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U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10
GENERAL FORM FOR REGISTRATION OF SECURITIES
PURSUANT TO SECTION 12(b) OR (g) OF
THE SECURITIES EXCHANGE ACT OF 1934
REVENGE MARINE, INC.
(Exact name of registrant as specified in its charter)
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NEVADA 36-3051776
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(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
2051 NW 11Th Street, Miami Fl 33004
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (305) 643-0334
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Securities to be registered pursuant to Section 12(b) of the Act: None
Securities to be registered pursuant to Section 12(g) of the Act:
Common Stock, $0.001
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(Title of class)
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INFORMATION REQUIRED IN REGISTRATION STATEMENT
CERTAIN FORWARD-LOOKING INFORMATION
The information contained in this Registration Statement includes
forward-looking statements. Since this information is based on current
expectations which involve risks and uncertainties, actual results could differ
materially from those expressed in the forward-looking statements. Various
important factors known to Revenge Marine, Inc. that could cause such material
differences are identified in the section entitled Business Factors contained in
Item 1 of this Registration Statement.
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ATTENTION: CURRENT REORGANIZATION IN PROGRESS
THE INFORMATION CONTAINED IN THIS REGISTRATION STATEMENT IS CURRENT AS OF
WEDNESDAY, OCTOBER 28, 1998. REVENGE MARINE, INC., A NEVADA CORPORATION
("REVENGE" OR THE "COMPANY") IS IN THE PROCESS OF A REORGANIZATION PLAN. THE
BOARD OF DIRECTORS OF REVENGE HAS DETERMINED THAT IT IS IN THE BEST INTEREST OF
THE COMPANY TO UNDERTAKE A REORGANIZATION FOR VARIOUS REASONS. THE PURPOSE OF
THIS REORGANIZATION IS TO SEPARATE OUT THE MARINE ASSETS AND MARINE BUSINESS OF
REVENGE, WHICH CONSTITUTE PRESENTLY THE ENTIRE BUSINESS, ASSETS AND ACTIVITY OF
REVENGE. TOWARD THIS END, THE MANAGEMENT HAS CAUSED TO BE FORMED A NEW DELAWARE
CORPORATION, REVENGE MARINE, INC. ("REVENGE DELAWARE"). IT IS THE INTENTION OF
MANAGEMENT THAT REVENGE DELAWARE PURCHASE THE MARINE ASSETS AND BUSINESS OF
REVENGE. MANAGEMENT ANTICIPATES THAT EACH SHAREHOLDER OF REVENGE WILL RECEIVE AN
INTEREST IN REVENGE DELAWARE AS PART OF THE SALE OF THE MARINE ASSETS TO REVENGE
DELAWARE. WHILE THE BOARD OF DIRECTORS OF REVENGE HAS APPROVED THE PRINCIPLE OF
THIS REORGANIZATION, THE BOARD OF DIRECTORS OF REVENGE HAS NOT DETERMINED
PRECISELY UNDER WHAT MECHANISM THE ASSETS WILL BE SOLD TO REVENGE DELAWARE OR
WHAT FORM OF PARTICIPATION THE SHAREHOLDERS OF REVENGE WILL HAVE IN REVENGE
DELAWARE. THE COMPANY IS CURRENTLY IN THE PROCESS OF OBTAINING A THIRD-PARTY
EVALUATION OF THE VALUE OF THE REVENGE ASSETS.
THE BOARD OF DIRECTORS OF REVENGE AND REVENGE DELAWARE ARE PRESENTLY
IDENTICAL. THE OFFICERS OF REVENGE AND REVENGE DELAWARE ARE NEARLY IDENTICAL.
REVENGE DELAWARE PURCHASED AN EXPIRED OPTION TO ACQUIRE THE ASSETS OF BLACKFIN
YACHT CORPORATION (THE "BLACKFIN ASSETS"), FROM REVENGE FOR A PURCHASE PRICE
EQUAL TO WHAT REVENGE PAID FOR THE OPTION, $100,000. REVENGE HAS NOT YET BEEN
PAID FOR THE PURCHASE PRICE OF THE OPTION. REVENGE DELAWARE CLOSED ON THE
PURCHASE OF THE BLACKFIN ASSETS ON FRIDAY, OCTOBER 23, 1998. REVENGE DELAWARE
ALSO ENTERED INTO A LOAN AGREEMENT WITH FINOVA FINANCIAL CORPORATION ("FINOVA")
FOR A $2.1 MILLION LOAN WHICH CLOSED ON FRIDAY, OCTOBER 23, 1998. SOME OF THE
PROCEEDS OF THIS LOAN WERE USED TO PURCHASE THE BLACKFIN ASSETS. REVENGE
EXECUTED THE LOAN AGREEMENT WITH FINOVA AS A CO-BORROWER, ALONG WITH REVENGE
DELAWARE AND MEMBERS OF MANAGEMENT AND CERTAIN STOCKHOLDERS OF REVENGE WHO ALSO
GUARANTEED THE FINOVA LOAN. IT IS CONTEMPLATED THAT FINOVA WILL RELEASE REVENGE
UPON THE COMPLETION OF THE REORGANIZATION AND ASSET SALE TO REVENGE DELAWARE,
BUT THERE IS NO ASSURANCE THAT THIS WILL OCCUR. REVENGE IS ALSO IN THE PROCESS
OF SEEKING ASSIGNMENTS AND/OR RELEASES FROM MIAMI RIVER PARTNERS, CONSOLIDATED
YACHT CORPORATION AND THE HOLDERS OF ITS CONVERTIBLE DEBENTURES UPON THE
COMPLETION OF THE REORGANIZATION. THERE IS NO ASSURANCE THAT ANY SUCH RELEASES
WILL BE OBTAINED.
CONCURRENTLY WITH THE REORGANIZATION AND ASSET SALE, REVENGE INTENDS TO
PURSUE AND IS PURSUING OTHER ACQUISITION OPPORTUNITIES THAT ARE PERIPHERALLY
RELATED, OR UNRELATED, TO THE MARINE INDUSTRY. WHILE THIS REGISTRATION STATEMENT
ACCURATELY DEPICTS REVENGE AS IT HAS EXISTED AND EXISTS PRESENTLY, NO ASSURANCE
CAN BE GIVEN THAT ANY OF THE REORGANIZATION PLANS OF REVENGE WILL ACTUALLY BE
REALIZED. IN THE IMMEDIATE FUTURE, REVENGE MAY TOTALLY DIVEST ITSELF OF ITS
MARINE ASSETS OR IT MAY CEASE ITS DIVESTITURE AT ANY STAGE IN
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THE REORGANIZATION PROCESS. WHILE EVERY EFFORT WILL BE MADE TO OBTAIN FAIR
SHAREHOLDER VALUE FOR THE MARINE ASSETS SHOULD THEY BE SOLD TO REVENGE DELAWARE
BY REVENGE, THERE CAN BE NO ASSURANCE THAT THE CONSIDERATION FOR THE SALE OF
SUCH ASSETS WILL BE ADEQUATE. IN ADDITION, AS REVENGE HAS NOT DETERMINED THE
MECHANISM BY WHICH ITS SHAREHOLDERS MIGHT RECEIVE SOME OWNERSHIP INTEREST IN
REVENGE DELAWARE, THERE IS NO ASSURANCE THAT SUCH A MECHANISM CAN OR WILL BE
FOUND. WHEN REVENGE MARINE, INC., A NEVADA CORPORATION, AND ITS BUSINESSES ARE
HEREIN DESCRIBED, THEY ARE DESCRIBED AS THEY PRESENTLY EXIST, WITHOUT AN
IMPLEMENTED PLAN OF REORGANIZATION. SUCH AN IMPLEMENTED PLAN WOULD HAVE A
MATERIAL EFFECT ON THE BUSINESS AND OPERATIONS OF REVENGE.
IN THIS REGISTRATION STATEMENT GENERALLY, WHEN THE TERMS REVENGE, THE
COMPANY OR MANAGEMENT ARE USED, IT MUST BE UNDERSTOOD THAT THESE TERMS MAY REFER
TO REVENGE MARINE, INC., A NEVADA CORPORATION OR TO REVENGE MARINE, INC., A
DELAWARE CORPORATION, BECAUSE THE REORGANIZATION HAS NOT YET BEEN COMPLETED.
EVERY ATTEMPT HAS BEEN MADE TO CONSISTENTLY IDENTIFY AND SEPARATE OPERATIONS OF
REVENGE AND REVENGE DELAWARE, TO THE EXTENT SUCH SEPARATION IS CURRENTLY
MEANINGFUL.
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ITEM 1. BUSINESS
OVERVIEW
Revenge Marine, Inc., a Nevada Corporation ("Revenge" or the "Company")
is a leading manufacturer and servicer of advanced technology yachts and motor
boats. Revenge is positioned to offer its customers a wide variety of marine
products, from a 16 foot flats motor boat to a 110 foot custom built megayacht.
Revenge meets its customers' needs for high-performance, competitively priced,
advanced technology boats and yachts by employing the latest industry materials
and manufacturing techniques, as well as pioneering the use of advanced
composite materials and innovative hull designs. Revenge also offers significant
service and refurbishing capabilities. The breadth of Revenge's custom and
production line and servicing capability allows Revenge to service the needs of
a very wide segment of marine industry customers.
In October of 1998, Revenge contemplated entering into an arrangement
with Revenge Marine, Inc., a Delaware Corporation ("Revenge Delaware"), whereby
Revenge would sell all of its assets, operations and subsidiaries to Revenge
Delaware in exchange for a form and amount of consideration as yet undetermined.
Revenge Delaware is a Delaware corporation formed in October, 1998 and set-up
for the purpose of allowing Revenge to separate out its marine operations and to
cause those operations to develop separately. At the closing of the sale of the
assets of Revenge to Revenge Delaware, should such an event occur, Revenge would
have no assets or business operations other than the consideration received from
the sale of those assets. Revenge contemplates entering into merger or
acquisition transactions currently under negotiation in fields only tangentially
related, if at all, to marine operations. There is no assurance that the asset
sale will be consummated or that Revenge will be successful in any subsequent
attempts to engage in merger or acquisition activity.
COMPANY HISTORY
Revenge was originally incorporated as a Nevada Corporation in
December, 1979 as Contracap, Inc. The Company then changed its name several
times. In November, 1994, the Company changed its name to Global Energy
Organization Corporation. In January, 1998, Global Energy Organization
Corporation entered into a stock exchange agreement with Revenge Marine, Inc.,
(formerly Revenge Yachts, Inc.), an Oklahoma corporation subsequent to which
Global Energy Organization Corporation changed its name to Revenge Marine, Inc.
Prior to January, 1998, neither Revenge Yachts, Inc. nor Global Energy
Organization Corporation had any significant assets. Prior to January, 1998,
Revenge had not engaged in significant activity involving the Yachting or Marine
Industries. In January, 1998, Revenge restated its purpose as providing
consulting services and investment opportunities in the Yachting and Marine
industries.
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Revenge began a strategy of identification, acquisition and
consolidation of marine industries. In May of 1998 Revenge entered into a stock
exchange agreement with Consolidated Marine, Inc., a Florida Corporation
("Consolidated"), whereby Revenge acquired all of the outstanding stock of
Consolidated in exchange for 636,934 shares of common stock in Revenge.
Consolidated is a custom and production yacht builder, as well as a re-fitter
and repairer of large watercraft. Revenge acquired Consolidated as the first
acquisition in a series of acquisitions of marine manufacturers with the purpose
of creating a leading marine manufacturing, repair and marketing organization
that could serve diverse customer demands and offer a wide-range of products and
services efficiently.
Revenge intends to pursue an acquisition strategy that seeks to combine
companies with cutting-edge manufacturing technology, ultra-light construction
techniques and the latest composite materials into an entity that offers a full
range of 16 to 110 foot boats and yachts at competitive prices. Consistent with
that strategy, in May of 1998, Revenge entered into a stock exchange agreement
with Egret Boat Company, a Florida Corporation ("Egret"), whereby Revenge
acquired all the outstanding stock of Egret in exchange for 955,414 shares of
common stock in Revenge. Egret is a production manufacturer of advanced
composite motorized flats boats of less than 35 feet in length. In August, 1998,
180,692 additional shares were issued to Egret and Consolidated to complete the
combined transactions and the full payment of the consideration specified in the
stock exchange agreements.
In September, 1998, Revenge entered into an agreement to purchase
Consolidated Yacht Corporation, which contained within it certain assets that
were not included in the Consolidated Marine, Inc. acquisition, but which added
refurbishing, repair and production capability to what had been acquired in the
Consolidated Marine, Inc. acquisition.
In October of 1998, Revenge had an option to purchase the assets of
Blackfin Yacht Corporation ( the "Blackfin Assets") from Detroit Diesel
Corporation. The option expired. Subsequent to the expiration of the option,
Revenge sold the option to Revenge Delaware for its purchase price, $100,000.
