SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[X] Preliminary Proxy [ ] Confidential, for Use of the
[ ] Definitive Proxy Statement Commission Only (as permitted by
[ ] Definitive Additional Materials Rule 14a-6(e)(2))
[ ] Soliciting Material Pursuant to
Rule 14a-11(c) or Rule 14a-12
AMERICAN CONSOLIDATED MINING CO.
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(Name of Registrant as Specified In Its Charter)
----------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11
1) Title of each class of securities to which transaction applies:
__________________________________________________________________________
2) Aggregate number of securities to which transaction applies:
__________________________________________________________________________
3) Per unit price or other underlying value of transaction computed pursuant
to Exchange Act Rule 0-11 (Set forth the amount on which the filing fee is
calculated and state how it was determined):
__________________________________________________________________________
4) Proposed maximum aggregate value of transaction:
__________________________________________________________________________
5) Total fee paid:
__________________________________________________________________________
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the Form or Schedule and the date of its filing.
1) Amount Previously Paid: ___________________________________________________
2) Form, Schedule or Registration Statement No.:______________________________
3) Filing Party:______________________________________________________________
4) Date Filed:________________________________________________________________
AMERICAN CONSOLIDATED MINING CO.
70 West Canyon Road, Suite D.
Alpine, Utah 84004
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
June 3, 2002
NOTICE is hereby given that the Annual Meeting of Shareholders of
American Consolidated Mining Co. (the "Company") will be held at the Company's
offices located at 70 West Canyon Road, Suite D, Alpine, Utah 84004, at 10:00
a.m. (MST) on June 3, 2002, for the following purposes:
1. To elect the six members of the Board of Directors.
2. To consider and vote upon the approval of an Agreement and Plan of
Share Exchange (the "Share Exchange Agreement") among the Company and
Renaissance Man, Inc., a Texas corporation ("RMI") pursuant to which
all of the issued and outstanding shares of RMI stock would be
transferred to the Company in exchange for common stock of the Company.
In the event the Share Exchange Agreement is closed, the stockholders
of RMI will own approximately 87% of the issued and outstanding shares
of the Company immediately after the closing, as more fully described
in the accompanying Proxy Statement. A copy of the Share Exchange
Agreement is attached as Annex A to the Proxy Statement accompanying
this Notice.
4. To approve an amendment to and restatement of the Company's Articles of
Incorporation to (i) effect a 1 for 100 reverse stock split of all
currently outstanding shares of common stock of the Company and (ii)
change of the Company's name to American Consolidated Management Group,
Inc.
5. To transact such other business as may properly come before such
meeting or any adjournments thereof.
The record date for the meeting is the close of business on April 15,
2002 and only the holders of common stock of the Company on that date will be
entitled to vote at such meeting or any adjournment thereof.
By order of the Board of Directors
/s/ Scott S. Moeller
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Acting Secretary
May 10, 2002
Please Return Your Signed Proxy
PLEASE COMPLETE AND PROMPTLY RETURN YOUR PROXY IN THE ENCLOSED ENVELOPE. THIS
WILL NOT PREVENT YOU FROM VOTING IN PERSON AT THE MEETING. IT WILL, HOWEVER,
HELP ASSURE A QUORUM AND AVOID ADDED PROXY SOLICITATION COSTS.
PROXY STATEMENT
AMERICAN CONSOLIDATED MINING CO.
70 West Canyon Road, Suite D.
Alpine, Utah 84004
ANNUAL MEETING OF SHAREHOLDERS
To Be Held June 3, 2002
INTRODUCTION
This Proxy Statement is being furnished to holders of American
Consolidated Mining Co. (the "Company") common stock, par value $0.01 per share,
in connection with the solicitation of proxies by the Company for use at the
Annual Meeting of Shareholders of the Company (the "Annual Meeting") to be held
at the Company's offices located at 70 West Canyon Road, Suite D, Alpine, Utah
84004, at 10:00 a.m. (MST) on June 3, 2002, and at any adjournment(s) or
postponement(s) thereof. This Proxy Statement, the enclosed Notice and the
enclosed form of proxy are being first mailed to shareholders of the Company on
or about May 10, 2002.
VOTING AT THE ANNUAL MEETING
The Board of Directors of the Company (the "Board") has fixed the close
of business on April 15, 2002, as the record date (the "Record Date") for the
determination of shareholders entitled to notice of and to vote at the Annual
Meeting. As of the Record Date, there were outstanding 69,998,900 shares of the
Company's common stock held by approximately 2,368 holders of record. On the
Record Date there were no shares of the Company's common stock were held as
treasury stock by the Company. Holders of record of the Company's common stock
on the Record Date are entitled to cast one vote per share, exercisable in
person or by properly executed proxy, with respect to each matter to be
considered by them at the Annual Meeting. The presence, in person or by properly
executed proxy, of the holders of a majority of the outstanding shares of the
Company's common stock is necessary to constitute a quorum at the Annual
Meeting.
Common stock will be voted in accordance with the instructions
indicated in a properly executed proxy. If no instructions are indicated, such
stock will be voted as recommended by the Board. If any other matters are
properly presented to the Annual Meeting for action, the person(s) named in the
enclosed form(s) of proxy and acting thereunder will have discretion to vote on
such matters in accordance with their best judgment. Broker non-votes and
abstentions are not treated as votes cast for purposes of any of the matters to
be voted on at the meeting. A shareholder who has given a proxy may revoke it by
voting in person at the meeting, or by giving written notice of revocation or a
later-dated proxy to the Secretary of the Company at any time before the closing
of the polls at the meeting. Any written notice revoking a proxy should be sent
to American Consolidated Mining Co., 70 West Canyon Road, Suite D. Alpine, Utah
84004, Attention: Mr. Scott S. Moeller, Acting Secretary.
The directors are elected by a plurality of the votes cast at the
meeting in person or by proxy. Approval of the Agreement and Plan of Share
Exchange (the "Share Exchange Agreement") requires the affirmative vote of a
majority of the shareholders who are present at the meeting in person or by
proxy. Approval of the amendments to and restatement of the Company's Articles
of Incorporation require the affirmative vote of a majority of the shareholders
that are entitled to vote thereon. The Board recommends that holders of the
Company's common stock vote FOR the approval of the election of the directors
proposed by the Board, the Agreement and Plan of Share Exchange and the
amendments to and restatement of the Articles of Incorporation.
SUMMARY OF THIS PROXY STATEMENT
This summary highlights material information in this document. You
should carefully read this entire document and the other documents we refer to
for a more complete understanding of the transaction.
The Companies
American Consolidated Mining Co.
70 West Canyon Crest Rd., Suite D,
Alpine, Utah 84004
Telephone: (801) 756-1414
Facsimile: (801) 756-5454
We have no business operations and do not have sufficient funding to
meet our short term cash needs. Our business objective is to find a suitable
business venture in which to become involved.
Renaissance Man, Inc.
4020 N. MacArthur Blvd., Suite 1222-222
Irving, Texas 75038
Telephone: (864) 250-2107
Renaissance Man, Inc. ("RMI") was organized for the purpose of
promoting and distributing its drink, Aloe Lu-Yu, to the general public using
mass-market distribution such as grocery and drug stores, health food stores,
convenience stores, wholesale clubs/discount stores and military commissaries.
RMI presently has no business operations and does not have sufficient funding to
meet its short term cash needs.
Overview of the Share Exchange Agreement (see pages 18-23)
If the Share Exchange Agreement is consummated, all of the issued and
outstanding shares of RMI stock will be transferred to us in exchange for shares
of our common stock. We will not receive any other consideration as part of the
transaction and, upon consummation of the transaction, RMI would become a wholly
subsidiary of American Consolidated. In the event the Share Exchange Agreement
is closed, it will result in a change in control of American Consolidated
whereby the stockholders of RMI will own approximately 87% of our issued and
outstanding shares immediately after the closing.
Conditions to Consummation of the Share Exchange Agreement (see pages 20-21)
The obligation of the parties to consummate the Share Exchange
Agreement is subject to the satisfaction or waiver of a number of conditions,
including:
o Our directors and shareholders must approve the Share Exchange
Agreement;
o We must complete a 100 to 1 reverse stock split;
o We cannot have more than 1,500,000 shares of common stock
outstanding immediately prior to the closing;
o We may have no more than $10,000 in total liabilities on the
closing date;
o We must change our name to "American Consolidated Management
Group, Inc.;"
o RMI, after conducting due diligence, must determine in its
sole discretion that our financial condition and our condition
otherwise is suitable to RMI and its stockholders;
2
o We must determine, in our sole discretion, that the financial
condition and condition of RMI otherwise is suitable American
Consolidated and our shareholders; and
o Our officers and directors must resign when the Share Exchange
Agreement is consummated and the designees named by RMI must
be appointed as the new officers and directors of American
Consolidated.
Stock Ownership after Consummation of the Share Exchange Agreement (see pages
21-23)
If the Share Exchange Agreement is completed, our existing shareholders
would own approximately 6% of American Consolidated, our creditors would own
approximately 7% of American Consolidated and the RMI stockholders will own
approximately 87% of American Consolidated.
Recommendation of the Board of Directors
Our board of directors believes that the Share Exchange Agreement is
advisable and in our best interest and has voted to approve the Share Exchange
Agreement and recommends that our shareholders vote FOR the approval of the
Share Exchange Agreement.
In making this determination, the board of directors considered
American Consolidated's lack of capital, substantial working capital deficit,
inability to conduct business operations due to its financial condition and
inability to attract funding. The board had been looking for ways to bring
increased value to shareholders under these difficult circumstances. After
considering these factors the board determined that the proposed transaction
with RMI, while not without substantial risk, is the only opportunity that the
board has found that may potentially create shareholder value. The board also
considered the fact that if no action was taken then shareholders would likely
continue as shareholders in a company with a substantial working capital
deficit, no operations, no products and no revenue sources.
Record Date for Voting (see page 1)
If you owned shares of American Consolidated on April 15, 2002, the
record date, you are entitled to receive this document and to vote in connection
with the Annual Meeting of Shareholders. Each share of our common stock is
entitled to cast one vote per share. Approval of the Share Exchange Agreement
requires the affirmative vote of a majority of the shareholders who are present
at the meeting in person or by proxy. Approval of the related amendments to and
restatement of our Articles of Incorporation require the affirmative vote of a
majority of the shareholders that are entitled to vote thereon. The directors
are elected by a plurality of the votes cast at the meeting in person or by
proxy. Our officers and directors beneficially own approximately 2.3% of our
outstanding shares of stock.
Conflicts of Interests of Directors and Executive Officers Relating to the Share
Exchange Agreement (see page 21)
Our directors and executive officers will receive benefits if the Share
Exchange Agreement is completed which results in those persons having interests
in the Share Exchange Agreement that are different from, or are in addition to,
the interests of our shareholders. Each member of the board of directors took
into account these interests prior to making their decision. Specifically, as a
result of or in connection with the Share Exchange Agreement:
o Two of our current directors, Messrs. Herschel J. Walker and
George E. Mappin, will remain as directors of American
Consolidated after the Share Exchange Agreement is closed;
o Messrs. Walker and Mappin own a substantial interest in RMI;
o If the Share Exchange Agreement is consummated, we have agreed
to compensate Messrs. William Moeller, Haslam, Holladay,
DeNiro, Keith Moeller and Scott Moeller each with an award of
3
10,000 shares of our common stock, after giving effect to the
proposed 100 for 1 reverse stock split, as payment for
services rendered; and
o As of December 31, 2001, we had total deferred salaries of
$1,776,925. An estimated 740,000 shares of our common stock,
after giving effect to the proposed 100 for 1 reverse stock
split, will be available to distribute to the our officers and
other creditors in cancellation of amounts owed.
Liabilities of American Consolidated (see page 20-21)
At December 31, 2001, American Consolidated had had $2,591,495 in
liabilities. These liabilities were comprised for the following:
o $1,776,925 was owing for accrued salaries and wages due to
officers of the Company;
o $546,025 in payables and expenses that have accrued over the
past decade that are owed to unaffiliated parties;
o $143,409 in notes payable owed to various non-affiliated
individuals;
o $93,808 in cash advances are owing to Clifton Mining Company;
and
o $31,328 in non-interest bearing notes payable are owed to
directors of American Consolidated.
Tax Consequences (see page 23)
The exchange of our common stock for RMI common stock is intended to be
tax-free to the American Consolidated shareholders for United States federal
income tax purposes. Tax matters are very complicated and the tax consequences
of the share exchange will depend on your own personal circumstances. You are
urged to consult with your tax advisor for a full understanding of all federal,
state, local and foreign income and other tax consequences of the share exchange
to you.
Accounting Treatment (see page 28)
We believe that the acquisition of RMI will be accounted for as a
"reverse acquisition", and although RMI is deemed to be the acquiring American
Consolidated for financial accounting purposes, the legal status of American
Consolidated as the parent corporation will not change.
Regulatory Approvals
We believe that no federal or state regulatory requirements must be
complied with by American Consolidated or RMI in order to consummate the
transaction other than general compliance with applicable corporation law and
state and federal securities law.
Completion and Effectiveness of the Share Exchange
The share exchange will be completed when all of the conditions to
completion of the share exchange are satisfied or waived in accordance with the
Share Exchange Agreement. The closing is expected to occur as soon as possible
after that time.
Opinion of Financial Advisors
We have not sought a fairness opinion or any other opinions in
connection with this transaction.
4
Appraisal Rights
Under Utah law, our shareholders are not entitled to appraisal rights
in connection with the Share Exchange Agreement.
SELECTED HISTORICAL SUMMARY FINANCIAL DATA
The following tables present selected historical financial data of
American Consolidated, selected historical financial data of RMI and selected
unaudited pro forma financial data of the parties, which reflect the
consummation of the Share Exchange Agreement.
American Consolidated Selected Historical Financial Data
The following selected historical financial data of American
Consolidated is only a summary and you should read it in conjunction with
American Consolidated's consolidated financial statements and the notes to those
financial statements.
Year Ended December 31,
Statement of Operations Data: 2001 2000
---------------------- ---------------------
Revenue....................................................... $ 0 $ 0
Operating expenses............................................ 12,804 14,680
Net loss...................................................... (10,495) (16,484)
Loss per share................................................ (.00) (.00)
Balance Sheet Data:
Current assets................................................ $ 17,922 $ 29,897
Total assets.................................................. 30,444 42,397
Current liabilities........................................... 2,591,495 2,586,672
Total liabilities............................................. 2,591,495 2,586,672
Working capital (deficit) .................................... (2,573,573) (2,556,775)
Stockholder's equity (deficit)................................ (2,561,051) (2,544,275)
Book value per share.......................................... (.04) (.04)
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RMI Selected Historical Financial Data
The following selected historical financial data of RMI is only a
summary and you should read it in conjunction with RMI's consolidated financial
statements and the notes to those financial statements.
5
Year Ended December 31,
Statement of Operations Data: 2001 2000
---------------------- ---------------------
Net Sales..................................................... $ 4,676 $ 52,679
Cost of Sales................................................. 2,633 84,273
Operating expenses............................................ 1,008,353 371,602
Net loss...................................................... (1,879,626) (900,606)
Loss per share................................................ (.20) (.10)
Balance Sheet Data:
Current assets................................................ $ 1,000 $ 0
Total assets.................................................. 738,982 825,800
Current liabilities........................................... 3,706,168 2,273,360
Total liabilities............................................. 4,766,168 2,973,360
Working capital (deficit) .................................... (3,705,168) (2,273,360)
Organizers' equity (deficit).................................. (4,027,186) (2,147,560)
Book value per share.......................................... (.43) (.23)
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Summary Unaudited Pro Forma Combined Condensed Consolidated
Financial Data The following selected unaudited pro forma combined
condensed consolidated financial data is only a summary and you should read it
in connection with our unaudited pro forma combined condensed consolidated
financial statements and notes to those statements included elsewhere in this
document.
For the Year Ended
December 31,
2001
---------------------
Statement of Operations Data:
Revenues................................................................................. $ 4,676
Cost of Sales............................................................................ 2,633
Operating expenses....................................................................... 1,123,790
Net loss................................................................................. (1,890,121)
Loss per share........................................................................... (.16)
Balance Sheet Data:
Current assets........................................................................... $ 1,000
Total assets............................................................................. 738,982
Current liabilities...................................................................... 3,706,168
Total liabilities........................................................................ 4,766,168
Working capital (deficit) ............................................................... (3,705,168)
Stockholders' equity (deficit)........................................................... (4,027,186)
6
RISK FACTORS
In addition to the other information contained herein, the following
factors should be considered carefully by shareholders in deciding whether or
not to vote for the approval of the Share Exchange Agreement.
We have a history of losses and may never become profitable.
We have reported no revenue or sales during the past two years. RMI has
reported nominal sales during this period. RMI's business plan may not be
commercially viable and RMI may never become profitable. In addition, prospects
for profitability will be affected by expenses, operational difficulties and
other factors frequently encountered in the development of a business enterprise
in a competitive environment, many of which factors may be unforeseen and beyond
our control.
We do not have sufficient funding to pay current creditors or execute our
business plan.
We do not have sufficient funding to meet our short or long term
capital requirements. We had $982 in cash, had a working capital (deficit) of
($2,573,573) and had liabilities of $2,591,495 as of December 31 2001. RMI had
$1,000 in cash, had a working capital (deficit) of ($3,705,168) and had
liabilities of $4,766,168 as of December 31 2001. RMI's had $4,676 in net sales
during 2001. If the Share Exchange Agreement is consummated, our working capital
and other capital requirements for the foreseeable future will vary based upon a
number of factors, including the costs associated with the marketing,
distributing, manufacturing and selling the Aloe Lu-Ya drink, and revenues
generated from the Aloe Lu-Ya drink. We will need additional funds in the
immediate future. RMI estimates that it will need to raise at least $5,000,000
in funding in 2002 and $3,000,000 after 2002 to execute its business plan. We
have no contractual arrangements or other sources of funds to provide any
additional funding during 2002 or thereafter and we may not find additional
funding on commercially reasonable terms or at all. If the Share Exchange
Agreement is consummated, any inability to obtain additional funding in the
immediate future will likely result in our inability to commercialize the Aloe
Lu-Ya drink.
The Aloe Lu-Ya drink may not be accepted by the market.
If the share exchange agreement is consummated and funding is
available, we will immediately begin efforts to commercialize the Aloe Lu-Ya
drink. The Aloe Lu-Ya drink may not be accepted by the market and its acceptance
will depend in large part on how well RMI management has anticipated market
demand and consumer taste. There have been no independent market studies to
access consumer demand for the Aloe Lu-Ya drink. In 1999 the product was
initially launched through Wall Mart. This product launch was a failure.
Consumers may not like the Aloe Lu-Ya drink, the drink may not achieve market
acceptance and consumers may not buy the drink.
Because we are significantly smaller than the majority of our competitors, we
may lack the resources needed to capture market share.
RMI is engaged in a highly competitive business and will compete
directly with firms that have longer operating histories, more experience,
substantially greater financial resources, greater size, more substantial
marketing organizations, established distribution channels and that are better
situated in the market than RMI. Competitors may use their economic strength to
influence the market to continue to buy their existing drink products. RMI has
no customer base and is likely to encounter a high degree of competition in
developing a customer base. One or more of these competitors could use their
resources to improve their current drink products or develop new drink products
that may compete more effectively with the Aloe Lu-Ya drink. New competitors may
emerge and may develop drinks that compete with the Aloe Lu-Ya drink. Such
competitors may use their economic strength to influence the market to continue
to buy their existing drinks. RMI may not be successful in competing in this
industry.
7
Our directors have potential conflicts of interest in recommending that you vote
in favor of approval of the Share Exchange Agreement.
Our directors who recommend that you vote in favor of the Share
Exchange Agreement have compensatory arrangements or interests in RMI that
provide them with interests in the share exchange that differ from yours.
Following completion of the share exchange, Messrs. Herschel J. Walker and
George E. Mappin will remain as directors of American Consolidated. Messrs.
Walker and Mappin own a substantial interest in RMI. We have agreed to
compensate Messrs. William Moeller, Haslam, Holladay, DeNiro, Keith Moeller and
Scott Moeller each with an award of 10,000 shares of our common stock, after
giving effect to the proposed 100 for 1 reverse stock split, as payment for
services rendered is the Share Exchange Agreement is consummated. As of December
31, 2001, we had total deferred salaries of $1,776,925. An estimated 740,000
shares of our common stock, after giving effect to the proposed 100 for 1
reverse stock split, will be available to distribute to the our officers and
other creditors in cancellation of amounts owed. The receipt of compensation or
other benefits in the share exchange may influence our directors in making their
recommendation that you vote in favor of the Share Exchange Agreement.
Failure to complete the share exchange could cause our stock price to decline.
If the share exchange is not completed for any reason, our stock price
may decline because costs related to the share exchange, such as legal and
accounting fees, must be paid even if the share exchange is not completed. In
addition, if the share exchange is not completed, our stock price may decline to
the extent that the current market price reflects a market assumption that the
share exchange will be completed.
If the conditions to the share exchange are not met, the share exchange will not
occur.
Specified conditions described under the heading "The Transaction" on
page 20 must be satisfied or waived to complete the share exchange. These
conditions are described in detail in the Share Exchange Agreement. These
conditions may not be satisfied. If the conditions are not satisfied or waived,
the share exchange will not occur or will be delayed.
