of contract and fiduciary duty to the Company, securities
fraud and other related claims. The suit was settled during the first quarter of
1998 at no expense to the Company.
Office Park Litigation: In March 1997, the Company was sued by the owner of the
office park facility in which its Los Angeles operations were located. The suit
claimed that the Company had breached the lease and sought damages for rent from
the date of the claimed breach, December 1996, through the end of the lease in
September 1998. The suit was ultimately settled by the Company relinquishing the
space with no additional liability.
DayStar Litigation: On May 14, 1998, Business Growth Fund of Southern
California, L.P. and DayStar Partners, Inc. sued the Company in Los Angeles
Superior Court (Case No. BC191159) alleging that the Company failed to deliver
to them warrants which they claim to have been entitled to as a result of their
agreements concerning certain bridge loans to the Company during 1996, the
proceeds of which were used, in part, to provide for the secondary offering made
by the Company in August 1996, and further claiming $77,770 due to them in
regards of their exercise of certain bridge loan warrants issued them. The
Company is seeking to find an accommodation. The Company believes it is unlikely
it will pay the amount claimed. If served, the Company intends to vigorously
defend the suit.
<PAGE>
Abraham & Christiansen, Inc. Judgement: On September 26, 1997, a former creditor
received a judgement in the state of California against the Company amounting to
$55,506. In conjunction with the judgement, a lien from the State of California
was placed on Company property. As of the date of the judgement and lien, the
Company held no property in the State of California. Management believes for the
judgement and lien to be effective, they must take place in the state the
company operates. Further, if such actions occur in the state it operates, the
Company intends to vigorously defend its position. At December 31, 1997, there
were no liabilities recorded as a result of the judgement.
N. Disposal of Equipment: During the fourth quarter of 1996, the Company had
removed its store equipment and fixtures from all locations and began to
liquidate its coffee operations. Accordingly, the Company had scrapped the
majority of its fixed assets and applied them to satisfy approximately $170,000
of accounts payable to product suppliers. During 1997, the Company sold or
disposed all of the remaining fixed assets. As a result, the Company has
recorded losses from disposal of property and equipment of $17,681 and $305,818
at December 31, 1997 and 1996, respectively.
O. Loss Per Share: The following reconciles amounts reported in the financial
statements for the years ended December 31, 1997 and 1996, respectively:
1997
--------------------------------------
Income (loss) Shares Per share
(Numerator) (Denominator) Amount
----------- ------------- ------
Income (loss) from
continuous operations $(1,030,433) -- $ --
Less preferred stock dividends -- -- --
Income (loss) from
available to common share-
holders (1,030,433) 2,073,820 $ (.50)
Extraordinary item 486,453 -- .24
Income (loss) available to common share-
holders - basic earnings per share $ (543,980) 2,073,820 $ (.26)
<PAGE>
Income (loss) Shares Per share
(Numerator) (Denominator) Amount
----------- ------------- ------
Income (loss) from
continuous operations $(1,472,507) -- $ --
Less preferred stock dividends -- -- --
Income (loss) from available
to common share holders
basic earnings per share (1,472,507) 838,313 $ (1.76)
Extraordinary item 707,234 -- .84
Income (loss) available to common share-
holders - diluted earnings per share $ (765,273) 838,313 $ (.92)
During 1997 and 1996, the Company had warrants and stock options outstanding,
each convertible into common stock. In addition, during 1997 and 1996, the
Company had convertible preferred stock outstanding (Note G), each share
convertible into common stock. These instruments were not included in the
computation of diluted earnings per share for any of the years presented, due to
their anti dilutive effects based on the net loss reported each year. During
1998, 865,750 shares of common stock has been issued.
Item 8. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure.
None.
PART III
Item 9. Directors and Executive Officers of the Registrant.
