UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
[X] Quarterly report under Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the Fiscal Quarter Ended June 30, 2001
or
[ ] Transitional report under Section 13 or 15(d) of the Exchange Act
Commission File No. 000-26639
Mayall Partners, Inc.
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(Name of Small Business Issuer in its Charter)
Delaware 13-4031364
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State or other jurisdiction of I.R.S. Employer Identification Number
incorporation or organization
317 Madison Avenue, Suite 2310, New York, New York 10017
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(Address of principal executive office)
Issuer's telephone number: (212) 949-9696
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Check whether the issuer: (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter
period that the registrant was required to file such reports), and (2) been
subject to such filing requirements for the past ninety (90) days.
Yes X No
--- ---
State the number of shares outstanding of each of the issuer's classes of common
equity, as of the latest practical date: As of August 8, 2001, there were
2,490,000 shares of Common Stock, par value $.001 per share, outstanding
Transitional Small Business Disclosure Format (check one):
Yes No X
--- ---
PART I
FINANCIAL INFORMATION
Item 1. Financial Statements.
MAYALL PARTNERS
(A DEVELOPMENT STAGE COMPANY)
CONTENTS
December 31, 2000 and June 30, 2001 and 2000 (unaudited)
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Page
FINANCIAL STATEMENTS
Balance Sheet 1
Statements of Operations 2
Statements of Stockholders' Equity 3
Statements of Cash Flows 4
Notes to Financial Statements 5 - 7
MAYALL PARTNERS
(A DEVELOPMENT STAGE COMPANY)
BALANCE SHEETS
December 31, 2000 and June 30, 2001 (unaudited)
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ASSETS
June 30, December 31,
2001 2000
-------- --------
(unaudited)
Assets
Cash $ 4,331 $ 10,215
Prepaid expenses 3,768 2,718
-------- --------
Total assets $ 8,099 $ 12,933
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accrued expenses $ -- $ 1,006
-------- --------
Total current liabilities -- 1,006
-------- --------
Stockholders' equity
Preferred stock, $0.001 par value
5,000,000 shares authorized
no shares issued and outstanding -- --
Common stock, $0.001 par value
40,000,000 shares authorized
2,490,000 (unaudited) and 2,490,000 shares issued
and outstanding 2,490 2,490
Additional paid-in capital 40,610 40,610
Contributed capital - stock warrants outstanding 2,813 2,813
Deficit accumulated during the development stage (37,814) (33,986)
-------- --------
Total stockholders' equity 8,099 11,927
-------- --------
Total liabilities and stockholders' equity $ 8,099 $ 12,933
======== ========
The accompanying notes are an integral part of these financial statements.
1
MAYALL PARTNERS
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF OPERATIONS
For the Three and Six Months Ended June 30, 2001 and 2000 (unaudited) and
for the Period from October 6, 1998 (Inception) to June 30, 2001 (unaudited)
- --------------------------------------------------------------------------------
For the
Period from
For the For the October 6,
Three Months Ended Six Months Ended 1998
June 30, June 30, (Inception) to
-------------------------------- -------------------------------- June 30,
2001 2000 2001 2000 2001
--------------- --------------- ---------------- --------------- ----------------
(unaudited) (unaudited) (unaudited) (unaudited) (unaudited)
Operating expenses $ 1,582 $ 3,178 $ 3,828 $ 8,911 $ 37,814
--------------- --------------- ---------------- --------------- ----------------
Net loss $ (1,582) $ (3,178) $ (3,828) $ (8,911) $ (37,814)
=============== =============== ================ =============== ================
Basic and diluted
Loss per common
share $ (0.001) $ (0.001) $ (0.002) $ (0.004) $ (0.017)
=============== =============== ================ =============== ================
Weighted-average
common shares
outstanding 2,490,000 2,170,000 2,490,000 2,170,000 2,248,096
=============== =============== ================ =============== ================
The accompanying notes are an integral part of these financial statements.