Detroit Diesel honored the expired option and on Friday, October 23, 1998,
Revenge Delaware purchased the Blackfin Assets for a purchase price of
$1,005,445 in cash and 545,455 warrants to acquire Revenge common stock
exercisable at an exercise price of $6.44 per share. In addition, Revenge
Delaware granted Blackfin Yacht Corporation a 2% fee of the per unit sale price
for each vessel produced from the Blackfin Assets. Revenge Delaware also granted
certain demand and piggyback registration rights to Blackfin Yacht Corporation
for the warrants issued in the asset purchase. The Blackfin Assets provide a
line of mid-size fiberglass yachts, from 27 to 48 feet. In addition, there was
an established dealer network for Blackfin products, which are visually unique
and have a high level of brand identification. The completion of the three
acquisitions outlined above gives Revenge or Revenge Delaware the capability to
produce a wide range of high technology motor yachts and motor boats, ranging
from 110 foot custom yachts to 16 foot flats boats.
Consistent with its philosophy of acquiring and streamlining
synergistic marine enterprises, Revenge entered into a long-term lease with an
option to purchase on an 8.67 acre marine facility in Miami, Florida in July of
1998. Revenge or Revenge Delaware has consolidated its acquisitions and many of
its operations in the Miami facility and therefore is positioned to take
advantage of economies of scale, improved production efficiencies and
elimination of redundancies. In addition to the Miami facility, Revenge
maintains a facility in Dania, Florida. Revenge or Revenge Delaware continues to
identify and explore other marine acquisitions that are consistent with its
objectives.
ACQUISITIONS AND STRATEGY
Management believes that several important objectives will be
accomplished by the acquisitions. The acquisitions of Consolidated Marine, Inc.
and Egret Boat Company and other targeted acquisitions will contribute
market-proven design technology, leading edge composite manufacturing materials
and processes, and high strength, lightweight construction that offer cost
savings and pricing flexibility to our full range of 16' to 110'
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boats and yachts. Our centralized operations will consolidate sales, facilities,
manufacturing, development, and general and administrative expenses in an
attempt to create significant savings and increase profits and cash flow. Sales
of a full line of boat sizes and related products to the individual megayacht,
sportfishing, and military markets may help to balance business cycles. Through
economies of scale and steadier, more predictable sales, our costs of raw
materials, engines, accessories, and advertising might be reduced through volume
purchases, partnering with vendors, and steadier ordering.
Of course, significant challenges exist with respect to the
acquisitions. Revenge has not yet fully integrated each acquisition into a
systematically operating, unified whole with separate profit centers. There are
a number of different personalities, skilled laborers accustomed to differing
management styles and logistical problems still to be worked out. While Revenge
hopes to form a clear and appealing brand name presence in the marketplace,
success at doing so is far from certain. In closing the various acquisitions and
leasing the Miami facility, Revenge has taxed its resources, both financial and
human. Revenge does not presently have enough operating capital to accomplish
its near-term operational goals. While management believes that there exists
opportunities for raising additional capital in equity and debt, this is not
certain. If Revenge cannot grow revenue sufficient to meet its operating
expenses or if it cannot raise sufficient additional financing, then the Company
may fail. Revenge has operated at a loss and there is no assurance that it will
ever operate at a profit. Nevertheless, management believes the acquisitions and
their integration into the Miami facility provide a possibility for significant
operational success.
PRODUCTS AND SERVICES
Revenge intends for its customers to be able to choose from a variety
of distinctive yacht and boat styles, from custom megayachts to small sport
fishing boats, each manufactured to exacting standards and incorporating some of
the latest marine technology. In addition, through the service capabilities of
the Consolidated acquisitions, Revenge offers a wide range or repair and
refitting options. Revenge has molds for yachts which offer customers a unique
design, distinctive from other manufacturers. In addition, Revenge focuses its
efforts on composite technologies which would allow for the use of smaller
engines, innovative hull designs and increased durability over certain
fiberglass materials.
BOATS
The Company has the capability of building custom megayachts through
the production capabilities acquired in the Consolidated acquisitions. These
custom megayachts range between 74 to 110 feet and provide significantly higher
margins than the Company realizes on the sales of its smaller boats.
Although no mid-sized yacht is currently in production, the Company
anticipates having a mid-sized yacht in place shortly, as soon as the molds from
the Blackfin acquisition can be evaluated and integrated into the production
line. Revenge is currently producing the Egret line of boats, which are
generally small, flats boats ranging from 16 to 29 feet. Egrets are
high-technology, high end, production boats, capable of customization through a
number of add-on options the customer can select.
THE CONSOLIDATED PRODUCT LINE
Consolidated Marine, Inc. is a key component in our future success, as
the manufacturer of megayachts, boats produced from the Revenge molds, and any
other products from future acquisitions. Consolidated Marine, Inc., located in
Dania, Florida, just south of Ft. Lauderdale, was formed in 1998 and is a custom
and production yacht builder, as well as a re-fitter and repairer of large
watercraft. Consolidated Marine, Inc. employs extensive use of carbon fiber
composites to manufacture lightweight yet extremely strong boats and major
components, and to perform refits and repairs. These materials and the expertise
and technology that capitalizes on them will
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be used to produce the Company's boats and yachts.
Consolidated recently entered into an agreement to manufacture an 85'
yacht. It also has plans to produce 74' to 110' megayachts. The Company will
rely on Consolidated to manufacture its other yachts, such as the output planned
using the Revenge molds. This strategy will ensure that Consolidated's advanced
carbon fiber technology is used for all of our products, and that we retain our
competitive edge. In addition, Egret Boat Company employs similar technology to
produce its top of the line "flats" boats - specialty fishing boats purchased by
sport enthusiasts.
Our diversification strategy, where a full range of yacht sizes will be
produced and sold to recreational, commercial, and military markets, will have a
similar affect on guarding our revenues from business cycles. Sales of multiple
size products to megayacht, sportfishing, and military markets will diversify
revenue sources from different market sectors, and enable multiple manufacturing
projects to be conducted simultaneously to provide a smoother revenue stream. In
addition, new technological advances will allow us to extend our market coverage
to other boat size market sectors, and add related products to our sales mix.
Through the Consolidated acquisition, we will produce megayachts and
market them at the following base prices. Added features will increase prices
above base levels:
Model Base Price
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74' $3.0 million
110' $5.8 million
THE EGRET PRODUCT LINE
Egret Boat Company has evolved its specialized manufacturing processes
over time from boat and component production, refits, and repairs performed by
Consolidated Marine, Inc. into the construction of what is considered to be the
ultimate 16' and 18' flats boats. These are highly evolved recreational small
craft sufficiently high-powered (110 to 175 horsepower) to get out to fishing
grounds quickly, but sufficiently seaworthy to handle the chop of large bodies
of water. Egret has designed its boats to meet these requirements in a boat that
rides smoothly without dragging its transom in the mud in shallow waters, a
major industry accomplishment.
Egret has targeted a market niche and is considered to be amongst the
highest quality products in the industry. The use of carbon-Kevlar composites
and high quality processes and components, positions the company as a custom
producer. About 133 18' units have been produced since Egret's 1992 inception,
and a 16' product is also currently being produced. A more conventional laminate
process will be offered to reduce costs, and produce greater market penetration
and higher per boat profits. A 29' center console sportfishing boat prototype
has been constructed and production manufacturing will commence on it in the
near future.
REPAIR AND REFURBISHING SERVICES
Revenge anticipates that a significant portion of its operating income
will be derived from its repair and refurbishing facilities. Although
Consolidated generated most of its revenues, before its acquisition by Revenge,
through repair and refurbishing, it did so in a facility with considerably less
resources than the Miami facility. Revenge now has a number of covered working
areas which can allow for in the water painting and repair of a number of large
vessels at one time. Although there is no historical basis for what kinds of
revenues might be generated through refurbishing and repair in the Miami
facility, because these services offer relatively high margins, management
believes that they could add significantly to Revenge revenues.
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OPERATIONS
The Company's sales and service structure combines the benefits of a
flexible, custom repair, refurbishing and service facility with a wide variety
of motor boats and motor yachts. The Company intends to exploit the efficiencies
of centralized back office functions and personnel and management, while
supporting a diverse product line and flexible service and repair structure.
The Company has two leased facilities presently, the Miami production
facility and the Dania facility. With respect to sales activities, certain sales
and marketing activities are done directly by Revenge, primarily its Egret line.
Most larger yachts will be sold and marketed concurrently by Revenge and third
party brokers. The Internal marketing and service operations are typically
responsible for developing and managing customer relationships, including
initial sales-generating activities, proposal drafting and the pricing of
product and service offerings, as well as on-going account management.
SALES AND MARKETING
The Company targets its marketing efforts primarily at individual
consumers and purchasers of production and custom yachts. In addition, Revenge
supports third-party dealers and brokers in their efforts to market Revenge
products. These marketing efforts take the form of advertisements in trade and
specialty publications, boat show events and promotions, speaking engagements,
networking activities and building relationships between Revenge management and
likely purchasers of Revenge products. The Company intends to leverage its
service, marina dockyard, and Miami facility tenants into potential marketing
vehicles for its products.
Since relocating to the Miami facility, Revenge has pursued a strategy
of building synergies amongst its various operations, so that marketing and
sales efforts in one area would complement other areas. Revenge is pursuing a
strategy of becoming the boat builder and re-fitter of choice for a wide variety
of potential marine customers. Management believes that significant numbers of
present and future service, refurbishing, and dockage customers will be
persuaded to make subsequent boat purchases from Revenge. Revenge is not
dependent on any particular customer for its revenue base or growth. In fiscal
1999, none of the Company's customers is projected to account for more than 10%
of the Company's total revenues from boat sales.
COMPETITION
The marine product and services industry is intensely competitive.
Revenge expects competition to intensify in the future. As an integrated product
and service provider, Revenge competes with sellers of used motor boats and
yachts, manufacturers of new products, and existing service providers.
Management is not aware of any company which would compete directly in every
phase of the Company's operations. Instead, Revenge faces competition from a
number of different sources and on different levels. Viking, Travis Boats,
Brunswick, and Cabo all compete with Revenge in boat products. In addition to
these large national companies, Revenge also competes against numerous regional
and local companies in the service, refurbishing and dockage areas and many of
these competitors have longstanding customer relationships. For the smaller,
less expensive boats, there is intense competition both from other boat builders
of similar size as well as from alternative craft that might compete with
flats-boats and small yachts.
Some of the Company's competitors have greater financial, technical and
marketing resources. As a result, such companies may be able to respond more
quickly to new or emerging technologies and changes in customer needs or devote
more resources to the development, promotion and sales of their boats, yachts or
services than Revenge. In addition, competition could result in price decreases
and depress gross margins in the industry. Further declines in the Company's
gross margins may exacerbate the impact of fluctuating net revenues and
operating costs on the Company's operating results and have a material adverse
affect on the Company's business, operating results and financial condition.
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The principal competitive factors in the Company's industry include the
breadth and quality of product and service offerings, product availability,
pricing, and expertise of technical workforce, research and design innovations,
developments in marine architecture and the price of skilled labor in the local
market. Revenge believes that it competes favorably with respect to each of
these factors. However, there can be no assurance that Revenge will, in the
future, be able to compete successfully against existing or future competitors
or that such competition will not adversely affect Revenge's business, operating
results and financial condition.
EMPLOYEES
As of September 30, 1998, the Company had over 55 full-time employees,
including 3 in sales and marketing, 40 in production, manufacturing and service
and 12 in management, accounting and administration. None of the Company's
employees is subject to a collective bargaining agreement. The Company has never
experienced a work stoppage and considers its employee relations to be good.
Revenge believes that its future success depends, to a large extent,
upon the efforts and abilities of its executive officers, managers, skilled
laborers, designers, sub-contractors, technical and sales personnel. Revenge's
planned expansion of its service operations will require the recruiting and
training of a significant number of additional qualified administrative, skilled
labor and marketing personnel, including fiberglass production specialists,
skilled laborers proficient in the fiberglass and composite boat building
processes that Revenge employs. Competition for qualified technical, production
and sales personnel is intense. The Company competes with other boat builders as
well as with non-marine employers for qualified employees. The Company has, in
the past, experienced annual turnover of personnel of less than 5%. Failure by
the Company to attract and train skilled managers, technical and sales personnel
on a timely basis, or the inability of the Company to retain such personnel,
could materially and adversely affect the Company's business, financial
condition or results of operation.
PATENTS AND INTELLECTUAL PROPERTY RIGHTS
Although Revenge has 1 registered trademark, it has no registered
patents and relies almost entirely upon un-patented technology in its
production, manufacturing and design processes. There is no assurance that
employees of Revenge will not appropriate its manufacturing techniques on behalf
of existing or new competitors. In addition, there can be no assurances that
Revenge can adequately protect its un-patented boat designs, molds, composite
materials, processes or designs or that others may not independently develop
similar processes or designs or otherwise gain access to Revenge designs, molds,
composite materials, processes, or methods of production. If Revenge were to
fail to maintain a technological edge against its competitors, there could be a
significant impact on future revenues.
RELIANCE ON PRINCIPAL SUPPLIERS
Revenge's key suppliers for resin, fiberglass and carbon fiber are GLS,
ATC and BTI. Key suppliers for marine engines are Pompano Beach Marine Center,
OMC, Detroit Diesel and Caterpillar. Revenge believes its relationships with its
suppliers are stable and anticipates no disruptions in those relationships.
Nevertheless, Revenge is not dependent on any particular supplier and management
believes that other suppliers would be readily available were Revenge's present
suppliers unable to meet the Company's needs.