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8
MATTERS TO BE CONSIDERED AT THE ANNUAL MEETING
1. Election of Directors
Board of Directors
The Company's Board is comprised of six directors who serve for annual
terms and are elected at the annual meeting of shareholders. The Board has
nominated the following persons for election to the Board: John M. DeNiro,
Steven J. Haslam, Robert J. Holladay, William D. Moeller, Herschel J. Walker and
George E. Mappin. All of the nominees are currently serving on Board. Messrs.
Walker and Mappin were appointed to the Board after the execution of the Share
Exchange Agreement. Their Board appointments were not required as part of the
Share Exchange Agreement, but the Board determined that their appointments in
advance of the closing of the Share Exchange Agreement was advisable so that in
the event the Share Exchange Agreement is approved there will be some continuity
in the composition of the Company's Board.
Unless otherwise specified, proxy votes will be cast for the election
of the nominee as a director. If the nominee should be unavailable for election,
the Board may designate a substitute nominee. It is intended that proxy votes
will be cast for the election of such substitute nominee. Shareholder
nominations of persons for election as directors are subject to the notice
requirements described under the caption "Other Matters" appearing later in this
proxy statement. Election of the nominee director requires the affirmative vote
of a plurality of the votes cast at the meeting for the election of directors.
The following pages contain information concerning the nominee and the
directors whose terms of office will continue after the meeting.
THE BOARD UNANIMOUSLY RECOMMENDS A VOTE FOR THE ELECTION AS DIRECTORS OF THE
NOMINEES NAMED HEREIN.
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9
Description of Business
Business Development
American Consolidated Mining Co. (the "Company or "Registrant") was
incorporated on November 5, 1980 under the name American Consolidated Mines Co.
On November 24, 1980 the Company's name was changed to American Consolidated
Mining Co.
From inception through 1994, the Company was engaged in the mining
business. The Company's efforts in the mining business were unsuccessful and
from 1994 to date the Company has had no mining or other current business
operations. The Company currently owns eight patented mining claims located in
Tooele County, Clifton Mining District, Utah, on approximately 133 acres of
property. The Company does not intend to explore these claims. Rather, subject
to shareholder approval, the Company intends to transfer these claims to one or
more debtors in exchange for the release of Company debts.
On June 3, 1993, Clifton Mining Company ("Clifton") was incorporated
under the laws of the State of Utah. Upon formation, Clifton issued to the
Company common stock and preferred stock, which represented all of the issued
and outstanding equity securities of Clifton. In consideration for the Clifton
securities, Company transfer to Clifton various patented and unpatented mining
claims located in Tooele County, Clifton Mining District, Utah (the "Clifton
Claims"). The Clifton Claims consist of approximately one square mile of mining
property located about nine miles southeast of the townsite of Goldhill, State
of Utah. Since 1993 the Company has transferred a substantial number of its
Clifton shares to various parties in consideration of lien cancellations,
repayment of Company debt and payment of other Company obligations. The Company
no longer owns a significant percentage of Clifton's outstanding equity
securities.
The Company defaulted in the payment of certain amounts owed to a
creditor which amounts were secured by approximately twenty patented and
eighty-five unpatented mining claims. In 1998, the creditor foreclosed on the
mining claims, leaving the Company with only the eight patented mining claims
that it current holds in the Clifton Mining District.
The Company has a working capital deficiency, an accumulated deficit,
incurred an operating loss, and substantial liabilities. These conditions raise
substantial doubt about the Company's ability to continue as a going concern.
Business of Issuer
The Company has no mining or other current business operations. The
Company's business plan is to seek one or more potential business ventures that,
in the opinion of management, may warrant involvement by the Company. The
Company recognizes that because of its limited financial, managerial and other
resources, the type of suitable potential business ventures which may be
available to it will be extremely limited.
In July 2001, RMI entered into the Share Exchange Agreement with the
Company. Under the Share Exchange Agreement all of the issued and outstanding
shares of RMI stock would be transferred to the Company in exchange for shares
of the Company's common stock. In the event the Share Exchange Agreement is
closed, the stockholders of RMI will own approximately 87% of the issued and
outstanding shares of the Company immediately after the closing. The Share
Exchange Agreement is subject to a number of contingencies, including, (i) the
Company effecting a 100 to 1 reverse stock split prior to the closing, (ii) the
Company having no more than 1,500,000 shares of common stock outstanding at the
closing date, (iii) the Company having no more than $10,000 in liabilities at
the closing date, (iv) satisfactory completion of due diligence by the parties,
(v) the Company changing its name to "American Consolidated Management Group,
Inc.", (vi) the Company's shareholders having approved the transaction, and
(vii) the resignation of all of the Company's officers and directors at the
closing and appointment of the designees named by RMI. Messrs. Walker and
Mappin, who are members of the Company's Board, also act as directors of RMI.
There can be no assurance that such contingencies will be satisfied, that the
10
Share Exchange Agreement will be closed, that RMI's business operations will
prove successful or that the transaction will prove to be favorable for the
shareholders of the Company.
In May 1998, the Company entered into a non-interest bearing Revolving
Loan Agreement with Clifton Mining Company. The Company owns less than one
percent of the outstanding shares of Clifton Mining Company. Under the terms of
the agreement, Clifton Mining Company agreed to make periodic loans to the
Company in an aggregate principal amount at any one time outstanding not to
exceed $250,000. As of December 31, 2001 the principal amount of $93,808 was
owing under the Revolving Loan Agreement. Clifton Mining Company may refuse to
lend additional amounts in its sole and absolute discretion under the Revolving
Loan Agreement. Principal is due and payable in a single balloon payment on May
6, 2002. The Company and Clifton Mining Company are discussing the possibility
of the Company transferring to Clifton Mining Company the eight patented mining
claims, subject to the related liabilities, that the Company currently owns that
are located in Tooele County, Clifton Mining District, Utah, on approximately
133 acres of property and other assets. In consideration therefore, Clifton
Mining Company would forgive the Company from all amounts owing to Clifton
Mining Company.
RMI was organized in July 1997 and is privately held. RMI is a
marketing company that is in the development stage that expects to focus on
selling health drinks, jerky and other products. As of June 30, 2001, RMI had
$3,706,168 in current liabilities, $4,766,168 in total liabilities and $738,982
in total assets. RMI had nominal sales for the six month period ending on June
30, 2001.
The Company currently employs five management officers who work for the
Company on a part time basis. The Company's CEO, President, Vice-Presidents,
Secretary and Treasurer and acting Secretary and controller spend approximately
5%, 1%, 5%, 1% and 5% percent of their time, respectively, working for the
Company. The Company has no other employees. The Company presently maintains its
business office at 70 West Canyon Crest Rd., Suite D, Alpine, Utah 84004.
Description of Property
The Company currently owns eight patented mining claims located in
Tooele County, Clifton Mining District, Utah, on approximately 133 acres of
unimproved property. The Company does not intend to explore these claims and has
conducted no mining activities on these claims. Rather, subject to shareholder
approval, the Company intends to transfer these claims to one or more debtors in
exchange for the release of such obligations.
The Company holds fee simple title to six of said claims free and clear
of any debt obligations. The Company has financed the purchase of its remaining
two patented claims. The total purchase price for these claims was $43,791.
Floyd Myers, the seller, financed the Company's purchase of these patents and
the Company is obligated to pay at least $700 per month toward the purchase
price thereof. The obligation is non-interest bearing (although an 8% imputed
interest rate has been assumed in the financial statements) and the obligation
is payable on demand. The Company currently does not have sufficient capital to
service this obligation and is in default on the obligation. At December 31,
2000, approximately $65,000 in principle and interest was owing on this
obligation.
The claims are comprised of quartz-adularia-beryllium enriched veins
associated with thrust faulting in both altered quartz monzonite and a
sedimentary package of silty and shaley rocks. Access if via all-weather dirt
and gravel roads. The roads are generally passable with a high-entered two-wheel
drive vehicles, but a four wheel drive is generally needed to access to
property.
No depletion has been taken with respect to any of the Company's mining
claims. In addition, the Company has not recorded any amount in its balance
sheet for mining claims or mine exploration costs as further described in Note
14 of the Company's audited financial statements.
Legal Proceedings
The Company is not a party to, nor are its properties the subject of,
any pending legal proceedings.
11
Market for Common Equity and Related Stockholder Matters.
Market Information
The Company's common stock (the "Common Stock") is quoted on the NASD
Over-the-Counter market under the symbol "ACMG." The following table sets forth
the high and low bid information of the Common Stock for the periods indicated
which information was obtained from America Online and its information service
providers. It should be understood that such over the counter market quotations
reflect inter-dealer prices without retail mark-up, mark-down or commission, and
the quotations may not reflect any actual market transactions in the Common
Stock.
Quarter Ended High Low
------------- ---- ---
2000
----
March 31.............................. $.01 $.00
June 30............................... $.01 $.00
September 30.......................... $.00 $.00
December 31........................... $.00 $.00
2001
----
March 31.............................. $.00 $.00
June 30............................... $.00 $.00
September 30.......................... $.00 $.00
December 31........................... $.06 $.00
Holders
As of the record date there were approximately 2,366 holders of record
of the Company's common stock.
Dividends
The Company has not declared any cash dividends within the past two
years on its common stock. The Company does not anticipate or contemplate paying
dividends in the foreseeable future. It is the present intention of management
to utilize available funds, if any, in furtherance of its business plan.
Management's Discussion and Analysis or Plan of Operation
The following discussion and analysis provides information which
management believes is relevant to an assessment and understanding of the
Company's consolidated results of operations and financial condition. The
discussion should be read in conjunction with the consolidated financial
statements and notes thereto.
Plan of Operation
The Company had $982 in cash and $2,591,495 in current liabilities as
of December 31, 2001. Working capital (deficit) as of December 31, 2001 was
($2,573,573) as compared to ($2,556,775) at December 31, 2000. The Company had
no revenues in the past two fiscal years. The Company had a shareholders'
deficit of ($2,561,051) at December 31, 2001 and net losses of ($10,495) and
($16,484) for the years ended December 31, 2001 and 2000, respectively.
The Company has no business operations, and very limited assets or
capital resources. The Company's business plan is to seek one or more potential
business ventures that, in the opinion of management, may warrant involvement by
the Company. The Company recognizes that because of its limited financial,
managerial and other resources, the type of suitable potential business ventures
which may be available to it will be extremely limited.
12
In July 2001, RMI entered into the Share Exchange Agreement with the
Company. Under the Share Exchange Agreement all of the issued and outstanding
shares of RMI stock would be transferred to the Company in exchange for shares
of the Company's common stock. In the event the Share Exchange Agreement is
closed, the stockholders of RMI will own approximately 87% of the issued and
outstanding shares of the Company immediately after the closing. The Share
Exchange Agreement is subject to a number of contingencies, including, (i) the
Company effecting a 100 to 1 reverse stock split prior to the closing, (ii) the
Company having no more than 1,500,000 shares of common stock outstanding at the
closing date, (iii) the Company having no more than $10,000 in liabilities at
the closing date, (iv) satisfactory completion of due diligence by the parties,
(v) the Company changing its name to "American Consolidated Management Group,
Inc.", (vi) the Company's shareholders having approved the transaction, and
(vii) the resignation of all of the Company's officers and directors at the
closing and appointment of the designees named by RMI. Messrs. Walker and
Mappin, who are members of the Company's Board, also act as directors of RMI.
There can be no assurance that such contingencies will be satisfied, that the
Share Exchange Agreement will be closed, that RMI's business operations will
prove successful or that the transaction will prove to be favorable for the
shareholders of the Company.
In May 1998, the Company entered into a non-interest bearing Revolving
Loan Agreement with Clifton Mining Company. The Company owns less than one
percent of the outstanding shares of Clifton Mining Company. Under the terms of
the agreement, Clifton Mining Company agreed to make periodic loans to the
Company in an aggregate principal amount at any one time outstanding not to
exceed $250,000. As of December 31, 2001 the principal amount of $93,808 was
owing under the Revolving Loan Agreement. Clifton Mining Company may refuse to
lend additional amounts in its sole and absolute discretion under the Revolving
Loan Agreement. Principal is due and payable in a single balloon payment on May
6, 2002. The Company and Clifton Mining Company are discussing the possibility
of the Company transferring to Clifton Mining Company the eight patented mining
claims, subject to the related liabilities, that the Company currently owns that
are located in Tooele County, Clifton Mining District, Utah, on approximately
133 acres of property and other assets. In consideration therefore, Clifton
Mining Company would forgive the Company from all amounts owing to Clifton
Mining Company.
RMI was organized in July 1997 and is privately held. RMI is a
marketing company that is in the development stage that expects to focus on
selling health drinks. RMI had $1,000 in cash, $3,706,168 in current liabilities
and $4,766,168 in total liabilities as of December 31, 2001. Its working capital
(deficit) as of December 31, 2001 was ($3,705,168). RMI had net sales of $4,676
and $52,679 in 2001and 2000, respectively. RMI had net losses of ($1,879,626)
and ($900,606) in 2001 and 2000, respectively.
The Company does not have sufficient funding to meet its short term
cash needs. Management has expressed an intent that to the extent necessary the
Company will seek to raise additional funds through the sale of equity
securities or by borrowing funds until a suitable business venture can be
completed. There are no arrangements in place whereby the Company could sell
equity securities or borrow funds. In addition, the Company has very little
authorized capital available from which it may sell equity securities. There is
no assurance that the Company will be able to successfully identify and/or
negotiate a suitable potential business venture or raise additional funds.
The Company has a working capital deficiency, an accumulated deficit
and substantial liabilities. The Company has experienced net losses and does not
have revenues during the past two years. During the past two years the Company
has had no business operations. In light of these circumstances, the ability of
the Company to continue as a going concern is significantly in doubt. The
attached financial statements do not include any adjustments that might result
from the outcome of this uncertainty.
13
Identify Directors and Executive Officers
Set forth below is certain information concerning each of the directors
and executive officers of the Company as of May 2, 2002:
With Company
Name Age Position Since
---- --- -------- ------------
William D. Moeller 64 Director and Chief Executive Officer 1981
Steven J. Haslam 61 Director and President 1982
Robert J. Holladay 53 Director and Vice-President 1983
John M. DeNiro 61 Director, Secretary and Treasurer 1986
Keith W. Moeller 40 Vice-President 1981
Scott S. Moeller 38 Acting Secretary and Controller 1990
Herschel J. Walker 39 Director 2001
George E. Mappin 53 Director 2001
- ---------------
William D. Moeller. Mr. Moeller has been with the Company since 1981.
He a director and the Chief Executive Officer of the Company. His principal
occupation for the past five years was acting as the Chief Executive Officer of
the Company and president of Clifton Mining Company. Mr. Moeller spends
approximately five percent of his time working for the Company. Mr. Moeller
holds no other directorships in reporting companies.
Steven J. Haslam. Mr. Haslam has been with the Company since 1982. He
is the President and a director of the Company. His principal occupation for the
past five years has been acting as a sales representative for Paragon Press. Mr.
Haslem spends approximately one percent of his time working for the Company. He
graduated from the University of Utah with a Bachelors of Science degree in Fine
Arts. Mr. Haslam holds no other directorships in reporting companies.
Robert J. Holladay. Mr. Holladay has been with the Company since 1983.
He is a Vice-President and director of the Company. His principal occupation for
the past five years was acting as the Vice-President of Clifton Mining Company
and as a managing partner of Resource Recycling. Mr. Holladay spends
approximately one percent of his time working for the Company. He graduated from
Brigham Young University with a Bachelors of Science degree in Chemistry and a
Masters in Business Administration. Mr. Holladay holds no other directorships in
reporting companies.
John M. DeNiro. Mr. DeNiro has been with the Company since 1986. He is
the Secretary, Treasurer and a director of the Company. His principal occupation
for the past five years was acting as the Chief Financial Officer of American
Asphalt and Grading Company. Mr. DeNiro spends approximately one percent of his
time working for the Company. He graduated from the University of Utah with a
Bachelors of Science degree in Accounting. Mr. DeNiro holds no other
directorships in reporting companies.
14
Keith W. Moeller. Mr. Moeller has been with the Company since 1981. He
is a Vice-President of the Company. His principal occupation for the past five
years was acting as the Vice-President of Clifton Mining Company. Mr. Moeller
spends approximately five percent of his time working for the Company. He
graduated from Brigham Young University with a Bachelors of Science degree in
Business. Mr. Moeller holds no other directorships in reporting companies.
Scott S. Moeller. Mr. Moeller has been with the Company since 1990. He
is the acting Secretary and the Controller of the Company. Mr. Moeller's
principal occupation for the past five years was acting as a Vice-President of
Clifton Mining Company. Mr. Moeller spends approximately five percent of his
time working for the Company. He graduated from Brigham Young University with a
Bachelors of Science degree in Accounting. Mr. Moeller holds no other
directorships in reporting companies.
Herschel J. Walker. Mr. Walker was appointed to the Company's Board in
2001. From 2000 to present Mr. Walker has acted as the Chairman of Renaissance
Man, Inc., a Texas corporation ("RMI"). Mr. Walker has been actively involved
with RMI as a shareholder and director since its creation in 1997. His principal
occupation for the past five years has been acting as spokesman for the health
drink Aloe Lu-Ya and serving as an officer and director of RMI. Mr Walker
attended the University of Georgia and enjoyed an extremely successful career as
a professional football player. Mr. Walker is currently a member of
HealthSouth's Sports Medicine Counsel. Mr. Walker holds no other directorships
in reporting companies.
George E. Mappin. Mr. Mappin was appointed to the Company's Board in
2001. From 1969 to present Mr. Mappin's principal occupation for the past five
years has been acting as the Chairman of Mappin Industries, Inc. Mappin
Industries, Inc. is a custom drapery and bedspread manufacturer, providing
design, manufacture and installation services to hospitality-based concerns. Mr.
Mappin holds no other directorships in reporting companies.
Significant Employees
The Company has no significant employees.
Family Relationships
William D. Moeller, the Company's Chief Executive Officer, is the
father of Keith W. Moeller, a Vice-President of the Company, and Scott S.
Moeller, the acting Secretary and Controller of the Company.
Involvement in Certain Legal Proceedings
The executive officers and directors of the Company have not been
involved in any material legal proceedings which occurred within the last five
years of any type as described in Regulation S-B.
Board Committees
The Board has not established an Executive Committee, Audit Committee,
Compensation Committee, Nominating Committee or any other committee of the
Board.
Board Meetings and Directors' Attendance
The Board held no meetings and took action by unanimous consent on two
occasions during the fiscal year ended December 31, 2001. No incumbent director
attended fewer than 75 percent of the Board meetings held while any such person
was serving as a director during the year ended December 31, 2001.
15
Certain Relationships and Related Transactions
In May 1998, the Company entered into a non-interest bearing Revolving
Loan Agreement with Clifton Mining Company. The Company owns less than one
percent of the outstanding shares of Clifton Mining Company. Under the terms of
the agreement, Clifton Mining Company agreed to make periodic loans to the
Company in an aggregate principal amount at any one time outstanding not to
exceed $250,000. As of December 31, 2001 the principal amount of $93,808 was
owing under the Revolving Loan Agreement. Clifton Mining Company may refuse to
lend additional amounts in its sole and absolute discretion under the Revolving
Loan Agreement. Principal is due and payable in a single balloon payment on May
6, 2002. The Company and Clifton Mining Company are discussing the possibility
of the Company transferring to Clifton Mining Company the eight patented mining
claims, subject to the related liabilities, that the Company currently owns that
are located in Tooele County, Clifton Mining District, Utah, on approximately
133 acres of property and other assets. In consideration therefore, Clifton
Mining Company would forgive the Company from all amounts owing to Clifton
Mining Company.
As of December 31, 2001, $1,776,925 of the Company's $2,591,495 in
liabilities related to deferred salaries. To close the Share Exchange Agreement
the Company is required to reduce its debt to $10,000. To reduce its debt the
Company intends to issue restricted common stock to the creditors in private
transactions in exchange for full satisfaction of the amounts owed. As of the
Record Date, there were approximately 69,998,900 shares of the Company's $.01
par value common stock outstanding of the 70,000,000 shares of authorized common
stock. Assuming shareholder approval and effectiveness of the 1 for 100 reverse
stock split, as described in Item 3, there will be approximately 700,000 shares
of common stock outstanding. The Company then intends to issue 10,000 shares of
the Company's common stock to six of its officers and directors for services
rendered. At the closing date of the Share Exchange Agreement the Company can
have no more then 1,500,000 shares of common stock outstanding. That means the
Company will have approximately 740,000 shares of common stock remaining to
negotiate in private transactions for the forgiveness of the remaining debts.
Because $1,776,925 of the Company's liabilities relate to deferred salaries, it
is expected that a substantial portion of these shares will be issued to
officers and directors in satisfaction of the deferred salary obligations. There
can be no assurance that the Company will be successful in reducing its
liabilities to $10,000. See "The Transaction" on page 20 for a more extensive
description of the break-down of shares anticipated in preparation for the
closing of the Share Exchange Agreement.