2
MAYALL PARTNERS
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF STOCKHOLDERS' EQUITY
For the Period from October 6, 1998 (Inception) to June 30, 2001 (unaudited)
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Contributed Deficit
Capital - Accumulated
Additional Stock during the
Common Stock Paid-In Warrants Development
Shares Amount Capital Outstanding Stage Total
------------ ------------ ----------- ----------- ------------ -----------
Balance, October 6, 1998 (inception) -- $ -- $ -- $ -- $ -- $ --
Sale of common stock 2,020,000 2,020 2,580 4,600
Net loss (1,238) (1,238)
---------- ---------- ---------- ---------- ---------- ----------
Balance, December 31, 1998 2,020,000 2,020 2,580 -- (1,238) 3,362
Sale of common stock 150,000 150 33,600 33,750
Issuance of stock warrants 2,813 2,813
Net loss (12,320) (12,320)
---------- ---------- ---------- ---------- ---------- ----------
Balance, December 31, 1999 2,170,000 2,170 36,180 2,813 (13,558) 27,605
Issuance of common stock 170,000 170 2,280 2,450
Issuance and exercise of stock warrants 150,000 150 2,150 2,300
Net loss (20,428) (20,428)
---------- ---------- ---------- ---------- ---------- ----------
Balance, December 31, 2000 2,490,000 2,490 40,610 2,813 (33,986) 11,927
Net loss (unaudited) (3,828) (3,828)
---------- ---------- ---------- ---------- ---------- ----------
Balance, June 30, 2001 (unaudited) 2,490,000 $ 2,490 $ 40,610 $ 2,813 $ (37,814) $ 8,099
========== ========== ========== ========== ========== ==========
The accompanying notes are an integral part of these financial statements.
3
MAYALL PARTNERS
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF CASH FLOWS
For the Six Months Ended June 30, 2001 and 2000 (unaudited) and
for the Period from October 6, 1998 (Inception) to June 30, 2001 (unaudited)
- --------------------------------------------------------------------------------
For the
Period from
For the October 6,
Six Months Ended 1998
June 30, (Inception) to
--------------------- June 30,
2001 2000 2001
-------- -------- --------
(unaudited) (unaudited) (unaudited)
Cash flows from operating activities
Net loss $ (3,828) $ (8,911) $(37,814)
Adjustments to reconcile net loss to net cash
used in operating activities
Stock warrants outstanding -- -- 2,813
Issuance of common stock for services
rendered -- -- 2,450
Exercise of warrants issued for services
rendered -- -- 800
Change in
Prepaid expenses (1,050) -- (3,768)
Accrued expenses (1,006) (950) --
-------- -------- --------
Net cash used in operating activities (5,884) (9,861) (35,519)
-------- -------- --------
Cash flows from financing activities
Cash received for common stock -- -- 39,850
Due to stockholder -- -- --
-------- -------- --------
Net cash provided by financing activities -- -- 39,850
-------- -------- --------
Net increase (decrease) in cash (5,884) (9,861) 4,331
Cash, beginning of period 10,215 30,395 --
-------- -------- --------
Cash, end of period $ 4,331 $ 20,534 $ 4,331
======== ======== ========
The accompanying notes are an integral part of these financial statements.
4
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Organization and Line of Business
---------------------------------
Mayall Partners (the "Company") was incorporated on October 6, 1998 in
the State of Delaware. The Company is in the development stage, and its
intent is to operate as a capital market access corporation and to
acquire one or more existing businesses through merger or acquisition.
The Company has had no significant business activity to date. Operating
expenses incurred to date consist primarily of legal and accounting
fees.
Basis of Presentation
---------------------
The Company has been in the development stage since its inception on
October 6, 1998. The Company has incurred losses from operations. These
factors raise substantial doubt about the Company's ability to continue
as a going concern.
Interim Financial Statements
----------------------------
In the opinion of management, the interim financial statements include
all adjustments, consisting of only normal, recurring adjustments,
necessary for a fair presentation of the Company's financial position,
results of operations, and cash flows.
Start-Up Costs
--------------
Start-up costs include legal and professional fees. In accordance with
Statement of Position 98-5, "Costs of Start-Up Activities," these costs
have been expensed as incurred.
Estimates
---------
The preparation of financial statements requires management to make
estimates and assumptions that affect the reported amounts of assets
and liabilities and disclosure of contingent assets and liabilities at
the date of the financial statements and the reported amounts of
revenue and expenses during the reporting period. Actual results could
differ from those estimates.