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BUSINESS FACTORS
IN EVALUATING THE COMPANY'S BUSINESS, THE FOLLOWING BUSINESS FACTORS
SHOULD BE CAREFULLY CONSIDERED. IN ADDITION, THIS DOCUMENT CONTAINS CERTAIN
FORWARD-LOOKING STATEMENTS AND TREND ANALYSIS BASED ON CURRENT EXPECTATIONS.
ACTUAL RESULTS MAY DIFFER MATERIALLY DUE TO A NUMBER OF FACTORS, INCLUDING THOSE
SET FORTH BELOW.
FLUCTUATIONS IN QUARTERLY RESULTS. The Company's quarterly results have
varied in the past and the Company expects its quarterly operating results to
continue to fluctuate. The Company's net revenues may fluctuate due to a variety
of factors, including the level of expenditures by purchasers of large yachts or
refurbishing repair demand, demand for marine related products and services in
general, demand for Revenge's boats and services in particular, the timing of
orders for Revenge's products and services, product supply constraints,
including manufacturing and integration difficulties and customer demand driven
by the introduction and adoption of new boats by Revenge and other
manufacturers. Due to its narrow product gross margins on inexpensive, smaller
boats, the Company's operating results may be especially sensitive to changes in
the mix of product option or service revenues, the margin mix of products sold,
the margin mix of services sold and the level of its operating expenses. The
Company's expenses may fluctuate as a result of numerous factors, including
interest rates, the timing and rate of new employee hiring, the amount and
timing of vendor-provided marketing funds, the utilization rate of service
personnel, competitive conditions and the impact of acquisitions. The Company's
costs are largely fixed in the near term and the Company may be unable to adjust
spending in a timely manner to compensate for an unexpected revenue shortfall.
As a result, revenue shortfalls may have an immediate and disproportionate
adverse effect on operating results. In addition, if the Company spends to build
its capacity to support higher revenue levels, the Company's near term operating
results will suffer until it achieves its revenue goals. For example, the
Company's retooling and repair of the Blackfin molds and ramping up for
production will involve significant expenses which may affect operating margins.
Due to the Company's recent growth, it is difficult to discern seasonal trends.
However, the Company believes that first and fourth quarter revenues may be
negatively affected due to generally lower boat purchases during the Summer
months. Due to all of these factors, the Company believes that its operating
results are likely to vary on a quarterly basis. As a result, period-to-period
comparisons of its operating results are not necessarily meaningful, and
quarterly results may not be indicative of results to be expected for a full
year.
NARROW GROSS MARGINS FOR PRODUCT SALES. Approximately 10% of the
Company's net revenues in fiscal 1998 were generated through service,
refurbishing and repair. As a result of intense price competition, the Company's
product gross margins on smaller boats will continue to be fairly low, projected
to be approximately 18% in fiscal 1999. The Company believes that competitive
conditions will continue to place pressures on its product gross margins. As a
result of the Company's narrow product gross margins, fluctuations in net
revenues and operating costs may have a disproportionate impact on the Company's
operating results. Further declines in the Company's product gross margins may
have a material adverse effect on the Company's business, financial condition
and operating results.
DEPENDENCE ON MIAMI FACILITY, DANIA FACILITY
Disruption of operations at Revenge's Miami facility for any reason,
including power or telecommunications failures, natural disasters such as
hurricanes, fires, tornados or floods, or work stoppages, would have a material
adverse effect on the Company's business, operating results and financial
condition. In addition, if Revenge were to be unable to secure the consent of
Miami River Partners, Ltd, its landlord, to sublet parts of the Miami facility
or to assign the lease-option in the Miami facility in the context of its
planned reorganization, it is possible that Revenge would be unable to continue
and would fail without the Miami facility.
In addition, Revenge is dependent on the continuing working
relationship with its landlord at the Dania facility. As Revenge does not have a
lease for the Dania facility, but operates month-to-month, a termination of or
significant changes to the financial or facility arrangements at Dania would
have a significant impact on Revenge's ability to be profitable.
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INCREASED EMPHASIS ON REPAIR AND LARGE YACHT SALES. Revenge's service
operations and custom large yacht sales are characterized by higher gross
margins than those attainable in small product sales, such as the Egret line. As
a result, the Company's goal is to increase the proportion of revenues derived
from the provision of services and large yachts relative to small product sales.
The Company's success in increasing its service revenues will depend primarily
on the acceptance by the relatively small group of large yacht owners and
purchasers of the Revenge's brand, identity, product and reputation. To the
extent that the Company does not successfully increase the proportion of
revenues attributable to its large yacht and service/repair business, the
Company's operating margins may be adversely affected. The Company has also
recently implemented a more sophisticated cost-based methodology for pricing its
services. If service revenues do not increase sufficiently or the Company fails
to accurately price its services, the Company's business, operating results and
financial condition would be materially and adversely affected.
NEED TO RECRUIT AND RETAIN MANAGEMENT, TECHNICAL AND SALES PERSONNEL.
The Company believes that its future success depends, to a large extent, upon
the efforts and abilities of its executive officers, managers, technical and
sales personnel. Failure by the Company to attract and train skilled managers,
technical and sales personnel on a timely basis, or the inability of the Company
to retain such personnel, could materially and adversely affect the Company's
business, operating results or financial condition.
MANAGEMENT OF GROWTH. The Company has experienced enormous growth since
its entry into the marine industry and its extensive acquisitions. This rapid
growth has placed, and is expected to continue to place, a significant strain on
the Company's management, financial, sales, technical and support systems and
personnel. The Revenge's ability to manage its growth effectively will require
it to continue to develop and improve its operational, financial and other
internal systems and train, manage and motivate its employees. The Company has
in the past and will continue in the future to evaluate the acquisition of
businesses that complement or expand the Company's presence and profitability in
the marine industry. Integrating newly acquired companies could be costly and
may result in the loss of customers and key personnel and may disrupt
operations. Additionally, integrating newly acquired businesses may divert
significant management resources and attention from day to day operations.
Historically, Revenge has spent considerable amounts of its human and managerial
capital on the integration of acquisitions and streamlining of operations, a
process that is far from complete.
INTENSE COMPETITION The marine product and services industry is
intensely competitive. Revenge expects competition to intensify in the future.
As an integrated product and service provider, Revenge competes with sellers of
used motor boats and yachts, manufacturers of new products, and existing service
providers. Management is not aware of any company which would compete directly
in every phase of the Company's operations. Instead, Revenge faces competition
from a number of different sources and on different levels. Viking, Travis
Boats, Brunswick, and Cabo all compete with Revenge in boat products. In
addition to these large national companies, Revenge also competes against
numerous regional and local companies in the service, refurbishing and dockage
areas and many of these competitors have longstanding customer relationships.
For the smaller, less expensive boats, there is intense competition both from
other boat builders of similar size as well as from alternative craft that might
compete with flats-boats and small yachts.
Some of the Company's competitors have greater financial, technical and
marketing resources. As a result, such companies may be able to respond more
quickly to new or emerging technologies and changes in customer needs or devote
more resources to the development, promotion and sales of their boats, yachts or
services than Revenge. In addition, competition could result in price decreases
and depress gross margins in the industry. Further declines in the Company's
gross margins may exacerbate the impact of fluctuating net revenues
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and operating costs on the Company's operating results and have a material
adverse affect on the Company's business, operating results and financial
condition.
The principal competitive factors in the Company's industry include the
breadth and quality of product and service offerings, product availability,
pricing, and expertise of technical workforce, research and design innovations,
developments in marine architecture and the price of skilled labor in the local
market. Revenge believes that it competes favorably with respect to each of
these factors. However, there can be no assurance that Revenge will, in the
future, be able to compete successfully against existing or future competitors
or that such competition will not adversely affect Revenge's business, operating
results and financial condition.
WARRANTY RISKS. The Company has begun implementing and intends to
expand the use of quality and product consistency controls. Nevertheless,
Revenge incurs significant exposure with the introduction of new production
models. Revenge will in all likelihood be obligated to correct any design or
manufacturing imperfections for a long period and at great expense in order to
develop and maintain its reputation for quality, accountability and service. As
a result, the Company must accurately estimate the resources required to provide
service on any warranty or repair work it is forced to provide. Failure by the
Company to estimate accurately support expenses or warranty costs could have a
material adverse effect on the Company's business, operating results or
financial condition.
DEPENDENCE ON DEALERS AND VENDORS. Although Revenge sells its products
directly, as well as through third party brokers, dealers and resellers, it is
dependent on those third parties for a significant volume of its sales. The
failure of third parties to continue to support the Revenge brands would have a
material and adverse effect on the Company. Revenge does not presently have the
capacity to market all of its products directly without the assistance of third
parties. It would take years for the Company to develop such a capacity.
Therefore, Revenge will remain dependent on its relationships with third party
dealers and there is no assurance that such relationships will be sustainable or
maintained.
HIGH DEGREE OF LEVERAGE; DEPENDENCE ON FINOVA CAPITAL CORPORATION;
FUTURE CAPITAL NEEDS. The Company requires substantial capital to fund its
business and, in particular, to finance product development, mold retooling,
acquisition integration, accounts receivable, capital expenditures, salaries and
lease payments on its Miami and Dania facilities. To date, the Company has
relied on an influx of equity and debt to finance its business and its
expansion. As a result, the Company is highly leveraged. Further Revenge has
financed a significant portion of its working capital needs, the Blackfin Asset
acquisition by Revenge Delaware, and certain capital improvements and payment of
accounts payable under the Company's $2.1 million Loan Agreement ("Loan
Agreement" of "Finova Loan") with Finova Capital Corporation ("Finova"), a loan
of secured by the Company's accounts receivables, inventory and other assets of
the Company, including its molds, its tools and its equipment. In addition,
certain members of management and certain large shareholders have individually
guaranteed the Finova Loan. Revenge is obligated under the Finova Loan to pay up
to $500,000 in success fees during the three year course of the loan. In
addition, the Company paid a closing fee of 1.5% of the loan amount. In
addition, there are other fees and costs contained in the Loan Agreement. Under
the Loan Agreement, Finova has the ability to severely restrict the ability of
the Company to make capital improvements, raise additional equity or debt
financing, raise salaries or provide incentives to management. While management
anticipates Finova will be a resource for future borrowings and a collaborative
partner in the Company's growth, agreeing to waive many of its rights under the
Loan Agreement to allow the Company increased operational flexibility on an as
needed basis, there is no assurance that this will happen. Events of default are
extensively enumerated in the Loan Agreement and many of these events of default
are likely to occur or may have already occurred.
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There are consequences to the Company, including a forced sale of its assets,
that could result from such a default. There can be no assurance that any
deterioration in the lender-customer relationship between the Company and Finova
will not occur. Such a deterioration would severely impact the Company's
operations and its ability to secure adequate working capital and financing. No
assurance can be given that Finova will continue to provide financing for the
Company's expanding operations.
Substantially all of the Company's outstanding indebtedness is tied to
the prime rate. The Company is not currently a party to any financial
instruments which would mitigate the Company's exposure to increases in the
prime interest rate. Accordingly, increases in the prime rate could adversely
impact the Company's pretax income or otherwise materially and adversely affect
the Company's business, operating results or financial condition. Also, there
can be no assurance that the Company will be able to generate sufficient cash
from operations to satisfy future interest and principal payments under the Loan
Agreement. In the event that the Company is unable to meet its payment
obligations or needs additional capital to fund its business, the Company would
be required to seek alternative sources of financing or attempt to refinance its
existing credit facilities. There can be no assurance that such alternative
equity or debt funding would be available on terms acceptable to the Company, if
at all. Under such circumstances, the Company's inability to procure additional
funding or refinance existing indebtedness would have a material adverse effect
on the Company's business, operating results and financial condition.
ENVIRONMENTAL AND REGULATORY RISKS. The marine manufacture and repair
industry is highly regulated. The Company operates under a number of federal,
state and local environmental protection, river protection and worker safety
regulations. The Company's manufacturing processes employ a number of highly
toxic, hazardous substances. A spill or accident involving any of these
chemicals would have a serious and material effect on the Company's operations
and ability to continue as a going concern and could result in civil or criminal
penalties on behalf of the Company, its employees, officers and directors. While
the Company has all necessary regulatory permits for its business as presently
conducted, there can be no assurance that such permits will continue to be
available or will successfully transfer to Revenge Delaware in the event that
the contemplated reorganization is consummated. The loss of these regulatory
permits could cause the Company to fail.
CONTROL BY PRINCIPAL STOCKHOLDERS. The directors and executive officers
of the Company own a majority of the outstanding Common Stock in Revenge. In
particular, Desai Robinson and entities under her beneficial ownership or
control constitute the largest shareholder of the Company's Common Stock. Desai
Robinson is the wife of William C. Robinson, an officer and director. As a
result, Mrs. Robinson may be able to control the election of members of the
Company's Board of Directors and generally exercise control over the Company's
corporate actions. Such concentration of ownership may also have the effect of
delaying or preventing a change in control of the Company.
ABSENCE OF DIVIDENDS. The Company has never declared or paid any cash
dividends on its Common Stock and does not presently intend to pay cash
dividends on the Common Stock in the foreseeable future, although some form of
Common or Preferred Stock dividend is contemplated in conjunction with the
restructuring, there is no assurance that such a dividend or the restructuring
itself will take place. Other than in the context of the restructuring, the
Company does not anticipate any dividends. The Company currently anticipates
that it will retain future earnings for reinvestment in its business.