The Company has had several changes in its directors and executive officers
during the period at issue and to the date of this report. Following is a
synopsis of the directors and executive officers of the Company during the time
periods indicated:
<PAGE>
October 1, 1996, through December 10, 1996:
Robert W. Marsik, Chairman of the Board,
CEO, President, CFO, Treasurer
Roger F. Tompkins Director
Mark S. Pierce Director
December 11, 1996, through February 17, 1997:
Robert W. Marsik Chairman of the Board,
CEO, President, CFO, Treasurer
Mark S. Pierce Director
February 18, 1997, through May 13, 1997:
Chris Traios Chairman of the Board of Directors, CEO, President
Robert W. Marsik Director, CFO, Treasurer and Vice-President
E. Robert Barbee Director, Vice-President
Charles Stidham Director, Managing Director of North American
Shipping and Trading
Arthur Malcolm Director
Mark Pierce Director
May 14, 1997, through August 29, 1997:
Chris Traios Chairman of the Board of Directors, CEO, President
Robert W. Marsik Director, CFO, Treasurer and Vice-President
E. Robert Barbee Director, Vice-President
Charles Stidham Director, Managing Director of North American
Shipping and Trading
Arthur Malcolm Director
August 30, 1997, through October 10, 1997:
Robert W. Marsik Chairman of the Board, CEO, President, CFO, CAO
and Treasurer
E. Robert Barbee Director, Vice-President
Arthur Malcolm Director
Charles Stidham Director, Managing Director of North American
Shipping and Trading Operations
October 11, 1997, through December 18, 1997
R. Wayne Duke Chairman of the Board, CEO, President, beginning
October 10, 1997
Robert W. Marsik Director, Executive Vice-President
E. Robert Barbee Director, Vice-President
Arthur Malcolm Director
<PAGE>
December 19, 1997, through January 21, 1998
R. Wayne Duke Chairman of the Board, CEO, President
E. Robert Barbee Director, Vice-President
Arthur Malcolm Director
Anne DeuPree Secretary
January 22, 1998, through June 5, 1998
Daniel W. Fisher Chairman of the Board, CEO
Edward Fisher Director
John H. Spriggs Director, President, COO and CFO
Willard G. McAndrew, III Sr. Vice-President/Investments
James R. Clark Director
R. Wayne Duke Director
June 6, 1998, through June 15, 1998:
John H. Spriggs Chairman, CEO, President, Treasurer
James R. Clark Director
R. Wayne Duke Director
June 16, 1998, through July 16, 1998:
Mark S. Pierce Director, CEO, President, CFO and Treasurer
R. Wayne Duke Director
July 17, 1998, through November 30, 1998:
Mark S. Pierce Director, CEO, President, CFO and Treasurer
The Company has been informed that Mr. Stephen King unilaterally made an
announcement to the public that he had become a director during 1997. This was
not true, as the acquisition proposed by Mr. King did not close and, therefore,
he was never appointed bo the Board of Directors.
Table of Directors and Executive Officers:
The following table sets forth all current directors and executive officers of
the Company, as well as their ages, as of the date of the filing of this report:
Name Age Position
---- --- --------
Mark S. Pierce 41 Director, President, CEO, CFO and Treasurer
Profiles of Directors and Executive Officers:
Mr. Pierce was a director of the Company from October, 1994, until May, 1997,
and again from June 15, 1998, to the date of this report. He was Secretary from
October, 1994, until December, 1997, and again from January 22, 1998, until June
15, 1998. Mr. Pierce became the sole executive officer of the Company on June
15, 1998, and maintained that capacity through the date of this report. From
September 1, 1993, until April 7, 1995, Mr. Pierce was the President and a
director of a small, privately-held merchant banking firm with six employees,
including himself. Prior to September 1, 1993, Mr. Pierce was engaged in the
private practice of law in Denver, Colorado. Mr. Pierce graduated from the
University of Wyoming in Laramie, Wyoming, in May, 1979, with a Bachelor of
Science degree in Accounting with Honors. He passed his examination as a
Certified Public Accountant in May, 1979, in his first sitting. Mr. Pierce
received his Juris Doctorate from the University of Colorado in Boulder,
Colorado, during May of 1983. He is a member of the American, Colorado and
Denver County Bar Associations.
<PAGE>
Mr. Pierce, in December, 1997, was named in a civil suit initiated by the
Securities and Exchange Commission in the Federal District Court for the
Southern District of New York. (The original case number in New York, prior to
severance and removal to Colorado, was 97 Civ. 9303.) The suit claims that Mr.
Pierce, along with Mr. Marsik and several others, engaged in fraudulent conduct
regarding the market for the Common Stock during the period beginning September,
1995, and ending in August, 1996. Messrs. Pierce and Marsik vehemently deny the
claims , having been advised by several parties that the claims are frivolous
and groundless; further, they have obtained the severance of the claims against
them from the remainder of the claims contained in the original complaint and
the removal of their case to the Federal District Court for the District of
Colorado. (The case number in Colorado is 98 S 1295.) The parties are currently
in the process of negotiating a case management order and have yet to initiate
discovery. The Company was not named in this suit.
No current director has any arrangement or understanding whereby they are or
will be selected as a director or as an executive officer. All directors will
hold office until the next annual meeting of shareholders and until their
successors have been duly elected and qualified, unless and until they earlier
resign or are removed from office. The executive officers of the Company are
elected by the Board of Directors at its annual meeting immediately following
the shareholders' annual meeting. The Company does not have any standing audit,
nominating or compensation committee, or any committee performing similar
functions.
Item 10. Executive Compensation.
The following table sets forth information concerning the compensation paid to
all executive officers during 1997 and 1996.
