UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 8-K/A
----------
Amendment No. 2
---------------
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): July 27, 2004
MONACO GROUP INC.
-----------------
(Exact name of registrant as specified in its charter)
Delaware 0 - 50752 98-0404764
-------- --------- ----------
(State or other jurisdiction of (Commission File (I.R.S. Employer
incorporation or organization) Number) Identification Number)
20A Voyager Court South, Etobicoke, Ontario, Canada, M9W 5M7
------------------------------------------------------------
(Address of principal executive offices)
(416) 213-0028
--------------
(Registrant's telephone number)
Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of the
following provisions (see General Instruction A.2. below):
[_] Written communications pursuant to Rule 425 under the Securities Act (17
CFR 230.425)
[_] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
[_] Pre-commencement communications pursuant to Rule 14d-2(b) under the
Exchange Act (17 CFR 240.14d-2(b))
[_] Pre-commencement communications pursuant to Rule 13e-4(c) under the
Exchange Act (17 CFR 240.13e-4(c))
ITEM 2.01. ACQUISITION OR DISPOSITION OF ASSETS
- ------------------------------------------------
On May 25, 2004, Monaco Group Inc. (the "Company") entered into an Asset
Purchase Agreement with Sweet Valley Foods Inc., an Ontario corporation ("Sweet
Valley"), and MG Holdings Inc., an Ontario corporation and the Company's wholly
owned subsidiary ("MG Holdings") (the "Asset Purchase Agreement"). Sweet Valley
is a manufacturer, processor, and distributor of sugar and other grocery
products.
On June 21, 2004, the parties entered into Asset Purchase Amending Agreement
(the "Amendment") to amend certain provisions of the Asset Purchase Agreement.
Under the terms of the Asset Purchase Agreement, as modified by the Amendment,
Sweet Valley would sell to MG Holdings its assets related to the manufacturing,
processing, and selling of sugar in consideration of $80,000 Canadian dollars in
cash, 750,000 exchangeable shares of stock of MG Holdings (the "Exchangeable
Shares"), and cash compensation for its inventory (the "Sugar Asset
Transaction").
On July 27, 2004, the parties completed the Sugar Asset Transaction. The value
of the inventory purchased, as at July 1, 2004, was $282,724.78 (Canadian
Dollars). Couprie, Fenton Inc., a corporation owned by certain shareholders of
Sweet Valley, has agreed to finance this inventory purchase on a short-term
basis. The cash paid by MG Holdings at closing was $80,000.00 (Canadian
Dollars). Burgio Family Holdings Inc., the largest shareholder of the Company,
agreed to loan funds to the Company to complete this purchase. For financial
reporting purposes, this transaction will be effective as of July 1, 2004. The
assets acquired will continue to be used to manufacture, process, and distribute
sugar. Sweet Valley has agreed to change its name within 30 days.
The following is a summary description of the Exchangeable Shares. Such
description is qualified in its entirety by reference to (i) the Exchange
Agreement, dated as of July 27, 2004, by and among Sweet Valley, MG Holdings,
and the Company ("Exchange Agreement"), (ii) the Certificate of Incorporation of
MG Holdings, dated November 10, 2003 ("MG Holdings Certificate"), and (iii) the
Amendment to the Certificate of Incorporation of MG Holdings, dated July 16,
2004 ("MG Holdings Certificate Amendment"). Copies of the Exchange Agreement, MG
Holdings Certificate, and MG Holdings Certificate Amendment are attached hereto
as Exhibits 4.3 to 4.5.
(i) Each Exchangeable Share may be exchanged for two shares of Company
common stock.
(ii) On not less than 30 days prior notice, MG Holdings may redeem some
or all of the then outstanding Exchangeable Shares ("Redemption") on any date
selected by its board of directors for the price of $1.25 per Exchangeable
Share.
(iii) Holders of Exchangeable Shares shall have until the 10th day
immediately preceding the Redemption to elect, by written notice to the Company,
to exchange the Exchangeable Shares for Company common stock.
The Company has formed a new subsidiary called Sweet Valley Food Corporation, an
Ontario corporation, to operate the business and assets acquired by MG Holdings
Inc.
Leo Couprie, a director of Sweet Valley, has been appointed to the board of
directors of the Company. Mr. Couprie is also the Chairman of Couprie, Fenton
Inc. Tyrone Ganpaul, a director of Sweet Valley, has been appointed Vice
President of the Company.
ITEM 5.02. OTHER EVENTS AND REGULATION FD DISCLOSURE
- -----------------------------------------------------
On July 27, 2004, as part of the Sugar Asset Transaction, the Board of Directors
of the Company ("Board"), acting by unanimous written consent, appointed Leo
Couprie to the Board of the Company and appointed Tyrone Ganpaul to the office
of Vice President of the Company.