Furthermore, the Loan Agreement prohibits the Company from paying cash dividends
on the Common Stock.
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ITEM 2. FINANCIAL INFORMATION
SELECTED CONSOLIDATED FINANCIAL DATA
The following selected consolidated financial data should be read in
conjunction with the consolidated financial statements and the notes thereto and
Management's Discussion and Analysis of Financial Condition and Results of
Operations included elsewhere herein. The consolidated statement of operations
data set forth below with respect to the period from inception on September 5,
1997 until June 30, 1998, and the consolidated balance sheet data at June 30,
1998 are derived from, and are qualified by reference to, the audited
consolidated financial statements included elsewhere in this Registration
Statement, which have been audited by Cross and Robinson and should be read in
conjunction with those consolidated financial statements and notes thereto.
REVENGE MARINE, INC.
AND SUBSIDIARIES
A Development Stage Company
(Formerly Global Energy Organization Corporation)
CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE PERIOD SEPTEMBER 5, 1997 (DATE OF INCEPTION)
TO JUNE 30, 1998
SALES $ 142,286
COST OF SALES 124,352
---------
GROSS PROFIT 17,934
---------
SELLING, GENERAL, AND ADMINISTRATIVE EXPENSES
Advertising 5,821
Contract labor 2,400
Commissions and fees 3,500
Office expense 5,269
Legal and professional fees 177,935
Penalties and fines 37,000
Postage and printing 6,563
Public relations 17,397
Video production 6,346
Telephone 6,764
Travel 27,289
Miscellaneous 19,202
---------
TOTAL SELLING, GENERAL, AND ADMINISTRATIVE EXPENSES 315,486
---------
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OTHER INCOME (EXPENSES)
Interest income 15
Depreciation and amortization (Notes 4 and 5) (13,261)
Interest expense (8,134)
----------
TOTAL OTHER INCOME (EXPENSES) (21,380)
----------
NET LOSS FROM OPERATIONS $ (318,932)
==========
WEIGHTED AVERAGE SHARES OUTSTANDING (NOTE 9) 4,325,237
NET LOSS PER SHARE $ (0.07)
REVENGE MARINE, INC.
AND SUBSIDIARIES
A Development Stage Company
(Formerly Global Energy Organization Corporation)
CONSOLIDATED BALANCE SHEET
JUNE 30, 1998
ASSETS
CURRENT ASSETS
Cash $ 102,793
Prepaid expenses (Note 1) 176,608
Work in progress (Note 1) 60,500
---------
TOTAL CURRENT ASSETS 339,901
---------
PROPERTY AND EQUIPMENT, AT COST (NOTE 4)
Equipment 85,000
Molds and prototype 242,523
Vehicles 45,493
Office equipment 5,429
Less: Accumulated depreciation (139,025)
--------
NET PROPERTY AND EQUIPMENT 239,420
--------
OTHER ASSETS
Deposit (Note 13) 50,000
Intangible assets, net (Note 5) 9,512
Investment in subsidiaries in excess of book value, net (Note 5) 2,356,971
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TOTAL OTHER ASSETS 2,416,483
-----------
TOTAL ASSETS $ 2,995,804
===========
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable $ 28,916
Accounts payable--related parties (Note 6) 50,786
Accrued liabilities 9,283
Customer deposits 64,500
Notes payable (Note 7) 66,252
Notes payable--related parties (Notes 6 and 7) 94,742
-----------
TOTAL LIABILITIES 314,479
===========
SHAREHOLDER'S EQUITY (NOTE 8)
Preferred stock $0.001 par value,
5,000,000 shares authorized,
-0- shares issued and outstanding
Common stock $0.001 par value,
50,000,000 shares authorized,
6,675,720 shares issued and outstanding 6,676
Subscriptions receivable (100,000)
Additional paid-in capital 3,093,581
Deficit accumulated in the development stage (318,932)
-----------
TOTAL SHAREHOLDER'S EQUITY 2,681,325
-----------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 2,995,804
===========
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
THIS SECTION CONTAINS TREND ANALYSIS AND OTHER FORWARD LOOKING
STATEMENTS BASED ON CURRENT EXPECTATIONS. ACTUAL RESULTS MAY DIFFER MATERIALLY,
DUE TO A NUMBER OF FACTORS INCLUDING THOSE SET FORTH IN THE PREVIOUS SECTION.
OVERVIEW
Revenge Marine, Inc., a Nevada Corporation ("Revenge" or the "Company")
is a leading manufacturer and servicer of advanced technology yachts and motor
boats. Revenge is positioned to offer its customers a wide variety of marine
products, from a 16' flats motor boat to a 110' custom built megayacht. Revenge
meets its customers' needs for high-performance, competitively priced, advanced
technology boats and yachts by employing the latest industry materials and
manufacturing techniques, as well as pioneering the use of advanced
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composite materials and innovative hull designs. Revenge also offers significant
service and refurbishing capabilities. The breadth of Revenge's custom and
production line and servicing capability allows Revenge to service the needs of
a very wide segment of marine industry customers.
In October of 1998, Revenge contemplated entering into an arrangement
with Revenge Marine, Inc., a Delaware Corporation ("Revenge Delaware"), whereby
Revenge would sell all of its assets, operations and subsidiaries to Revenge
Delaware in exchange for a form and amount of consideration as yet undetermined.
Revenge Delaware is a Delaware corporation formed on October, 1998 and set-up
for the purpose of allowing Revenge to separate out its marine operations and to
cause those operations to develop separately. At the closing of the sale of the
assets of Revenge to Revenge Delaware, should such an event occur, Revenge would
have no assets or business operations other than the consideration received from
the sale of those assets. Revenge contemplates entering into merger or
acquisition transactions currently under negotiation in fields only tangentially
related, if at all, to marine operations. There is no assurance that the asset
sale will be consummated or that Revenge will be successful in any subsequent
attempts to engage in merger or acquisition activity.
PLAN OF OPERATION
Consistent with its reorganization and the integration of the marine
acquisition, management anticipates that Revenge Delaware will proceed with the
integration of the acquisitions, continue to build a customer base, seek
refurbishing and repair contracts, continue to build a dealer and direct
marketing network, streamline production and continue to develop new products.
During 1999, Revenge Delaware expects to invest in ongoing capital improvements
and increased production capacity.
After the completion of the reorganization, Revenge intends to
concentrate its efforts on acquisitions and mergers in the emerging technology
field. At the conclusion of the reorganization, Revenge will in all probability
have no assets or operations other than what may be achieved by means of future
acquisition or merger activity. Revenge is currently exploring such acquisition
and merger activity.
RESULTS OF OPERATIONS AND GOING CONCERN
Revenge is in the development stage and has not generated sufficient
revenues to meet its day-to-day operating expenses. Revenge has a net operating
loss of $318,000. Revenge may not be able to raise sufficient capital in the
future to cover its ongoing operating expenses. These conditions raise
substantial doubt about Revenge's ability to continue as a going concern.
LIQUIDITY AND CAPITAL RESOURCES
The substantial growth of Company's operations and its acquisitions has
utilized significant cash. The Company believes existing cash, cash generated
from operations, customer deposits, miscellaneous income from tenants in the
Miami facility and dockage fees will be sufficient to satisfy its currently
anticipated liquidity requirements through the next 3 months. Thereafter, the
Company may require additional funds to support its working capital requirements
or for other purposes and may seek to raise such additional funds through public
or private equity or debt financings or from other sources. There can be no
assurance that additional financing will be available at all or that, if
available, such financing will be obtainable on terms favorable to the Company
and would not be dilutive to the Company. The Company's future liquidity and
cash requirements will depend upon a number of factors, including its ability to
integrate production of the various product lines, to successfully sublease
unused portions of the Miami facility, to attract customer demand for its boats,
to produce those boats at a competitive price and to control its operating
costs.
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SALES, MARKETING, GENERAL AND ADMINISTRATIVE EXPENSES
Sales, Marketing, General and Administrative Expenses include payroll
and related costs for Revenge's administrative and executive personnel, costs
related to the Company's marketing and promotional efforts, other overhead costs
including significant sums on legal, accounting and other professionals. Sales,
marketing, general and administrative expenses from inception through June 30,
1998 were $315,486. Revenge expects Sales, marketing, general and administrative
expenses to increase substantially in future periods as Revenge invests in
marketing activity to foster brand recognition and increased sales of its
products.
ITEM 3. PROPERTIES
The Company's headquarters are located in Miami, Florida, where the
Company leases a 8.67 acre, 100,000 square foot facility from Miami River
Partners, Ltd. ("Miami Partners") under a lease agreement which expires on May
5, 2008. The Company leases its Miami, Florida facility under a non-cancelable
operating lease. The agreement, as amended on July 10, 1998, calls for monthly
lease payments of $37,333 beginning in July 1998, with a twelve month, interest
free option to purchase the property at a purchase price of $3,259,500. After
the initial twelve month period, the option to purchase will begin to accrue
interest at an annual rate of 6%. The Company is responsible for paying
insurance and real estate taxes on the property, which are estimated to total
$5,720 per month. Pursuant to the July 10, 1998 Amended Agreement, $15,000 of
the initial $50,000 deposit was refunded to the Company in July 1998. The term
of the lease is ten years with an option to extend the lease for an additional
five years.
While the Company cannot cancel, assign or sublet the property without
the consent of Miami Partners, management anticipates obtaining such consents.
There is no assurance that Miami Partners will consent to any sublease or
assignment of the Miami facility. The withholding of such consents would have a
substantial and material impact on the Company's ability to meet its lease
obligations and to effect its planned reorganization. In addition, the Company
leases its Dania facility from the Derektor-Gunnell Shipyard on a month to month
basis. Although the Company anticipates no disruptions in its occupancy of the
Dania facility, such disruptions may in fact occur and would have a material
impact on the Company's ability to conduct its operations.
The minimum obligations for the lease agreement on the Miami facility
over the next five years are as follows:
Year Ended
June 30
-------
1999 516,636
2000 516,636
2001 516,636
2002 516,636
2003 516,636
-------
Total $2,583,180
==========
ITEM 4. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information with respect to the
beneficial ownership of the Company's Common Stock as of June 30, 1998 for (i)
each person or entity who is known by the Company to beneficially own five
percent or more of the outstanding Common Stock of the Company, (ii) each of the
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Company's directors, (iii) each of the Named Officers, and (iv) all directors
and executive officers of the Company as a group:
SHARES BENEFICIALLY OWNED(1)
NAME OF GROUP OR BENEFICIAL OWNERS NUMBER PERCENT
Capital Market Alliance, Inc. (2)................................................. 1,954,431 29.28%
Jim Gardiner...................................................................... 1,114,649 16.70%
Roy Meadows and affiliated companies.............................................. 533,761 8.00%
Scott Flanders.................................................................... 477,707 7.16%
Donald Mitchell................................................................... 45,000 *%
All officers and directors as a group, including affiliated entities.............. 3,691,787 55.30%
- -----------------------
(1) Beneficial ownership is determined in accordance with the rules of the
Securities and Exchange Commission. In computing the number of shares
beneficially owned by a person and the percentage ownership of that
person, shares of Common Stock subject to options held by that person that
are currently exercisable or exercisable within 60 days of June 30, 1998
are deemed outstanding. Such shares, however, are not deemed outstanding
for the purposes of computing the percentage ownership of each other
person. Except as indicated in the footnotes to this table and pursuant to
applicable community property laws, each stockholder named in the table
has sole voting and investment power with respect to the shares set forth
opposite such stockholder's name.
(2) Shares owned by Capital Market Alliance, Inc. are under the beneficial
ownership of Mrs. Desai Robinson, wife of William C. Robinson, an officer
and director. Capital Markets Alliance, Inc., is owned by Allied Capital
Corporation, which is owned by the Desai V. Robinson Living Trust. In
addition, Allied Capital Corporation owns 40,000 shares of Common Stock.
100,000 shares of Common Stock are also held by the Desai Vol Robinson
Children's Trust for the benefit of Mrs. Robinson's children . See
"Certain Transactions."
(*) Constitutes less than 1% of the Company's outstanding shares.
STOCK IN REVENGE DELAWARE
In addition, the common stock of Revenge Delaware while presently un-issued, is
contemplated by the board of directors of Revenge Delaware to be purchased at
$0.01 per share, the fair market value as determined by the board of directors,
as follows:
Name Shares Purchase Price
Allied Capital Corporation 14,545 $ 145.45
Capital Markets Alliance Corporation 961,611 $ 9,616.11
Donald Mitchell 107,545 $ 1,075.45
James Gardiner 527,394 $ 5,273.94
Scott Flanders, Sr. 273,712 $ 2,737.12
*Linda Riznick 62,000 $ 620.00
*Dana Greenwood 62,000 $ 620.00
Tom Schroeder 34,545 $ 345.50
Robinson Children's Trust 236,363 $ 2,363.63
*Southeastern Venture Corp. designees 186,700 $ 1,867.00
Employee Trust of Revenge Marine, Inc. 45,563 $ 455.63
*Stockbroker Relations 60,000 $ 600.00
Total 2,571,978 $ 25,719.78
* Subject to the execution of satisfactory ancillary agreements or conditions
precedent.