Change in Control
In July 2001, the Company entered into the Share Exchange Agreement
with RMI. Under the Share Exchange Agreement all of the issued and outstanding
shares of RMI stock would be transferred to the Company in exchange for shares
of the Company's common stock. In the event the Share Exchange Agreement is
closed, the stockholders of RMI will own approximately 87% of the issued and
outstanding shares of the Company immediately after the closing. The Share
Exchange Agreement is subject to a number of contingencies, including (i) the
Company effecting a 100 to 1 reverse stock split prior to the closing, (ii) the
Company having no more than 1,500,000 shares of common stock outstanding at the
closing date, (iii) the Company having no more than $10,000 in liabilities at
the closing date, (iv) satisfactory completion of due diligence by the parties,
(v) the Company changing its name to "American Consolidated Management Group,
Inc.", (vi) the Company's shareholders having approved the transaction, and
(vii) the resignation of all of the Company's officers and directors at the
closing and appointment of the designees named by RMI. Messrs. Walker and
Mappin, who are members of the Company's Board, also act as directors of RMI.
There can be no assurance that such contingencies will be satisfied, that the
Share Exchange Agreement will be closed, that RMI's business operations will
prove successful or that the transaction will prove to be favorable for the
shareholders of the Company. See "Item 2. Approval of the Share Exchange
Agreement."
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934 requires the
Company's executive officer, directors and persons who beneficially own more
than 10% of the Company's Common Stock to file initial reports of ownership and
reports of changes in ownership with the Securities and Exchange Commission
("SEC"). Such persons are required by SEC regulations to furnish the Company
with copies of all Section 16(a) forms filed by such persons.
16
Based solely on the lack of forms provided to the Company, the Company
believes that, other than Messrs. Walker and Mappin who serve as directors of
the Company, none of the Company's executive officers or other directors have
ever filed initial reports of ownership or reports of changes in ownership.
Executive Compensation
The table below set forth certain information concerning compensation
paid by the Company to its Chief Executive Officer and all other executive
officers with annual compensation in excess of $100,000 (determined for the year
ended December 31, 2001) (the "Named Executive Officers"). The table include
information related to stock options granted to the Named Executive Officers.
Summary Compensation Table. The following table provides certain
information regarding compensation paid by the Company to the Named Executive
Officers.
SUMMARY COMPENSATION TABLE
Annual Compensation Long-Term Compensation Awards
------------------- -----------------------------
Restricted Stock All Other
Name and Other Annual Stock Options/ LTIP Compensation
Principal Position Year Salary ($) Bonus ($) Compensation($) Awards ($) SAR(#) Payouts($) ($)
------------------ ---- ---------- --------- --------------- ---------- ------ ---------- ---
William D. Moeller 1999 $6,000 (1) --- --- --- --- --- ---
CEO 2000 $4,500 (1) --- --- --- --- --- ---
2001 $6,000 (1) --- --- --- --- --- ---
- ---------------
(1) The Company has not had sufficient funds to pay all of Mr. Moeller's salary,
the unpaid portion of which has accrued from late 1980 at the rates of $4,500 to
$60,000 per year. In 2001, Mr. Moeller received a $20,000 payment toward the
accrued amounts owing. He has received no other salary payments during the past
three years. The amount deferred at December 31, 2001 for William D. Moeller was
approximately $989,350. As of December 31, 2001, no interest had been accrued on
the deferred amount. In addition, total deferred salaries for the Company,
including the above amount, at December 31, 2001 was $1,776,925.
Compensation of Directors
No cash fees or other consideration was paid to directors of the
Company by the Company for service on the Board during 1994 through the date
hereof because of the lack of funding. The Company has agreed to compensation
Messrs. William Moeller, Haslam, Holladay and DeNiro with an award of 10,000
shares of common stock (after giving effect to the proposed 100 for 1 reverse
stock split) as payment for services rendered which shares are in addition to
the amount of deferred compensation that is owing. However, no stock
compensation will be paid until and unless the Company closes on the Share
Exchange Agreement. No other arrangements have been made with respect to future
compensation. All directors are entitled to reimbursement for reasonable
expenses incurred in the performance of their duties as Board members.
Employment Agreements
The Company does not have employment agreements with any of its
officers or employees. The Company has not had sufficient funds to pay the
salaries for its officers since prior to 1994. As a result, the salary
obligations have been deferred until the Company has the ability to pay the
amounts owed. The amount deferred at December 31, 2001 was $1,776,925. At
present, no interest has been accrued on the deferred amount. The Company has,
however, agreed to compensation Messrs. Keith Moeller and Scott Moeller with an
award of 10,000 shares of common stock (after giving effect to the proposed 100
for 1 reverse stock split) as payment for services rendered which shares are in
addition to the amount of deferred compensation that is owing. However, the
stock compensation will not be paid unless the Company closes on the Share
Exchange Agreement.
17
Compensation Committee Interlocks and Insider Participation
No executive officers of the Company serve on the Compensation
Committee (or in a like capacity) for the Company or any other entity.
2. Approval of the Share Exchange Agreement
THE PRINCIPAL TERMS OF THE TRANSACTION ARE SET FORTH IN THE SHARE EXCHANGE
AGREEMENT, A COPY OF WHICH IS SET FORTH AS ANNEX A HERETO AND IS MADE A PART OF
THIS PROXY STATEMENT. THE FOLLOWING DISCUSSION SETS FORTH A DESCRIPTION OF
MATERIAL TERMS OF THE SHARE EXCHANGE AGREEMENT AND IS QUALIFIED BY THE MORE
COMPLETE INFORMATION SET FORTH IN THE SHARE EXCHANGE AGREEMENT.
Purpose and Background of the Transaction
From inception through 1994, the Company was engaged in the mining
business. The Company's efforts in the mining business were unsuccessful and
from 1994 to date the Company has had no mining or other current business
operations. The Company currently owns eight patented mining claims located in
Tooele County, Clifton Mining District, Utah, on approximately 133 acres of
property. The Company does not intend to explore these claims and has not
conducted any mining on these claims. Rather, subject to shareholder approval,
the Company intends to transfer these claims to one or more debtors in exchange
for the release of Company debts.
The Company has no business operations. The Company does not have
sufficient funding to meet its short term cash needs. There are no arrangements
in place whereby the Company could sell equity securities or borrow funds to
raise additional capital. In addition, the Company has very little authorized
capital available from which it may sell equity securities.
The Company has a working capital deficiency, an accumulated deficit
and substantial liabilities. The Company has experienced net losses and does not
have revenues during the past two years. In light of these circumstances, the
ability of the Company to continue as a going concern is significantly in doubt.
The Company's attached financial statements do not include any adjustments that
might result from the outcome of this uncertainty.
The Company's business plan is to seek one or more potential business
ventures that, in the opinion of management, may warrant involvement by the
Company. The Company recognizes that because of its limited financial,
managerial and other resources, the type of suitable potential business ventures
that may be available to it may be extremely limited. The Company's principal
business objective has been to seek long-term growth potential in the business
venture in which it participates rather than to seek immediate, short-term
earnings. In seeking to attain the Company's business objective, it has not
restricted its search to any particular business or industry. There can be no
assurance that the Company will be successful in achieving this objective.
In furtherance of the Company's objective to find a suitable business
venture in which to become involved, in July 2001, the Company entered into the
Share Exchange Agreement with RMI. RMI was organized for the purpose of
commercializing its Aloe Lu-Yu drink. If the transaction is completed, the
Company, through RMI as a wholly owned subsidiary, will be seeking to promote
the Aloe Lu-Yu drink to the general public using mass-market distribution such
as grocery and drug stores, health food stores, convenience stores, wholesale
clubs/discount stores and military commissaries. At present, RMI has no business
operations. There can be no assurance that the Company and RMI will be
successful in achieving their business objective. See "--Risk Factors" and "RMI
Managements' Discussion and Analysis or Plan of Operation."
18
Factual Background and Negotiations
The Company understands that RMI engaged the services of Associated
Business Consultants, Houston, Texas, to assist them in locating and identifying
a public company seeking a merger. Associated Business Consultants, and their
counsel, Wallace Rutland, contacted several merger candidates, including the
Company. After introductions in March 2001, management of and advisors to RMI
and the Company held numerous discussions relating to a reorganization involving
RMI and the Company. Negotiations and discussions on behalf of the Company have
been conducted primarily through William Moeller and Scott Moeller. Negotiations
and discussion on behalf of RMI from March 2001 through September 2001 were
handled primarily through Wallace J. Rutland and Bob Pennington, advisors to
RMI. Negotiations and discussions and discussions on behalf of RMI after
September 2001 were handled primarily through George Mappin and Brian Holden.
In an initial letter from Wallace J. Rutland, dated May 18, 2001, it
was proposed that the Company conduct a reverse split and then acquire 100% of
the stock of RMI in a reorganization involving the two companies. The Company
currently has 69,998,900 shares issued and outstanding and has 70,000,000 shares
authorized. The purpose of the reverse stock split is to free up additional
shares for issuance in connection with the proposed Share Exchange Agreement. In
numerous telephone conversations between Company management and RMI's advisors,
the parties negotiated the general terms of the transaction.
In June 2001, the Company consulted with its counsel regarding its
duties and obligations in connection with the proposed transaction. The parties
then prepared the Share Exchange Agreement that was executed in June 2001. The
Share Exchange Agreement is subject to a number of contingencies, including (i)
the Company effecting a 100 to 1 reverse stock split prior to the closing, (ii)
the Company having no more than 1,500,000 shares of common stock outstanding at
the closing date, (iii) the Company having no more than $10,000 in liabilities
at the closing date, (iv) satisfactory completion of due diligence by the
parties, (v) the Company changing its name to "American Consolidated Management
Group, Inc.", (vi) the Company's shareholders having approved the transaction,
(iv) satisfactory completion of due diligence by the parties and (vii) the
resignation of all of the Company's officers and directors at the closing and
the appointment of the designees named by RMI.
Due diligence was conducted beginning in June through November 2001.
During this period there was frequent contact between the parties. There was
significant discussion regarding the amount of debt on RMI's balance sheet.
Representatives of RMI assured the Company a number of times that at or soon
after the closing date RMI would have no debt. The following non-exclusive
methods of eliminating the debt were proposed: (i) RMI considered raising funds
from third-parties to pay off the debts, (ii) RMI considered raising funds from
its stockholders to pay off the debts and (iii) RMI considered negotiating for
the cancellation of the debt through the issuance of RMI shares. Although
discussions continued for some time regarding this matter, RMI did not implement
a plan to reduce its outstanding debt. Ultimately, the Company and RMI did not
reach terms regarding RMI's outstanding debt and the Company elected to move
forward with the transaction in spite of RMI's significant outstanding debt. The
board of directors elected to move forward because it did not see any viable
alternative that may create value for the Company's shareholders. See
"Recommendation of the Board of Directors" at page 3.
In an attempt to reduce the Company's outstanding debt of $10,000, the
Company intends to issue restricted common stock to its creditors in private
transactions in exchange for full satisfaction of the amounts owed. See "The
Transaction" on page 20 below for a complete discussion on how the Company will
attempt to accomplish the required debt reduction.
In December 2001, Messrs. Mappin and Holden suggested that Messrs.
Mappin and Walker be appointed to the Company's board of directors. It was
suggested that this occur to provide continuity in the event that the Share
Exchange Agreement was approved by the Company's shareholders and consummated.
Messrs. Mappin and Walker were subsequently appointed to the Company's board.
In 2001, RMI provided the Company with approximately $18,000 to assist
it in offsetting some of the costs associated with this transaction and in 2002
$15,000 was provided to the Company for the same purpose. Other than the advance
19
of such funds, the obligations set forth in the Share Exchange Agreement and as
otherwise described in this Proxy Statement, the Company has not entered into
any agreements, understandings or arrangements with RMI or its officers or
directors that are not otherwise described herein. The Company has not entered
into any agreements, understandings or arrangements with Wallace Rutland, Bob
Pennington or Associated Business Consultants regarding the Share Exchange
Agreement or any matter relating thereto.
The Transaction
Under the Share Exchange Agreement all of the issued and outstanding
shares of RMI stock would be transferred to the Company in exchange for shares
of the Company's common stock. The Company will not receive any other
consideration as part of the transaction. In the event the Share Exchange
Agreement is closed, the stockholders of RMI will own approximately 87% of the
issued and outstanding shares of the Company immediately after the closing. The
Share Exchange Agreement is subject to a number of contingencies, including, (i)
the Company effecting a 100 to 1 reverse stock split prior to the closing, (ii)
the Company having no more than 1,500,000 shares of common stock outstanding at
the closing date, (iii) the Company having no more than $10,000 in liabilities
at the closing date, (iv) satisfactory completion of due diligence by the
parties, (v) the Company changing its name to "American Consolidated Management
Group, Inc.", (vi) the Company's shareholders having approved the transaction,
and (vii) the resignation of all of the Company's officers and directors at the
closing and appointment of the designees named by RMI. Messrs. Walker and
Mappin, who are members of the Company's Board, also act as directors of RMI.
There can be no assurance that such contingencies will be satisfied, that the
Share Exchange Agreement will be closed, that RMI's business operations will
prove successful or that the transaction will prove to be favorable for the
historical shareholders of the Company.
As of December 31, 2001, the Company's liabilities totaled $2,591,495,
its working capital (deficit) was ($2,573,573) and it had a shareholders'
deficit of ($2,561,051). The Company also had net losses of ($10,495) and
($16,484) for the years ended December 31, 2001 and 2000, respectively. As of
December 31, 2001, the Company's liabilities were comprised of payables and
accrued expenses of $546,025, notes payable of $143,409 and related party
payables of $1,902,061, $1,776,925 of which represents deferred salaries.
To reduce the remaining debt the Company intends to issue restricted
common stock to the creditors in private transactions in exchange for full
satisfaction of the amounts owed. As of the Record Date, there were
approximately 69,998,900 shares of the Company's $.01 par value common stock
outstanding of the 70,000,000 shares of authorized common stock. Assuming
shareholder approval and effectiveness of the 1 for 100 reverse stock split, as
described in Item 3, there will be approximately 700,000 shares of common stock
outstanding. The Company then intends to issue 10,000 shares of the Company's
common stock to six of its officers and directors for services rendered. At the
closing date of the Share Exchange Agreement the Company can have no more then
1,500,000 shares of common stock outstanding. That means the Company will have
approximately 740,000 shares of common stock remaining to negotiate in private
transactions for the forgiveness of the remaining debts. Because $1,776,925 of
the Company's liabilities relate to deferred salaries, it is expected that a
substantial portion of these shares will be issued to officers and directors in
satisfaction of the deferred salary obligations. There can be no assurance that
the Company will be successful in reducing its liabilities to $10,000.
At the closing of the Share Exchange Agreement, the Company is expected
to have the following approximate numbers of shares of common stock outstanding,
assuming (i) completion of the 1 for 100 reverse stock split, (ii) issuance of
60,000 shares of shares of common stock to certain officers and directors of the
Company after the reverse stock split, (iii) issuance of approximately 740,000
shares of common stock to creditors of the Company after the reverse stock split
and (iv) issuance of 10,000,000 shares of common stock to the shareholders of
RMI pursuant to the terms of the Share Exchange Agreement:
20
Percentage
Shares of of the Total
Class of Shareholder Common Stock Outstanding
-------------------- ----------- -------------
Historical Shareholders of the Company 700,000 6%
New Shares Issued to Officers and Directors (1) 60,000 *
Creditors of the Company (2) 740,000 7%
Historical Shareholders of RMI 10,000,000 87%
----------
Total 11,500,000
* Less than 1%.
(1) The Company's officers and directors also own shares that are included
in the "Historical Shareholders of the Company."
(2) At December 31, 2001, the Company had $2,591,495 in liabilities. These
liabilities were comprised for the following: (i) $1,776,925 was owing
for accrued salaries and wages due to officers of the Company; (ii)
$546,025 in payables and expenses that have accrued over the past
decade that are owed to unaffiliated parties, (iii) $143,409 in notes
payable owed to various non-affiliated individuals, (iv) $93,808 in
cash advances are owing to Clifton Mining Company and (v) $31,328 in
non-interest bearing notes payable are owed to directors of the
Company. As a result, it is expected that a substantial portion of the
shares that are included in this line item will be issued to officers
in satisfaction of the deferred salary obligations.
Shares Issuable to Officers and Directors in Connection with the Transaction
Please note that 60,000 of the shares referenced in the prior table
will be issued to current officers and directors of the Company and a
substantial portion of the 740,000 shares referenced in the prior table are
expected to be issued to current officers and directors of the Company in
connection with the proposed transaction. Please also note that two of the
Company's current directors, Messrs. Walker and Mappin, will each receive a
substantial interest in the Company subsequent to completion of the proposed
share exchange. See "Security Ownership of Management and Certain Beneficial
Owners" which details the number of shares to be received by Messrs. Walker and
Mappin.
Potential Conflicts of Interest
The Company's directors and executive officers will receive benefits if
the Share Exchange Agreement is completed which results in those persons having
interests in the Share Exchange Agreement that are different from, or are in
addition to, the interests of the Company's shareholders. Specifically: (i) two
directors of the Company, Messrs. Herschel J. Walker and George E. Mappin, will
remain as directors of the Company after the Share Exchange Agreement is closed;
(ii) Messrs. Walker and Mappin own a substantial interest in RMI; (iii) if the
Share Exchange Agreement is consummated, the Company has agreed to compensate
Messrs. William Moeller, Haslam, Holladay, DeNiro, Keith Moeller and Scott
Moeller each with an award of 10,000 shares of our common stock, after giving
effect to the proposed 100 for 1 reverse stock split, as payment for services
rendered; and (iv) after giving effect to the proposed 100 for 1 reverse stock
split, will be an estimated 740,000 available to distribute to the our officers,
who are presently owed approximately $1,776,925 in deferred salaries, and other
creditors in cancellation of amounts owed.
Security Ownership of Management and Certain Beneficial Owners
The Company has one class of capital stock authorized, namely
70,000,000 shares of $.01 par value common stock. As of December 31, 2001, the
Company had 69,998,900 shares of common stock outstanding no person was known by
the Company to beneficially own more than 5 percent of the Company's outstanding
common stock at that date.
The following table sets forth certain information with respect to the
beneficial ownership of the common stock of the Company as of the December 31,
2001 for: (i) each of the Company's directors, (ii) each of the Company's Named
Executive Officers, (iii) all Company directors and executive officers as a
21
group and (iv) each person who is known by the Company to beneficially own more
than five percent of the Company's common stock. All numbers are stated on a
post 1 for 100 reverse stock split basis.
Beneficial Ownership Beneficial Ownership After
as of 3/25/02 Share Exchange(2)
---------------------------- -----------------------------
Name and Address Shares Percentage Shares Percentage Position with
of Beneficial Owner(1) Owned of Class Owned of Class(3) Company (4)
---------------------- ---------- ------------ ----------- ----------- ------------------
William D. Moeller 1,000 * 11,000 * Director and CEO
Steven J. Haslam 12,910 1.32% 22,910 * Director and
President
Robert J. Holladay 1,978 * 11,978 * Director and
Vice-President
John M. DeNiro (5) 4 * 10,004 * Director,
Secretary and
Treasurer
Keith W. Moeller 222 * 10,222 * Vice-President
Scott S. Moeller 26 * 10,026 * Acting Secretary
and Controller
Herschel J. Walker 0 * 1,069,519 10.7% Director
George E. Mappin 0 * 1,069,519 10.7% Director
Executive Officers and Directors 16,140 2.31% 2,215,178 22.2%
as a Group (eight persons)
Position with RMI
-----------------
Jack Shaw 0 * 1,069,519 10.7% Director
Brian K. Holden (6) 0 * 1,069,519 10.7% Director
Herschel J. Walker 0 * 1,069,519 10.7% Chairman and
President
G. Diane McKnight 0 * 1,069,519 10.7% Director,
Secretary and
Treasurer
George E. Mappin 0 * 1,069,519 10.7% Director
Myka Dean 0 * 1,069,519 10.7%
Judith T. Lauterbach 0 * 1,069,519 10.7%
Aloe Commodities International, Inc. 0 * 1,069,519 10.7%
Jerrilyn Brennan 0 * 534,750 5.3%
Deanna Brennan 0 * 534,750 5.3%
* Less than 1%.
- ------------------
22
(1) Except where otherwise indicated, the addresses of the Company's officers
and directors, excluding Messrs. Walker and Mappin, is deemed to be the
same address as the Company and the addresses of Messrs. Walker and Mappin
and the other beneficial owners is deemed to be the same address as RMI.
(2) These columns also assumes (i) the closing of the Share Exchange Agreement,
including the issuance of 10,000,000 post-split shares to the RMI
shareholders, (ii) the issuance of 60,000 post-split shares to the certain
of the Company's officers and directors and (iii) the issuance of
approximately 740,000 post-split shares of common stock to creditors of the
Company, resulting in total outstanding shares for purposes of these
columns of 12,500,000 shares.
(3) No attempt has been made to account for the shares of common stock that may
go to any given creditor, including employees of the Company, due to the
fact that these amounts are all subject to negotiation. It is expected,
however, that a substantial number of the 740,000 shares that will be
available for creditors will go to employees of the Company because more
than one-half of the Company's liabilities are comprised of deferred
salaries.
(4) These are positions held prior to the closing of the Share Exchange
Agreement. When the Share Exchange Agreement is closed the current officers
and directors of the Company will resign their positions and the nominees
of RMI will be appointed as the new officers and directors of the Company.
RMI has not designated who the replacement officers and directors.