Loss per Share
--------------
The Company utilizes Statement of Financial Accounting Standards
("SFAS") No. 128, "Earnings per Share." Basic loss per share is
computed by dividing the loss available to common stockholders by the
weighted-average number of common shares outstanding. Diluted loss per
share is computed similar to basic loss per share except that the
denominator is increased to include the number of additional common
shares that would have been outstanding if the potential common shares
had been issued and if the additional common shares were dilutive.
Because the Company has incurred net losses, basic and diluted loss per
share are the same.
5
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Income Taxes
------------
The Company uses the asset and liability method of accounting for
income taxes. The asset and liability method accounts for deferred
income taxes by applying enacted statutory rates in effect for periods
in which the difference between the book value and the tax bases of
assets and liabilities are scheduled to reverse. The resulting deferred
tax asset or liability is adjusted to reflect changes in tax laws or
rates. Because the Company is in the development stage and has incurred
a loss from operations, no benefit is realized for the tax effect of
the net operating loss carryforward due to the uncertainty of its
realization.
Recently Issued Accounting Pronouncements
-----------------------------------------
In July 2001, the Financial Accounting Standards Board ("FASB") issued
SFAS No. 141, "Business Combinations." This statement addresses
financial accounting and reporting for business combinations and
supersedes Accounting Principles Bulletin ("APB") Opinion No. 16,
"Business Combinations," and SFAS No. 38, "Accounting for
Pre-Acquisition Contingencies of Purchased Enterprises." All business
combinations in the scope of this statement are to be accounted for
using one method, the purchase method. The provisions of this statement
apply to all business combinations initiated after June 30, 2001. Use
of the pooling-of-interests method for those business combinations is
prohibited. This statement also applies to all business combinations
accounted for using the purchase method for which the date of
acquisition is July 1, 2001 or later.
In July 2001, the FASB issued SFAS No. 142, "Goodwill and Other
Intangible Assets." This statement addresses financial accounting and
reporting for acquired goodwill and other intangible assets and
supersedes APB Opinion No. 17, "Intangible Assets." It addresses how
intangible assets that are acquired individually or with a group of
other assets (but not those acquired in a business combination) should
be accounted for in financial statements upon their acquisition. This
statement also addresses how goodwill and other intangible assets
should be accounted for after they have been initially recognized in
the financial statements. It is effective for fiscal years beginning
after December 15, 2001. Early application is permitted for entities
with fiscal years beginning after March 15, 2001, provided that the
first interim financial statements have not been issued previously.
6
NOTE 2 - WARRANTS OUTSTANDING
On April 19, 1999, warrants to purchase 51,000 shares of the Company's
common stock, par value $0.001, were issued to the placement agent at
an exercise price of $0.255 per share. The shares vest immediately and
can be exercised within seven years from the date of issuance of the
warrants. The fair value of the warrants at the date of issuance was
approximately $2,813 based on the fair value of the placement agent's
services, less cash paid. As of June 30, 2001, the warrants were still
outstanding.
NOTE 3 - ISSUANCE OF COMMON STOCK
On August 8, 2000, the Company issued 170,000 shares of common stock
valued at $2,450 under various agreements with several consultants in
return for certain professional services rendered, which were not
related to raising capital.
NOTE 4 - RESTRICTED STOCK
2,214,853 shares of common stock issued to the President and other
stockholders are subject to a Lockup and Registration Rights Agreement.
Under the terms of the agreement, these shares cannot be sold, pledged,
assigned, or otherwise transferred or hypothecated (a) for a period of
six months after the registration of the common stock and merger and
(b) to the extent of 50% of the shares of the Company, for a period of
12 months following the consummation of the merger.
NOTE 5 - EXERCISE OF WARRANTS ISSUED
On June 26, 2000, pursuant to a consulting agreement, warrants to
purchase a total of 150,000 shares of the Company's common stock, par
value $0.001, were issued to various consultants at an exercise price
of $0.01 per share. In September 2000, holders of these warrants
exchanged the warrants for 150,000 shares of common stock, the
consideration for which was the fair value of their services, valued at
$800, and a cash payment of $1,500.