There is no assurance that the purchases contemplated herein will actually
take place or that the board will not decide to alter this arrangement in the
context of its ongoing reorganization. This table represents purchases of shares
in Revenge Delaware that have been authorized by its board.
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ITEM 5. DIRECTORS AND EXECUTIVE OFFICERS
MANAGEMENT -- EXECUTIVE OFFICERS, DIRECTORS AND OTHER KEY EMPLOYEES
The executive officers, directors and other key employees of the
Company, and their ages and positions are as follows:
Name Age Position
- ---- --- --------
Donald Mitchell 65 President, CEO and Director of Revenge
William Robinson 42 Executive Vice President, Director and Secretary
of Revenge
James Gardiner 42 Vice President and Director of Revenge
Linda Riznick 53 Chief Financial Officer of Revenge
Scott Flanders 53 Director of Revenge
Dana Greenwood 40 Chief Operating Officer of Revenge
DONALD MITCHELL is the President and Chief Executive Officer of Revenge. Mr.
Mitchell is an expert in organizational development and has an extensive
background structuring and growing public and private companies. He is a partner
in and advisor to Asian Strategic Partners, a Hong Kong based investment fund
and also serves as Chairman of Baskin In The Sun, a recreational diving company
located in the British Virgin Islands. Formerly a Vice President of CBS in its
educational Merger and Acquisition activities, Mr. Mitchell has served in a
variety of executive officer positions both in the United States and abroad,
bringing more than 30 years of management experience to Revenge. Until November,
1979, Mr. Mitchell ran the largest English Instruction School in the world, The
Shokouh Institute for English in Tehran.
WILLIAM ROBINSON is a founder, director and officer of Revenge. During his 20
years of business and financial experience, Mr. Robinson has extensive
experience with marine management. He implemented team-manufacturing techniques
to build yachts, and completed retooling for two high volume production yacht
companies. Mr. Robinson has led multiple public and private stock offerings to
raise capital for new and existing corporations, and has managed investor
relations and communications. He has produced consistent top performance at
major financial corporations throughout his career. Mr. Robinson is responsible
for leading the transactions involved to establish Revenge.
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JAMES GARDINER is a director and officer of Revenge. Under Jim's leadership,
Consolidated Yacht Corporation grew to an $8 million boat builder, re-fitter,
and repairer in five years, utilizing advanced composite materials that today
lead the industry. Egret Boat has become the recognized quality and design
leader in the highly specialized 16' and 18' fishing boat, or "flats boat",
industry that sells to affluent fishing enthusiasts. Prior to founding
Consolidated and Egret, Jim was a composite materials consultant to Gougeon
Bros., a custom builder of boats, plugs, and molds. He has also served as
production manager in charge of construction of plugs, molds, and custom
fiberglass motor yachts, developing advanced vacuum-bagged, cored fiberglass
construction.
LINDA RIZNICK is the Chief Financial Officer of Revenge. Ms. Riznick was
formerly Vice President of Operations for Broward Marine, Inc., a manufacturer
of custom aluminum yachts in Florida and Michigan. Prior to her management of
Broward, Ms. Riznick was the United States President for Lloyd's Shipsholdings,
PTY, Ltd., an Australian custom yacht manufacturer. Ms. Riznick ran the United
States and European operations of Lloyds. Ms. Riznick has also served as a
private consultant to Colonna Yachts and to Norship, a Norwegian yacht
manufacturer. Ms. Riznick is also a licensed yacht broker.
DANA GREENWOOD is the Chief Operating Officer of Revenge. He was previously the
President of Consolidated Yacht Corporation. Prior to Consolidated, Mr.
Greenwood was the General Manager of Barron Yachts, Beaufort, South Carolina,
where he directed the start-up of a new manufacturing facility. Mr. Greenwood
has also served as Director of Engineering for the Luhrs Corporation. Previously
Mr. Greenwood held various management and supervisory positions with Regal.
Revenge currently has five directors. All directors serve on the Board
of Directors of Revenge until the next annual meeting of the stockholders of
Revenge, and until their successors are elected and qualified. There are no
family relationships among any of the directors or officers of Revenge.
Revenge's executive officers serve at the discretion of the Board of Directors.
DIRECTOR COMPENSATION
Revenge does not pay cash compensation to its directors. However,
Revenge reimburses directors for expenses incurred in attending board and
committee meetings.
INTERLOCKS AND INSIDER PARTICIPATION
Please see the section at the front of this statement regarding the
reorganization of Revenge and the section entitled Certain Transactions.
EMPLOYMENT AGREEMENTS
All of the employees of the Company are employed at-will, terminable at
mutual option. The Company does not have any written employment agreements
currently.
LIMITATION OF LIABILITY AND INDEMNIFICATION MATTERS
It is anticipated that Revenge Delaware's Amended and Restated
Certificate of Incorporation, which has not yet been filed, will limit the
liability of directors to the maximum extent permitted by Delaware law. Delaware
law provides that a corporation's certificate of incorporation may contain a
provision eliminating or limiting the personal liability of a director for
monetary damages for breach of their fiduciary duties as directors, except for
liability (i) for any breach of their duty of loyalty to the corporation or its
stockholders, (ii) for acts
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or omissions not in good faith or which involve intentional misconduct or a
knowing violation of law, (iii) for unlawful payments of dividends or unlawful
stock repurchases or redemptions as provided in Section 174 of the Delaware
General Corporation Law or (iv) for any transaction from which the director
derived an improper personal benefit. Revenge Delaware's Bylaws provide that the
Company shall indemnify its directors and officers and may indemnify its
employees and agents to the fullest extent permitted by law. Revenge Delaware
believes that indemnification under its Bylaws covers at least negligence and
gross negligence on the part of indemnified parties.
Revenge's Amended and Restated Articles of Incorporation and Amended
and Restated By Laws indemnify its officers, directors and employees to the
fullest extent provided under Nevada law.
At present, there is no pending litigation or proceeding involving any
director, officer, employee or agent of the Company where indemnification will
be required or permitted. The Company is not aware of any threatened litigation
or proceeding that might result in a claim for such indemnification.
ITEM 6. EXECUTIVE COMPENSATION
EXECUTIVE COMPENSATION
The following table sets forth information concerning the compensation
paid by Revenge and during the Company's fiscal year ending June 30, 1998 to the
Company's Chief Executive Officers. As Revenge has only a brief operating
history and is currently in the process of reorganization, amounts paid to
executive officers may change significantly in fiscal year 1999.
-21-
22
SUMMARY COMPENSATION TABLE
FOR FISCAL YEAR 1998
LONG-TERM
COMPENSATION
AWARDS
ANNUAL COMPENSATION SECURITIES
UNDERLYING ALL OTHER
NAME AND PRINCIPAL POSITION SALARY ($) (3) BONUS ($) OPTIONS(5) COMPENSATION ($)
Donald Mitchell (1)............................
President and Chief Executive Officer $15,000 $ 0 $0 $ 6,299
William C. Robinson (2).................. $ 0 $ 0 $0 $ 2,155
Interim President and Executive
Vice President
(1) Mr. Mitchell did not receive any direct payment of salary during fiscal
year 1998. However, $15,000 was paid to Ilona Lang Associates, an
entity controlled by Mr. Mitchell's spouse, in partial compensation for
his services. It is contemplated by management that after the
reorganization is complete, Mr. Mitchell would receive an annual salary
of approximately $90,000 as well as certain stock incentives presently
under negotiation.
(2) Mr. Robinson has not been paid a salary during fiscal 1998. Mr.
Robinson served briefly as Interim President during fiscal year 1998.
It is contemplated by management that after the reorganization is
complete, Mr. Robinson would receive an annual salary as well as
certain stock incentives presently under negotiation. However, payments
have been made by the Company during fiscal year 1998 in the context of
certain related party transactions with entities beneficially owned or
controlled by Mrs. Robinson or her children. For a description of these
transactions, please see Item 7, Certain Transactions.
ITEM 7. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
CERTAIN TRANSACTIONS
CONSOLIDATED YACHT CORPORATION, INC.
Pursuant to the Company's acquisition of the assets of Consolidated
Yacht Corporation, Inc. in July, 1998, a promissory note was entered into
between the Company and James Gardiner, an officer and director of the Company,
whereby the Company agreed to pay Mr. Gardiner the principal sum of $458,162.00.
This sum represents the purchase price of the Consolidated Yacht assets. Mr.
Gardiner was required by Finova to subordinate this debt to the Finova Loan.
ALLIED CAPITAL CORPORATION; WILLIAM C. ROBINSON AND RELATED ENTITIES
Since inception of the development stage, Allied Capital Corporation
("Allied") has advanced cash to the Company totaling $98,324 for operating
expenses as of June 30, 1998. Further, Allied has directly paid legal and other
expenses on behalf of the Company totaling $158,714. Allied owns 40,000 shares
of the Company's common stock and is the owner of Capital Markets Alliance,
Inc., which is the Company's principal shareholder, owning 1,954,431 of the
6,675,720 shares of common stock that were outstanding at June 30, 1998. Allied
is wholly owned by the Desai V. Robinson Living Trust. Desai Robinson is the
former president of Revenge Marine and is the wife of William C. Robinson,
executive vice president of the
-22-
23
Company.
As of June 30, 1998, the Company's total debt to Allied was $145,528.
The Company has signed a promissory note for $94,742 of this debt and the
remaining unsecured debt of $50,786 is reflected as accounts payable. Subsequent
to June 30, 1998, Allied directly paid or advanced expenses on behalf of the
Company totaling approximately $200,000. Thus, the total owed to Allied was
approximately $350,000. Upon the closing of the Loan Agreement with Finova,
$225,000 was paid to Allied by Finova out of the loan proceeds. Allied
subordinated the remainder of its right to receive payment from the Company to
Finova. Allied, the Desai V. Robinson Living Trust and Capital Markets Alliance,
all of which are entities beneficially owned or controlled by Mrs. Robinson or
her children, pledged their shares of the Company and other securities and
assets on behalf of the Company to secure the Finova loan. After deduction of
the Finova payment to Allied, Allied is still owed the $94,742 note and an
approximately an additional $30,000 in unsecured debt currently reflected as
accounts payable. It is intended that this remaining debt be evidenced by a
promissory note between Allied and the Company and that the repayment of such
debt be subordinated to the Finova loan and to the Company's capital
requirements.
Additionally, the Company has the right to redeem its convertible
debenture held by Sholem Libenthal, dated July 13, 1998 for a redemption price
of $93,187. The Company does not intend to exercise its right of redemption, but
instead intends to assign the right of redemption to the Desai Vol Robinson
Children's Trust. It is contemplated that after the Desai Vol Robinson
Children's Trust purchases the debenture, it will convert the debenture into
shares of the Company's Common Stock.
EGRET BOAT COMPANY AND CONSOLIDATED MARINE, INC. ACQUISITIONS
In the context of the Company's May acquisitions of Consolidated
Marine, Inc. and Egret Boat Company, Scott Flanders and James Gardiner, both
directors, significant shareholders and members of the management of the
Company, have recently asserted the right to certain additional compensation
related to the asset acquisitions. The Company believes that there is no basis
for such claims of additional compensation and that the purchases of
Consolidated Marine, Inc. and Egret Boat Company were fully paid for under the
terms of the respective Stock Exchange Agreements.
ITEM 8. LEGAL PROCEEDINGS
Revenge is not a party to any legal actions which could have a
material adverse effect on its business, financial condition or results of
operations.
ITEM 9. MARKET PRICE OF AND DIVIDENDS ON THE REGISTRANT'S COMMON EQUITY AND
RELATED STOCKHOLDER MATTERS
MARKET PRICE
The principal market where the Registrant's equity is traded is the
Nasdaq Bulletin Board. The range of high and low bids for the Registrant's
equity for each of the past 3 quarters since trading began in January, 1998 is
as follows:
-23-
24
Year Quarter High Low
- ---- ------- ---- ---
1998 Jan/March 3.06 0.25
1998 April/June 2.50 1.03
1998 July/Sept 1.75 0.50
The above quotations reflect inter-dealer prices, without retail
mark-up, mark-down or commission and may not represent actual transactions.
There are approximately 2090 holders of 7,196,222 common shares of the
Registrant.
DIVIDEND POLICY
The Company has never declared or paid any cash dividends on its Common
Stock and does not presently intend to pay cash dividends on the Common Stock in
the foreseeable future. Although some form of Common or Preferred Stock dividend
is contemplated in conjunction with the restructuring, there is no assurance
that such a dividend or the restructuring itself will take place. Other than in
the context of the restructuring, the Company does not anticipate any dividends.
The Company currently anticipates that it will retain future earnings for
reinvestment in its business. Furthermore, the Loan Agreement prohibits the
Company from paying cash dividends on the Common Stock.
ITEM 10. RECENT SALES OF UNREGISTERED SECURITIES
From inception through June 30, 1998 Revenge issued and sold the
following securities:
In September 1997 the Company received $1,000 from the issuance of
1,000,000 shares of common stock at par value.
In September 1997 the Company issued 2,000,000 shares of common stock
as the result of a private memorandum offering dated September 15, 1997.
Proceeds of the offering were $2,000.
In December 1997 the Company issued 240,000 shares of common stock
through the conversion of the Company's debentures, in exchange for a promissory
note in the amount of $900,000. The note and the 240,000 shares were
subsequently cancelled.
