ZABA INTERNATIONAL, INC.
5650 Greenwood Plaza Blvd.
Suite 216
Englewood, Colorado 80111
COMMISSION FILE NUMBER 0-21099
DISCLOSURE STATEMENT
PURSUANT TO
SECTION 14(f) OF THE
SECURITIES EXCHANGE ACT OF 1934 AND
RULE 14f-1 THEREUNDER
INTRODUCTION
This Statement is being mailed on or about November 8, 1999 to holders
of record on November 1, 1999 of the shares of Common Stock, par value $.001 per
share (the "Common Stock") of Zaba International, Inc., a Colorado corporation
(the "Company"). It is being furnished in connection with the change of the
Company's directors to be effected at a Board meeting to be held at the closing
of the transaction discussed below (the "Closing Date"), to be held on or about
November 19, 1999.
BACKGROUND OF TRANSACTION AND CHANGE IN CONTROL
Pursuant to the terms of an agreement between the Company and Merendon
Mining Corporation Ltd. ("MMC"), a privately held Canadian corporation (the
"Agreement"), the Company has agreed to undertake a forward split of its issued
and outstanding common stock, whereby 2 shares of Common Stock shall be issued
in exchange for every share of Common Stock presently issued and outstanding, in
order to establish the number of issued and outstanding Common Shares of the
Company at the Closing Date to be 4,814,332 shares. Thereafter, the Company will
acquire all of MMC's issued and outstanding shares of common stock
(collectively, the "MMC Stock") in exchange for an aggregate of 12,369,133
"restricted" shares of the Company's Common Stock (the "Transaction").
Accordingly, if all of the issued and outstanding shares of MMC Stock are
exchanged for the Company's Common Stock, the holders thereof will own
approximately 72% of the Company's outstanding shares of Common Stock.
MMC is a private Canadian corporation based in Calgary, Canada and
which is engaged in gold exploration, production and processing in the Republic
of Honduras. MMC has completed the construction of a gold processing facility
located in Tegucigalpa, Honduras, the capital of Honduras, that has been
designed to process up to 500 ounces of gold per day, which can be expanded as
supply contracts for gold concentrates are secured. It also has concessions
covering 196,197 ha in preliminary exploration stages. However, due to a
concentration of MMC's resources on completion of the gold processing facility,
exploration efforts have been nominal to date. It is anticipated that the gold
exploration program will become active as cash flow from the processing facility
is allocated by management.
As of August 31, 1999, MMC had $6,644,328 in total assets, with
$448,699 in total liabilities (unaudited). MMC is currently engaged in an audit
of its financial statements, which is expected to be completed on or shortly
after closing of the Transaction. The relevant Agreement will contain
representations and warranties concerning MMC's financial condition and results
of the audit in the event the audit is not completed by the proposed Closing
Date.
<PAGE>
Upon consummation of the Transaction, the Company's current officers
and directors will resign and be replaced by directors and officers selected by
MMC's management (see "Directors and Executive Officers and Related
Transactions" below). Also, as part of the terms of the Transaction, the name of
the Company will change to "Merendon Mining Corporation, Ltd." MMC shall become
a wholly owned subsidiary of the Company.
Consummation of the Transaction will result in a change of control. If
the Transaction is not consummated, the forward split referenced above will not
be undertaken, Company's current officers and directors will not resign and
there will not be a change in control. The Company anticipates, but cannot
assure, that the Agreement will be executed on or about November 19, 1999, with
the closing to occur shortly thereafter.
REASON FOR DISCLOSURE STATEMENT
Because a majority of its directors is being changed otherwise than at
a meeting of stockholders, the Company is required pursuant to Rule 14f-1
promulgated under the Securities Exchange Act of 1934, as amended, to provide
its stockholders and the Securities and Exchange Commission (the "Commission")
with certain information not less than ten days prior to the date on which the
change will take place, or such other time period as may be established by the
Commission. This Disclosure Statement is being filed with the Commission and
sent to stockholders in compliance with that Rule.
INFORMATION RELATING TO THE COMPANY'S SECURITIES
As of the date of this report, there were outstanding 2,407,166 shares
of the Company's Common Stock. Each outstanding share of Common Stock entitles
the record holder thereof to one vote on all matters which are to be presented
to stockholders for their consideration. The Common Stock is the only issued and
outstanding stock of the Company.
PRINCIPAL STOCKHOLDERS
The following table sets forth as of the date of this report certain
information with respect to all those known by the Company to be record or
beneficial owners of more than 5% of its outstanding Common Stock, each Director
and all Directors and Officers as a group. The figures provided are so provided
on a pre-reverse split basis.
No. of Percentage
Name and Address Shares Owned Ownership
- ---------------- ------------ ---------
Gregory W. Skufca(1) 1,200,000 49.9%
5650 Greenwood Plaza Blvd.
Suite 216
Englewood, CO 80111
William L. Skufca(1) 570,833 23.7%
620 Front Range Rd.
Littleton, CO 80120
Jack Beam 466,666 19.3%
3433 E. 7th Ave.
Denver, CO 80206
Reed Johnson 125,000 5.2%
2175 E. Grapevince Rd.
Idledale, CO 80453
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No. of Percentage
Name and Address Shares Owned Ownership
- ---------------- ------------ ---------
All Directors 1,770,833 73.6%
and Officers as a
Group (2 persons)
- --------------------
(1) Officer and/or director of the Company.