Leo Couprie serves on the board of directors of Sweet Valley. Mr. Couprie is
also the Chairman of Couprie, Fenton Inc., a company he co-founded in 1986. For
1994 to 1996, Mr. Couprie was the President of C&F Meat Brokers and from 1974 to
1984, a trader for Canada Packers Limited, International Division. Mr. Couprie
also serves on the board of directors of Mortgage Central and Voyager Group Inc.
Since 2001, he has served as the Chair of Seneca College's International
Business Advisory Board.
Tyrone Ganpaul is currently the president and a director of Sweet Valley. Mr.
Ganpaul has a wide ranging experience in financial management, marketing,
control, and development for a number of business environments especially food,
consumer products and resource products. From 2001 to 1994, he was a business
development consultant for various companies, including Goudas Food Products
Company Limited. From 1987 to 1994, Mr. Ganpaul was Vice President Finance for
Export Packers Company Limited. Mr. Ganpaul has a degree in Economics and
Business Administration from the University of Guyana and a RIA diploma from the
Society of Management Accountants (formerly the Society of Registered Industrial
Accountants).
ITEM 9.01. FINANCIAL STATEMENTS AND EXHIBITS
- ---------------------------------------------
(a) Financial statements of business acquired.
The financial statements required by this item were previously filed.
(b) Pro forma financial information.
The pro forma financial information required by this item has been revised
and is included herein.
MONACO GROUP INC.
-----------------
PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2004
(Stated in US Dollars)
(Unaudited)
---------
MONACO GROUP INC.
-----------------
PRO FORMA CONSOLIDATED BALANCE SHEET
June 30, 2004
(Stated in US Dollars)
(Unaudited)
---------
Monaco Sweet Valley Consolidation Pro Forma
Group Foods And Pro Forma Consolidated
ASSETS Inc. Inc. Adjustments Notes Balance Sheet
- ------ ---------------- ---------------- ---------------- ----- ----------------
Current
Cash $ 1,297 $ 33,437 $ (33,437) (4b) $ 1,297
Accounts receivable 83,923 469,085 (469,085) (4b) 83,923
Inventory - 210,926 - 210,926
Prepaid expenses - 22 - 22
Tax credit receivable - 12,587 (12,587) (4b) -
---------------- ---------------- ---------------- ----------------
85,220 726,056 (515,109) 296,167
Capital assets - 190,400 78,273 (2) 268,673
Goodwill - 169,982 677,136 (2) 847,118
---------------- ---------------- ---------------- ----------------
$ 85,220 $ 1,086,438 $ 240,300 $ 1,411,958
================ ================ ================ ================
LIABILITIES
- -----------
Current
Accounts payable and accruals $ 88,486 $ 692,801 $ (680,161) (4b,c&d) $ 101,126
Loans from related party 20,000 - - 20,000
Advances from related party 22,598 - 272,848 (4a) 295,446
Long term debt - current portion - 46,628 - 46,628
---------------- ---------------- ---------------- ----------------
131,084 739,429 (407,313) 463,200
Long term debt - 31,011 31,011
Advances from shareholders - 422,880 (422,880) (4b) -
Future taxes - - 26,112 (2) 26,112
---------------- ---------------- ---------------- ----------------
131,084 1,193,320 (804,081) 520,323
---------------- ---------------- ---------------- ----------------
SEE ACCOMPANYING NOTES
MONACO GROUP INC.
-----------------
PRO FORMA CONSOLIDATED BALANCE SHEET
June 30, 2004
(Stated in US Dollars)
(Unaudited)
---------
Monaco Sweet Valley Consolidation Pro Forma
Group Foods And Pro Forma Consolidated
Inc. Inc. Adjustments Notes Balance Sheet
---------------- ---------------- ---------------- ----- ----------------
SHAREHOLDERS' EQUITY
- --------------------
Share capital 4,447 22 (22) 5,947
1,500 (4a)
Paid in capital 81,203 - 936,000 (4a) 1,017,203
Deficit (131,514) (106,903) 106,903 (131,514)
---------------- ---------------- ---------------- ----------------
(45,864) (106,881) 1,044,381 891,636
---------------- ---------------- ---------------- ----------------
$ 85,220 $ 1,086,438 $ 240,300 $ 1,411,958
================ ================ ================ ================
SEE ACCOMPANYING NOTES
MONACO GROUP INC.