(5) Does not include 3,915 shares of common stock that are held by various
family members of Mr. DeNiro for which Mr. DeNiro disclaims beneficial
ownership.
(6) These shares are held by Iconn Investments, LLC, and Mr. Holden is a member
of that company. Iconn Investments, LLC has agreed to transfer 10% of these
shares to another party.
Directors and Officers of the Company Following the Transaction
The Share Exchange Agreement provides, among other things, that at the
closing of the transaction the officers and directors of the Company will resign
from their offices and RMI's nominees will be elected as the directors and
officers of the Company. RMI has not identified the nominees it will elect as
the officers and directors of the Company.
Tax Consequences to Company Shareholders
The exchange of the Company's common stock for RMI common stock is
intended to be tax-free to the Company's shareholders for United States federal
income tax purposes. Tax matters are very complicated and the tax consequences
of the share exchange will depend on your own personal circumstances. No opinion
is being given as to any securities or tax matters involving the Share Exchange
Agreement. You are urged to consult with your tax advisor for a full
understanding of all federal, state, local and foreign income and other tax
consequences of the share exchange to you.
If the transaction is treated as a taxable transaction, then the RMI
stockholders could experience a taxable gain or loss. Any such gain or loss
would be determined on an individual basis by comparing the individual's basis
in his RMI stock against the value of the Company stock received. To the extent
stock received had a greater value than one's basis in the RMI stock, then such
RMI stockholders would report a taxable gain on the difference. To the extent
stock received had a lesser value than one's basis in the RMI stock, then such
RMI stockholders may have a taxable loss on the difference. There should be no
direct effect on the Company's historical shareholders generally because they
are not directly acquiring or selling stock in connection with the transaction.
To the extent that persons receive shares of the Company's stock in
consideration for cancellation of accrued salary obligations, such persons will
have taxable income based on the value of the shares received.
23
General Information About RMI
RMI was organized in July 1997, as a Texas corporation. RMI is a
privately held corporation. Its principal business offices are located at 4020
N. MacArthur Blvd., Suite 1222-222, Irving, Texas 75038 and the telephone number
at its principal offices is (864) 250-2107.
RMI was organized for the purpose of promoting and distributing its
drink, Aloe Lu-Yu, to the general public using mass-market distribution such as
grocery and drug stores, health food stores, convenience stores, wholesale
clubs/discount stores and military commissaries. The product initially shipped
to Wal-Mart distribution centers in December 1998 and was introduced in some of
its stores in 1999. This product launch was unsuccessful. RMI believes that
launch was unsuccessful due to communication problems with Wal-Mart regarding
distribution, location of product within the store and general sales and
promotion procedure. RMI believes it has addressed the problems related to the
sale and promotion of the product and has formulated a new strategy which
includes increased marketing and promotional programs to support the Aloe Lu-Ya
product. There can be no assurance, however, that RMI's strategy will prove
effective or that the initial launch of the Aloe Lu-Ya product failed for the
stated reasons or that RMI will be able to successfully sell the Aloe Lu-Ya
product in the future.
RMI does not have sufficient funding to meet its short or long term
needs. RMI had $1,000 in cash, a working capital (deficit) of ($3,705,168) and
liabilities of $4,766,168 as of December 31, 2001. RMI had net sales of $4,676
during 2001 and $52,679 in net sales during 2000. RMI's working capital and
other capital requirements for the foreseeable future will vary based upon a
number of factors, including the costs associated with the marketing,
distributing, manufacturing and selling the Aloe Lu-Ya drink and revenues
generated from the Aloe Lu-Ya drink. RMI will need additional funds in the
immediate future. RMI estimates that it will need to raise at least $5,000,000
in funding in 2002 and $3,000,000 after 2002 to execute its business plan. RMI
has no contractual arrangements or other sources of funds to provide any
additional funding during 2002 or thereafter and there can be no assurance that
additional funding will be available on commercially reasonable terms or at all.
Any inability to obtain additional funding in the immediate future will have a
material adverse effect on RMI, including possibly requiring RMI to cease
pursuing its business objectives.
RMI Market Information
RMI has 9,350,000 shares of issued and outstanding common stock. There
is no public market for RMI's common stock. On the Record Date, there were 11
holders of record of RMI's common stock. RMI has not declared any dividends
within the past two years on its common stock. RMI does not anticipate or
contemplate paying dividends in the foreseeable future. It is the present
intention of management to utilize available funds, if any, for the development
of RMI's business.
RMI Directors, Executive Officers, Promoters and Control Persons
Set forth below is certain information concerning each of the directors
and executive officers of RMI as of March 25, 2002:
With
Company
Name Age Position Since
---- --- -------- -----
Herschel J. Walker 39 Chairman of the Board and President 1997
Jack Shaw 67 Director 1999
G. Diane McKnight 50 Director, Secretary and Treasurer 1997
L. Scott McKnight 55 Director 1997
24
Loren E. Bagley 69 Director 1997
George E. Mappin 53 Director 1997
Brian K. Holden 37 Director and Principal Financial Officer 1999
- ---------------
Herschel Walker. Mr. Walker has been with RMI since 1997 and is the
Chairman of the Board and the President. From 2000 to present Mr. Walker has
acted as Chairman of RMI. Mr. Walker has been actively involved with RMI as a
shareholder and director since its creation in 1997. His principal occupation
for the past five years has been acting as spokesman for the health drink Aloe
Lu-Ya and serving as an officer and director of RMI. Mr. Walker spends
approximately forty percent of his time working for RMI. Mr Walker attended the
University of Georgia and enjoyed an extremely successful career as a
professional football player. Mr. Walker is currently a member of HealthSouth's
Sports Medicine Counsel. Mr. Walker is a member of the Company's Board. Mr.
Walker holds no other directorships in reporting companies.
Jack Shaw. Mr. Shaw has been with RMI since 1999 and serves as a member
of the Board. Mr. Shaw principal occupation of the past five years has been as
the president and CEO of Shaw Resources, Inc., a privately held company employed
in the development, construction and management of commercial real estate. Mr.
Shaw is a director of Unitronics Corp., a reporting company, and BB&T
Corporation, Associated Receivables Funding, Inc. and other closely held private
companies. Mr. Shaw is a former member of the South Carolina Legislature having
served on the Labor Commerce and Industry Committee. Except as noted above, Mr.
Shaw holds no other directorships in reporting companies.
G. Diane McKnight. Mrs. McKnight has been with RMI since 1997 and
serves as a member of the Board and the secretary and treasurer of RMI. Ms.
McKnight spends approximately ten percent of her time working for RMI. From 1995
to 1998 Mrs. McKnight was principally employed as a vice president of Aloe
Commodities International, Inc. Mrs. Knight holds no directorships in reporting
companies.
L. Scott McKnight. Mr. McKnight has been with RMI since 1997 and serves
as a member of the Board. For the past five years Mr. McKnight's principal
occupation has been serving as Chairman, President and Chief Operating Officer
for Aloe Commodities International, Inc., the manufacturer of Aloe Lu-Ya. Prior
to co-founding Aloe Commodities International, Inc. with Leland Ritter in
December of 1994, Mr. McKnight was the majority owner of the Dallas Collection,
Inc., a sales and distribution firm of health and beauty aids and cosmetics
featuring Aloe Vera as the main ingredient. Mr. McKnight also spent 19 years
with the Fuller Brush Company, serving the last 4 years as Executive Vice
President and Chief Operating Officer. He has served on the Board of Directors
of the Direct Selling Association of America and the Medical Examiners Council.
Mr. McKnight was also one of the original founders of the International Aloe
Science Council. Mr. Knight holds no directorships in reporting companies.
Loren Bagley. Mr. Bagley has been with RMI since 1997 and serves as a
member of the Board. Mr. Bagley' principal occupation for the past five years
has been acting a president and a director of Trans Energy, Inc., a publicly
traded company in the oil and gas business. He is also an original investor and
a member of the Board of Directors of Aloe Commodities International, Inc. and a
director of Sancho Oil and Gas, Tyler Pipeline and Prima Oil Co., Inc. Except as
noted above, Mr. Bagley holds no directorships in reporting companies.
George Mappin. Mr. Mappin has been with RMI since 1999 and serves as a
member of the Board. From 1969 to present Mr. Mappin has acted as the Chairman
of Mappin Industries, Inc. Mappin Industries, Inc. is a custom drapery and
bedspread manufacturer, providing design, manufacture and installation services
to hospitality-based concerns. Mr. Mappin is a member of the Company's Board.
Mr. Mappin holds no other directorships in reporting companies.
25
Brian Holden. Mr. Holden has been with RMI since 1999 and serves as a
member of the Board. For the past five years Mr. Holden has been principally
employed as the President and Chairman of Associated Receivables Funding, Inc.
He is also a management consultant for and partner of Kapok Management, L.P., a
management consulting company. Mr. Holden co-founded Associated Receivables
Funding, Inc. which specializes in the factoring of accounts receivables for
companies ranging in sales of $100,000 to $36 million per year. Prior to
co-founding Associated Receivables Funding, Inc. in August 1996, Mr. Holden
served as Vice President of Business Development of J.T.A. Factors, Inc., an
accounts receivable funding company with annual volume of $300 million. Mr.
Holden also spent several years as a partner and CPA in the public accounting
firm of Milner, Brock, Holden and Company. Mr. Holden is a Certified Public
Accountant in the state of South Carolina and holds memberships in both the
American Institute of Certified Public Accountants and the South Carolina
Association of Certified Public Accountants. Mr. Holden holds no directorships
in reporting companies.
Significant Employees
RMI has no significant employees who are not identified above.
Family Relationships
Mrs. McKnight, the secretary and treasurer and a director of RMI, is
married to Mr. McKnight, a director of RMI.
Involvement in Certain Legal Proceedings
The executive officers, directors, control persons and promoters of RMI
have not been involved in any material legal proceedings which occurred within
the last five years of any type as described in Regulation S-B.
Certain Relationships and Related Transactions
George Mappin, a stockholder and director of RMI and a director of the
Company, provided advertising services in the amount of $460,000 during the year
ended December 31, 2001. These advertising services related to sponsoring a race
car on the Hooter circuit that prominently displayed the Aloe Lu-Ya name. The
race car is owned by Mr. Mappin. RMI has no future obligation or agreement
relating to such advertising.
In January 1999, RMI and Associated Receivables Funding, Inc. ("A/R
Funding") entered into a factoring agreement. In this case, the factoring
agreement is a contractual agreement between A/R Funding and RMI wherein A/R
Funding advances cash to RMI based upon invoices provided by RMI. A/R Funding
advances cash to RMI based upon invoices provided by RMI. A/R Funding advances
85% of the face value of the invoices of RMI.
Under the factoring agreement, as orally amended, A/R Funding has
provided financing to RMI. Messrs. Jack Shaw and Brian Holden, members of RMI's
Board, are directors of A/R Funding. The amounts owed by RMI to A/R Funding as
of December 31, 2001 and 2000 under the agreement was $3,325,787 and $2,155,360,
respectively. Factoring fees charged to RMI were approximately $715,000 and
$443,000 for 2001 and 2000, respectively.
No RMI accounts receivable were acquired by A/R Funding in 2001 under
the factoring agreement. If and when receivables are acquired, RMI will be
responsible for any costs incurred by A/R Funding in bringing an action to
collect the amounts owing on the factored accounts and guarantees payment of the
amounts owing. The agreement also requires a minimum of $500,000 and a maximum
of $1,000,000 in receivables to be acquired by A/R Funding each calendar
quarter, although this requirement has been waived to date. RMI will also pay a
commission to A/R Funding of 1.85%, subject to adjustment upon certain events,
every 28 days on funds advanced. The 1.85% commission is payable with respect to
the amounts owed by RMI to A/R Funding. In connection with the agreement, RMI
has granted A/R Funding a security interest in all of RMI's accounts receivable,
contract rights intangibles and certain other assets. With certain exceptions,
the agreement may be terminated by either party upon 90 days written notice.
26
In November 1997, RMI entered into a Manufacturing Agreement with Aloe
Commodities International, Inc. ("ACII"). Mr. L. Scott McKnight, a director of
RMI, is the president, chairman and COO of ACII. Under the agreement, as
amended, ACII performed research and development work relating to create the
Aloe Lu-Ya drink in exchange for the exclusive right to manufacture the drink
and the right to sell all product requirements to RMI. ACII may recoup its
research and development costs through additional manufacturing charges to RMI
in connection with the Aloe Lu-Ya drink. ACII also has a right of first refusal
relating to the manufacture of other aloe vera products for RMI and ACII owns
the formula and related rights to the Aloe Lu-Ya drink (the "Rights") and other
Aloe Lu-Ya products developed for RMI. RMI has the option to acquire the Rights
for the greater of $1,000,000 or 10% of the market value of RMI on the date the
option is exercised. In 1999 the option was exercised in exchange for a $100,000
payment and a $900,000 note, accruing at the rate of 6% per annum with payments
of $100,000 due each year until the note mature on March 1, 2008.
RMI Managements' Discussion and Analysis or Plan of Operation
The following discussion and analysis provides information which RMI's
management believes is relevant to an assessment and understanding of RMI's
consolidated results of operations and financial condition. The discussion
should be read in conjunction with the consolidated financial statements and
notes thereto.
Plan of Operation
RMI had $1,000 in cash, $3,706,168 in current liabilities and
$4,766,168 in total liabilities as of December 31, 2001. Its working capital
(deficit) as of December 31, 2001 was ($3,705,168) as compared to ($2,273,360)
at December 31, 2000. RMI had net sales of $4,676 and $52,679 in 2001 and 2000,
respectively. RMI had net losses of ($1,879,626) and ($900,606) in 2001 and
2000, respectively. At December 31, 2001, RMI owed A/R Funding $3,325,787. RMI
is required to pay a commission to A/R Funding of 1.85%, subject to adjustment
upon certain events, every 28 days on the amounts owing.
RMI has no business operations and very limited assets or capital
resources. RMI was organized for the purpose of promoting and distributing its
drink, Aloe Lu-Yu, to the general public using mass-market distribution such as
grocery and drug stores, health food stores, convenience stores, wholesale
clubs/discount stores and military commissaries. RMI believes that it will be
successful in marketing the Aloe Lu-Ya drink, in part, as a result of the
endorsement of Herschel Walker, former college, professional and Olympic
athlete.
RMI's principle business objective is to seek long-term growth
potential regarding the Aloe Lu-Ya family of drinks and the production and
marketing of the same. In seeking to obtain this business objective, RMI will
participate in any related business ventures of essentially any kind or nature
that would allow it to attain growth and favorable market share regarding the
production, distribution and sale of the Aloe Lu-Ya family of drinks.
In July 2001, RMI entered into the Share Exchange Agreement with the
Company. Under the Share Exchange Agreement all of the issued and outstanding
shares of RMI stock would be transferred to the Company in exchange for shares
of the Company's common stock. In the event the Share Exchange Agreement is
closed, the stockholders of RMI will own approximately 87% of the issued and
outstanding shares of the Company immediately after the closing. The Share
Exchange Agreement is subject to a number of contingencies, including, (i) the
Company effecting a 100 to 1 reverse stock split prior to the closing, (ii) the
Company having no more than 1,500,000 shares of common stock outstanding at the
closing date, (iii) the Company having no more than $10,000 in liabilities at
the closing date, (iv) satisfactory completion of due diligence by the parties,
(v) the Company changing its name to "American Consolidated Management Group,
Inc.", (vi) the Company's shareholders having approved the transaction, and
(vii) the resignation of all of the Company's officers and directors at the
closing and appointment of the designees named by RMI. Messrs. Walker and
Mappin, who are members of the Company's Board, also act as directors of RMI.
There can be no assurance that such contingencies will be satisfied, that the
Share Exchange Agreement will be closed, that RMI's business operations will
prove successful or that the transaction will prove to be favorable for the
shareholders of the Company.
27
RMI does not have sufficient funding to meet its short or long term
needs. RMI had no cash, had a working capital (deficit) of ($3,705,168) and had
liabilities of $4,766,168 as of December 31, 2001. The Company had $4,676 in
sales during 2001. The Company will need additional cash in 2002 and does not
have sufficient funding to meet its immediate capital needs. The Company's
working capital and other capital requirements for the foreseeable future will
vary based upon a number of factors, including the costs associated with the
marketing, distributing, manufacturing and selling the Aloe Lu-Ya drink, and
revenues generated from the Aloe Lu-Ya drink. RMI has not committed to spend any
material amounts not reflected in accrued liabilities as of December 31, 2001.
RMI will need additional funds in the immediate future (i.e., in the first half
of 2002). RMI estimates that it will need to raise at least $5,000,000 in
funding in 2002 to meet its obligations and to execute its business plan. RMI
estimates that it will need at least $3,000,000 in funding after 2002 to execute
its business plan and meet its obligations. RMI has no contractual arrangements
or other sources of funds to provide any additional funding during 2002 or
thereafter and there can be no assurance that additional funding will be
available on commercially reasonable terms or at all. Any inability to obtain
additional funding in the immediate future will have a material adverse effect
on RMI, including possibly requiring RMI to cease pursuing its business
objectives.
Changes In and Disagreements With Accountants on Accounting and Financial
Disclosure
The Company is not aware, and has not been advised by its auditors, of
any disagreement on any matter of accounting principles or practices, financial
statement disclosure, or auditing scope or procedure. RMI is not aware, and has
not been advised by its auditors, of any disagreement on any matter of
accounting principles or practices, financial statement disclosure, or auditing
scope or procedure.
Regulatory Approval
The Company believes that no federal or state regulatory requirements
must be complied with by the Company or RMI in order to consummate the
transaction other than general compliance with applicable corporation law and
state and federal securities law.
Preemptive Rights
The holders of the Company's common stock have no preemptive rights.
Accounting Treatment
The Company believes that the acquisition of RMI will be accounted for
as a "reverse acquisition", and although RMI is deemed to be the acquiring the
Company for financial accounting purposes, the legal status of the Company as
the parent corporation will not change.
Financial Statements
See index to consolidated financial statements included herein.
THE BOARD HAS UNANIMOUSLY APPROVED AND RECOMMENDS A VOTE "FOR" APPROVAL OF THE
SHARE EXCHANGE AGREEMENT.
3. Approval of the Amendment to and Restatement of the Company's Articles of
Incorporation
At a meeting held on September 19, 2001, the Board determined that it
is advisable and in the best interest of the Company to effect a 100 for 1
reverse stock split of all outstanding shares of the Company's common stock
which will result in an decrease in the outstanding shares of common stock from
69,998,900 shares to approximately 700,000 shares (the "Stock Split"). If
approved, all fractional shares would be rounded up to the nearest whole share.
The Record Date for purposes of calculating the reverse split is the close of
business on April 15, 2002, and the commencement date of the split will be the
commencement of business on February 26, 2002. The reverse stock split will have
28
no effect on the number of authorized shares of common stock or the par value of
the Company's common stock as set forth in the Company's Articles of
Incorporation, as amended.
The primary purpose of increasing the authorized shares of the Company
is to (i) create sufficient authorized capital so that the Company can enter
into the Share Exchange Agreement and have sufficient authorized and unissued
common stock available for issuance at the closing of that transaction and (ii)
leave the Company with what the Board believes is a reasonable amount of
additional authorized common stock.
At the September 19, 2001 Board meeting, the Board also determined that
it was in the best interest of the Company to change its name from "American
Consolidated Mining Co." to "American Consolidated Management Group, Inc." RMI
required that the Company's name be changed as described above and that the name
change be incorporated into the Share Exchange Agreement prior to RMI's
execution of the same. The purpose of changing the Company's name is to comply
with the terms of the Share Exchange Agreement. RMI's purpose in seeking the
name change was to reflect the fact that since 1994 the Company has not had
mining operations and the fact that the Company will not be engaged in mining
operations in the future.
THE BOARD HAS UNANIMOUSLY APPROVED AND RECOMMENDS A VOTE "FOR" APPROVAL OF THE
AMENDMENTS TO THE ARTICLES OF INCORPORATION.
4. Other Matters
Discretionary Authority
At the time of mailing of this proxy statement, the Board was not aware
of any other matters which might be presented at the meeting. If any matter not
described in this Proxy Statement should properly be presented, the persons
named in the accompanying proxy form will vote such proxy in accordance with
their judgment.
Independent Public Accountants
The Company retained Tanner + Co. as its independent auditor for 2001.
Tanner + Co. has acted as the Company's independent auditor since 1997. The
Company expects representatives of Tanner + Co. to be present at the Company's
2002 Annual Meeting of Shareholders. Tanner + Co. will have the opportunity to
make a statement at the annual meeting if it desires to do so and it is expected
that representatives of Tanner + Co. will be available to respond to appropriate
questions if called upon to do so. The Company does not anticipate making a
decision regarding the appointment of independent accountants for 2002 until
after the Share Exchange Agreement is either closed or terminated.
Notice Requirements
Any shareholder who desires to have a proposal included in the
Company's proxy soliciting material relating to the Company's 2003 annual
meeting of shareholders should send to the Secretary of the Company a signed
notice of intent. This notice, including the text of the proposal, must be
received no later than February 15, 2003.
Annual Report
This Proxy Statement has been preceded or accompanied by an Annual
Report. Shareholders are referred to such reports for financial and other
information about the activities of the Company, but such report is not to be
deemed a part of the proxy soliciting material.
