UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
____________________________________________________
FORM 8-K/A
AMENDMENT NO. 1
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): May 20, 2004
MARMION INDUSTRIES CORP
(Exact name of registrant as specified in its charter)
FLORIDA
(State or other jurisdiction of incorporation or organization)
000-31507 06-1588136
(Commission File Number) (IRS Employer Identification No.)
9103 EMMOTT ROAD, BUILDING 6, SUITE A,
HOUSTON, TEXAS 77040
(principal executive offices) (Zip Code)
(713) 466-6585
(Registrant's telephone number, including area code)
This Current Report on Form 8-K/A is to report the financial information
that was required to be presented as a result of the contribution by Wilbert H.
Marmion, the President and Chief Executive Officer of the Registrant, on May 20,
2004 of all of his shares of common stock in Marmion Investments, Inc., a Texas
corporation d/b/a Marmion Air Service, to the Registrant as a contribution to
the Registrant's capital. The shares contributed to the Registrant by Wilbert H.
Marmion constituted one hundred percent of the issued and outstanding shares in
Marmion Investments, Inc.
As a result of the capital contribution by Mr. Marmion, Marmion
Investments, Inc. became a wholly-owned subsidiary of the Registrant.
ITEM 9.01. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.
(a) FINANCIAL STATEMENTS OF BUSINESSES ACQUIRED.
See Item 9.01(a) attached herewith.
(b) PRO FORMA FINANCIAL INFORMATION.
See Item 9.01(b) attached herewith.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this Current Report to be signed on its behalf by the
undersigned hereunto duly authorized.
Date: September 27, 2004
MARMION INDUSTRIES CORP.
By/s/Wilbert H. Marmion
-------------------------------------------
Wilbert H. Marmion, Chief Executive Officer
ITEM 9.01(A)
INDEPENDENT AUDITORS' REPORT
To the Board of Directors
Marmion Investments, Inc.
Houston, Texas
We have audited the accompanying balance sheet of Marmion Investments, Inc. as
of December 31, 2003 and the related statements of operations, stockholders'
deficit, and cash flows for each of the two years then ended. These financial
statements are the responsibility of Marmion Investments, Inc.'s management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Marmion Investments, Inc. as of
December 31, 2003 and the results of its operations and its cash flows for each
of the two years then ended, in conformity with accounting principles generally
accepted in the United States of America.
Lopez, Blevins, Bork & Associates, LLP
Houston, Texas
September 10, 2004
1
MARMION INVESTMENTS, INC.
BALANCE SHEET
DECEMBER 31, 2003
ASSETS
Current assets
Cash $ 78,862
Accounts receivable, net of allowance for doubtful accounts of $0 150,498
----------
Total current assets 229,360
Property and equipment, net 123,259
----------
TOTAL ASSETS $ 352,619
==========
LIABILITIES AND STOCKHOLDER'S DEFICIT
Current liabilities
Accounts payable $ 89,546
Accrued expenses 29,628
Accrued salaries - officers 344,592
Advances - stockholder 91,109
Notes payable - related party 245,000
Current maturities of notes payable 17,430
----------
Total current liabilities 817,305
Notes payable, net of current maturities 43,700
----------
TOTAL LIABILITIES 861,005
Commitments
STOCKHOLDER'S DEFICIT:
Common stock, $25 par value, 1,000 shares authorized,
40 shares issued and outstanding 1,000
Retained earnings (509,386)
----------
Total Stockholder's Deficit (508,386)
----------
TOTAL LIABILITIES AND STOCKHOLDER'S DEFICIT $ 352,619
==========
See accompanying summary of accounting policies and notes to financial
statements.
2
MARMION INVESTMENTS, INC.