Pursuant to a January 23, 1998 stock exchange agreement, 3,240,000
shares of common stock of the Company were exchanged for 3,240,000 shares of
Global Energy Organization Corporation common stock. In accordance with the
agreement, the newly reorganized Company issued 258,390 shares of common stock
to the Global shareholders of record at the date of the agreement and an
additional 540,500 shares to selected Global shareholders, subject to a one year
lock-up agreement.
The company received $500 from the issuance of 500,000 shares of common
stock at par value in connection with a private memorandum offering dated
February 2, 1998.
The company issued 250,713 shares of common stock and received $250,000
in proceeds from the conversion of the Company's debentures dated March 27,
1998.
In May 1998, the Company issued 333,761 shares of common stock in
exchange for consulting services valued at $174,557.
The Company issued 200,000 shares of common stock as a result of a
private memorandum offering dated May 15, 1998. Proceeds of the offering were
$100,000 as of June 30, 1998 and the remaining $100,000 proceeds were received
during July 1998.
The Company issued 955,414 shares of stock valued at $1,500,000 to the
shareholders of Egret Boat Company, Inc., pursuant to a May 1998 stock exchange
agreement.
The Company issued 636,942 shares of stock valued at $1,000,000 to the
shareholder of
-24-
25
Consolidated Marine, Inc., pursuant to a May 1998 stock exchange agreement,
discussed further in Note 2.
The issuances of the securities described above were deemed to be
exempt from registration under the Securities Act in reliance on Section 4(2),
Rule 701 promulgated thereunder, Section 3(a)(9) among other exemptions. The
recipients of securities in each such transaction represented their intentions
to acquire the securities for investment only and not with a view to or for sale
in connection with any distribution thereof and appropriate legends were affixed
to the share certificates issued in such transactions. All recipients had
access, through their relationships with the Registrant, to information about
the Registrant.
ITEM 11. DESCRIPTION OF REGISTRANT'S SECURITIES TO BE REGISTERED
The authorized capital stock of the Company consists of 50,000,000
shares of Common Stock, $0.001 per share par value and 5,000,000 shares of
Preferred Stock, $0.001 par value.
The following summary of certain provisions of the Common Stock and
Preferred Stock does not purport to be complete and is subject to, and qualified
in its entirety by, the provisions of applicable law and the provisions of the
Company's Amended and Restated Articles of Incorporation, which are included as
an exhibit to this Registration Statement.
COMMON STOCK
As of September 30, 1998, there were 7,196,222 shares of Common Stock
outstanding that were held of record by 2090 stockholders.
The holders of Common Stock are entitled to one vote for each share
held of record on all matters submitted to a vote of stockholders. Subject to
preferences that may be applicable to any outstanding shares of Preferred Stock,
the holders of Common Stock are entitled to receive ratably such dividends, if
any, as may be declared by the Board of Directors out of funds legally available
for the payment of dividends. See "Dividend Policy." In the event of a
liquidation, dissolution or winding up of the Company, the holders of Common
Stock are entitled to share ratably in all assets remaining after payment the
liquidation preference of the Preferred Stock and the payment of liabilities.
Holders of Common Stock have no preemptive rights or rights to convert their
Common Stock into any other securities. There are no redemption or sinking fund
provisions applicable to the Common Stock. All outstanding shares of Common
Stock are fully paid and non-assessable.
PREFERRED STOCK
Pursuant to the Company's Amended and Restated Articles of
Incorporation, the Board of Directors has the authority, subject to any
limitations prescribed by the Nevada law without further action by the
stockholders, to issue up to 5,000,000 shares of Preferred Stock in one or more
series and to fix the designations, powers, preferences, privileges, and
relative participating, optional or special rights and the qualifications,
limitations or restrictions thereof, including dividend rights, conversion
rights, voting rights, terms of redemption and liquidation preferences, any or
all of which may be greater than the rights of the Common Stock. Depending on
the terms of the Preferred Stock established by the Board of Directors, any or
all series of Preferred Stock could have preference over the Common Stock with
respect to dividends and other distributions. Preferred Stock could thus be
issued quickly with terms calculated to delay or prevent a change in control of
the Company or make removal of management more difficult. Additionally, the
issuance of Preferred Stock may have the effect of decreasing the market price
of the Common Stock, and may adversely affect the voting and other rights of the
holders of Common Stock. At present, there are no shares of Preferred Stock
outstanding and the Company has no plans to issue any of the shares of Preferred
Stock except possibly in connection with the contemplated reorganization.
-25-
26
TRANSFER AGENT
The Transfer Agent for the Common Stock of the Company is Interwest
Transfer Co., Inc., 1981 East Murray Holladay Road, Suite 100, Salt Lake City,
Utah 89110.
ITEM 12. INDEMNIFICATION OF OFFICERS AND DIRECTORS
The Company's Amended and Restated Articles of Incorporation provide
for indemnification to the full extent permitted by Nevada law of all persons it
has the power to indemnify under Nevada law. In addition, Article VII of the
Company's Amended and Restated By Laws provide for indemnification to the full
extent permitted by Nevada law of all persons it has the power to indemnify
under Nevada law. Such indemnification is not deemed to be exclusive of any
other rights to which those indemnified may be entitled, under any bylaw,
agreement, vote of stockholders or otherwise. The provisions of the Company's
Amended and Restated Articles of Incorporation and By Laws which provide
indemnification may reduce the likelihood of derivative litigation against the
Company's directors and officers for breach of their fiduciary duties, even
though such action, if successful, might otherwise benefit the Company and its
stockholders.
ITEM 13. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
See Audited Financial Statements and supplementary data index which appears on
page F-1 herein.
ITEM 14. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
NONE.
ITEM 15. FINANCIAL STATEMENTS AND EXHIBITS
(a) (1) See Audited Financial Statements and supplementary data
index which appears on page F-1 herein.
(2) Schedules have been omitted because they are either not
applicable or the required information is shown in the
financial statements or notes thereto.
(3) Exhibits
INDEX TO EXHIBITS
Exhibit No. Description of Exhibit
----------- ----------------------
3.1 Certificate of Amendment of Restated Articles of
Incorporation of the Registrant
3.2 Amended and Restated Articles of Incorporation of
the Registrant
3.3 Amended and Restated Bylaws of the Registrant
4.1 Form of the Registrant's Common Stock Certificate
-26-
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4.2 Loan Agreement between Finova Capital Corporation
and Revenge Marine, Inc., a Delaware corporation,
dated October 23, 1998.
10.1 Lease Agreement between the Registrant and Miami
River Partners, Ltd., dated May 4, 1998.
10.2 Amendment dated July 10, 1998 to the Lease Agreement
between the Registrant and Miami River Partners,
Ltd., dated May 4, 1998.
10.3 Stock Exchange Agreement between Consolidated
Marine, Inc. and the Registrant dated May 29, 1998.
10.4 Stock Exchange Agreement between Egret Boat Company
and the Registrant dated May 21, 1998.
10.5 Promissory note between Consolidated Yacht
Corporation and the Registrant dated July 30, 1998.
10.6 Securities Subscription Agreement and Convertible
Debenture between Sholem Liebenthal and the
Registrant dated July 13, 1998
10.7 Purchase Agreement between BYC Acquisition
Corporation and Revenge Marine, Inc., a Delaware
corporation, dated October 22, 1998.
10.8 Contract between Arthur M. Barbeito & Associates,
Inc. and the Registrant dated October 27, 1998.
10.9 Stock Loan and Consulting Agreement between The Wall
St. Trading Group and the Registrant dated February
17, 1998.
10.10 Consulting Agreement between Stockbroker Relations,
Inc. and the Registrant dated May 14, 1998.
10.11 Consulting Agreement between Grant Douglas
Publishing, Inc. and the Registrant dated May 14,
1998.
21.1 List of Subsidiaries of the Registrant
21.2 Certificate of Incorporation of Revenge Marine,
Inc., a Delaware Corporation
21.3 Bylaws of Revenge Marine, Inc., a Delaware
Corporation
23.1 Consent of Cross and Robinson, independent auditors
-27-
28
SIGNATURES
Pursuant to the requirements of Section 12 of the Securities Exchange
Act of 1934, the Registrant has duly caused this registration statement to be
signed on its behalf by the undersigned, thereunto duly authorized.
REVENGE MARINE, INC.
- --------------------
(Registrant)
Date: October 28, 1998
----------------
By: /s/ Donald Mitchell
-------------------
Donald Mitchell
President and Chief Executive Officer
-28-
29
REVENGE MARINE, INC.
A Development Stage Company
(Formerly Global Energy Organization Corporation)
CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 1998
AND
INDEPENDENT AUDITOR'S REPORT
30
REVENGE MARINE, INC.
A Development Stage Company
(Formerly Global Energy Organization Corporation
C O N T E N T S
PAGE
Independent Auditor's Report 1
Consolidated Balance Sheet 2
Consolidated Statement of Operations 4
Consolidated Statement of Stockholders' Equity 5
Consolidated Statement of Cash Flows 6
Notes to Consolidated Financial Statements 8-20
31
INDEPENDENT AUDITOR'S REPORT
To the Board of Directors and Stockholders
of Revenge Marine, Inc.
We have audited the accompanying consolidated balance sheet of Revenge
Marine, Inc., a development stage company (formerly known as Global Energy
Organization Corporation) and subsidiaries as of June 30, 1998, and the related
consolidated statements of operations, stockholders' equity, and cash flows for
the period from inception, September 5, 1997 to June 30, 1998. These
consolidated financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these consolidated
financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audit provides a reasonable basis
for our opinion.
In our opinion, the consolidated financial statements referred to
above present fairly, in all material respects, the financial position of
Revenge Marine, Inc. as of June 30, 1998, and the results of its operations and
its cash flows for the initial period then ended in conformity with generally
accepted accounting principles.
/s/ CROSS AND ROBINSON
-------------------------------
CROSS AND ROBINSON
Certified Public Accountants
September 8, 1998
1
32
REVENGE MARINE, INC.
AND SUBSIDIARIES
A Development Stage Company
(Formerly Global Energy Organization Corporation)
CONSOLIDATED BALANCE SHEET
June 30, 1998
ASSETS
CURRENT ASSETS
Cash $ 102,793
Prepaid expenses (Note 1) 176,608
Work in progress (Note 1) 60,500
----------
TOTAL CURRENT ASSETS 339,901
----------
PROPERTY AND EQUIPMENT, AT COST (NOTE 4)
Equipment 85,000
Molds and prototype 242,523
Vehicles 45,493
Office equipment 5,429
Less: Accumulated depreciation (139,025)
----------
NET PROPERTY AND EQUIPMENT 239,420
----------
OTHER ASSETS
Deposit (Note 13) 50,000
Intangible assets, net (Note 5) 9,512
Investment in subsidiaries in excess of book value, net (Note 5) 2,356,971
----------
TOTAL OTHER ASSETS 2,416,483
----------
TOTAL ASSETS $2,995,804
==========
2
33
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable $ 28,916
Accounts payable--related parties (Note 6) 50,786
Accrued liabilities 9,283
Customer deposits 64,500
Notes payable (Note 7) 66,252
Notes payable--related parties (Notes 6 and 7) 94,742
----------
TOTAL LIABILITIES 314,479
----------
SHAREHOLDER'S EQUITY (NOTE 8)
Preferred stock $0.001 par value,
5,000,000 shares authorized,
-0- shares issued and outstanding
Common stock $0.001 par value,
50,000,000 shares authorized,
6,675,720 shares issued and outstanding 6,676
Subsriptions receivable (100,000)
Additional paid-in capital 3,093,581
Deficit accumulated in the development stage (318,932)
----------
TOTAL SHAREHOLDER'S EQUITY 2,681,325
----------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $2,995,804
==========
ACCOMPANYING NOTES ARE ON INTEGRAL PART OF
THE FINANCIAL STATEMENTS.
3
34
REVENGE MARINE, INC.
AND SUBSIDIARIES
A Development Stage Company
(Formerly Global Energy Organization Corporation)
CONSOLIDATED STATEMENT OF OPERATIONS
For the Period September 5, 1997 (Date of Inception)
to June 30, 1998
SALES $ 142,286
COST OF SALES 124,352
---------
GROSS PROFIT 17,934
---------
SELLING, GENERAL, AND ADMINISTRATIVE EXPENSES
Advertising 5,821
Contract labor 2,400
Commissions and fees 3,500
Office expense 5,269
Legal and professional fees 177,935
Penalties and fines 37,000
Postage and printing 6,563
Public relations 17,397
Video production 6,346
Telephone 6,764
Travel 27,289
Miscellaneous 19,202
---------
TOTAL SELLING, GENERAL, AND ADMINISTRATIVE EXPENSES 315,486
---------
OTHER INCOME (EXPENSES)
Interest income 15
Depreciation and amortization (Notes 4 and 5) (13,261)
Interest expense (8,134)
---------
TOTAL OTHER INCOME (EXPENSES) (21,380)
---------
NET LOSS FROM OPERATIONS $(318,932)
=========
WEIGHTED AVERAGE SHARES OUTSTANDING (NOTE 9) 4,325,237
---------
NET LOSS PER SHARE $ (0.07)
=========
4
35
REVENGE MARINE, INC.