The following table sets forth as of the date hereof, certain
information with respect to all those known by the Company who, assuming
consummation of the Transaction, would be the record or beneficial owners of
more than 5% of its outstanding Common Stock, each to be appointed director and
executive officer of the Company and all to be appointed Directors as a group.
Except as indicated in the footnotes to the table, the listed stockholders will
hold sole voting and investment power over their respective shares. The figures
so provided assume that the forward stock split discussed above herein becomes
effective.
<TABLE>
<CAPTION>
Shares of
Common Stock
to be owned upon Approximate
consummation of Percent
Name and Address Offices To Be Held the Transfer of Class
- ---------------- ------------------ ------------ --------
<S> <S> <C> <C>
Gary A. Sorenson Chairman of the Board & 5,384,420 31.3%
Suite 630 Chief Executive Officer
333 11th Ave.
Calgary, Alberta
Canada T2R 1L9
Luis F. Lorie Director 10,000 *
10735 S.W. 58 Ave.
Pinecrest, FL 33156
All Proposed Directors - 5,394,420 31.4%
and Officers as a
Group (2 persons)
</TABLE>
LEGAL PROCEEDINGS
There are no legal proceedings to which any director, officer or
affiliate of the Company, any owner of record or beneficially of more than five
percent of the Company's Common Stock, or any associate of any of the foregoing,
is a party adverse to the Company or any of its subsidiaries or has a material
interest adverse to Company or any of its subsidiaries.
DIRECTORS AND EXECUTIVE OFFICERS AND RELATED TRANSACTIONS
DIRECTORS AND EXECUTIVE OFFICERS.
If and when the Transaction is consummated, the Company's current
officers and directors will resign and will be replaced, without stockholder
action, by the following Officers and Directors:
Name Age Position
---- --- --------
Gary A. Sorenson 56 CEO, Chairman of the Board of
Directors
Luis F. Lorie 34 Director
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<PAGE>
Resumes:
Gary A. Sorenson will be appointed as Chairman of the Board of
Directors and Chief Executive Officer of the Company upon closing of the
Transaction. Since May 1996, Mr. Sorenson has been CEO and a director of MMC.
From 1990 through April 1996, Mr. Sorenson was employed by the Canadian National
Investment Corporation, Ltd., where his responsibilities included directing
corporate development. Upon closing of the proposed Transaction, Mr. Sorenson
intends to devote substantially all of his time to the business of the Company.
Luis F. Lorie will be appointed as a director of the Company upon
closing of the Transaction. Since December 1997, Mr. Lorie has been the Managing
Partner of Exclusive Real Estate Investments Ltd., Pinecrest, FL, which owns and
manages commercial real estate properties. Prior, from December 1995 through
December 1997, Mr. Lorie was vice president of operations of the retail mortgage
division of Global Mortgage Investors, Inc., Coral Gables, FL, where he
supervised loan originations. From November 1993 through December 1995, Mr.
Lorie was vice president of operations for the retail mortgage division of
Exclusive Mortgage Co., Coral Gables, FL. Mr. Lorie received a Bachelor of
Science degree in economics and finance from Barry University in 1986. Upon
closing of the Transaction, it is expected that Mr. Lorie will devote only such
time as necessary to the business of the Company.
COMPENSATION
Upon closing of the Transaction, Gary A. Sorenson is expected to
receive an annual salary of $78,000 (CDN). No executive officer is expected to
receive annual compensation in excess of $100,000 during the next fiscal year of
the Company. There are no employment agreements between MMC and its executive
officers or directors.
In addition, MMC may award stock options to key employees, members of
management, directors and consultants under stock option programs as bonuses
based on performance.
STANDING AUDIT, NOMINATING AND COMPENSATION COMMITTEES.
The Board of Directors of the Company has no standing audit, nominating
or compensation committees.
INFORMATION RELATING TO BOARD OF DIRECTORS MEETINGS.
The Company presently has two Directors. During the fiscal year ended
November 30, 1999, the Directors held one meeting of the Board of Directors.
COMPENSATION OF DIRECTORS AND EXECUTIVE OFFICERS
The Company's officers and directors have not been paid a salary during
the fiscal years ended November 30, 1999, 1998 and 1997. The Company maintains a
policy whereby the directors and executive officers of the Company may be
reimbursed for out-of-pocket expenses incurred in the performance of their
duties. The Company did not reimburse any director or officer for such expenses
during the 1999, 1998 or 1997 fiscal years.
The Company has no bonus or incentive plans in effect, nor are there
any understandings in place concerning additional compensation to the Company's
officers or directors.
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<PAGE>
SECTION 16(A) BENEFICIAL OWNERSHIP
REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires the
Company's officers, directors and person who own more than 10% of the Company's
Common Stock to file reports of ownership and changes in ownership with the
Securities and Exchange Commission, provided that there were any changes to such
persons respective stock holdings in the Company during the previous fiscal
year.
Based solely on its review of the copies of such forms received by it,
or written representations from certain reporting persons that no forms were
required for those persons, the Company believes that during the 1998 fiscal
year and subsequent thereto all filing requirements applicable to Officers,
Directors and greater than 10% beneficial owners were complied with.
Dated: November 8, 1999.
ZABA INTERNATIONAL, INC.
s/Gregory W. Skufca
Gregory W. Skufca, President
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