STATEMENTS OF OPERATIONS
YEARS ENDED DECEMBER 31, 2003 AND 2002
2003 2002
---------- ----------
Revenues $ 880,043 $ 819,349
Cost of sales 587,803 442,557
---------- ----------
Gross profit 292,240 376,792
---------- ----------
Costs and expenses
Salaries and employee benefits 389,988 379,426
General and administrative 248,027 311,672
---------- ----------
Total costs and expenses 638,015 691,098
---------- ----------
Net loss $(345,775) $(314,306)
========== ==========
Net loss per share $ (8,644) $ (7,858)
========== ==========
Weighted average shares outstanding:
Basic and diluted 40 40
========== ==========
See accompanying summary of accounting policies and notes to financial
statements.
3
MARMION INVESTMENTS, INC.
STATEMENTS OF STOCKHOLDER'S DEFICIT
YEARS ENDED DECEMBER 31, 2003 AND 2002
Common Stock Additional
------------------- Paid-In Accumulated
Shares Amount Capital Deficit Total
---------- ------- ---------- -------------- -----------
Balance,
December 31, 2001 40 $ 1,000 $ - $ 213,695 $ 214,695
Distributions - - - (63,000) (63,000)
Net loss - - - (314,306) (314,306)
---------- ------- ---------- -------------- -----------
Balance,
December 31, 2002 40 1,000 - (163,611) (162,611)
Net loss - - - (345,775) (345,775)
---------- ------- ---------- -------------- -----------
Balance,
December 31, 2003 40 $ 1,000 $ - $ (509,386) $ (508,386)
========== ======= ========== ============== ===========
See accompanying summary of accounting policies and notes to financial
statements.
4
MARMION INVESTMENTS, INC.
STATEMENTS OF CASH FLOWS
YEAR ENDED DECEMBER 31, 2003 AND 2002
2003 2002
---------- ----------
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss $(345,775) $(314,306)
Adjustments to reconcile net loss to cash used in
operating activities:
Depreciation and amortization 36,192 29,500
Loss on disposition of asset 4,945 -
Bad debt expense - 51,136
Changes in assets and liabilities:
Accounts receivable (58,963) (56,424)
Accounts payable 50,250 31,471
Accrued expenses 18,024 5,876
Accrued salaries - officers 134,592 130,000
---------- ----------
CASH FLOWS USED IN OPERATING ACTIVITIES (160,735) (122,747)
---------- ----------
CASH FLOWS FROM INVESTING ACTIVITIES
Advances to related party - (38,436)
Proceeds on disposition of property and equipment 20,421 -
Capital expenditures (96,882) (10,906)
---------- ----------
CASH FLOWS USED IN INVESTING ACTIVITIES (76,461) (49,342)
---------- ----------
CASH FLOWS FROM FINANCING ACTIVITIES
Distribution to stockholder - (63,000)
Advances - stockholder, net 66,879 4,000
Proceeds from notes payable - related party 245,000 -
Proceeds from notes payable 50,636 -
Repayment of notes payable (37,299) (14,454)
---------- ----------
CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES 325,216 (73,454)
---------- ----------
NET INCREASE (DECREASE) IN CASH 88,020 (245,543)
Cash, beginning of period (9,158) 236,385
---------- ----------
Cash, end of period $ 78,862 $ (9,158)
========== ==========
SUPPLEMENTAL DISCLOSURES
Interest paid $ 2,949 $ 8,429
========== ==========
Income taxes $ - $ -
========== ==========
See accompanying summary of accounting policies and notes to financial
statements.
5
MARMION INVESTMENTS, INC.
NOTES TO FINANCIAL STATEMENTS
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BUSINESS AND BASIS OF PRESENTATION
Nature of our Business
Marmion Investments, Inc., a Texas corporation d/b/a Marmion Air Service
("Marmion Air"), was incorporated on June 8, 1995. Marmion Air Service commenced
operations in 1998 in residential and commercial HVAC service. Marmion Air
specializes in explosion-proof heating, ventilation, cooling pressurization and
chemical filtration solutions for mission-critical applications.
Basis of Accounting
Marmion Air maintains its accounts on the accrual method of accounting in
accordance with accounting principles generally accepted in the United States of
America.
Use of Estimates
The preparation of financial statements in conformity with accounting principles
generally accepted in the United States of America requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities at the date of the balance sheet. Actual results could differ from
those estimates.