NOTE 6 - RELATED PARTY TRANSACTIONS
The Company utilizes office space of a law firm owned by its
President/Director. The Company does not pay any rent for such office
space.
7
Item 2. Plan of Operation.
Statements contained in this Plan of Operation of this Quarterly Report on
Form 10-QSB include "forward-looking statements" within the meaning of Section
27A of the Securities Act of 1933 as amended (the "Securities Act") and Section
21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act").
Forward-looking statements involve known and unknown risks, uncertainties and
other factors which could cause the actual results of the Company (sometimes
referred to as "we", "us" or the "Company"), performance (financial or
operating) or achievements expressed or implied by such forward-looking
statements not to occur or be realized. Such forward-looking statements
generally are based upon the Company's best estimates of future results, general
merger and acquisition activity in the marketplace, performance or achievement,
current conditions and the most recent results of operations. Forward-looking
statements may be identified by the use of forward-looking terminology such as
"may," "will," "project," "expect," "believe," "estimate," "anticipate,"
"intends," "continue", "potential," "opportunity" or similar terms, variations
of those terms or the negative of those terms or other variations of those terms
or comparable words or expressions. (See the Company's Form 10SB and Annual
report on Form 10-KSB for the fiscal year ended December 31, 2000 for a
description of certain of the known risks and uncertainties of the Company.)
General
Our plan is to seek, investigate, and if such investigation warrants,
consummate a merger or other business combination, purchase of assets or other
strategic transaction (i.e. Merger) with a corporation, partnership, limited
liability company or other business entity (a "Merger Target"), desiring the
perceived advantages of becoming a publicly reporting and publicly held
corporation. At this time, we have no binding agreement to enter into a Merger
with any specific business or company and we have not identified any specific
business or company for investigation and evaluation. We will not restrict our
search to any specific business, industry, or geographical location, and may
participate in business ventures of virtually any kind or nature. Discussion of
proposed plan of operation and Mergers under this caption and throughout this
Quarterly Report is purposefully general and is not meant to restrict our
virtually unlimited discretion to search for and enter into potential business
opportunities. While we maintain as low an overhead as possible, we also have
minimal capital that may not be sufficient to satisfy our cash requirements
during the next 12 months.
We may seek a Merger with an entity which only recently commenced
operations, or a developing company in need of additional funds to expand into
new products or markets or seeking to develop a new product or service, or an
established business which may be experiencing financial or operating
difficulties and needs additional capital which is perceived to be easier to
raise by a public company. Indeed, our most common merger candidates are often
companies that lack the ability to conduct an IPO, or whose business industry is
not well received by the investment banking community. In some instances, a
Merger may involve entering into a transaction with a corporation which does not
need substantial additional cash but which desires to establish a public trading
market for its common stock. We may purchase assets and establish wholly-owned
subsidiaries in various businesses or purchase existing businesses as
subsidiaries.
Selecting a Merger Target will be complex and involve a high degree of
risk. Because of general economic conditions, rapid technological advances being
made in some industries, and shortages of available capital, management believes
that there are numerous entities seeking the benefits of being a publicly-traded
corporation. Many potential Merger Targets are in industries that have
essentially not presented well in the conventional IPO market, regardless of
their financial success, and suffer from low initial valuations. The perceived
benefits of being a publicly traded corporation may include facilitating or
improving the terms on which additional equity financing may be sought,
providing liquidity (subject to restrictions of applicable statutes and
regulations) for the principals of a business, creating a means for providing
incentive stock options or similar benefits to key employees, providing
liquidity (subject to restrictions of applicable statutes and regulations) for
all stockholders, and other items. Potential Merger Targets may exist in many
different industries and at various stages of development, all of which will
make the task of comparative investigation and analysis of such Merger Targets
extremely difficult and complex.
8
We don't have sufficient capital with which to provide the owners of Merger
Targets significant cash or other assets. We believe we can offer owners of
Merger Targets the opportunity to acquire a controlling ownership interest in a
public company at substantially less cost than is required to conduct an initial
public offering. Nevertheless, we have not conducted any specific market
research and we are not aware of statistical data which would support the
perceived benefits of a Merger or acquisition transaction for the owners of a
Merger Target.