-----------------
PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
for the year ended December 31, 2003
(Stated in US Dollars)
(Unaudited)
---------
Pro Forma
Monaco Sweet Valley Consolidated
Group Foods Statement
Inc. Inc. of Operations
---------------- ---------------- ----------------
Revenue
Sales $ 48,834 $ 3,017,049 $ 3,065,883
Cost of sales 46,997 2,447,020 2,494,017
---------------- ---------------- ----------------
Gross profit 1,837 570,029 571,866
---------------- ---------------- ----------------
General and Administrative Expenses
Accounting and audit fees 5,200 31,217 36,417
Amortization - 77,481 77,481
Bad debt - 4,312 4,312
Commissions - 1,059 1,059
Consulting fees 57,500 - 57,500
Equipment leasing - 26,904 26,904
Filing and regulatory fees 2,184 - 2,184
Interest and bank charges 87 10,078 10,165
Insurance - 5,170 5,170
Legal fees 19,320 - 19,320
Management fees - 43,122 43,122
Office and general expenses 179 45,485 45,664
Rent - 106,927 106,927
Repairs and maintenance - 11,344 11,344
Storage - 20,586 20,586
Telephone expenses - 3,456 3,456
Transfer agent fees 745 - 745
Wages - 167,901 167,901
---------------- ---------------- ----------------
85,215 555,042 640,257
---------------- ---------------- ----------------
SEE ACCOMPANYING NOTES
Earnings (loss) before the following (85,215) 14,987 (68,391)
Investment tax credit earnings - 13,369 13,369
---------------- ---------------- ----------------
Net loss for the year $ (83,378) $ 28,356 $ (55,022)
================ ================ ================
Pro forma loss per share $ (0.01)
================
Weighted average number of shares 5,824,340
================
SEE ACCOMPANYING NOTES
MONACO GROUP INC.
-----------------
PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
for the six months ended June 30, 2004
(Stated in US Dollars)
(Unaudited)
---------
(Note 4d) Pro Forma
Monaco Sweet Valley Sweet Valley Consolidated
Group Foods Pro Forma Statement
Inc. Inc. Adjustments of Operations
-------------- -------------- -------------- --------------
Revenue
Sales $ 194,429 $ 2,559,428 $ (80,342) $ 2,673,515
Cost of sales 191,538 2,177,939 (80,342) 2,289,135
-------------- -------------- -------------- --------------
Gross profit 2,891 381,489 - 384,380
-------------- -------------- -------------- --------------
General and Administrative Expenses
Accounting and audit fees 5,850 19,528 25,378
Amortization - 29,833 29,833
Commissions - 5,694 5,694
Equipment leasing - 28,631 28,631
Filing and regulatory fees 3,845 - 3,845
Interest and bank charges 1,263 22,309 23,572
Legal fees 39,227 - 39,227
Office and general expenses 217 37,229 37,446
Rent - 60,736 60,736
Repairs and maintenance 9,474 9,474
Storage 9,360 9,360
Telephone expenses - 1,588 1,588
Transfer agent fees 625 - 625
Wages - 106,809 106,809
-------------- -------------- -------------- --------------
51,027 331,191 - 382,218
-------------- -------------- -------------- --------------
Net income (loss) for the period ( 48,136) 50,298 - 2,162
============== ============== ============== ==============
Pro forma earnings per share $ 0.00
==============
Weighted average number of shares 5,946,500
==============
SEE ACCOMPANYING NOTES
Monaco Group Inc.
Notes to the Pro Forma Consolidated Financial Statements
June 30, 2004
(Stated in US Dollars)
(Unaudited) - Page 1
---------
Note 1 Basis of Presentation
---------------------
The accompanying unaudited pro forma consolidated balance sheet and
unaudited consolidated statement of operations give effect to the
acquisition of substantially all the assets and business of Sweet
Valley Foods Inc. ("Sweet Valley") by a wholly-owned subsidiary of
Monaco Group Inc., a Delaware corporation ("Monaco") effective on July
1, 2004 pursuant to an asset purchase agreement dated May 25, 2004 and
an amended agreement dated June 21, 2004.
The unaudited pro forma consolidated financial statements of Monaco
included herein have been prepared by management of Monaco in
accordance with the accounting principles generally accepted in the
United States of America. They have been prepared from information
derived from the December 31, 2003 audited financial statements of
Monaco, the June 30, 2004 unaudited financial statements of Monaco,
the December 31, 2003 audited financial statements of Sweet Valley and
the June 30, 2004 unaudited financial statements of Sweet Valley,
together with other information available to the corporations. In the
opinion of management of Monaco, these unaudited pro forma
consolidated financial statements include all adjustments necessary
for fair presentation of the acquisition of the Sweet Valley assets by
Monaco as described below.