AND SUBSIDIARIES
A Development Stage Company
(Formerly Global Energy Organization Corporation)
STATEMENT OF SHAREHOLDERS' EQUITY
For the Period September 5, 1997 (Date of Inception)
to June 30, 1998
COMMON STOCK ADDITIONAL
------------------------- PAID-IN ACCUMULATED
SHARES AMOUNT CAPITAL DEFICIT
----------- ------ ---------- -----------
BALANCE AT INCEPTION -- $ -- $ -- $ --
Common stock, par value $0.001
50,000,000 shares authorized:
Issued for cash, September 1997 3,000,000 3,000
Stock subscription, December 1997, less
issuance costs of $7,800 240,000 240 471,960
Issued to original Global shareholders,
per agreement dated January 23, 1998 798,890 799 (799)
Proceeds from 504 offering dated
February 2, 1998 500,000 500 --
Proceeds from conversion of debentures
dated March 27, 1998 250,713 251 249,749
Issued through private offering dated
May 10, 1998, in exchange for services 333,761 334 174,223
Private offering dated May 15, 1998:
Issued for cash 100,000 100 99,900
Subcribed to at June 30, 1998 100,000 100 99,900
Issued to the shareholders of Egret Boat
Company, May 1998 955,414 955 1,499,045
Issued to the shareholder of Consolidated
Marine, Inc., May 1998 636,942 637 999,363
Stock issuance costs January-June 1998 -- -- (20,000)
Stock subcription cancelled (240,000) (240) (479,760)
Net loss for the period -- -- -- (318,932)
--------- ------ ---------- ----------
BALANCE AT JUNE 30,1998 6,675,720 $6,676 $3,093,581 $ (318,932)
========= ====== ========== ==========
ACCOMPANYING NOTES ARE ON INTEGRAL PART OF
THE FINANCIAL STATEMENTS.
5
36
Revenge Marine, Inc.
AND SUBSIDIARIES
A Development Stage Company
(Formerly Global Energy Organization Corporation)
CONSOLIDATED STATEMENT OF CASH FLOWS
For the Period September 5, 1997 (Date of Inception)
to June 30, 1998
Cash Flows From Operating Activities:
Cash received from customers $ 101,785
Interest received 15
Cash paid for goods and services (399,084)
----------
Net Cash Used by Operating Activities (297,284)
----------
Cash Flows From Investing Activities:
Cash acquired from acquisition of subsidiaries 56,216
Plant & equipment purchases (128,624)
----------
Net Cash Used by Investing Activities (72,408)
----------
Cash Flows From Financing Activities:
Issuance of common stock 353,500
Proceeds from short-term debt 147,742
Repayment of short-term debt (957)
Stock issuance costs incurred (27,800)
----------
Net Cash Provided by Financing Activities 472,485
----------
Net Increase in Cash 102,793
Cash at Beginning of Period --
----------
Cash at End of Period $ 102,793
==========
6
37
Reconciliation of Net Loss to Net
Cash Used by Operating Activities:
Net loss (318,932)
Adjustments to reconcile net loss to net
cash used by operating activities:
Depreciation 6,752
Amortization of intangible assets 6,511
Decrease in customer deposits (40,500)
Decrease in work in progress 20,679
Increase in deposits on rental property (50,000)
Decrease in accrued liabilities 1,613
Increase in intangible assets (3,450)
Increase in accounts payable 79,701
Decrease in deferred expenses 342
----------
Total adjustments 21,648
----------
Net Cash Used by Operating Activities $ (297,284)
==========
Supplemental Disclosures of Cash Flow Information:
Cash paid during the year for interest $ 8,134
Schedule of Other Non-cash Transactions:
333,761 shares of common stock were issued
during the year in exchange for services $ 174,557
1,592,356 shares of common stock were issued
during the year to acuire subsidiaries $2,500,000
100,000 shares of common stock were issued
pursuant to a subscription agreement $ 100,000
ACCOMPANYING NOTES ARE ON INTEGRAL PART OF
THE FINANCIAL STATEMENTS.
7
38
REVENGE MARINE, INC.
A Development Stage Company
(Formerly Global Energy Organization Corporation)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 1998
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
ORGANIZATION AND DESCRIPTION OF BUSINESS
Revenge Marine, Inc. (the "Company"), is a publicly traded
Nevada company that was incorporated December 28, 1979. The Company
has operated under various names since its incorporation, most
recently operating as Global Energy Organization Corporation
("Global").
The Company entered the development stage after it
reorganized in January 1998 (see Note 2) and changed its primary focus
to acquiring yacht manufacturing and marine technology companies, with
future plans to produce and market a full line of boats from 16 to 110
feet in length. Since that time, the Company has devoted substantially
all of its efforts to raising capital and acquisition activities. As
of June 30, 1998, the Company's principal operations had not commenced
and their only reported revenues were from a recently acquired
subsidiary. Because the Company is in the development stage, the
accompanying consolidated financial statements should not be regarded
as typical for normal operating periods.
LIQUIDITY CONSIDERATIONS
Since its reorganization, the Company has expended
substantial financial resources in its acquisition and capital raising
activities. The Company believes it will commence its principal
operations and begin generating revenues in the fiscal year ending
June 30, 1999. As of June 30, 1998, the Company's accumulated deficit
was $318,932, which was funded primarily through short-term borrowings
and the proceeds from private placement offerings of its common stock.
Management believes it can fund planned operations through the
proceeds of stock issues and from its anticipated revenues or
reductions in its operating expenses.
PRINCIPALS OF CONSOLIDATION
The June 30, 1998 consolidated balance sheet includes the
accounts of Revenge Marine, Inc. and its wholly owned subsidiaries,
Revenge Marine, Inc., (an Oklahoma corporation), Egret Boat Company,
Inc., (a Florida corporation), and Consolidated Marine, Inc. (a
Florida corporation).
The June 30, 1998 consolidated statements of income,
shareholders' equity and cash flows include the accounts of Revenge
Marine, Inc. (Oklahoma)
8
39
REVENGE MARINE, INC.
A Development Stage Company
(Formerly Global Energy Organization Corporation)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 1998
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
from September 5, 1997 (inception) through June 30, 1998 and the
accounts of Egret Boat Company, Inc. and Consolidated Marine, Inc.
from their acquisition dates (May 21 and May 27, 1998 respectively).
All material intercompany accounts and transactions have been
eliminated in consolidation.
The consolidated financial statements and notes of Revenge
Marine, Inc. are representations of the Company's management, who is
responsible for their integrity and objectivity. The accounting
policies of the Company are in accordance with generally accepted
accounting principles and conform to the standards applicable to
development stage companies.
CASH AND CASH EQUIVALENTS
The Company considers highly liquid investments (that are
readily convertible to cash) purchased with original maturity dates of
three months or less to be cash equivalents.
REVENUE RECOGNITION
The Company's revenues through June 30, 1998 consist solely
of the earnings of Egret Boat Company from the date of acquisition
through June 30, 1998. Egret recognizes revenues when completed boats
are delivered to the customer. No other revenues had been recognized
as of June 30, 1998 for this Development Stage Company.
INTANGIBLE ASSETS
Intangible assets include organizational costs, costs
associated with developing a new line of yachts, and the Company's
investment in its subsidiaries in excess of the book value of the
subsidiaries' net assets. Intangible assets are amortized using the
straight-line method based on the economic useful lives of the assets,
principally over five years.
PROPERTY AND EQUIPMENT
Property and equipment are stated at cost and depreciated
using the straight-line method over the estimated useful life of the
asset of five years. When assets are retired or otherwise disposed of,
the cost and accumulated depreciation are removed from the accounts
and any resulting gain or loss is reflected in operations in the
period realized.
9
40
REVENGE MARINE, INC.
A Development Stage Company
(Formerly Global Energy Organization Corporation)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 1998
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
INCOME TAXES
The Company uses the liability method of accounting for
income taxes as set forth in Statement of Financial Accounting
Standards No. 109, "Accounting for Income Taxes." Under the liability
method, deferred taxes are determined based on the differences between
the financial statement and tax bases of assets and liabilities at
enacted tax rates in effect in the years in which the differences are
expected to reverse. Deferred tax assets are reduced by a valuation
allowance when, in the opinion of management, it is more likely than
not that some portion or all of the deferred tax assets will not be
realized.
USE OF ESTIMATES
The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets
and liabilities at the date of the financial statements and the
reported revenues and expenses during the reporting period.
Accordingly, actual results could differ from those estimates.
EARNINGS (LOSS) PER SHARE
Primary income (loss) per share is calculated by dividing net
income (loss) by the weighted average shares of common stock of the
Company and common stock equivalents outstanding during the period
(see Note 9). Common stock equivalents represent the dilutive effect
of the assumed exercise of certain outstanding stock options and
warrants.
The calculation of fully diluted income (loss) per share of
common stock assumes the dilutive effect of the Company's outstanding
stock options and warrants converted into common stock at the later of
the beginning of the fiscal year or issue date. During a loss period,
the assumed exercise of outstanding stock options and warrants have an
antidilutive effect. As a result, these shares are not included in the
weighted average shares of 4,325,237 used in the calculation of loss
per share.
WORK IN PROGRESS
Work in Progress consists of customer deposits received by
Egret Boat Company, Inc. These deposits have been advanced to
Consolidated Yacht Corporation, Inc. as progress payments on boats
under construction at the balance sheet date (see "Related Party
Transactions", Note 6). These payments will become a component of the
Company's cost of goods sold in the period that revenue is recognized
on the completed boats.
10
41
REVENGE MARINE, INC.
A Development Stage Company
(Formerly Global Energy Organization Corporation)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 1998
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
PREPAID EXPENSES
Prepaid expenses at June 30, 1998 consisted of prepaid
insurance and the fair market value of common stock issued by the
Company in exchange for consulting services to be rendered in the
forthcoming fiscal year (see Note 11).
FISCAL YEAR END
The Company's fiscal year ends on June 30. Egret Boat
Company, which previously had a December 31 year-end, will change its
fiscal year to June 30 as a result of the acquisition by the Company.
NOTE 2 - REORGANIZATION AND ACQUISITIONS
GLOBAL ENERGY ORGANIZATION CORPORATION
In January 1998, Revenge Marine, Inc. (formerly Revenge
Yachts, Inc.), an Oklahoma corporation, executed a Stock Exchange
Agreement (the "Agreement") with Global Energy Organization
Corporation ("Global"), a publicly traded Nevada corporation, which
had been inactive for the previous five years.
Pursuant to the Agreement dated January 23, 1998, Global
issued 3,240,000 shares of its $.001 par value common stock in
exchange for 100% of the issued and outstanding common stock of
Revenge Marine, Inc. As a result of this "reverse acquisition",
Revenge Marine, Inc. became a wholly owned subsidiary of Global. In
accordance with the terms of the agreement, Global (the Nevada parent)
adopted the name "Revenge Marine, Inc.".
Immediately preceding the Agreement, Global enacted a one for
ten (1 for 10) reverse split of its stock, leaving Global with 274,824
shares of $0.001 par value common stock issued and outstanding at the
date of the merger. As of June 30, 1998, 258,390 shares of Revenge
Marine, Inc. stock had been issued to replace these shares. The
remaining 16,434 shares will be issued as their respective owners are
identified. Additionally, Global effected the issuance of 540,500
shares of common stock to selected Global shareholders in exchange for
their services relating to the reorganization with Revenge Marine,
Inc. These shares were issued subject to a lock-up agreement, whereby
the shareholders were restricted from selling, assigning, or conveying
any of their shares for a period of twelve months. Revenge Marine
stock had been issued to these shareholders as of June 30, 1998.
11
42
REVENGE MARINE, INC.
A Development Stage Company
(Formerly Global Energy Organization Corporation)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 1998
NOTE 2 - REORGANIZATION AND ACQUISITIONS (CONTINUED)
EGRET BOAT COMPANY, INC.
Pursuant to a stock exchange agreement dated May 21, 1998,
the Company issued 955,414 shares of its common stock, valued at
$1,500,000, in exchange for all of the outstanding shares of Egret
Boat Company, Inc., a Florida corporation. The acquisition was
accounted for as a purchase and is included with consolidated
operations from the acquisition date through June 30, 1998. The
purchase price was allocated as follows:
Property and equipment, $ 117,547
Working capital, net 20,061
Other intangible assets $1,362,392
----------
Total $1,500,000
==========
CONSOLIDATED MARINE, INC.
Pursuant to a stock exchange agreement dated May 27, 1998,
the Company issued 636,942 shares of its common stock, valued at
$1,000,000 in exchange for all of the outstanding shares of
Consolidated Marine, Inc., a Florida corporation. The acquisition was
accounted for as a purchase and was included with consolidated
operation from the acquisition date through June 30, 1998. The
purchase price was allocated as follows:
Organization costs $ 500
Other intangible assets 999,500
----------
Total $1,000,000
==========
The consolidated pro forma results of operations which follow
assume that the acquisitions had occurred at the beginning of the
period presented. The calculations include adjustments for
depreciation, amortization, and interest. The pro forma statements may
not be indicative of the results that would have occurred if the
acquisition had been effective on the date indicated or of the results
that may be obtained in the future.
12
43
REVENGE MARINE, INC.