29
Expenses and Methods of Solicitation
The expenses of soliciting proxies will be paid by the Company. In
addition to the use of the mails, proxies may be solicited personally, or by
telephone or other means of communications, by directors, officers and employees
of the Company and its subsidiaries, who will not receive additional
compensation therefor. Arrangements will also be made with brokerage firms and
other custodians, nominees and fiduciaries for the forwarding of proxy
solicitation material to certain beneficial owners of the Company's common
stock, and the Company will reimburse such forwarding parties for reasonable
expenses incurred by them.
By order of the Board of Directors,
By /s/ Scott S. Moeller
------------------------------------
Scott S. Moeller, Acting Secretary
30
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
The following Financial Statements are attached hereto:
A. The Company's Audited Financial Statements for the Years 2001-2000
B. RMI's Audited Financial Statements for the Years 2001-2000
C. Pro Forma Unaudited Combined Financial Statements
26
AMERICAN CONSOLIDATED MINING CO.
Financial Statements
December 31, 2001 and 2000
27
AMERICAN CONSOLIDATED MINING CO.
Index to Financial Statements
Page
Independent Auditor's Report F-2
Balance Sheet F-3
Statement of Operations F-4
Statement of Shareholders' Deficit F-5
Statement of Cash Flows F-6
Notes to Financial Statements F-7
F-1
INDEPENDENT AUDITORS' REPORT
To the Board of Directors and Stockholders
of American Consolidated Mining Co.
We have audited the accompanying balance sheet of American Consolidated Mining
Co. as of December 31, 2001 and 2000, and the related statements of operations,
shareholders' deficit, and cash flows for the years then ended. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audits 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 American Consolidated Mining
Co. as of December 31, 2001 and 2000, and the results of its operations and its
cash flows for the years then ended in conformity with accounting principles
generally accepted in the United States of America.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note 2 to the
financial statements, the Company has a working capital deficiency, an
accumulated deficit, incurred an operating loss, and has substantial
liabilities. These conditions raise substantial doubt about its ability to
continue as a going concern. Management's plans regarding those matters also are
described in Note 2. The financial statements do not include any adjustments
that might result from the outcome of this uncertainty.
TANNER + CO.
Salt Lake City, Utah
February 22, 2002
F-2
AMERICAN CONSOLIDATED MINING CO.
Balance Sheet
December 31,
- -----------------------------------------------------------------------------------------------------------
2001 2000
-----------------------------------
Assets
Current assets:
Cash $ 982 $ 4
Marketable securities 16,940 29,893
-----------------------------------
Total current assets 17,922 29,897
Property and equipment, net 2,000 2,000
Other assets 10,522 10,500
-----------------------------------
$ 30,444 $ 42,397
===================================
- -----------------------------------------------------------------------------------------------------------
Liabilities and Shareholders' Deficit
Current liabilities:
Payables and accrued expenses $ 546,025 $ 536,427
Notes payable 143,409 143,409
Related party payables 1,902,061 1,906,836
-----------------------------------
Total current liabilities 2,591,495 2,586,672
-----------------------------------
Commitments and contingencies - -
Shareholders' deficit:
Common stock, $.01 par value, 70,000,000 shares
authorized; 69,998,900 shares issued and outstanding 699,990 699,990
Capital in excess of par value 7,323,739 7,323,739
Accumulated other comprehensive income 10,268 16,549
Accumulated deficit (10,595,048) (10,584,553)
-----------------------------------
Total shareholders' deficit (2,561,051) (2,544,275)
-----------------------------------
$ 30,444 $ 42,397
===================================
- -----------------------------------------------------------------------------------------------------------
See accompanying notes to financial statements. F-3
AMERICAN CONSOLIDATED MINING CO.
Statement of Operations
Years Ended December 31,
- -----------------------------------------------------------------------------------------------------------
2001 2000
-----------------------------------
Revenue $ - $ -
General and administrative expenses 12,804 14,680
-----------------------------------
Loss from operations (12,804) (14,680)
Other income (expense):
Interest income 432 448
Interest expense (11,451) (15,579)
Gain on sale of marketable securities 13,328 13,327
-----------------------------------
Loss before provision for income taxes (10,495) (16,484)
Provision for income taxes - -
-----------------------------------
Net loss $ (10,495) $ (16,484)
===================================
Loss per share, basic and diluted $ (.00) $ (.00)
===================================
Weighted average shares - basic and diluted 69,999,000 69,999,000
===================================
- ------------------------------------------------------------------------------------------------------------
See accompanying notes to financial statements. F-4
AMERICAN CONSOLIDATED MINING CO.
Statement of Shareholders' Deficit
Years Ended December 31, 2001 and 2000
- --------------------------------------------------------------------------------------------------------------
Accumulated
Common Stock Capital in Other
--------------------------- Excess of Comprehensive Accumulated
Shares Amount Par Value Income Deficit Total
----------------------------------------------------------------------------------------
Balance at
January 1, 2000 69,998,900 $ 699,990 $ 7,323,739 $ 24,824 $ (10,568,069) $ (2,519,517)
Comprehensive
income:
Net loss - - - - (16,484) (16,484)
Reclassification
adjustment on
unrealized holding
gain - - - (8,275) - (8,275)
---------------
Total
comprehensive loss (24,759)
---------------
----------------------------------------------------------------------------------------
Balance at 69,998,000 699,990 7,323,739 16,549 (10,584,553) (2,544,275)
December 31, 2000
Comprehensive
Income:
Net loss - - - - (10,495) (10,495)
Unrealized holding
gain on
investments - - - 1,989 - 1,989
Reclassification
adjustment on
unrealized holding
gain - - - (8,270) - (8,270)
---------------
Total
comprehensive
loss (16,776)
---------------
----------------------------------------------------------------------------------------
Balance at
December 31, 2001 69,998,000 $ 699,990 $ 7,323,739 $ 10,268 $ (10,595,048) $ (2,561,051)
========================================================================================
- --------------------------------------------------------------------------------------------------------------
See accompanying notes to financial statements. F-5
AMERICAN CONSOLIDATED MINING CO.
Statement of Cash Flows
Years Ended December 31,
- -----------------------------------------------------------------------------------------------------------
2001 2000
----------------------------------
Cash flows from operating activities:
Net loss $ (10,495) $ (16,484)
Adjustments to reconcile net loss to
net cash used in operating activities:
Depreciation and amortization - 1,804
Gain on disposal of marketable securities (13,328) (13,327)
(Increase) decrease in:
Other assets (22) 7,100
Increase (decrease) in:
Accounts payable and accrued expenses 9,598 13,617
Related party payables 15,225 (12,900)
----------------------------------
Net cash provided by (used in)
operating activities 978 (20,190)
----------------------------------
Cash flows from investing activities-
proceeds from sale of marketable securities - 20,000
----------------------------------
Net cash provided by
investing activities - 20,000
----------------------------------
Cash flows from financing activities - - -
----------------------------------
Net change in cash 978 (190)
Cash, beginning of year 4 194
----------------------------------
Cash, end of year $ 982 $ 4
==================================
- -----------------------------------------------------------------------------------------------------------
See accompanying notes to financial statements. F-6
AMERICAN CONSOLIDATED MINING CO.
Notes to Financial Statements
December 31, 2001 and 2000
- --------------------------------------------------------------------------------
1. Organization Organization
and Summary of American Consolidated Mining Co. (the Company), did
Significant not have ongoing operations during the years ended
Accounting December 31, 2001 and 2000. During this period, the
Policies Company has been primarily engaged in seeking a
potential merger opportunity with an operating
company.
Cash Equivalents
For purposes of the statement of cash flows, cash
includes all cash and investments with original
maturities to the Company of three months or less.
Marketable Securities
The Company classifies marketable debt securities as
"held to maturity" if it has the positive intent and
ability to hold the securities to maturity. All other
marketable debt and equity securities are classified
as "available for sale." Securities classified as
"available for sale" are carried in the financial
statements at fair value. Realized gains and losses,
determined using the specific identification method,
are included in earnings; unrealized holding gains
and losses are included in other comprehensive income
which is reported as a separate component of
shareholders deficit. Securities classified as held
to maturity are carried at amortized cost.
For both categories of securities, declines in fair
value below amortized cost that are other than
temporary are included in earnings.
Property and Equipment
Property and equipment are recorded at cost, less
accumulated depreciation and amortization.
Depreciation and amortization on capital leases and
property and equipment is determined using the
straight-line method over the estimated useful lives
of the assets or terms of the lease. Expenditures for
maintenance and repairs are expensed when incurred
and betterments are capitalized. Gains and losses on
sale of property and equipment are reflected in
operations.
- --------------------------------------------------------------------------------
F-7
AMERICAN CONSOLIDATED MINING CO.
Notes to Financial Statements
Continued
- --------------------------------------------------------------------------------
1. Organization Other Assets
and Summary of Other assets consist of cash bonds on deposit at a
Significant bank.
Accounting
Policies Income Taxes
Continued Deferred income taxes are provided in amounts
sufficient to give effect to temporary differences
between financial and tax reporting, principally
related to the capitalization of mine development
costs.
Concentration of Credit Risk
The Company maintains its cash in bank deposit
accounts which, at times, may exceed federally
insured limits. The Company has not experienced any
losses in such accounts and believes it is not
exposed to any significant credit risk on cash and
cash equivalents.
Use of Estimates in the Preparation of Financial
Statements The preparation of financial statements in
conformity with generally accepted accounting
principles requires management to make estimates and
assumptions that affect the reported amounts of
assets and liabilities and disclosure of contingent
assets and liabilities at the date of the financial
statements and the reported amounts of revenues and
expenses during the reporting period. Actual results
could differ from those estimates.
Earnings Per Common and Common Equivalent Share
The computation of basic earnings per common share is
computed using the weighted average number of common
shares outstanding during the year.
- --------------------------------------------------------------------------------
F-8
AMERICAN CONSOLIDATED MINING CO.
Notes to Financial Statements
Continued
- --------------------------------------------------------------------------------
1. Organization and Earnings Per Common and Common Equivalent Share -
Summary of Continued
Significant The computation of diluted earnings per common share
Accounting is based on the weighted average number of shares
Policies outstanding during the year plus common stock
Continued equivalents which would arise from the exercise of
stock options and warrants outstanding using the
treasury stock method and the average market price
per share during the year. Common stock equivalents
are not included in the diluted earnings per share
calculation when their effect is antidilutive.
2. Going Concern At December 31, 2001, the Company has a working
capital deficiency, a shareholders' deficit, incurred
a loss for the years ended December 31, 2001 and
2000, and has significant liabilities. These
conditions raise substantial doubt about the ability
of the Company to continue as a going concern. The
financial statements do not include any adjustments
that might result from the outcome of this
uncertainty.
The Company's ability to continue as a going concern
is subject to its ability to settle its liabilities
and obtain sufficient cash to fund the expenses
related to the ongoing public reporting obligations
and continued search for a merger partner. The
Company has entered into an agreement and plan of
share exchange with another company (see note 13). In
relation to this transaction, the Company has entered
into various preliminary agreements with creditors
that provide for the settlement of liabilities
through the issuance of common stock. There can be no
assurance that these agreements will result in final
settlement of outstanding obligations nor that the
agreement and plan of share exchange will be
completed.
3. Payables
and
Accrued Expenses December 31,
2001 2000
Payables and accrued expenses:
Trade Payables $134,755 $136,601
Accrued interest 147,336 135,863
Advances 217,894 217,894
Other accrued liabilities 46,040 46,069
$546,025 $536,427
- --------------------------------------------------------------------------------
F-9
AMERICAN CONSOLIDATED MINING CO.
Notes to Financial Statements
Continued
- --------------------------------------------------------------------------------
4. Marketable All of the Company's marketable securities consist of
Securities Clifton Mining Company (Clifton) common stock and are
classified as available for sale. Some of the
officers of the Company are also officers of Clifton.
Information related to marketable securities
classified as available for sale is as follows:
Years Ended
December 31,
2001 2000
Cost $ 6,672 $ 13,344
Unrealized holding gain 10,268 16,549
Carrying value $ 16,940 $ 29,893
Changes in the unrealized holding gain on marketable
securities available-for-sale and reported as a
separate component of stockholders' deficit are as
follows:
Years Ended
December 31,
2001 2000
Balance, beginning of year $ 16,549 $ 24,824
Unrealized holding gain 1,989 -
Decrease due to disposal of
marketable securities (8,270) (8,275)
Deferred income tax effect
related to the unrealized
holding gain - -
$ 10,268 $ 16,549
- --------------------------------------------------------------------------------
F-10
AMERICAN CONSOLIDATED MINING CO.
Notes to Financial Statements
Continued
- --------------------------------------------------------------------------------
5. Property Property and equipment consists of the following at
and Equipment December 31, 2001 and 2000:
Land $ 2,000
Machinery and equipment 44,216
Vehicles 2,221
Office equipment and fixtures 13,341
----------
61,778
Less accumulated depreciation and
amortization (59,778)
----------
$ 2,000
==========
Mining Properties
The Company owns property that lies in the Gold
Hill/Clifton Mining District, Tooele County, in
northwest Utah. The Company's property consists of 8
patented mining claims of approximately 133 acres.
Due to the lack of a formal reserve study documenting
the estimated proven reserves of such property, the
Company's book basis in such properties was
previously reduced to $0 through an exploration cost
expense of $78,883.
6. Notes Payable Notes payable are comprised of the following at
December 31, 2001 and 2000:
Unsecured note payable to an individual, with
interest at 8%, due on demand $ 82,500
Non-interest bearing note payable to a shareholder,
with 8% imputed interest, secured by mining claims
and due on demand 41,159
Unsecured notes payable to Individuals, with interest
ranging from 7% to 12%, due on demand 19,750
---------
$ 143,409
=========
- --------------------------------------------------------------------------------
F-11
AMERICAN CONSOLIDATED MINING CO.
Notes to Financial Statements
Continued
- --------------------------------------------------------------------------------
7. Related Party Payables to related parties consist of the following:
Payables
2001 2000
------------ ------------
Accrued salaries and wages due to certain officers/
shareholders of the Company. These amounts are
non-interest bearing and are payable on demand $ 1,776,925 $ 1,778,925
Unsecured non-interest bearing cash advances from
Clifton Mining Company. The company is a shareholder
of Clifton and has some common management 93,808 96,583
Unsecured non-interest bearing notes payable to
directors of the Company, due on demand 31,328 31,328
------------ ------------
$ 1,902,061 $ 1,960,836
============ ============
8. Income The provision for income taxes differs from the
Taxes amount computed at federal statutory rates as
follows:
Years Ended
December 31,
2001 2000
----------- ------------
Income tax benefit at statutory
rate $ 3,000 $ 6,000
Expiration of net operating loss (173,000) (162,000)
Expiration of investment tax
credit - (23,000)
Change in valuation allowance 170,000 179,000
----------- ------------
$ - $ -
=========== ============
- --------------------------------------------------------------------------------
F-12
AMERICAN CONSOLIDATED MINING CO.
Notes to Financial Statements
Continued
- --------------------------------------------------------------------------------
8. Income Deferred tax assets (liabilities) are comprised of
Taxes the following:
Continued
Years Ended
December 31,
2001 2000
----------- ------------
Net operating loss carryforward $ 3,273,000 $ 3,443,000
Valuation allowance (3,273,000) (3,443,000)
----------- ------------
$ - $ -
=========== ============
As of December 31, 2001, the Company had net
operating losses of approximately $9,628,000, which
begin to expire in 2002. If substantial changes in
the Company's ownership should occur, would be an
annual limitation of the amount of net operating loss
carryforwards which could be utilized. The ultimate
realization of these carryforwards is due, in part,
on the tax law in effect at the time and future
events which cannot be determined.
9. Supplemental Actual amounts paid for interest and income taxes are
Cash Flow as follows:
Information
December 31,
2001 2000
----------- ------------
Interest $ - $ 4,106
Income taxes $ - $ -
During the year ended December 31, 2001, the Company
settled $20,000 of accounts payable through the
transfer of marketable securities with a cost basis
of $6,672.
10. Fair Value of The Company's financial instruments consist of cash,
Financial marketable securities, payables, and notes payable.
Instruments The carrying amount of cash, marketable securities,
and payables approximates fair value because of the
short-term nature of these items. The carrying amount
of the notes payable approximates fair value as the
individual borrowings bear interest at market
interest rates.
- --------------------------------------------------------------------------------
F-13
AMERICAN CONSOLIDATED MINING CO.
Notes to Financial Statements
Continued
- --------------------------------------------------------------------------------
11. Commitments and The Company may become subject to investigations,
Contingencies claims or lawsuits ensuing out of the conduct of its
business, including those related to environmental
safety and health, product liability, commercial
transactions etc. The Company is currently not aware
of any such items which it believes could have a
material adverse affect on its financial position.
12. Recent In July 2001, SFAS No. 141, "Business Combinations"
Accounting and SFAS No. 142, "Goodwill and Other Intangible
Pronouncements Assets" were issued. SFAS 142 addresses financial
accounting and reporting for acquired goodwill and
other intangible assets. It requires, among other
things, that companies no longer amortize goodwill,
but instead test goodwill for impairment at least
annually. SFAS 142 is required to be applied for
fiscal years beginning after December 15, 2001.
Currently, the Company has no recorded goodwill and
will assess how the adoption of SFAS 141 and SFAS 142
will impact its financial position and results of
operations in any future acquisitions.
The FASB recently issued FASB Statement No. 143
Accounting for Asset Retirement Obligations. This
Statement addresses financial accounting and
reporting for obligations associated with the
retirement of tangible long-lived assets and the
associated asset retirement costs. This Statement
applies to all entities. It applies to legal
obligations associated with the retirement of
long-lived assets that result from the acquisition,
construction, development and (or) the normal
operation of a long-lived asset, except for certain
obligations of leases. This Statement amends SFAS 19.
The effective date for this Statement is June 15,
2002. Currently, the Company has no tangible
long-lived assets and will assess how the adoptions
SFAS 143 will impact its financial position and
future operations.
The FASB recently issued FASB Statement No. 144,
Accounting for the Impairment or Disposal of
Long-Lived Assets. The new guidance resolves
significant implementation issues related to FASB
Statement No. 121, Accounting for the Impairment of
Long-Lived Assets and for Long-Lived Assets to be
Disposed of. Statement 144 is effective for fiscal
years beginning after December 15, 2001. Management
has not determined the potential impact on financial
position or results of operations.
- --------------------------------------------------------------------------------
F-14
AMERICAN CONSOLIDATED MINING CO.
Notes to Financial Statements
Continued
- --------------------------------------------------------------------------------
13. Significant Stock Purchase Agreement
Agreements The Company has entered into an agreement and plan of
share exchange with another company. The agreement
calls for the issuance of capital stock in exchange
for all of the issued and outstanding capital stock
of the other company.
Settlement and Release Agreement
The Company has entered a settlement and release
agreement with Clifton. The agreement calls for the
transfer of mining claims and certain other assets,
which carry an aggregate book value at December 31,
2001 of $0, to Clifton in exchange for the release of
the Clifton obligation, which at December 31, 2001
was $93,808.
- --------------------------------------------------------------------------------
F-15
RENAISSANCE MAN, INC.
(A DEVELOPMENT STAGE ENTERPRISE)
Financial Statements
December 31, 2001 and 2000
(with Independent Auditors' Report thereon)
F-16
RENAISSANCE MAN, INC.
(A DEVELOPMENT STAGE ENTERPRISE)
Table of Contents
December 31, 2001 and 2000
Page(s)
Independent Auditors' Report............................................F-18
Financial Statements:
Balance Sheets ......................................................F-19
Statements of Operations.............................................F-20
Statements of Changes in Organizers' Deficit.........................F-21
Statements of Cash Flows.............................................F-22
Notes to Financial Statements.........................................F-23-30
F-17
Independent Auditors' Report
To the Directors
Renaissance Man, Inc.
Greenville, South Carolina
We have audited the accompanying balance sheets of Renaissance Man, Inc. (a
Texas corporation) (a development stage enterprise) as of December 31, 2001 and
2000, and the related statements of operations, organizers' deficit and cash
flows for the years then ended and for the period from July 29, 1997 (date of
inception) through December 31, 2001. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States of America. 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 Renaissance Man, Inc. (a
development stage enterprise) at December 31, 2001 and 2000, and the results of
its operations and its cash flows for periods then ended, in conformity with
accounting principles generally accepted in the United States of America.
/s/ Crisp Hughes Evans, LLP
Asheville, North Carolina
February 24, 2002
F-18
RENAISSANCE MAN, INC.
(A DEVELOPMENT STAGE ENTERPRISE)
Balance Sheets
December 31, 2001 and 2000
2001 2000
---- ----
Assets
Cash $ 1,000 $ -
--------------- ---------------
Total current assets 1,000 -
Equipment, net 3,307 5,709
Note receivable 15,000 -
Intangible asset, net 719,675 820,091
--------------- ---------------
Total assets $ 738,982 $ 825,800
=============== ===============
Liabilities and Organizers' Deficit
Current liabilities:
Accounts payable $ 114,381 $ -
Account payable--related party 3,325,787 2,155,360
Accrued interest payable 53,000 5,000
Note payable--related party 200,000 100,000
Stockholder loans 13,000 13,000
--------------- ---------------
Total current liabilities 3,706,168 2,273,360
Accounts payable--related party 460,000 -
Note payable, net of current portion 600,000 700,000
--------------- ---------------
Total liabilities 4,766,168 2,973,360
--------------- ---------------
Organizers' deficit:
Common stock, par value $1 per share, 10,000,000
shares authorized, 9,350,000 shares issued and
outstanding 350,000 350,000
Deficit accumulated during the development stage (4,377,186) (2,497,560)
--------------- ---------------
Total organizers' deficit (4,027,186) (2,147,560)
--------------- ---------------
Total liabilities and organizers' deficit $ 738,982 $ 825,800
=============== ===============
The accompanying notes are an integral part of these financial statements.