<PAGE>
Summary Compensation Table
Annual Compensation
Name Principal Position (1) Year Salary Bonus
- ---- ---------------------- ---- ------ -----
Robert W. Marsik President CEO,CFO 1997 $ 0 $44,284(2)
1996 100,000 0
(1) Mr. Pierce was not an executive officer during the period covered by this
report; consequently, he received no compensation from the Company in this
regards. (2) On termination of his employment agreement, Mr. Marsik
received 26,791 shares of Series A Preferred Stock and 1,217,800 Series A
Warrants. The figure in this table is the market value of these securities
as determined by the independent members of the Board of Directors on that
date.
Employment Agreements: Mr. Robert W. Marsik entered into an employment contract
with the Company on September 1, 1995, which had a five year term ending
September 1, 2000. Pursuant to this agreement, Mr. Marsik received a base salary
of $100,000 per year, $500 per month as a car allowance, health insurance
benefits and vacation benefits. The contract was mutually terminated without any
further obligation of the Company on February 17, 1997.
Item 11. Security Ownership of Management and Certain Others.
The following table sets forth certain information regarding the beneficial
ownership as of November 30, 1998, of the Common Stock by (1) each person known
by the Company to be the beneficial owner of more than five percent of the
Common Stock, (2) each director and executive officer of the Company, and (3)
all directors and executive officers as a group. Except as otherwise indicated,
each stockholder identified in the table possesses sole voting and investment
power with respect to its or his shares.
Name of Number of Shares Percentage of
Beneficial Owner Beneficially Owned Ownership (1)
- ---------------- ------------------ -------------
Mark S. Pierce 3,400 - Series A Preferred (2)(3)
Route 107T
Story, WY 82842
All executive officers and directors as a group (one person)(3)
1. These shares and percentages are based upon the assumed conversion of all
outstanding shares of Series A Preferred Stock, on November 30, 1998, which
would have resulted in there having been 16,270,077 shares of Common Stock
outstanding on that date.
2. These shares are convertible into 143,990 shares of Common Stock.
3. Less than one percent.
<PAGE>
Item 12. Certain Transactions.
The Company, on February 17, 1997, issued 26,791 shares of Series A Preferred
Stock and 1,217,800 Series A Warrants (valued at $44,284, the market price
therefor) to Mr. Marsik in recognition of (1) his serving the Company without
payment in full for these services and (2) his services in wrapping up the
former operations of the Company, which involved more time and effort than could
have been reasonably asked of him. The foregoing was approved by the independent
members of the board. Further on February 17, 1997, the Company issued 14,826
shares of Series A Preferred Stock and 612,700 Series A Warrants (valued in the
aggregate at $24,508, the market price therefor) and 397,360 shares of Common
Stock (valued at $47,205, the market price therefor) to Mr. Pierce in exchange
for the forgiveness of overdue attorneys fees and costs. These share issuances
were approved by the independent members of the board. Finally on February 17,
1997, the Company issued 175,000 shares of Common Stock (valued at $21,875, the
market price therefor) to Mr. Roger F. Tompkins in exchange for his services as
a director prior to his resignation in December, 1996.
On July 31, 1997, after his resignation from the Board of Directors and from all
positions as an executive officer, the board granted Mr. Pierce 100,000 shares
of Common Stock under the ISOP, and granted to themselves the remaining 400,000
shares of Common Stock available under the plan.
The Company, on August 29, 1997, issued 29,000 shares of Series A Preferred
Stock (valued at $58,000, the market price therefor) to Mr. Charles Stidham in
exchange for his services as an officer and director of the Company. On February
6, 1998, the Company issued another 90,000 shares of Series A Preferred Stock
and 4,500,000 Series A Warrants (valued in the aggregate at $180,000, the market
price therefor) to Mr. Stidham in exchange for his services to the Company from
August 29, 1997, to January 22, 1998.
The Company believes that the foregoing transactions with its officers and
directors were on terms no less favorable than could have been obtained from
independent third parties. All future transactions, including all loans, between
the Company and its officers, directors and principal shareholders or affiliates
or any of them, will also be on terms no less favorable than could be obtained
from independent third parties and will be approved by a majority of the
independent, disinterested directors.
<PAGE>
Item 13. Exhibits and Reports on Form 8-K.
None.
SIGNATURES
In accordance with the requirements of the Section 13 or 15(d) of the Securities
Exchange Act of 1934, registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of Denver,
State of Colorado on the 14th day of December, 1998.
MIDLAND, INC.
- -----------------------------------
(Registrant)
By:/s/ Mark S. Pierce
--------------------------------
Mark S. Pierce, Chief Executive,
Financial and Accounting Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following person on behalf of the registrant in the
capacity on this 14th day of December, 1998.
By: /s/ Mark S. Pierce
--------------------------------
Mark S. Pierce, Director
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<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> DEC-31-1997
<CASH> 7,984
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
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<CURRENT-LIABILITIES> 594,724
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0
49,847
<COMMON> 753,494
<OTHER-SE> (1,390,081)
<TOTAL-LIABILITY-AND-EQUITY> 7,984
<SALES> 13,422
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<CGS> 5,937
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