We also believe that finding a suitable Merger Target willing to enter into
a Merger with us may depend on the existence of a public trading market for our
Common Stock. There is presently no material trading market and there is no
assurance that one can be developed.
We will not restrict our search for any specific kind of Merger Target, and
we may merge with an entity which is in its preliminary or development stage,
which is already in operation, or in essentially any stage of its corporate
life. It is impossible to predict at this time the status of any business in
which we may become engaged, in that such business may need to seek additional
capital, may desire to have its shares publicly traded, or may seek other
perceived advantages which we may offer. However, we do not intend to obtain
funds in one or more private placements to finance the operation of any acquired
business opportunity until such time as we have successfully consummated such a
Merger, if ever.
Selection and Evaluation of Merger Targets
Our Management, which currently consists of Mr. Prestiano, will have
complete discretion and flexibility in identifying and selecting a prospective
Merger Target. In connection with its evaluation of a prospective Merger Target,
management anticipates that it will conduct a due diligence review which will
encompass, among other things, meeting with incumbent management and inspection
of facilities, as well as a review of financial, legal and other information
which will be made available to us.
Under the Federal securities laws, public companies must furnish
stockholders certain information about significant acquisitions, which
information may require audited financial statements for an acquired company
with respect to one or more fiscal years, depending upon the nature of the
specific acquisition. Likewise, the Merger Target after the merger will be
subject to similar rules. Consequently, we will only be able to effect a Merger
with a prospective Merger Target that has available audited financial statements
or has financial statements which can be audited. If after a Merger the Company
fails to comply with these rules, the stockholders may be adversely affected
because we may not be able to file registration statements or raise capital
until satisfactory audits are obtained.
The time and costs required to select and evaluate a Merger Target
(including conducting a due diligence review) and to structure and consummate
the Merger (including negotiating relevant agreements and preparing requisite
documents for filing pursuant to applicable securities laws and corporation
laws) cannot presently be ascertained with any degree of certainty. Mr.
Prestiano, our current executive officer and sole director intends to devote
only a small portion of his time to our affairs and, accordingly, consummation
of a Merger may require a greater period of time than if our management devoted
his full time to our affairs. We have engaged third party consultants to assist
us in the evaluation and due diligence review of potential Merger Targets. To
date, these third party consultants have been paid in stock only, but we may be
required to hire new consultants and/or pay such persons cash or other
securities of the Company to carry out our business plan.
We will seek potential Merger Targets from all known sources and anticipate
that various prospective Merger Targets will be brought to our attention from
various non-affiliated sources, including securities broker-dealers, investment
bankers, venture capitalists, bankers, other members of the financial community
and affiliated sources, including, possibly, our executive officer, director and
his affiliates. While we have not yet ascertained how, if at all, we will
advertise and promote our company, we may elect to publish advertisements in
financial or trade publications seeking potential business acquisitions. Such an
advertisement may only be made pursuant to an exemption under the Securities
Act. While we do not presently anticipate engaging the services of professional
firms that specialize in finding business acquisitions on any formal basis, we
may engage such firms in the future, in which event we may pay a finder's fee or
other compensation. In no event, however, will we pay a finder's fee or
commission to our current officer and director or any entity with which he is
affiliated for such service. Moreover, in no event shall we issue any of our
securities to any officer, director or affiliate of the Company, or any of their
respective affiliates or associates, in connection with activities designed to
locate a Merger Target.
9
In analyzing prospective Merger Targets, management may consider, among
other factors, such matters as;
o the available technical, financial and managerial resources;
o working capital and other financial requirements;
o the current Wall Street and other market and analyst's valuations of
similarly situated companies;
o history of operation, if any;
o prospects for the future;
o present and expected competition;
o the quality and experience of management services which may be
available and the depth of that management;
o the potential for further research, development or exploration;
o specific risk factors not now foreseeable but which then may be
anticipated to impact the proposed activities of the company;
o the potential for growth or expansion;
o the potential for profit;
o the perceived public recognition or acceptance of products, services
or trades; and
o name recognition.