The financial statements of Sweet Valley have been converted from
Canadian dollars to US dollars. Balance sheet amounts at the rate of
exchange in effect at June 30, 2004 of 1 US dollar equals 1.3404
Canadian dollars. Revenues and expenses for the twelve months ended
December 31, 2003 and for the six months ended June 30, 2004 at the
average rate of exchange in effect for the period of 1 US dollar
equals 1.3914 Canadian dollars and 1 US dollar equals 1.3419 Canadian
dollars, respectively.
In preparing the pro forma consolidated financial statements, no
adjustments have been made to reflect the additional costs or savings
that could result from combining the operations of Monaco and Sweet
Valley.
The unaudited pro forma consolidated financial statements should be
read in conjunction with the historical financial statements and notes
thereto referred to above. The unaudited pro forma consolidated
balance sheet gives effect to the acquisitions of the Sweet Valley
assets as if it had occurred on June 30, 2004. The unaudited pro forma
consolidated statements of operations gives effect to the acquisitions
of the Sweet Valley assets as if it had occurred at the start of the
fiscal period beginning on January 1, 2003. These unaudited pro forma
financial statements are not necessarily indicative of the financial
position or results of operations, which would have resulted if the
combination and related transactions had actually occurred on those
dates.
Monaco Group Inc.
Notes to the Pro Forma Consolidated Financial Statements
June 30, 2004
(Stated in US Dollars)
(Unaudited) - Page 2
---------
Note 2 Acquisition of Sweet Valley's Assets and Business
-------------------------------------------------
Pursuant to an Asset Purchase Agreement dated May 25, 2004, and an
Amended Agreement dated June 21, 2004, a wholly-owned subsidiary of
Monaco acquired substantial all of the assets and business of Sweet
Valley. The acquisition has been accounted for using the purchase
method of accounting. Under this method, the shares issued are valued
at the fair value, agreed to by the purchaser and the vendor at
arms-length, of the assets and liabilities acquired determined at July
1, 2004 based on the unaudited working capital of Sweet Valley as
follows:
July 1, 2004
Fair Value
Acquired
----------------
Inventory $ 210,948
Capital assets 268,673
Goodwill 847,118
Assumed liabilities (77,639)
----------------
Fair value of 100% interest acquired $ 1,249,100
Future income taxes (26,112)
----------------
1,222,988
================
Consideration paid
Cash $ 272,848
Accounts payable 12,640
Shares issued at fair value - Note 4(a) 937,500
================
The carrying values of the assets and liabilities of Sweet Valley as
presented in the June 30, 2004 historical financial statements
approximate their fair values.
The expenses relating to the accounts payable portion that form part
of the Consideration paid noted above were incurred by a subsidiary of
Monaco subsequent to June 30, 2004. These accounts payable were not
previously accrued on Monaco's consolidated balance sheet as at June
30, 2004.
Monaco Group Inc.
Notes to the Pro Forma Consolidated Financial Statements
June 30, 2004
(Stated in US Dollars)
(Unaudited) - Page 3
---------
Note 3 Share Capital
- ------ -------------
Authorized: 10,000,0 common shares, par value $0.001 per share
Pro forma Common Shares Issued:
Common shares Additional
Number Paid-in
of Shares Par Value Capital Deficit Total
------------ ------------ ------------ ------------ ------------
Monaco common shares at June 30, 2004 4,446,500 $ 4,447 $ 81,203 $ (131,514) $ (45,864)
Sweet Valley shares issued at June 30, 2004 30 22 - (106,903) (106,851)
Adjustments (30) (22) - 106,903 106,851
Issued pursuant to purchase agreement -
Note 4a(i) 1,500,000 1,500 936,000 - 937,500
------------ ------------ ------------ ------------ ------------
5,946,500 $ 5,947 $ 1,017,203 $ (131,514) $ 891,636
============ ============ ============ ============ ============
The number of shares issued and outstanding is that of Monaco.
Subsequent to June 30, 2004, Monaco increased its authorized common
stock to 15,000,000 shares, and authorized 4,000,000 preferred stock
at $0.001 par value.
Monaco Group Inc.