F-19
RENAISSANCE MAN, INC.
(A DEVELOPMENT STAGE ENTERPRISE)
Statements of Operations
Years Ended December 31, 2001 and 2000,
and for the Period from July 29, 1997
(date of inception) through December 31, 2001
July 27, 1997
(inception) to
December 31,
2001 2000 2001
---- ---- ----
Net sales $ 4,676 $ 52,679 $ 433,271
Cost of sales 2,633 84,273 686,053
--------------- --------------- ---------------
Gross profit (loss) 2,043 (31,594) (252,782)
Operating expenses 1,108,353 371,602 2,647,139
--------------- --------------- ---------------
Operating loss (1,106,310) (403,196) (2,899,921)
Other expense:
Interest and factoring expense (773,316) (497,410) (1,477,265)
--------------- ------------------ ---------------
Loss before income taxes (1,879,626) (900,606) (4,377,186)
Income taxes - - -
--------------- --------------- ---------------
Net loss $ (1,879,626) $ (900,606) $ (4,377,186)
=============== =============== ===============
The accompanying notes are an integral part of these financial statements.
F-20
RENAISSANCE MAN, INC.
(A DEVELOPMENT STAGE ENTERPRISE)
Statements of Changes in Organizers' Deficit
Years Ended December 31, 2001 and 2000,
and for the Period from July 29, 1997
(date of inception) through December 31, 1999
Deficit
Accumulated
Common Stock During the
--------------------------------- Development
Shares Amount Stage Total
-------------- -------------- -------------- --------------
Inception, July 29, 1997 - $ - $ - $ -
Proceeds from the sale of stock to organizers 9,350,000 350,000 - 350,000
Net loss - - (1,596,954) (1,596,954)
-------------- -------------- -------------- --------------
Balance, December 31, 1999 9,350,000 350,000 (1,596,954) (1,246,954)
Net loss - - (900,606) (900,606)
-------------- -------------- -------------- --------------
Balance, December 31, 2000 9,350,000 350,000 (2,497,560) (2,147,560)
Net loss - - (1,879,626) (1,879,626)
-------------- -------------- -------------- --------------
Balance, December 31, 2001 9,350,000 $ 350,000 $ (4,377,186) $ (4,027,186)
============== ============== ============== ==============
The accompanying notes are an integral part of these financial statements.
F-21
RENAISSANCE MAN, INC.
(A DEVELOPMENT STAGE ENTERPRISE)
Statements of Cash Flows
Years Ended December 31, 2001 and 2000,
and for the Period from July 29, 1997
(date of inception) through December 31, 2001
July 27, 1997
(inception) to
December 31,
2001 2000 2001
---- ---- ----
Net cash used for pre-operating activities:
Net loss $ (1,879,626) $ (900,606) $ (4,377,186)
Adjustments to reconcile net loss to net cash
provided by pre-operating activities:
Depreciation and Amortization 102,818 104,302 293,317
Net changes in pre-operating assets and liabilities:
Accrued expenses 1,337,697 403,410 1,947,097
Prepaid expenses - 16,168 -
---------------- ---------------- ----------------
Net cash used by pre-operating activities (439,111) (376,726) (2,136,772)
---------------- ---------------- ----------------
Cash flows from investing activities:
Purchase of equipment - - (12,112)
Purchase of intangible - - (104,187)
Purchase of certificate of deposit - - (13,500)
Redemption of certificate of deposit - - 13,500
Issuance of note receivable (15,000) - (15,000)
---------------- ---------------- ----------------
Net cash used in investing activities (15,000) - (131,299)
---------------- ---------------- ----------------
Cash flows from financing activities:
Advances from related party 455,111 444,430 2,006,071
Repayment of note payable - (100,000) (100,000)
Loans from stockholders - - 13,000
Proceeds from issuance of stock and stock purchase note - - 350,000
---------------- ---------------- ----------------
Net cash provided by financing activities 455,111 344,430 2,269,071
---------------- ---------------- ----------------
Net increase (decrease) in cash and cash equivalents 1,000 (32,296) 1,000
Cash and cash equivalents at beginning of period - 32,296 -
---------------- ---------------- ----------------
Cash and cash equivalents at end of period $ 1,000 $ - $ 1,000
================ ================ ================
Supplemental disclosures of cash flow information:
Cash paid during the year for:
Interest $ - $ 40,000 $ 40,000
================ ================ ================
Supplemental disclosure of non-cash investing activities:
Issuance of note payable to acquire intangible asset $ - $ - $ 900,000
================ ================ ================
The accompanying notes are an integral part of these financial statements.
F-22
RENAISSANCE MAN, INC.
(A DEVELOPMENT STAGE ENTERPRISE)
Notes to Financial Statements
December 31, 2001 and 2000
1. Summary of Significant Accounting Policies and Activities
Renaissance Man, Inc. (the "Company") was incorporated on July 29,
1997, under the laws of the state of Texas for the purpose of marketing
alternative beverages. The Company is a development stage enterprise as
defined by Statement of Financial Accounting Standard No. 7, Accounting
and Reporting by Development Stage Enterprises, as it devotes
substantially all its efforts to establishing a new business. The
Company's planned principal operations have not commenced and
significant revenue has not been recognized from the planned principal
operations.
Year End - The Company has adopted a fiscal year ending on December 31.
Estimates - The preparation of the financial statements in conformity
with accounting principles generally accepted in the United States of
America requires management to make estimates and assumptions that
effect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual amounts could differ from those estimates.
Cash and Cash Equivalents - Cash and cash equivalents include cash on
hand and demand deposits in financial institutions.
Equipment - Equipment is stated at cost less accumulated depreciation
and amortization, computed principally by the straight-line method over
the estimated useful lives of the assets.
Advertising Costs - The Company expenses advertising costs as incurred.
Long-Lived Assets - Long-lived assets to be held and used are reviewed
for impairment whenever events or changes in circumstances indicate
that the related carrying amount may not be recoverable. When required,
impairment losses on assets to be held and used are recognized based on
the excess of the asset's carrying amount over the fair value of the
asset. Impairment losses on long-lived assets to be disposed are
recognized based on the excess of the asset's carrying amount over fair
value less cost to sell.
Income Taxes - The Company utilizes the liability method of computing
income taxes. Under the liability method, deferred tax liabilities and
assets are established for future tax return effects of temporary
differences between the stated value of assets and liabilities for
financial reporting purposes and their tax bases. The focus is on
accruing the appropriate balance sheet deferred tax amount.
An evaluation of the probability of being able to realize the future
benefits of deferred tax assets is made. A valuation allowance is
provided for the portion of the deferred tax asset when it is more
likely than not that some portion or all of the deferred tax asset will
not be realized. The Company has provided such a valuation reserve for
all net deferred tax assets.
F-23
2. Related Party Balances
Periodically, stockholders loan funds to the Company. As of December
31, 2001 and 2000, the Company owed to stockholders a total of $13,000.
These advances bear no interest and do not have fixed repayment terms.
Stockholders of the Company own an entity that provides funding for the
Company's operating expenses. The Company has a signed financing
contract with this entity. The amount owed by the Company as of
December 31, 2001 and 2000 under this contract, was $3,325,787 and
$2,155,360, respectively. Factoring fees charged to the Company under
this arrangement were approximately $715,000 and $443,000 for the years
ended December 31, 2001 and 2000, respectively. This amount is included
in current liabilities as accounts payable--related party.
A stockholder of the Company provided advertising services in the
amount of $460,000 during the year ended December 31, 2001. This amount
is included in long-term liabilities as accounts payable--related
party.
3. Intangible Asset
In 1999, the Company purchased the rights to drink formulas developed
by Aloe for approximately $1,000,000. The Company paid $100,000 down
and issued a promissory note for the balance. The rights are being
amortized over a ten year useful life. The approximate accumulated
amortization as of December 31, 2001 and 2000 was $285,000 and
$184,000, respectively.
4. Note Payable--Related Party
As of December 31, 2001 and 2000, note payable--related party consisted
of the following:
December 31,
-------------------------------------
2001 2000
---- ----
Note payable to Aloe, annual payments of
$100,000, plus interest, at 6% per annum with
final maturity on March 1, 2008. $ 800,000 $ 800,000
Less: current maturities (200,000) (100,000)
---------------- ----------------
Long-term portion $ 600,000 $ 700,000
================ ================
Notes payable mature as follows:
2002 $ 200,000
2003 100,000
2004 100,000
2005 100,000
2006 100,000
Thereafter 200,000
----------------
$ 800,000
================
The intangible asset, which consists of drink formulas, is collateral
for this loan.
F-24
5. Income Taxes
The components of the deferred tax asset at December 31, 2001 and 2000,
are as follows:
December 31,
-------------------------------
2001 2000
---- ----
Deferred tax asset:
Net operating losses $ (1,619,000) $ 903,000
Valuation allowance 1,619,000 (903,000)
------------- ------------
Net deferred tax asset $ - $ -
============= ============
The Company has recorded a valuation allowance equal to the net
deferred tax asset at December 31, 2001 and 2000, as the realization of
this asset is dependent on the Company's ability to generate future
taxable income during the periods in which temporary differences become
deductible.
As of December 31, 2001, the Company has operating loss carryforwards
of approximately $4.3 million for federal and state purposes that may
be used to offset future taxable income. The carryforwards expire
through 2021.
F-25
AMERICAN CONSOLIDATED MINING CO.
AND RENAISSANCE MAN, INC.
PROFORMA CONDENSED COMBINED FINANCIAL STATEMENTS
[Unaudited]
The following unaudited proforma condensed combined balance sheet aggregates the
balance sheet of American Consolidated Mining Co. (a Utah corporation) ("ACMC")
and the balance sheet of Renaissance Man, Inc. (a Texas corporation) ("RMI") as
of December 31, 2001, accounting for the transaction as a recapitalization of
RMI with the issuance of shares for the net assets of ACMC (a reverse
acquisition) and using the assumptions described in the following notes, giving
effect to the transaction, as if the transaction had occurred as of the end of
the period. The transaction was not completed as of December 31, 2001.
The following unaudited proforma condensed combined statements of operations
combine the results of operations of ACMC and the results of operations of RMI
for the year ended December 31, 2001 as if the transaction had occurred as of
the beginning of the period.
The proforma condensed combined financial statements should be read in
conjunction with the separate financial statements and related notes thereto of
ACMC and RMI. These proforma financial statements are not necessarily indicative
of the combined financial position, had the acquisition occurred on the date
indicated above, or the combined results of operations which might have existed
for the period indicated or the results of operations as they may be in the
future.
F-26
AMERICAN CONSOLIDATED MINING CO.
AND RENAISSANCE MAN, INC.
UNAUDITED PROFORMA CONDENSED COMBINED BALANCE SHEET
December 31, 2001
ASSETS
American
Renaissance Consolidated Proforma
Man, Inc. Mining Co. Increase Proforma
[RMI] [ACMC] (Decrease) Combined
------------ ------------ ----------- -----------
ASSETS:
Cash $ 1,000 $ 982 [F] $ (982) $ 1,000
Marketable securities - 16,940 [F] (16,940) -
Note receivable - related party 15,000 - - 15,000
Property and Equipment, net 3,307 2,000 [E] (2,000) 3,307
Intangible and other assets, net 719,675 10,522 [F] (10,522) 719,675
------------ ------------ ----------- -----------
$ 738,982 $ 30,444 $ (30,444) $ 738,982
------------ ------------ ----------- -----------
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
LIABILITIES:
Related party payables $ 3,325,787 $ 1,902,061 [F] (1,808,253) $ 3,325,787
[E] (93,808)
Accounts payable and
accrued expenses 114,381 546,025 [F] (478,728) 114,381
[E] (67,297)
[E] (67,297) -
Accrued interest - related party 53,000 - - 53,000
Stockholder loans 13,000 - - 13,000
Notes payable - 143,409 [F] (143,409) -
Notes payable - related party 200,000 - - 200,000
------------ ------------ ----------- -----------
Total current liabilities 3,706,168 2,591,495 (2,591,495) 3,706,168
Notes payable - related party 600,000 - - 600,000
Related party payables 460,000 - - 460,000
------------ ------------ ----------- -----------
Total liabilities 4,766,168 2,591,495 (2,591,495) 4,766,168
------------ ------------ ----------- -----------
STOCKHOLDERS' EQUITY (DEFICIT):
Common stock 350,000 699,990 [b] (350,000) 115,000
[A] 100,000
[D] (692,990)
[F] 7,400
[G] 600
Additional paid-in capital - 7,323,739 [A] (100,000) 235,000
[B] 350,000
[C] (10,595,048)
[D] 692,990
[E] 159,105
[F] 2,404,814
[G] (600)
Accumulated other comprehensive
income - 10,268 [F] (10,268) -
Retained deficit (4,377,186) (10,595,048) [C] 10,595,048 (4,377,186)
------------ ------------ ----------- -----------
Total Stockholders' Equity (Deficit) (4,027,186) (2,561,051) 2,561,051 (4,027,186)
------------ ------------ ----------- -----------
$ 738,982 $ 30,444 $ (30,444) $ 738,982
------------ ------------ ----------- -----------
See Notes To Unaudited Proforma Condensed Financial Statements.
F-27
AMERICAN CONSOLIDATED MINING CO.
AND RENAISSANCE MAN, INC.
UNAUDITED PROFORMA CONDENSED COMBINED STATEMENT OF OPERATIONS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2001
American
Renaissance Consolidated Proforma
Man, Inc. Mining Co. Increase Proforma
[RMI] [ACMC] (Decrease) Combined
------------ ------------ ----------- -----------
REVENUE $ 4,676 $ - $ - $ 4,676
------------ ------------ ----------- -----------
OPERATING EXPENSES:
Cost of sales 2,633 - - 2,633
General and administrative 1,108,353 12,804 - 1,121,157
------------ ------------ ----------- -----------
Total operating expenses 1,110,986 12,804 - 1,123,790
------------ ------------ ----------- -----------
INCOME (LOSS) FROM OPERATIONS (1,106,310) (12,804) - (1,119,114)
Interest expense (773,316) (11,451) - (784,767)
Other income - 13,760 - 13,760
------------ ------------ ----------- -----------
(LOSS) FROM OPERATIONS
BEFORE PROVISION FOR TAXES (1,879,626) (10,495) - (1,890,121)
PROVISION FOR INCOME TAXES - - - -
------------ ------------ ----------- -----------
NET LOSS $ (1,879,626) $ (10,495) $ - $(1,890,121)
------------ ------------ ----------- -----------
LOSS PER COMMON SHARES $ (.20) $ (.01) $ - $ (.16)
------------ ------------ ----------- -----------
WEIGHTED AVERAGE SHARES 9,350,000 700,000 - 11,500,000
------------ ------------ ----------- -----------
F-28
AMERICAN CONSOLIDATED MINING CO.
AND RENAISSANCE MAN, INC.
NOTES TO UNAUDITED PROFORMA CONDENSED COMBINED FINANCIAL STATEMENTS
NOTE 1 - AMERICAN CONSOLIDATED MINING CO.
AMERICAN CONSOLIDATED MINING CO. ["ACMC"], a Utah corporation, was
incorporated on November 5, 1980. During the periods presented, the
ACMC has been primarily engaged in seeking a potential merger
opportunity with an operating company.
NOTE 2 - RENAISSANCE MAN, INC.
Renaissance Man, Inc. ["RMI"], was incorporated under the laws of Texas
on July 29, 1997 for the purpose of marketing alternative beverages.
The Company is a development stage enterprise as defined by Statement
of Financial Accounting Standard No. 7, Accounting and Reporting by
Development Stage Enterprises, as it devotes substantially all its
efforts to establishing a new business. The Company's planned principal
operations have not commenced and significant revenue has not been
recognized from the planned principal operations.
NOTE 3 - PROFORMA ADJUSTMENTS
In July 2001, ACMC entered into an agreement and plan of share exchange
wherein ACMC would acquire 100% of RMI through the issuance of
10,000,000 shares (post-split) of restricted common stock in a
transaction wherein RMI will become a wholly-owned subsidiary of ACMC.
Upon closing of the transaction, the shareholders of RMI will own
approximately 87% of the issued and outstanding shares of the Company.
Because the shares issued in the transaction represent control of the
total shares of the outstanding common stock immediately following the
transaction, the transaction has been accounted for as a reverse
acquisition. Final consummation of the proposed acquisition is subject
to various conditions being met and is not guaranteed.
In connection with the proposed acquisition, ACMC will affect a 100 to
1 reverse split of its common stock, thus reducing its shares
outstanding just prior to the acquisition. At December 31, 2001, ACMC
had 69,998,900 shares outstanding. After the acquisition, stock split
and other stock issuances noted below under notes [F] and [G], there
will be approximately 11,500,000 shares of common stock outstanding.
F-29
AMERICAN CONSOLIDATED MINING CO.
AND RENAISSANCE MAN, INC.
NOTES TO UNAUDITED PROFORMA CONDENSED COMBINED FINANCIAL STATEMENTS
NOTE 3 - PROFORMA ADJUSTMENTS [Continued]
Pro forma adjustments on the attached financial statements include the
following:
[A] To record the acquisition of RMI by ACMC through the issuance of
10,000,000 shares of common stock. The ownership interests of the
former owners of RMI in the combined enterprise will be greater than
that of the ongoing shareholders of ACMC and, accordingly, the
management of RMI will assume operating control of the combined
enterprise. Consequently, the acquisition is accounted for as the
recapitalization of RMI, wherein RMI purchased the assets of ACMC and
accounted for the transaction as a "Reverse Acquisition" for accounting
purposes.
[B] To eliminate the common stock of the RMI for consolidation.
[C] To eliminate the accumulated deficit of ACMC at the date of
acquisition to reflect the purchase by RMI for accounting purposes.
[D] To record the 100 TO 1 reverse common stock split resulting in
699,989 shares of ACMC common stock outstanding prior to the
acquisition and prior to transactions noted in [F] and [G] (as of
December 31, 2001).
[E] To reflect the transfer of the property and equipment (including
mining claims with a net book value of $0) of ACMC in the net amount of
$2,000 and related liabilities of ACMC of $67,297 to Clifton Mining
Company (a related entity) in exchange for forgiveness of liabilities
owed to Clifton Mining Company in the amount of approximately $93,808
as of December 31, 2001. The gain resulting from the exchange
(approximately $159,105) is reflected as an adjustment to stockholders'
deficit.
[F] To record the issuance of approximately 740,000 shares of ACMC
common stock, transfer of ACMC other assets and payment of existing
ACMC cash (including estimated cash received upon sale of marketable
securities) as payment of ACMC liabilities in the amount of $2,430,390
as of December 31, 2001. In accordance with the Agreement and Plan of
Share Exchange, as of the closing date there can be no more than
$10,000 of liabilities and no more than 1,500,000 shares of common
stock outstanding on ACMC's books. Accordingly, ACMC intends to settle
all liabilities prior to closing through the issuance of common stock
and payment of existing cash. The majority of the outstanding
liabilities are owed to related parties. There can be no assurance that
ACMC will be successful in settling the outstanding liabilities.
[G] To record the issuance of 60,000 shares of ACMC common stock to six
officers and directors as payment for services rendered.
NOTE 4 - PROFORMA (LOSS) PER SHARE
The proforma (loss) per share is computed based on the number of shares
outstanding, after adjustment for shares issued in the acquisition and
the shares issued for settlement of liabilities and as payment of
services, as though such shares had been outstanding from the beginning
of the periods presented. The computation also reflects the 100 to 1
reverse stock split.
Dilutive earnings per share was not presented, as its effect was
anti-dilutive for the periods presented.
F-30
ANNEX A
AGREEMENT AND PLAN OF SHARE EXCHANGE
This Agreement and Plan of Share Exchange (hereinafter the "Agreement")
is entered into effective as of this 14th day of July, 2001, by and among
American Consolidated Mining Co., a Utah corporation (hereinafter "ACMC"),
Renaissance Man, Inc., a Texas corporation (hereinafter "RMI") and the owners of
all the outstanding shares of common stock of RMI (hereinafter the "RMI
Stockholders").
RECITALS:
WHEREAS, the RMI Stockholders own 9,350,000 shares of RMI common stock
which represents all of the issued and outstanding shares of RMI (the "RMI
Common Stock"). ACMC desires to acquire the RMI Common Stock solely in exchange
for voting common stock of ACMC, making RMI a wholly-owned subsidiary of ACMC;
and
WHEREAS, the RMI Stockholders (as set forth on the attached Exhibit
"A") desire to acquire voting common stock of ACMC in exchange for the RMI
Common Stock, as more fully set forth herein.