Allowance for Doubtful Accounts
Earnings are charged with a provision for doubtful accounts based on a current
review of collectibility of accounts receivable. Accounts deemed uncollectible
are applied against the allowance for doubtful accounts.
From July 2001 through November 2002, Marmion Air advanced money to an
individual who was going to become a partner with Mr. Marmion. During 2002, the
individual decided to leave Marmion Air, accordingly Marmion Air recorded a
$51,136 bad debt expenses in 2002.
Property and Equipment
Property and equipment are stated at cost less accumulated depreciation. Major
renewals and improvements are capitalized; minor replacements, maintenance and
repairs are charged to current operations. Depreciation is computed by applying
the straight-line method over the estimated useful lives which are generally
three to seven years.
Long Lived Assets
The Company reviews for the impairment of long-lived assets whenever events or
changes in circumstances indicate that the carrying amount of an asset may not
be recoverable. An impairment loss would be recognized when estimated future
cash flows expected to result from the use of the asset and its eventual
disposition are less than its carrying amount. The Company has not identified
any such impairment losses.
Revenue Recognition
Marmion Air recognizes revenue when persuasive evidence of an arrangement
exists, delivery has occurred, the sales price is fixed or determinable and
collectibility is probable. These criteria are generally met at the time product
is shipped or services are performed.
6
Income Taxes
Income taxes are computed using the asset and liability method. Under the asset
and liability method, deferred income tax assets and liabilities are determined
based on the differences between the financial reporting and tax bases of assets
and liabilities and are measured using the currently enacted tax rates and laws.
A valuation allowance is provided for the amount of deferred tax assets that,
based on available evidence, are not expected to be realized.
NOTE 2 - PROPERTY AND EQUIPMENT:
Components of property and equipment, at December 31, 2003 are as follows:
Vehicles $147,771
Warehouse equipment 26,882
Computers 9,392
Furniture and fixtures 6,498
---------
190,543
Less: accumulated depreciation (67,284)
---------
$123,259
=========
Depreciation expense totaled $36,192 and $29,500 in 2003 and 2002, respectively
In September 2003, Marmion Air received $20,421 in the disposition of a vehicle
resulting in a loss of $4,945. The proceeds were used to pay off the remaining
balance of the note for the vehicle.
NOTE 3 - ADVANCES - STOCKHOLDER
Marmion Air has received net advances from its sole stockholder of $91,109. The
advances are unsecured and are due upon demand. Interest is being accrued at 10%
per year. Accrued interest for the years ended 2003 and 2002 are $17,029 and
$7,447, respectively.
NOTE 4 - NOTES PAYABLE - RELATED PARTY
As of December 31, 2003, the sister-in-law of the stockholder advanced $245,000
to Marmion Air. The same related party then advanced $15,000 per week though May
12, 2004 bringing the total cash advanced to $500,000. Starting May 20, 2004
Marmion Air began re-paying the loan at a rate of $25,000 per week. The
repayment terms have been orally agreed to. Interest for the loan is being
accrued at the rate of 6% per year. Interest in 2003 is minimal due to the cash
being advanced so late in the year.
NOTE 5 - NOTES PAYABLE
Marmion Air entered into two financing agreements to purchase automobiles in
2003 totaling $35,445 and $16,957 with interest rates of 7.55% and 13.45%,
respectively. Monthly payments on the vehicles are $711 and $575, respectively.
The notes are secured by the vehicles. The terms of the financing agreements are
60 and 36 months, respectively, expiring in fiscal years 2008 and 2006. The
balances due on these two notes are $33,679 and $16,957 as of December 31, 2003.
Marmion Air entered into a financing agreement to purchase automobiles in both
1999 and 2000 totaling $25,154 and $19,337 with interest rates of 7.95% and
12.00%, respectively. Monthly payments on the vehicles are $511 and $432,
respectively. The notes are secured by the vehicles. The terms of the financing
agreements are both 60 months, expiring in fiscal years 2004 and 2005,
respectively. The balances due on these two notes are $1,577 and $8,917 as of
December 31, 2003.