Notes to the Pro Forma Consolidated Financial Statements
June 30, 2004
(Stated in US Dollars)
(Unaudited) - Page 4
---------
Note 4 Pro Forma Adjustments
- ------ ---------------------
The unaudited pro forma consolidated financial statements include the
following pro forma adjustments:
a) Subsequent to June 30, 2004, Monaco completed the following
transactions:
i) Purchased substantially all the assets and business of Sweet
Valley for $270,610 cash ("Cash Amount") and 750,000
exchangeable shares of a subsidiary of Monaco that are
exchangeable for 1,500,000 shares of Monaco common stock at
a per share price of $0.625; and
ii) Monaco was advanced $61,922 (CDN $83,000) from a shareholder
and $210,926 (CDN $282,725) from a related party to Sweet
Valley for a total of $272,848. These funds were used to pay
the Cash Amount for the Sweet Valley acquisition and $2,238
of the legal and accounting expenses incurred related to
this transaction.
b) Pursuant to the Sweet Valley asset purchase agreement dated May
25, 2004, and the amended agreement dated June 21, 2004, a
wholly-owned subsidiary Monaco purchased, effective July 1, 2004,
substantially all the assets and business of Sweet Valley, excluding
cash and accounts receivable, and assumed no liabilities except for a
business loan in the amount of $77,639 (CDN $104,067) and the premise
lease located 4055 Sladeview Cres., Unit #4, Mississauga, Ontario.
c) The expenses relating to the $12,640 accounts payable portion
that forms part of the Consideration paid (see Note 2) for the Sweet
Valley transaction were incurred by a subsidiary of Monaco subsequent
to June 30, 2004. These accounts payable were not previously accrued
on Monaco's consolidated balance sheet as at June 30, 2004.
d) During the month of June 2004, a subsidiary of Monaco sold
products to the predecessor to Sweet Valley in the amount of $80,342
(CDN $109,080). This amount has been eliminated from Monaco's pro
forma consolidated statement of operations for the period ended June
30, 2004. As at June 30, 2004, a subsidiary of Monaco had accounts
receivable from Sweet Valley in the amount of $83,434 (CDN $111,835).
Pursuant to the Sweet Valley asset purchase agreement, Monaco's
subsidiary did not acquire the accounts receivable and account payable
of Sweet Valley as at June 30, 2004, therefore, Sweet Valley's
accounts receivable and accounts payable as presented in Monaco's pro
forma consolidated balance sheet as at June 30, 2004 did not include
these amounts and no further elimination was done for Monaco's
subsidiary's accounts receivable from Sweet Valley as at June 30,
2004.
Note 5 Pro Forma Earnings Per Share
- ------ ----------------------------
Pro forma earnings per share has been calculated using the historical
weighted average number of shares previously reported by Monaco
combined with the shares issued pursuant to the Sweet Valley purchase
agreement.
(c) Exhibits
Exhibit Number Description
- -------------- -----------
4.3 Exchange Agreement, dated as of July 27, 2004, by and among
Monaco Group Inc, MG Holdings Inc., and Sweet Valley Foods
Inc.*
4.4 Certificate of Incorporation of MG Holdings, dated November
10, 2003*
4.5 Amendment to the Certificate of Incorporation of MG
Holdings, dated July 16, 2004*
10.2 Asset Purchase Agreement dated May 25, 2004 by and among
Monaco Group Inc, MG Holdings Inc., and Sweet Valley Foods
Inc. (incorporated by reference from the Company's Current
Report on Form 8-K filed with the SEC on May 28, 2004).*
10.3 Asset Purchase Amending Agreement dated June 21, 2004 by and
among Monaco Group Inc, MG Holdings Inc., and Sweet Valley
Foods Inc. (incorporated by reference from the Company's
Current Report on Form 8-K/A filed with the SEC on June 22,
2004).*
* Previously filed.
SIGNATURES
----------
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Monaco Group Inc.
(Registrant)
/s/ Peter Nelipa
----------------------------
Peter Nelipa
Chief Executive Officer
(Duly Authorized Officer)
Date: November 15, 2004
EXHIBIT INDEX
-------------
Exhibit Number Description
- -------------- -----------
4.3 Exchange Agreement, dated as of July 27, 2004, by and among
Monaco Group Inc, MG Holdings Inc., and Sweet Valley Foods
Inc.*
4.4 Certificate of Incorporation of MG Holdings, dated November
10, 2003*
4.5 Amendment to the Certificate of Incorporation of MG
Holdings, dated July 16, 2004*
10.2 Asset Purchase Agreement dated May 25, 2004 by and among
Monaco Group Inc, MG Holdings Inc., and Sweet Valley Foods
Inc. (incorporated by reference from the Company's Current
Report on Form 8-K filed with the SEC on May 28, 2004).*
10.3 Asset Purchase Amending Agreement dated June 21, 2004 by and
among Monaco Group Inc, MG Holdings Inc., and Sweet Valley
Foods Inc. (incorporated by reference from the Company's
Current Report on Form 8-K/A filed with the SEC on June 22,
2004).*
* Previously filed.