NOW THEREFORE, for the mutual consideration set out herein and other
good and valuable consideration, the legal sufficiency of which is hereby
acknowledged, the parties agree as follows:
AGREEMENT
1. Plan of Share Exchange. It is hereby agreed that all of the RMI
Common Stock shall be acquired by ACMC in exchange solely for ACMC common voting
stock (the "ACMC Shares"). It is the intention of the parties hereto that all of
the issued and outstanding shares of capital stock of RMI shall be acquired by
ACMC in exchange solely for ACMC common voting stock and that this entire
transaction qualify as a corporate reorganization under Section 368(a)(1)(B) of
the Internal Revenue Code of 1986, as amended, and related or other applicable
sections thereunder. However, neither party is making any representations or
warranties regarding the tax treatment of this transaction.
2. Exchange of Shares. ACMC and RMI Stockholders agree that on the
Closing Date or at the Closing as hereinafter defined, the RMI Common Stock
shall be delivered at Closing to ACMC in exchange for the ACMC Shares, after
giving effect to a 100 to 1 reverse stock split (the "ACMC Reverse Stock Split")
as to all presently outstanding shares of ACMC common stock, as follows:
(a) At Closing, ACMC shall, subject to the conditions set forth herein,
issue an aggregate of 11,000,000 shares of ACMC common stock for immediate
delivery to the RMI Stockholders on the basis of 1.176470588 ACMC Shares for
each outstanding share of RMI Common Stock.
(b) Unless otherwise agreed by ACMC and RMI this transaction shall
close only in the event ACMC is able to acquire all of the outstanding RMI
Common Stock.
3. Pre-Closing Events. The Closing is subject to the completion of the
following:
(a) ACMC shall have authorized 70,000,000 shares of $.01 par value
common stock.
(b) ACMC shall have effectuated the ACMC Reverse Stock Split at or
prior to Closing, and shall have 1,500,000 shares of its common stock issued and
outstanding and no other shares of capital stock issued or outstanding.
(c) ACMC shall demonstrate to the reasonable satisfaction of RMI that
it has no material assets and that its liabilities, contingent and fixed, do not
exceed $10,000.
4. Exchange of Securities. As of the Closing Date each of the following
shall occur:
(a) Each share of RMI Common Stock issued and outstanding immediately
prior to the Closing Date shall be exchanged for 1.176470588 ACMC Shares to be
delivered at Closing. All such outstanding shares of RMI Common Stock shall be
deemed, after Closing, to be owned by ACMC. The holders of such certificates
previously evidencing shares of RMI Common Stock outstanding immediately prior
to the Closing Date shall cease to have any rights with respect to such shares
of RMI Common Stock except as otherwise provided herein or by law;
(b) Any shares of RMI Common Stock held in the treasury of RMI
immediately prior to the Closing Date shall automatically be canceled and
extinguished without any conversion thereof and no payment shall be made with
respect thereto; and
(c) The 1,500,000 shares of ACMC common stock previously issued and
outstanding prior to the Closing, after giving effect to the ACMC Reverse Split,
will remain outstanding.
5. Other Events Occurring at Closing. At Closing, the following shall
be accomplished:
(a) ACMC shall file an amendment to its Articles of Incorporation with
the Division of Corporation and Commercial Code of the State of Utah in
substantially the form attached hereto as Exhibit "B" effecting an amendment to
its Certificate of Incorporation to reflect a name change and to accomplish the
ACMC Reverse Stock Split, all as set forth in the attached Exhibit "B".
(b) The resignation of the existing ACMC officers and directors and
appointment of new officers and directors as described in Section 12(f) hereof.
6. Other Matters.
(a) Except as otherwise described herein, including the ACMC Reverse
Stock Split, there shall be no stock dividend, stock split, recapitalization, or
exchange of shares with respect to or rights issued in respect of, ACMC's
capital stock after the date hereof and there shall be no dividends paid on
ACMC's capital stock after the date hereof, in each case through and including
the Closing Date.
(b) RMI shall have received all requisite director and shareholder
approval of all matters set forth herein, and no shareholder of RMI shall have
exercised any dissenters rights under applicable corporate law.
(c) ACMC shall have received all requisite director and shareholder
approval of the matters set forth herein.
(d) All parties hereto acknowledge and recognize that in 1994 ACMC
filed a Form 10 with the Securities and Exchange Commission registering ACMC's
common stock pursuant to section 12(g) of the Securities Exchange Act of 1934
(the "1934 Act") which Form 10 became effective 60 days after filing. As a
result of the Form 10 filing, ACMC became obligated to file annual reports on
Form 10-K or 10-KSB, quarterly reports on Form 10-Q or 10-QSB, Current Reports
on Form 8-K, other reports and information as described in the 1934 Act and
related rules and to otherwise comply with various provisions of the 1934 Act
and related rules. Since the Form 10 became effective, the Company has failed to
comply with substantially all of the obligations imposed upon it by the 1934 Act
(the "1934 Act Violations"). As a result, ACMC could be subject to substantial
civil and criminal penalties due to such non-compliance. There can be no
assurance that substantial civil and criminal penalties will not be imposed.
Moreover, in those instances where ACMC has held shareholder meetings without
complying with the proxy rule requirements found in the 1934 Act and related
rules, such shareholder actions may be invalid and illegal.
2
7. Delivery of Shares. On or as soon as practicable after the Closing
Date, RMI will use its best efforts to cause the RMI Stockholders to surrender
for cancellation certificates representing their shares of RMI Common Stock,
against delivery of certificates representing the ACMC Shares for which the
shares of RMI Common Stock are to be exchanged at Closing.
8. Representations of RMI Stockholders. RMI Stockholders hereby
represent and warrant each only as to its own RMI Common Stock, effective this
date and the Closing Date as follows:
(a) Except as may be set forth in Exhibit "A", the RMI Common Stock is
free from claims, liens, or other encumbrances, and at the Closing Date RMI
Stockholders will have good title and the unqualified right to transfer and
dispose of such RMI Common Stock.
(b) Each RMI Stockholder, respectively, is the sole owner of the issued
and outstanding RMI Common Stock as set forth in Exhibit "A";
(c) No RMI Stockholder has the present intent to sell or dispose of the
ACMC Shares and no RMI Stockholder is under a binding obligation, formal
commitment, or existing plan to sell or otherwise dispose of the ACMC Shares.
9. Representations of RMI. RMI hereby represents and warrants as
follows, which warranties and representations shall also be true as of the
Closing Date:
(a) Except as noted on Exhibit "A", the RMI Stockholders listed on the
attached Exhibit "A" are the sole owners of record and beneficially of the
issued and outstanding common stock of RMI.
(b) RMI has no outstanding or authorized capital stock, warrants,
options or convertible securities other than as described in the RMI Financial
Statements or in Exhibit "A", attached hereto.
(c) RMI has the corporate power to enter into this Agreement and to
perform its respective obligations hereunder. The execution and delivery of this
Agreement and the consummation of the transactions contemplated hereby have been
duly authorized by the board of directors and shareholders of RMI. The execution
and performance of this Agreement will not constitute a material breach of any
agreement, indenture, mortgage, license or other instrument or document to which
RMI is a party and will not violate any judgment, decree, order, writ, rule,
statute, or regulation applicable to RMI or its properties. The execution and
performance of this Agreement will not violate or conflict with any provision of
the Articles of Incorporation or Bylaws of RMI.
(d) The audited financial statements as of and for the period ended
December 31, 2000, which have been or will shortly be delivered to ACMC
(hereinafter referred to as the "RMI Financial Statements") are or will be when
delivered complete and accurate and fairly present the financial condition of
RMI as of the date thereof and the results of its operations for the period
covered. There are no material liabilities or obligations, either fixed or
contingent, not disclosed in the RMI Financial Statements or in any exhibit or
notes thereto other than contracts or obligations in the ordinary course of
business; and no such contracts or obligations in the ordinary course of
business constitute liens or other liabilities which materially alter the
financial condition of RMI as reflected in the RMI Financial Statements. RMI has
good title to all assets shown on the RMI Financial Statements subject only to
dispositions and other transactions in the ordinary course of business, the
disclosures set forth therein and liens and encumbrances of record. The RMI
Financial Statements have been prepared in accordance with generally accepted
accounting principles consistently applied (except as may be indicated therein
or in the notes thereto).
(e) Since the date of the RMI Financial Statements, there have not been
any material adverse changes in the financial position of RMI except changes
arising in the ordinary course of business, which changes will in no event
materially and adversely affect the financial position of RMI.
3
(f) RMI is not a party to any material pending litigation or, to its
best knowledge, any governmental investigation or proceeding, not reflected in
the RMI Financial Statements, and to its best knowledge, no material litigation,
claims, assessments or any governmental proceedings are threatened against RMI.
(g) RMI is in good standing in its jurisdiction of incorporation, and
is in good standing and duly qualified to do business in each jurisdiction where
required to be so qualified except where the failure to so qualify would have no
material negative impact on RMI.
(h) RMI has (or, by the Closing Date, will have filed) all material
tax, governmental and/or related forms and reports (or extensions thereof) due
or required to be filed and has (or will have) paid or made adequate provisions
for all taxes or assessments which have become due as of the Closing Date.
(i) RMI has not materially breached any material agreement to which it
is a party. RMI has previously given ACMC copies or access thereto of all
material contracts, commitments and/or agreements to which RMI is a party
including all relationships or dealings with related parties or affiliates.
(j) RMI has no subsidiary corporations except as described in writing
to ACMC.
(k) RMI has made all material corporate financial records, minute
books, and other corporate documents and records available for review to present
management of ACMC prior to the Closing Date, during reasonable business hours
and on reasonable notice.
(l) The execution of this Agreement does not materially violate or
breach any material agreement or contract to which RMI is a party and has been
duly authorized by all appropriate and necessary corporate action under Texas
law and RMI, to the extent required, has obtained all necessary approvals or
consents required by any agreement to which RMI is a party.
(m) There are no existing options, calls, warrants, preemptive rights
or commitments of any character relating to the issued or unissued capital stock
or other securities of ACMC, except as contemplated in this Agreement.
(n) All information regarding RMI that has been delivered to ACMC by
RMI for use in connection with the transaction (the "Acquisition") described
herein is true, complete and accurate in all material respects.
10. Representations of ACMC. ACMC hereby represents and warrants as
follows, which warranties and representations shall also be true as of the
Closing Date:
(a) As of the Closing Date, the ACMC Shares to be issued and delivered
to the RMI Stockholders hereunder will, when so issued and delivered,
constitute, duly authorized, validly and legally issued shares of ACMC common
stock, fully-paid and nonassessable.
(b) ACMC has the corporate power to enter into this Agreement and to
perform its respective obligations hereunder. The execution and delivery of this
Agreement and the consummation of the transactions contemplated hereby have been
duly authorized by the board of directors of ACMC. The execution and performance
of this Agreement will not constitute a material breach of any agreement,
indenture, mortgage, license or other instrument or document to which ACMC is a
party and will not violate any judgment, decree, order, writ, rule, statute, or
regulation applicable to ACMC or its properties. The execution and performance
of this Agreement will not violate or conflict with any provision of the
Articles of Incorporation or Bylaws of ACMC.
(c) The audited financial statements as of and for the period ended
December 31, 2000, which have been or shortly will be delivered to RMI
(hereinafter referred to as the "ACMC Financial Statements") are or will be when
delivered complete and accurate and fairly present the financial condition of
4
ACMC as of the date thereof and the results of its operations for the period
covered. There are no material liabilities or obligations, either fixed or
contingent, not disclosed in the ACMC Financial Statements or in any exhibit or
notes thereto other than contracts or obligations in the ordinary course of
business; and no such contracts or obligations in the ordinary course of
business constitute liens or other liabilities which materially alter the
financial condition of ACMC as reflected in the ACMC Financial Statements. ACMC
has good title to all assets shown on the ACMC Financial Statements subject only
to dispositions and other transactions in the ordinary course of business, the
disclosures set forth therein and liens and encumbrances of record. The ACMC
Financial Statements have been prepared in accordance with generally accepted
accounting principles consistently applied (except as may be indicated therein
or in the notes thereto).
(d) Since the date of the ACMC Financial Statements, there have not
been any material adverse changes in the financial position of ACMC except
changes arising in the ordinary course of business, which changes will in no
event materially and adversely affect the financial position of ACMC.
(e) ACMC is not a party to any material pending litigation or, to its
best knowledge, any governmental investigation or proceeding, not reflected in
the ACMC Financial Statements, and to its best knowledge, no material
litigation, claims, assessments or any governmental proceedings are threatened
against ACMC.
(f) ACMC is in good standing in the State of Utah.
(g) ACMC has (or, by the Closing Date, will have filed) all material
tax, governmental and/or related forms and reports (or extensions thereof) due
or required to be filed and has (or will have) paid or made adequate provisions
for all taxes or assessments which have become due as of the Closing Date.
(h) ACMC has not materially breached any material agreement to which it
is a party. ACMC has previously given RMI copies or access thereto of all
material contracts, commitments and/or agreements to which ACMC is a party
including all relationships or dealings with related parties or affiliates.
(i) ACMC has no subsidiary corporations except as described in writing
to RMI.
(j) ACMC has made all material corporate financial records, minute
books, and other corporate documents and records available for review to present
management of RMI prior to the Closing Date, during reasonable business hours
and on reasonable notice.
(k) The execution of this Agreement does not materially violate or
breach any material agreement or contract to which ACMC is a party and has been
duly authorized by all appropriate and necessary corporate action under Utah law
and ACMC, to the extent required, has obtained all necessary approvals or
consents required by any agreement to which ACMC is a party.
(l) There are no existing options, calls, warrants, preemptive rights
or commitments of any character relating to the issued or unissued capital stock
or other securities of ACMC, except as contemplated in this Agreement.
(m) All information regarding ACMC that has been delivered to RMI by
ACMC for use in connection with the transaction (the "Acquisition") described
herein is true, complete and accurate in all material respects.
(n) Notwithstanding the foregoing representations and warrants, ACMC
makes no representations and warranties with respect to the possible penalties,
liabilities or effects of the 1934 Act Violations.
11. Closing. The Closing of the transactions contemplated herein shall
take place on such date (the "Closing") as mutually determined by the parties
hereto when all conditions precedent have been met and all required documents
5
have been delivered, which Closing shall be no later than thirty days following
ACMC shareholder approval of the reverse stock split reference in Section 3(b),
unless extended by mutual consent of all parties hereto. The "Closing Date" of
the transactions described herein (the "Acquisition"), shall be that date on
which all conditions set forth herein have been met and the ACMC Shares are
issued in exchange for the RMI Common Stock.
12. Conditions Precedent to the Obligations of RMI. All obligations of
RMI under this Agreement are subject to the fulfillment, prior to or as of the
Closing and/or the Closing Date, as indicated below, of each of the following
conditions:
(a) The representations and warranties by or on behalf of ACMC
contained in this Agreement or in any certificate or document delivered pursuant
to the provisions hereof shall be true in all material respects at and as of the
Closing and Closing Date as though such representations and warranties were made
at and as of such time.
(b) ACMC shall have performed and complied with all covenants,
agreements, and conditions set forth in, and shall have executed and delivered
all documents required by this Agreement to be performed or complied with or
executed and delivered by it prior to or at the Closing.
(c) On or before the Closing, the board of directors, and shareholders
representing a majority interest the outstanding common stock of ACMC, shall
have approved in accordance with applicable state corporation law and the 1934
Act the execution and delivery of this Agreement and the consummation of the
transactions contemplated herein.
(d) On or before the Closing Date, ACMC shall have delivered to RMI
certified copies of resolutions of the board of directors and shareholders of
ACMC approving and authorizing the execution, delivery and performance of this
Agreement and authorizing all of the necessary and proper action to enable ACMC
to comply with the terms of this Agreement including the election of RMI's
nominees to the Board of Directors of ACMC and all matters outlined herein.
(e) The Acquisition shall be permitted by applicable law and ACMC shall
have sufficient shares of its capital stock authorized to complete the
Acquisition.
(f) At Closing, the existing officers and directors of ACMC shall have
resigned in writing from all positions as directors and officers of ACMC
effective upon the election and appointment of the RMI nominees.
(g) At the Closing, all instruments and documents delivered to RMI and
RMI Stockholders pursuant to the provisions hereof shall be reasonably
satisfactory to legal counsel for RMI.
(h) The shares of restricted ACMC capital stock to be issued to RMI
Stockholders at Closing will be validly issued, nonassessable and fully-paid
under Utah law and will be issued in compliance with all federal, state and
applicable corporation and securities laws.
(i) RMI and RMI Stockholders shall have received the advice of their
tax advisor, if deemed necessary by them, as to all tax aspects of the
Acquisition.
(j) RMI shall have received all necessary and required approvals and
consents from required parties and its shareholders.
(k) After completing it due diligence investigation prior to the
closing, RMI shall have determined that, in RMI's sole discretion, the financial
condition of ACMC and the condition of ACMC otherwise is suitable to RMI and its
stockholders. In the event that RMI determines, in its sole discretion, that
ACMC is not suitable to RMI or its stockholders for any reason whatsoever, then
RMI may rescind this Agreement by giving written notice to ACMC. In the event of
any such rescission, this Agreement thereafter shall be null and void and
neither party shall have any obligation to the other.
6
13. Conditions Precedent to the Obligations of ACMC. All obligations of
ACMC under this Agreement are subject to the fulfillment, prior to or at the
Closing, of each of the following conditions:
(a) The representations and warranties by RMI and RMI Stockholders
contained in this Agreement or in any certificate or document delivered pursuant
to the provisions hereof shall be true in all material respects at and as of the
Closing as though such representations and warranties were made at and as of
such time.
(b) RMI shall have performed and complied with, in all material
respects, all covenants, agreements, and conditions required by this Agreement
to be performed or complied with by it prior to or at the Closing.
(c) RMI shall deliver on behalf of the RMI Stockholders a letter
commonly known as an "Investment Letter," signed by each of said shareholders,
in substantially the form attached hereto as Exhibit "C", acknowledging that the
ACMC Shares are being acquired for investment purposes.
(d) On or before the Closing, the board of directors, and shareholders
representing a majority interest the outstanding common stock of RMI, shall have
approved in accordance with applicable state corporation law and the execution
and delivery of this Agreement and the consummation of the transactions
contemplated herein and no shareholder of RMI shall have exercised dissenters
rights under applicable corporate law.
(e) On or before the Closing Date, RMI shall have delivered to ACMC
certified copies of resolutions of the board of directors and shareholders of
RMI approving and authorizing the execution, delivery and performance of this
Agreement and authorizing all of the necessary and proper action to enable RMI
to comply with the terms of this Agreement.
(f) At the Closing, all instruments and documents delivered to ACMC
pursuant to the provisions hereof shall be reasonably satisfactory to legal
counsel for ACMC.
(g) The Acquisition shall be permitted by applicable law and ACMC shall
have sufficient shares of its capital stock authorized to complete the
Acquisition
(h) The shares of restricted ACMC capital stock to be issued to RMI
Stockholders at Closing will be validly issued, nonassessable and fully-paid
under Utah law and will be issued in compliance with all federal, state and
applicable corporation and securities laws.
(i) ACMC and ACMC Stockholders shall have received the advice of their
tax advisor, if deemed necessary by them, as to all tax aspects of the
Acquisition.
(j) ACMC shall have received all necessary and required approvals and
consents from required parties and its shareholders.
(k) After completing it due diligence investigation prior to the
closing, ACMC shall have determined that, in ACMC's sole discretion, the
financial condition of RMI and the condition of RMI otherwise is suitable to
ACMC and its stockholders. In the event that ACMC determines, in its sole
discretion, that RMI is not suitable to ACMC or its stockholders for any reason
whatsoever, then ACMC may rescind this Agreement by giving written notice to
RMI. In the event of any such rescission, this Agreement thereafter shall be
null and void and neither party shall have any obligation to the other.
14. Indemnification.
(a) For a period of one year from the Closing, ACMC agrees to indemnify
and hold harmless RMI, and for the same period RMI agrees to indemnify and hold
harmless ACMC, against and in respect of any liability, damage or deficiency,
all actions, suits, proceedings, demands, assessments, judgments, costs and
7
expenses including attorney's fees incident to any of the foregoing, resulting
from any material misrepresentations made by an indemnifying party to an
indemnified party, an indemnifying party's breach of covenant or warranty or an
indemnifying party's nonfulfillment of any agreement hereunder, or from any
material misrepresentation in or omission from any certificate furnished or to
be furnished hereunder.
(b) For a period of one year from the Closing, in the event that the
liabilities of ACMC exceed $10,000 on the Closing date ACMC agrees to indemnify
RMI for the amount of said liabilities in excess of $10,000.
(c) For a period of one year from the Closing, in the event that the
liabilities of RMI are materially different than disclosed to ACMC in ACMC's due
diligence investigation prior to the Closing, then RMI agrees to indemnify ACMC
for the amount of said liabilities in excess of the disclosed amounts.
15. Nature and Survival of Representations. All representations,
warranties and covenants made by any party in this Agreement shall survive the
Closing and the consummation of the transactions contemplated hereby for one
year from the Closing. All of the parties hereto are executing and carrying out
the provisions of this Agreement in reliance solely on the representations,
warranties and covenants and agreements contained in this Agreement and not upon
any investigation upon which it might have made or any representation, warranty,
agreement, promise or information, written or oral, made by the other party or
any other person other than as specifically set forth herein.