7
Future maturities of these notes are as follows:
Year Ending December 31,
2004 $ 17,430
2005 16,943
2006 13,103
2007 7,744
2008 5,910
---------
61,130
Less: current portion (17,430)
---------
43,700
=========
NOTE 6 - INCOME TAXES
For the period from inception through December 31, 2003, Marmion Air has
incurred net losses and, therefore, has no tax liability. The net deferred tax
asset generated by the loss carry-forward has been fully reserved. The valuation
allowance increased approximately $570,000. The cumulative net operating loss
carry-forward is approximately $525,000 at December 31, 2003, and will expire in
the years 2022 through 2023.
Deferred income taxes consist of the following at December 31, 2003:
Long-term:
Deferred tax assets $ 296,000
Valuation allowance (296,000)
-------------
$ -
=============
NOTE 7 - COMMITMENTS
Office Lease
Marmion Air leases office facilities under an operating lease that expired on
April 30, 2004. Rent expense was $35,653 and $29,922 for 2003 and 2002,
respectively. Monthly rent is $2,825 per month. In 2004, Marmion Air extended
the lease twelve months to now expire April 30, 2005. Monthly rent for the new
lease term is $2,850 per month.
Officers Salaries
Accrued Salaries - Officers consists of salaries to two officers under oral
agreements. The officers' salaries are $120,000 and $60,000 per year.
NOTE 8 - MAJOR CUSTOMERS AND VENDORS
Major customers during the year ended December 31, 2003 and 2002 as shown as a
percent of total revenue were:
------------------------------------
2003 2002
-------------------- ------ ------
Customer A 31% -
-------------------- ------ ------
Customer B 26% 47%
-------------------- ------ ------
Customer C 15% -
------------------------------------
In 2003, Marmion Air purchased just over half of its goods from one vendor. In
2002, Marmion Air purchased about 72% of their goods from three vendors.
8
NOTE 9 - SUBSEQUENT EVENT
On May 20, 2004, Wilbert H. Marmion, the President and Chief Executive Officer
of Marmion Industries Corp. (formerly International Trust & Financial Systems,
Inc.) contributed all of his shares of common stock in Marmion Investments,
Inc., a Texas corporation d/b/a Marmion Air Service, to Marmion Industries Corp.
(formerly International Trust & Financial Systems, Inc.) as a contribution to
Marmion Industries Corp.'s capital. The shares contributed to Marmion Industries
Corp. (formerly International Trust & Financial Systems, Inc.) represent one
hundred percent of the issued and outstanding shares in Marmion Investments,
Inc.
For accounting purposes, this transaction was treated as an acquisition of
Marmion Industries Corp. (formerly International Trust & Financial Systems,
Inc.) and a recapitalization of Marmion Investments, Inc. Marmion Investments,
Inc. is the accounting acquirer and the results of its operations carry over.
Accordingly, the operations of Marmion Industries Corporation (formerly
International Trust & Financial Systems, Inc.) are not carried over and will be
adjusted to $0.
9
ITEM 9.01(B)
PRO FORMA CONSOLIDATED BALANCE SHEET
The following pro forma balance sheet has been derived from the balance sheet of
International Trust and Financial Systems, Inc. ("International Trust") at
December 31, 2003 and adjusts such information to give effect to the acquisition
of Marmion Investments, Inc. ("Marmion Investments"), as if the acquisition had
occurred at December 31, 2003. The pro forma balance sheet is presented for
informational purposes only and does not purport to be indicative of the
financial condition that would have resulted if the acquisition had been
consummated at December 31, 2003. The pro forma balance sheet should be read in
conjunction with the notes thereto and Marmion Investment's financial statements
and related notes thereto contained elsewhere in this filing.