A Development Stage Company
(Formerly Global Energy Organization Corporation)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 1998
NOTE 2 - REORGANIZATION AND ACQUISITIONS (CONTINUED)
FROM INCEPTION
THROUGH JUNE 30, 1998
---------------------
Sales $1,164,162
Cost of goods sold 979,320
----------
Gross profit 184,842
Operating expenses 391,373
----------
Operating income (loss) (206,532)
Other income (expense), net (59,036)
----------
Net income (loss) $(265,568)
==========
NOTE 3- SUBSCRIPTIONS RECEIVABLE
Subscriptions receivable consists of a subscription agreement
to purchase a total of 200,000 shares of the Company's common stock at
a price of $1.00 per share. As of June 30, 1998, 100,000 shares had
not been purchased. These shares were purchased in July 1998.
NOTE 4 - PROPERTY AND EQUIPMENT
Property and equipment consists of the following at June 30,
1998:
Molds and prototype $ 242,523
Equipment 85,000
Automobiles 45,493
Office equipment 5,429
---------
Total consolidated property and
equipment 378,445
Less accumulated depreciation (139,025)
---------
Net property and equipment $ 239,420
=========
Total depreciation expense for the period ended June 30, 1998
was $6,750.
NOTE 5 - INTANGIBLE ASSETS
Intangible assets consists of the following at June 30, 1998:
13
44
REVENGE MARINE, INC.
A Development Stage Company
(Formerly Global Energy Organization Corporation)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 1998
NOTE 5 - INTANGIBLE ASSETS (CONTINUED)
ESTIMATED
USEFUL LIFE
-----------
Investment in subsidiaries
in excess of book value $ 2,361,892 40 years
Marine assets 8,602 5 years
Organizational costs 2,500 5 years
-----------
Total intangible assets 2,372,994
Less accumulated amortization (6,511)
Net intangible assets $ 2,366,483
===========
Total amortization expense for the period ended June 30, 1998
was $6,511.
NOTE 6 - RELATED PARTY TRANSACTIONS
ALLIED CAPITAL CORPORATION
Since inception of the development stage, Allied Capital
Corporation ("Allied") has advanced cash to the Company totaling
$98,324 for operating expenses. Further, Allied has directly paid
legal and other expenses on behalf of the Company totaling $158,714.
Allied owns 40,000 shares of the Company's common stock and is the
owner of Capital Markets Alliance, Inc., which is the Company's
principal shareholder, owning 1,954,431 of the 6,675,720 shares of
common stock that was outstanding at June 30, 1998. Allied is wholly
owned by the Desai Robinson Trust Fund. Desai Robinson is the former
president of Revenge Marine and is the wife of William C. Robinson,
executive vice president of the Company. Thomas Schroeder, who
resigned as Vice President and Chief Financial Officer of Revenge
Marine, Inc. effective June 30, 1998 is President of Capital Markets
Alliance.
As of June 30, 1998, the Company's total debt to Allied was
$145,528. The Company has signed a promissory note for $94,742 of this
debt (See Note 7) and the remaining unsecured debt of $50,786 is
reflected as accounts payable.
CONSOLIDATED YACHT CORPORATION, INC.
All of the boats sold by Egret Boat Company, a wholly owned
subsidiary of the Company, are manufactured by Consolidated Yacht
Corporation, Inc., a company owned by Jim Gardiner, with which Egret
shares its operating facilities. Mr. Gardiner is the president of
Consolidated Marine and a principal shareholder and officer of Revenge
Marine, Inc.
14
45
REVENGE MARINE, INC.
A Development Stage Company
(Formerly Global Energy Organization Corporation)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 1998
NOTE 6 - RELATED PARTY TRANSACTIONS (CONTINUED)
ROY MEADOWS AND AFFILIATED COMPANIES
Roy Meadows is the owner of Stockbroker Relations, Inc.,
Grant Douglas Publishing, Inc., ASBIA, Roy Starr, Inc., and James
Stockwell Capital, Inc., all of which received shares of the Company's
common stock pursuant to consulting agreements highlighted in Note 11
and the May 15, 1998 private offering highlighted in Note 12. At June
30, 1998, the aggregate number of shares issued to Roy Meadows and his
affiliated companies was 533,761, which equated to approximately eight
percent (8%) of the total shares issued and outstanding at that date.
NOTE 7 - NOTES PAYABLE
Notes payable consist of the following at June 30, 1998:
Notes payable to related-party shareholders (see Note 6):
Promissory note, due on or before November 16, 1998 at
an interest rate of 10% per annum. $ 94,742
Notes payable to other entities:
Demand note due on or before June 1, 1998 currently in
default at an interest rate of 10% per annum. 7,153
Unsecured $75,000 operating line of credit with First Union
National Bank, with interest-only payments due monthly at
an interest rate equal to the prime rate plus
2% (10.5% at June 30, 1998). 53,000
Retail vehicle installment contract with Chrysler
Financial Corporation, due in monthly installments of
principal and interest of $613, with fixed interest at
8.9% until February 22, 1999. This note is secured by a
Dodge Caravan. 4,164
Retail vehicle installment contract with Ford Motor
Credit, due in monthly installments of principal and
interest of $613 with fixed interest at 8.25% until
December 29, 1998. This note is secured by a 1995
Ford Econoline Van. 1,935
---------
Total notes payable 154,554
Current portion (154,554)
---------
$ --
=========
15
46
REVENGE MARINE, INC.
A Development Stage Company
(Formerly Global Energy Organization Corporation)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 1998
NOTE 8 - CAPITALIZATION
In September 1997 the Company received $1,000 from the
issuance of 1,000,000 shares of common stock at par value.
In September 1997 the Company issued 2,000,000 shares of
common stock as the result of a private memorandum offering dated
September 15, 1997. Proceeds of the offering were $2,000.
In December 1997 the Company issued 240,000 shares of common
stock through the conversion of the Company's debentures, in exchange
for a promissory note in the amount of $900,000. The note and the
240,000 shares were subsequently cancelled.
Pursuant to a January 23, 1998 stock exchange agreement (see
Note 2), the 3,240,000 shares referred to above were exchanged for
3,240,000 shares of Global Energy Organization Corporation common
stock. In accordance with the agreement, the newly reorganized Company
issued 258,390 shares of common stock to the Global shareholders of
record at the date of the agreement and an additional 540,500 shares
to selected Global shareholders, subject to a one year lock-up
agreement.
The company received $500 from the issuance of 500,000 shares
of common stock at par value in connection with a private memorandum
offering dated February 2, 1998.
The company issued 250,713 shares of common stock and
received $250,000 in proceeds from the conversion of the Company's
debentures dated March 27, 1998.
In May 1998, the Company issued 333,761 shares of common
stock in exchange for consulting services valued at $174,557.
The Company issued 200,000 shares of common stock as a result
of a private memorandum offering dated May 15,1998. Proceeds of the
offering were $100,000 as of June 30, 1998 and the remaining $100,000
proceeds were received during July 1998.
The Company issued 955,414 shares of stock valued at
$1,500,000 to the shareholders of Egret Boat Company, Inc., pursuant
to a May 1998 stock exchange agreement, discussed further in Note 2.
16
47
REVENGE MARINE, INC.
A Development Stage Company
(Formerly Global Energy Organization Corporation)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 1998
NOTE 8 - CAPITALIZATION (CONTINUED)
The Company issued 636,942 shares of stock valued at
$1,000,000 to the shareholder of Consolidated Marine, Inc., pursuant
to a May 1998 stock exchange agreement, discussed further in Note 2.
NOTE 9 - WEIGHTED AVERAGE COMMON SHARES OUTSTANDING
Common shares outstanding at June 30, 1998 6,675,720
Effect of using weighted average common
shares outstanding (2,350,483)
----------
Weighted average common shares outstanding 4,325,237
==========
NOTE 10 - PRINCIPAL SHAREHOLDERS
The Company's principal shareholders at June 30, 1998 are as
follows:
Shares Percent
Shareholder Owned of Total
----------------------------- --------- --------
Capital Markets Alliance, Inc. 1,954,431 29.28
Jim Gardiner 1,114,649 16.70
Roy Meadows and affiliated companies 533,761 8.00
Scott Flanders 477,707 7.16
All others (less than 5% each) 2,595,172 38.87
--------- ------
6,675,720 100.00
========= ======
NOTE 11 - PROFESSIONAL SERVICES
The Company has entered into various agreements for
consulting and broker services relating to future planned acquisitions
and other operations of the Company. The agreements are with a variety
of companies, most of whose owners or officers are shareholders of
Revenge Marine. In several of the agreements, the Company has issued
common stock, stock options, or stock warrants as partial or, in some
cases, total consideration for the services to be performed. The terms
of the significant agreements are highlighted as follows:
ROSS, FORSTER, SCILLIA, AND BROOKS, INC.
The Company has engaged Ross, Forster, Scillia, and Brooks,
Inc. as its corporate financial advisor and investment banker to
assist and advise the Company in future mergers or acquisitions. It is
estimated that the fees for these services could reach as high as
$266,900 if certain terms and obligations are met.
17
48
REVENGE MARINE, INC.
A Development Stage Company
(Formerly Global Energy Organization Corporation)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 1998
NOTE 11 - PROFESSIONAL SERVICES (CONTINUED)
STOCKBROKER RELATIONS, INC.
On May 14, 1998, the Company executed an agreement for
consulting services valued at $112,800 in exchange for 215,761 shares
of the Company's common stock. In addition, the Company issued
convertible stock options to Stockbroker Relations in the following
amounts.
These options may be exercised at any time until December 31,
1998.
Number of
Shares Price
--------- -----
175,000 $1.00
175,000 1.50
175,000 2.00
These options may be exercised at any time until December 31,
1998.
GRANT DOUGLAS PUBLISHING, INC.
On May 14, 1998, the Company entered into an agreement with
Grant Douglas Publishing, Inc. to advertise and publish information
about the Company in various publications produced by Grant Douglas
Publishing in exchange for 118,000 free trading shares of the
Company's common stock. The value of the services is estimated to be
$61,714.
WALL STREET TRADING GROUP
On February 17, 1998, the Company entered into a consulting
agreement with The Wall Street Trading Group ("WSTG"). As compensation
for the services provided, the Company will arrange with certain
Revenge shareholders to assign WSTG options to purchase 300,000 free
trading shares of the Company's common stock at $2.00 per share until
December 31, 2001. Additionally, the Company was obligated to arrange
a stock loan agreement between Wall Street Trading Group and another
company to loan Wall Street Trading Group 100,000 free trading shares
of Revenge Marine until July 31,1999.
MDI RESEARCH
The Company contracted with MDI Research to write a research
report for the Company. As partial consideration for the services
rendered, the Company issued common stock warrants with an option to
purchase 20,000 unrestricted shares of the Company's common stock at a
price of $1.50 per share. The warrants can be exercised at any time
from May 1, 1998 until May 1, 2002.
18
49
REVENGE MARINE, INC.
A Development Stage Company
(Formerly Global Energy Organization Corporation)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 1998
NOTE 12 - INCOME TAXES
Significant components of the Company's deferred tax assets
and liabilities as of June 30, 1998 are as follows:
Deferred tax liabilities:
Tax over book depreciation $ 18,680
Book over tax amortization (1,968)
---------
Net tax deferred liabilities 16,712
Deferred tax asset:
Net operating loss carryforward 127,573
Valuation allowance (110,861)
---------
Total deferred tax assets 16,712
---------
Net deferred tax liabilities $ --
=========
As of June 30, 1998, the Company had a net operating loss
carryforward of approximately $318,932, which expires in 2013.
Deferred taxes reflect a combined federal and state tax rate of
approximately 40%.
A reconciliation between the amount of federal income taxes,
based on a forty percent (40%) tax rate, and the effective amount of
income taxes based on continuing operations is as follows:
Statutory federal income taxes (refund) $(127,573)
Tax over book depreciation 16,712
Book over tax amortization 1,968
Valuation allowance 110,861
---------
Effective income taxes $ --
=========
NOTE 13 - LEASE AGREEMENT
The Company leases its Miami, Florida facility under a
non-cancelable operating lease. The agreement, as amended on July 10,
1998, calls for monthly lease payments of $37,333 beginning in July
1998, with a twelve month, interest free option to purchase the
property at a purchase price of $3,259,500. After the initial twelve
month period, the option to purchase will begin to accrue interest at
a rate of 6%, compounded daily. The Company is responsible for paying
insurance and real estate taxes on the property, which are estimated
to total $5,720 per month. Pursuant to the July 10, 1998 Amended
Agreement, $15,000 of the initial $50,000 deposit was refunded to the
Company in July 1998. The term of the lease is ten years with an
option to extend the lease for an additional five years.
19
50
REVENGE MARINE, INC.
A Development Stage Company
(Formerly Global Energy Organization Corporation)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 1998
NOTE 13 - LEASE AGREEMENT (CONTINUED)
The minimum obligations for the next five years are as
follows:
YEAR ENDED
JUNE 30
-----------
1999 $ 516,636
2000 516,636
2001 516,636
2002 516,636
2003 516,636
----------
Total $2,583,180
==========
NOTE 14 - SUBSEQUENT EVENTS
PURCHASE OF CONSOLIDATED YACHT CORPORATION ASSETS
On September 8, 1998, the Company entered into an agreement
to purchase the assets of Consolidated Yacht Corporation, Inc., a
Florida corporation, whose owner is a related party to the Company
(see Note 6).
20