Merger opportunities in which we may participate will present certain
risks, many of which cannot be adequately identified prior to selecting a
specific opportunity. Our stockholders must, therefore, depend on management to
identify and evaluate such risks. The investigation of specific Merger
opportunities and the negotiation, drafting and execution of relevant
agreements, disclosure documents and other instruments will require substantial
management time and attention and substantial costs for accountants, attorneys
and others. If a decision is made not to participate in a specific Merger
opportunity the cost therefore incurred in the related investigation would not
be recoverable. To help offset this and minimize expense we have employed
several consultants, who have received stock compensation only, to perform due
diligence and assist us in evaluating Merger Targets. Furthermore, even if an
agreement is reached for the participation in a specific Merger opportunity, the
failure to consummate that transaction may result in our loss of the related
costs incurred.
There can be no assurance that we will find a suitable Merger Target. If no
such Merger Target is found, no return on an investment in our securities will
be realized, and there will not, most likely, be a market for the Company's
stock.
Consultants Retained To Assist In Mergers
In order to assist us in reviewing and evaluating Merger Targets, we have
retained certain consultants. These consultants received stock compensation only
and may be reimbursed for certain out of pocket expenses incurred at our
request. We may be required to retain additional consultants for cash
consideration if the need should arise, and we will be limited, by cash on hand
in doing so.
Structuring of a Merger
As a general rule, Federal and state tax laws and regulations have a
significant impact upon the structuring of Mergers. We will evaluate the
possible tax consequences of any prospective Merger and will endeavor to
structure a Merger so as to achieve the most favorable tax treatment to us, the
Merger Target and our respective stockholders. There can be no assurance that
the Internal Revenue Service or relevant state tax authorities will ultimately
assent to our tax treatment of a particular consummated Merger. To the extent
the Internal Revenue Service or any relevant state tax authorities ultimately
prevail in recharacterizing the tax treatment of a Merger, there may be adverse
tax consequences to us, the Merger Target and our respective stockholders. Tax
considerations as well as other relevant factors will be evaluated in
determining the precise structure of a particular Merger.
10
We may utilize available cash and equity securities in effecting a Merger.
Although we have no commitments as of this date to issue any shares of Common
Stock or options or warrants, except for additional securities that we may issue
for certain professional services, other than those already issued in the
offering of our common stock pursuant to Regulation D promulgated under the
Securities Act of 1933, as amended (the "Securities Act") (the "Private
Placement"), we will likely issue a substantial number of additional shares in
connection with the consummation of a Merger, probably in most cases equal to
nine or more times the amount held by our stockholders prior to the Merger. This
will leave current stockholders with approximately 10% or less of the post
merger company. We also may decide to issue Preferred Stock, with rights, voting
privileges, liquidation and dividend preferences that are senior to the Common
Stock, in connection with a Merger or obtaining financing therefore, although we
have no present plans to do so. We may have to effect reverse stock splits prior
to or immediately after any Merger. To the extent that such additional shares
are issued, dilution to the interests of our stockholders will occur.
Additionally, in connection with a Merger, a change in control will occur which
may affect, among other things, our ability to utilize net operating loss
carry-forwards, if any.
We may need to borrow funds to effect a Merger. However, our limited
resources and lack of operating history may make it difficult to do so. The
amount and nature of our borrowings will depend on numerous considerations,
including our capital requirements, potential lenders' evaluation of our ability
to meet debt service on borrowings and the then prevailing conditions in the
financial markets, as well as general economic conditions. We have no
arrangements with any bank or financial institution to secure additional
financing and there can be no assurance that such arrangements if required or
otherwise sought, would be available on terms commercially acceptable or
otherwise in our best interests. Our inability to borrow funds required to
effect or facilitate a Merger, or to provide funds for an additional infusion of
capital into a Merger Target, may have a material adverse effect on our
financial condition and future prospects, including our ability to effect a
Merger. To the extent that debt financing ultimately proves to be available, any
borrowings may subject us to various risks traditionally associated with
indebtedness, including the risks of interest rate fluctuations and
insufficiency of cash flow to pay principal and interest. Furthermore, a Merger
Target may have already incurred debt financing and, therefore, we will assume
all the risks inherent thereto.