On January 19, 2004, a change in control occurred as the result of the
acquisition of International Trust's capital stock by Wilbert H. Marmion and
Steven F. Owens. In connection with a Purchase and Escrow Agreement dated
November 12, 2003, by International Trust and Wilbert H. Marmion, and J. Bennett
Grocock, P.A., on January 19, 2004, Mr. Marmion acquired 2,360,430 shares of
International Trust's common stock and 2,870,000 shares of Series A preferred
stock. The Series A preferred shares is convertible into 40 shares of common
stock, and each preferred share has the same voting rights as 40 shares of our
common stock. On January 19, 2004, Mr. Owens acquired 2,999,855 shares of our
free-trading common stock.
As a result of the transactions, Mr. Marmion acquired control of International
Trust. In connection with the transactions, International Trust changed its name
to Marmion Industries Corp.
In May 2004, Mr. Marmion contributed Marmion Investments, Inc. to Marmion
Industries Corp.
For accounting purposes, this transaction was treated as an acquisition of
Marmion Industries Corp. and a recapitalization of Marmion Investments, Inc.
Marmion Investments, Inc. is the accounting acquirer and the results of its
operations carryover. Accordingly, the operations of Marmion Industries Corp.
are not carried over and will be adjusted to $0. In connection with the reverse
merger, Marmion Investments, Inc. acquired $0 in assets and assumed $0 in
liabilities.
The financial statements are presented based on this recapitalization, whereby,
Marmion Investments has 4,720,860 common shares outstanding and 2,870,000 Series
A preferred stock as of December 31, 2003.
1
Pro forma information giving effect to the acquisition as if the acquisition
took place on December 31, 2003 is presented as follows.
International Marmion Adjustments Pro Forma
Trust Investments
Cash $ - $ 78,862 $ - $ 78,862
Accounts receivable - 150,498 - 150,498
--------------- ------------- ------------- -----------
Total current assets - 229,360 - 229,360
Property and equipment - 123,259 - 123,259
--------------- ------------- ------------- -----------
$ - $ 352,619 $ - $ 352,619
=============== ============= ============= ===========
Accounts payable $ - $ 89,546 - $ 89,546
Accrued expenses - 29,628 - 29,628
Accrued salaries - officers - 344,592 - 344,592
Advances - stockholder - 91,109 - 91,109
Notes payable - related party - 245,000 - 245,000
Current maturities of notes payable - 17,430 - 17,430
--------------- ------------- ------------- -----------
Total current liabilities - 817,305 - 817,305
Long-term liabilities - 43,700 - 43,700
--------------- ------------- ------------- -----------
Total liabilities - 861,005 - 861,005
--------------- ------------- ------------- -----------
Stockholder's Deficit:
Preferred stock 147,669 - - 147,669
Common stock 30,286 1,000 (26,565) 4,721
Additional paid in capital 859,393 - (786,785) 72,608
Retained earnings (1,037,348) (509,386) 813,350 (733,384)
--------------- ------------- ------------- -----------
Total Stockholder's Equity - (508,386) - (508,386)
--------------- ------------- ------------- -----------
$ - $ 352,619 $ - $ 352,619
=============== ============= ============= ===========
2
NOTE 1 - BASIS OF PRESENTATION
The unaudited pro forma consolidated balance sheet is presented assuming the
acquisition occurred December 31, 2003. The unaudited consolidated financial
statements are based on the historical financial statements of Marmion
Investments which are included elsewhere in this filing and should be read in
conjunction with those financial statements and notes thereto. The unaudited
consolidated financial statements may not necessarily be indicative of the
results which would actually have occurred if the merger had been in effect on
the date or for the period indicated or which may result in the future.
NOTE 2 - PRO FORMA CONSOLIDATED BALANCE SHEET
The pro forma adjustments to the unaudited pro forma consolidated balance sheet
reflect the following adjustments:
- Elimination of all equity accounts of International Trust.
- Issuance of 4,720,860 shares of $.001 par value common stock to
Marmion Investments.
- Issuance of 2,870,000 shares of Series A preferred stock.
After the acquisition, there will be 35,464,901 shares of common stock
outstanding and 2,870,000 shares of Series A preferred stock. International
Trust's prior stockholders will hold 30,744,041 of common stock.
3