16. Documents at Closing. At the Closing, the following documents shall
be delivered:
(a) RMI will deliver, or will cause to be delivered, to ACMC the
following:
(i) a certificate executed by the President and Secretary of
RMI to the effect that all representations and warranties made by RMI
under this Agreement are true and correct as of the Closing, the same
as though originally given to ACMC on said date;
(ii) a certificate from the jurisdiction of incorporation of
RMI dated at or about the Closing to the effect that RMI is in good
standing under the laws of said jurisdiction;
(iii) certified copies of resolutions adopted by RMI's board
of directors and RMI's Stockholders authorizing the Acquisition and all
related matters described herein;
(iv) Investment Letters in the form attached hereto as Exhibit
"C" executed by each RMI Stockholder;
(v) such other instruments, documents and certificates, if
any, as are required to be delivered pursuant to the provisions of this
Agreement; and
(vi) all other items, the delivery of which is a condition
precedent to the obligations of ACMC as set forth herein.
(b) ACMC will deliver or cause to be delivered to RMI:
(i) stock certificates representing the ACMC Shares to be
issued as a part of the stock exchange as described herein;
(ii) a certificate of the President and Secretary of ACMC, to
the effect that all representations and warranties of ACMC made under
this Agreement are true and correct as of the Closing, the same as
though originally given to RMI on said date;
8
(iii) certified copies of resolutions adopted by ACMC's board
of directors and ACMC's Stockholders authorizing the Acquisition and
all related matters described herein;
(iv) certificate from the jurisdiction of incorporation of
ACMC dated at or about the Closing Date that ACMC is in good standing
under the laws of said state;
(v) such other instruments, documents and certificates, if
any, as are required to be delivered pursuant to the provisions of this
Agreement;
(vi) resignation of the existing officer and director of ACMC;
(vii) all corporate and financial records of ACMC; and
(viii) all other items, the delivery of which is a condition
precedent to the obligations of RMI, as set forth herein.
17. Finder's Fees. ACMC, represents and warrants to RMI, and RMI
represents and warrants to ACMC, that neither of them, or any party acting on
their behalf, has incurred any liabilities, either express or implied, to any
"broker" of "finder" or similar person in connection with this Agreement or any
of the transactions contemplated hereby. In this regard, ACMC, on the one hand,
and RMI on the other hand, will indemnify and hold the other harmless from any
claim, loss, cost or expense whatsoever (including reasonable fees and
disbursements of counsel) from or relating to any such express or implied
liability.
18. Confidentiality.
(a) Confidential Information. As used in this Agreement, the term
"Confidential Information" shall mean (a) any material information relating to
ACMC that has not been publicly disclosed by means of disclosure on an report,
registration statement or proxy statement with the Securities and Exchange
Commission, (b) information marked or designated by ACMC as confidential; (c)
information, whether or not in written form and whether or not designated as
confidential, which is known to a party as being treated by as confidential by
ACMC; (d) information provided to any party by third parties which the any party
is obligated to keep confidential, and (e) information relating to the terms and
existence of this Agreement.
(b) Non-use and Nondisclosure. Each of the parties agrees not to use
any Confidential Information for any purpose except to evaluate and engage in
discussions concerning this Agreement and the potential business relationship
relating thereto. The parties agree not to disclose any Confidential Information
of ACMC to third parties or to employees or associates of the receiving party,
except to those employees who are required to have the Confidential Information
in order to evaluate or engage in discussions concerning the contemplated
business relationship.
(c) Maintenance of Confidentiality. The parties agree to take all
reasonable measures to protect the secrecy of and prevent the disclosure and
unauthorized use of ACMC's Confidential Information. Without limiting the
foregoing, the receiving party shall take at least those measures that the
receiving party takes to protect its own Confidential Information and shall have
its employees who have access to ACMC's Confidential Information sign a non-use
and nondisclosure agreement relating to ACMC's Confidential Information. A
receiving party shall immediately notify ACMC in the event of any unauthorized
use of disclosure of ACMC's Confidential Information.
9
19. Miscellaneous.
(a) Further Assurances. At any time, and from time to time, after the
Closing Date, each party will execute such additional instruments and take such
action as may be reasonably requested by the other party to confirm or perfect
title to any property transferred hereunder or otherwise to carry out the intent
and purposes of this Agreement.
(b) Waiver. Any failure on the part of any party hereto to comply with
any of its obligations, agreements or conditions hereunder may be waived in
writing by the party to whom such compliance is owed.
(c) Termination. All obligations hereunder may be terminated at the
discretion of either party's board of directors if (i) the closing conditions
specified in Sections 12 and 13 are not met within thirty days following the
ACMC shareholder approval of the reverse stock split referenced in Section 3(b),
unless extended by mutual agreement of the parties, (ii) any of the
representations and warranties made herein have been materially breached or
(iii) the Agreement is terminated pursuant to Sections 12(k) or 13(k).
(d) Amendment. This Agreement may be amended only in writing as agreed
to by all parties hereto.
(e) Notices. All notices and other communications hereunder shall be in
writing and shall be deemed to have been given if delivered in person or sent by
prepaid first class registered or certified mail, return receipt requested.
(f) Headings. The section and subsection headings in this Agreement are
inserted for convenience only and shall not affect in any way the meaning or
interpretation of this Agreement.
(g) Counterparts. This Agreement may be executed simultaneously in two
or more counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument.
(h) Governing Law. This Agreement shall be construed and enforced in
accordance with the laws of the State of Utah.
(i) Binding Effect. This Agreement shall be binding upon the parties
hereto and inure to the benefit of the parties, their respective heirs,
administrators, executors, successors and assigns.
(j) Entire Agreement. This Agreement and the attached Exhibits
constitute the entire agreement of the parties covering everything agreed upon
or understood in the transaction. There are no oral promises, conditions,
representations, understandings, interpretations or terms of any kind as
conditions or inducements to the execution hereof.
(k) Time. Time is of the essence.
(l) Severability. If any part of this Agreement is deemed to be
unenforceable the balance of the Agreement shall remain in full force and
effect.
(m) Responsibility and Costs. All fees, expenses and out-of-pocket
costs and expenses, including, without limitation, fees and disbursements of
counsel, advisors and accountants, incurred by the parties hereto shall be borne
solely and entirely by the party that has incurred such costs and expenses.
10
IN WITNESS WHEREOF, the parties have executed this Agreement the day
and year first above written.
AMERICAN CONSOLIDATED RENAISSANCE MAN, INC.
MINING CO.
By: /s/ Steven J. Haslam By: /s/ Herschel Walker
---------------------------- -------------------------------
President RMI President
By: /s/ John M. DeNiro
------------------------------
John M. DeNiro, Secretary
11
Counterpart Signature Page to the Agreement and Plan of Share Exchange
The undersigned hereby agrees to become a party as an RMI Stockholder
to the Agreement and Plan of Share Exchange dated July 14, 2001 between American
Consolidated Mining Co., Renaissance Man, Inc. (the "RMI") and the RMI
Stockholders named therein. The undersigned hereby authorizes the RMI to attach
this counterpart signature page to the Agreement and Plan of Share Exchange and
to add the name of the undersigned to the list of RMI Stockholders set forth in
Exhibit A to the Agreement and Plan of Share Exchange.
Dated: _____________ _________________________________
(signature)
Address: ________________________
_________________________________
EXHIBIT "A"
RMI STOCKHOLDER SCHEDULE
Name Number of Shares of Common Stock
---- --------------------------------
Jack Shaw 1,000,000
Brian K. Holden 1,000,000
Herschel Walker 1,000,000
G. Diane McKnight 1,000,000
Myka Dean 1,000,000
Judith T. Lauterbach 1,000,000
Aloe Commodities International, Inc. 1,000,000
George Mappin 1,000,000
Jerrilyn Brennan 500,000
Deanna Brennan 500,000
Leren E. Bagley
Total Issued and Outstanding 9,350,000
Total Authorized 10,000,000
EXHIBIT "B"
AMENDMENT TO ARTICLES OF INCORPORATION
[THE SHARE EXCHANGE AGREEMENT WAS EXECUTED WITHOUT THIS EXHIBIT. THE PARTIES
HAVE NOT PREPARED A DRAFT COPY OF THE AMENDMENT TO THE ARTICLES OF INCORPORATION
NOR HAVE THEY AGREED ON THE FORM OF SUCH AMENDMENT]
EXHIBIT "C"
INVESTMENT LETTER
In connection with the Agreement and Plan of Share Exchange dated July
14, 2001 (the "Agreement"), between American Consolidated Mining Co. ("ACMC"),
Renaissance Man, Inc. ("RMI") and the RMI Stockholders named therein, the
undersigned hereby represents and warrants as follows:
(a) The undersigned's representations in this letter are
complete and accurate to the best of the undersigned's knowledge, and ACMC and
RMI may rely upon them.
(b) The undersigned is able to bear the economic risk of an
investment in the ACMC common stock (the "Securities") for an indefinite period
of time, can afford the loss of the entire investment in the Securities, and
will, after making an investment in the Securities, have sufficient means of
providing for the undersigned's current needs and possible future contingencies.
Additionally, the undersigned's overall commitment to investments that are not
readily marketable is not disproportionate to the undersigned's net worth and
the share exchange described in the Agreement will not cause such overall
commitment to become excessive.
(c) The Securities will not be sold by the undersigned without
registration under applicable securities acts or a proper exemption from such
registration.
(d) The Securities are being acquired for the undersigned's
own account and risk, for investment purposes, and not on behalf of any other
person or with a view to, or for resale in connection with, any distribution
thereof within the meaning of the Securities Act of 1933. The undersigned is
aware that there are substantial restrictions on the transferability of the
Securities.
(e) The undersigned has had access to any and all information
concerning ACMC that the undersigned and the undersigned's financial, tax and
legal advisors required or considered necessary to make a proper evaluation of
this investment. Specifically, the undersigned has had access to the ACMC
Financial Statements and to the business documents referenced in Section 10(c)
and 10 (j) of the Agreement and is aware of ACMC's failure to comply with its
reporting obligations as described in Section 6(d) of the Agreement. In making
the decision to purchase the Securities by entering into the Agreement, the
undersigned and his or her advisers have relied solely upon their own
independent investigations, and fully understand that there are no guarantees,
assurances or promises in connection with any investment hereunder and
understand that the particular tax consequences arising from this investment in
ACMC will depend upon the individual circumstances of the undersigned. The
undersigned further understands that no opinion is being given as to any
securities or tax matters involving the transactions contemplated by the
Agreement.
(f) All of the representations and warranties of the
undersigned contained herein and all information furnished by the undersigned to
ACMC are true, correct and complete in all respects, and the undersigned agrees
to notify ACMC immediately of any change in any representation, warranty or
other information set forth herein.
(g) The undersigned also understands and agrees that stop
transfer instructions relating to the Securities will be placed in ACMC's stock
transfer ledger, and that the Securities sold will bear legends in substantially
the following form:
The securities represented by this certificate have not been
registered under the Securities Act of 1933 (the "Act") and
are "restricted securities" as that term is defined in Rule
144 under the Act. The securities may not be offered for sale,
sold or otherwise transferred except pursuant to an effective
registration statement under the Act or pursuant to an
exemption from registration under the Act, the availability of
which is to be established to the satisfaction of the issuer.
(h) The undersigned knows that the Securities are offered and
sold pursuant to exemptions from registration under the Securities Act of 1933,
and state securities law based, in part, on these warranties and
representations, which are the very essence of this Agreement, and constitute a
material part of the bargained-for consideration without which this Agreement
would not have been executed.
(i) The undersigned has the capacity to protect the
undersigned's own interest in connection with this transaction or has a
pre-existing personal or business relationship with ACMC or one or more of its
officers, directors or controlling persons consisting of personal or business
contacts of a nature and duration such as would enable a reasonably prudent
purchaser to be aware of the character, business acumen and general business and
financial circumstances of such person with whom such relationship exists.
(j) The Securities offered hereby were not offered to the
undersigned by way of general solicitation or general advertising and at no time
was the undersigned presented with or solicited by means of any leaflet, public
promotional meeting, circular, newspaper or magazine article, radio or
television advertisement.
(k) If initialed below, The undersigned represents that The
undersigned is an "accredited investor" as defined under Rule 501 of Regulation
D by reason of:
FOR INDIVIDUALS ONLY (INITIAL IF APPLICABLE):
_______ 1. I had individual income (exclusive of any income attributable
Initial to my spouse) in excess of $200,000 in each of the most recent
Here two years and I reasonably expect to have an individual income
in excess of $200,000 for the current year, or I had joint
income with my spouse in excess of $300,000 in each of those
years and I reasonably expect to have a joint income with my
spouse in excess of $300,000 for the current year.
_______ 2. I have an individual net worth, or my spouse and I have a
Initial combined individual net worth, in excess of $1,000,000. For
Here purposes of this Agreement, "individual net worth" means the
excess of total assets at fair market value, including home
and personal property, over total liabilities.
_______ 3. I am qualified as an "accredited investor" pursuant to Rule
Initial 501(a) of Regulation D of the 1933 Act for the following
Here reason:_______________________________________________________
______________________________________________________________
FOR CORPORATIONS AND PARTNERSHIPS ONLY (INITIAL IF APPLICABLE):
_______ 1. The undersigned hereby certifies that the Partnership or
Initial Corporation that he/she represents possesses total assets in
Here excess of $5,000,000 and was not formed for the specific
purpose of acquiring the securities offered by ACMC.
_______ 2. The undersigned hereby certifies personally, and on behalf of
Initial the Partnership or Corporation that he/she represents, that
Here all of the beneficial owners of equity qualify individually as
accredited investors under the individual accredited investor
test set forth above.
FOR TRUSTS ONLY (INITIAL IF APPLICABLE):
_______ 1. The undersigned hereby certifies that the trust which he/she
Initial represents possesses total assets in excess of $5,000,000 and
Here was not formed for the specific purpose of acquiring the
securities offered by ACMC, and that the purchase of the
securities is directed by a sophisticated person as described
in Rule 506(b)(2)(ii) of the Act.
2
_______ 2. The undersigned hereby certifies personally, and on behalf of
Initial the trust that he/she represents, that such trust is a
Here revocable trust that may be amended or revoked at any time by
the grantors, and all the grantors are accredited individual
investors under the individual accredited investor test set
forth above.
FOR TRUSTEES AND AGENTS (READ AND INITIAL BOTH STATEMENTS):
_______ The undersigned hereby acknowledges that he/she is acting as
Initial an agent or trustee for the following person or entity:
Here ______________________________________________________________
______________________________________________________________
_______ 2. The undersigned hereby agrees to provide to ACMC, upon ACMC's
Initial request, the following documents:
Here
(a) a copy of the trust agreement, power of attorney or
other instrument granting the power and authority to
execute and deliver the Agreement, or
(b) an opinion of counsel verifying the undersigned's
power and authority to execute and deliver the
Agreement and this letter.
The representations and warranties contained herein shall survive the
Closing of the transaction described in the Agreement.
Date: ________________ ________________________________
________________________________
(print name)
3
AMENDMENT NO. 1
TO THE AGREEMENT AND PLAN OF SHARE EXCHANGE
BY AND BETWEEN
AMERICAN CONSOLIDATED MINING CO.
AND RENAISSANCE MAN, INC.
THIS AMENDMENT NO. 1 TO THE AGREEMENT AND PLAN OF SHARE EXCHANGE (the
"Amendment") by and between American Consolidated Mining Co. (the "ACMC"),
Renaissance Man, Inc. ("RMI") and the owners of all the outstanding shares of
common stock of RMI is made and entered into to be effective as of the 21st day
of December, 2001, by and between the undersigned parties. All capitalized terms
not otherwise defined herein shall have the same meaning as set forth in the
Agreement And Plan Of Share Exchange (the "Agreement").
RECITALS
A. On or about July 14, 2001, the parties entered into the
Agreement (the "Agreement").
B. The parties wish to modify the agreement as set forth below.
NOW THEREFORE, the parties hereto hereby amend the Agreement as
follows:
1. Section 2(a) of the Agreement is hereby amended to read in its
entirety as follows:
At Closing, ACMC shall, subject to the conditions set forth
herein, issue an aggregate of 10,000,000 shares of ACMC common
stock for immediate delivery to the RMI Stockholders on the
basis of 1.0695187 ACMC Shares for each outstanding share of
RMI Common Stock.
2. Section 4(a) of the Agreement is hereby amended to read in its
entirety as follows:
Each share of RMI Common Stock issued and outstanding
immediately prior to the Closing Date shall be exchanged for
1.0695187 ACMC Shares to be delivered at Closing. All such
outstanding shares of RMI Common Stock shall be deemed, after
Closing, to be owned by ACMC. The holders of such certificates
previously evidencing shares of RMI Common Stock outstanding
immediately prior to the Closing Date shall cease to have any
rights with respect to such shares of RMI Common Stock except
as otherwise provided herein or by law;
3. Exhibit A of the Agreement is hereby amended to read in its
entirety as follows:
RMI STOCKHOLDER SCHEDULE
Number of Shares
Name of Common Stock
---- -----------------
Jack Shaw 1,000,000
Brian K. Holden 1,000,000
Herschel J. Walker 1,000,000
G. Diane McKnight 1,000,000
Myka Dean 1,000,000
Judith T. Lauterbach 1,000,000
Aloe Commodities 1,000,000
International, Inc.
George E. Mappin 1,000,000
Jerrilyn Brennan 500,000
Deanna Brennan 500,000
Number of Shares
Name of Common Stock
---- -----------------
Loren E. Bagley 350,000
Total Issued and Outstanding 9,350,000
Total Authorized 10,000,000
4. The Agreement shall remain in full force and effect and shall
remain unaltered, except to the extent specifically amended herein.
IN WITNESS WHEREOF, the undersigned, have executed this Amendment No. 1
to the Agreement as of the date first above written.
AMERICAN CONSOLIDATED RENAISSANCE MAN, INC.
MINING CO.
By: /s/ Steven J. Haslam By: /s/ Herschel Walker
----------------------------- -----------------------------
President RMI President
By: /s/ John M. DeNiro
------------------------------
John M. DeNiro, Secretary
2
Counterpart Signature Page to the Agreement and Plan of Share Exchange
The undersigned hereby agrees to become a party as an RMI Stockholder
to the Amendment, dated December 21, 2001, to the Agreement and Plan of Share
Exchange dated July 14, 2001 between American Consolidated Mining Co.,
Renaissance Man, Inc. (the "RMI") and the RMI Stockholders named therein. The
undersigned hereby authorizes the RMI to attach this counterpart signature page
to the Amendment to the Agreement and Plan of Share Exchange and to add the name
of the undersigned to the list of RMI Stockholders set forth in Exhibit A to the
Agreement and Plan of Share Exchange.
Dated: _____________ _______________________________
(signature)
Address: ________________________
_________________________________
ANNEX C
PROXY CARD FOR ANNUAL MEETING OF SHAREHOLDERS OF
AMERICAN CONSOLIDATED MINING CO.
This Proxy is Solicited on Behalf of the Board Of Directors. The undersigned
hereby appoints William D. Moeller as Proxy, with the power to appoint his
substitute and hereby authorize them to represent and to vote, as designated
below, all the shares of common stock of American Consolidated Mining Co. held
on record by the undersigned on April 15, 2002 at the annual meeting of
shareholders to be held on June 3, 2002, or any adjournment thereof.
1. Election of Nominee Directors
[ ]FOR John M. DeNiro [ ]WITHHOLD AUTHORITY to vote for John M. DeNiro
[ ]FOR Steven J. Haslam [ ]WITHHOLD AUTHORITY to vote for Steven J. Haslam
[ ]FOR Robert J. Holladay [ ]WITHHOLD AUTHORITY to vote for Robert J. Halladay
[ ]FOR William D. Moeller [ ]WITHHOLD AUTHORITY to vote for William D. Moeller
[ ]FOR Herschel J. Walker [ ]WITHHOLD AUTHORITY to vote for Herschel J. Walker
[ ]FOR George E. Mappin [ ]WITHHOLD AUTHORITY to vote for George E. Mappin
2. Proposal to approve the Agreement and Plan of Share Exchange among the
Company and Renaissance Man, Inc., a Texas corporation.
[ ] For[ ] Against [ ] Abstain
3. Proposal to approve an amendment to and restatement of the Company's Articles
of Incorporation to effect a 1 for 100 reverse stock split of all currently
outstanding shares of common stock of the Company.
[ ] For[ ] Against [ ] Abstain
4. Proposal to approve an amendment to and restatement of the Company's Articles
of Incorporation to change the Company's name to American Consolidated
Management Group, Inc.
[ ] For[ ] Against [ ] Abstain
5. In their discretion, the Proxy is authorized to vote upon such other business
as may properly come before the meeting. This proxy when properly executed will
be voted in the manner directed herein by the undersigned shareholder(s). If no
directions are made, this proxy will be voted for the above Proposals.
Please sign below. When shares are held by joint tenants, both should
sign. When signing as attorney, executor, administrator, trustee or guardian,
please give full title as such. If a corporation, please sign in full
corporation name by President or other authorized officer. If a partnership,
please sign in partnership name by authorized person.
Dated: ___________________, 2002 ___________________________________
(signature)
Please mark, sign, date and return the ___________________________________
proxy card promptly using the enclosed (signature if held jointly)
envelope or proxy cards may be sent by
facsimile to the Company at (801) ___________________________________
756-5454. (print name of shareholder(s))