Merger Target
We are, and may continue to be, subject to intense competition in the
business of seeking a Merger with a Merger Target. Such competition is from
other entities having business strategies similar to ours. Many of these
entities, including venture capital partnerships and corporations, other blind
pool companies, large industrial and financial institutions, small business
investment companies and wealthy individuals, are well-established and have
extensive experience in connection with identifying and effecting Mergers
directly or through affiliates. Many of these competitors possess greater
financial, technical, human and other resources than us and there can be no
assurance that we will have the ability to compete successfully. Our financial
resources will be limited in comparison to those of many of our competitors.
This inherent competitive limitation may compel us to select certain less
attractive Merger prospects. There can be no assurance that such prospects will
permit us to achieve our stated business objectives.
Equipment and Employees
We have no operating business and thus no equipment and no employees other
than our president, who does not receive a salary. We do not expect to acquire
any equipment or employees. We do not intend to develop our own operating
business but instead hope to effect a Merger with a Merger Target.
11
Expenses for the Six Months Ended June 30, 2001
Net cash used in operating activities for the six months ended June 30,
2001 was $5,884, as compared to $9,861 for the six months ended June 30, 2000.
The Company did not have other sources or uses of cash during the six months
ended June 30, 2001. Accordingly cash on hand decreased by $5,884 for the six
months ended June 30, 2001 to $4,331. The Company's total liabilities and
stockholders' equity as of June 30, 2001 was reduced by $4,834 to $8,099, as
compared to total liabilities and stockholders' equity of $12,933 at the fiscal
year end December 31, 2000.
Expenses of approximately $3,828 for the six months ended June 30, 2001
resulted primarily from accounting/auditing, legal, and general administrative
expenses relating to the Company's annual public disclosure and reporting
requirements. As discussed above, the Company will incur substantial expenses,
including expenses for professional and other consulting services, when it seeks
to negotiate and enter into a Merger.
12
PART II
OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits
Exhibit Number Description
- -------------- -----------
4.1 Form of Subscription Supplement, Lock-Up and Registration Rights
Agreement executed by investors in the December 1998 Private
Placement. (1)
4.2 Form of Subscription Agreement executed by investors in the December
1998 Private Placement. (1)
4.3 Placement Agent's Warrant Agreement between Algiers Resources, Inc.,
Balstron Corporation, Daliprint, Inc., Hartscup Corporation, Mayall
Partners, Inc., PSLRA, Inc., Regal Acquisitions Inc., Spacial
Corporations, Voyer One, Inc., Voyer Two, Inc. and CMI, dated as of
April 19, 1999 relating to issue of Placement Agent Warrants to
purchase 51,000 Shares of Common Stock. (1)
4.4 Consulting Agreement dated as of June 26, 2000, between Algiers
Resources, Inc., Balstron Corporation, Daliprint, Inc., Hartscup
Corporation, Mayall Partners, Inc., PSLRA, Inc., Regal Acquisitions
Inc., Spacial Corporations, Voyer One, Inc., Voyer Two, Inc. and CMI
(the "Consultant"). (2)
4.5 Form of Warrant Agreement relating to warrants issued to Consultant.
(3)
10 Placement Agent Agreement between each of Algiers Resources, Inc.,
Balstron Corporation, Daliprint, Inc., Hartscup Corporation, Mayall
Partners, Inc., PSLRA, Inc., Regal Acquisitions Inc., Spacial
Corporations, Voyer One, Inc., Voyer Two, Inc. and Tradeway
Securities, Inc. as Placement Agent. (1)
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(1) Incorporated by reference from the Company's Form 10-KSB, for fiscal year
ended December 31, 1999.
(2) Incorporated by reference from Exhibit 4.1 to the Company's Registration
Statement on Form S-8 (SEC File No. 333-41916), filed on July 20, 2000.
(3) Incorporated by reference from Exhibit 4.2 to the Company's Registration
Statement on Form S-8 (SEC File No. 333-41916), filed on July 20, 2000.
(b) Reports on Form 8-K
No reports on Form 8-K were filed during the quarter ended June 30, 2001.
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SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
MAYALL PARTNERS, INC.
Date: August 13, 2001 By /s/ James A. Prestiano
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James A. Prestiano, President,
Secretary and Chief Financial
Officer
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