THREAD ALERT
MEIS
techstocks.com
This company owns 62% of USBL. USBL trades @ ~$3 and Seems to me that MEIS should be worth at least $1.50 and move with USBL.
some highlghts:
as the USBL goes so does MEIS. I feel the USBL will be very successful. Here in Shreveport we have minor league hockey, baseball and soccer. I think a minor league basketball league thruout the United States will be successful.
from the MEIS SEC 10k filing June1997. New filing due in a couple of weeks.
Form 10-KSB
FOR ANNUAL AND TRANSITION REPORTS
PURSUANT TO SECTIONS 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
[x] Annual Report Pursuant to Section 13
or 15(d) of The Securities Exchange Act of 1934
For the fiscal year ended February 28, 1997
or
[ ] Transitional Report Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934
For the transition period from to
Commission File Number 0-21547
MEISENHEIMER CAPITAL, INC.
(Exact Name of registrant as specified in its charter)
Delaware 06-1101766
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
46 Quirk Road, Milford, Connecticut 06460
(Address of principal executive offices) (Zip Code)
Issuer's telephone number, including area code: (203) 877-9508
Securities registered pursuant to Section 12(b) of the Act:
Common Stock - $.01 par value
Securities registered pursuant to Section 12(g) of the Act:
Indicate by check mark whether the Registrant (1) has filed all reports required to be filed
by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12
months (or for such shorter period that the registrant was required to file such reports), and
(2) has been subject to such filing requirements for the past 90 days.
Yes [ X ] No [ ]
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation
S-K is not contained herein, and will not be contained, to the best of registrant's
knowledge, in definitive proxy or information statements incorporated by reference in Part
III of this Form 10-K or any amendments to this Form 10-K. [ X ]
State the aggregate market value of the voting stock held by non-affiliates of the registrant.
The aggregate market value shall be computed by reference to the price at which the stock
was sold, or the average bid and asked prices of such stock, as of a specified date within
60 days prior to the date of filing.
$841,281.25
APPLICABLE ONLY TO CORPORATE REGISTRANTS
Indicate the number of shares outstanding of each of the registrant's classes of common
stock, as of the latest practicable date.
The number of shares of the registrant's Common Stock outstanding as of May 15, 1997
was 4,471,028 shares.
Part I
ITEM 1. DESCRIPTION OF BUSINESS
General
Meisenheimer Capital, Inc. ("MCI" or the "Company") was organized under the laws of the
State of Delaware in December, 1983. In 1984, the company made an initial public offering
pursuant to a Registration Statement on Form S-18 which was declared effective by the
Securities and Exchange Commission on or about July 27, 1984. Pursuant to the offering,
the Company sold
1,130,000 Units at $1.00 a Unit for net proceeds of approximately $995,000. Each Unit
consisted of one share of common stock (the "Common Stock") and one warrant entitling
the holder thereof to purchase one share of Common Stock. The Warrants expired in
April, 1985.
Since 1984, the Company has been engaged, through its subsidiary, the United States
Basketball League, Inc. ("USBL") in the business of developing and managing a
professional basketball league, the "United States Basketball League" (the "League"). In
1992, the Company acquired another subsidiary, Cadcom, Inc., ("Cadcom"), incorporated
in the State of Connecticut
in 1987. Cadcom is engaged in the business of manufacturing component parts for high
tolerance aircraft parts. In August, 1995, MCI established another wholly owned
subsidiary, Meisenheimer Real Estate Holdings Inc. ("MCR") to acquire the office and
factory that it had been previously leasing.
MCI owns approximately 52% of the issued and outstanding stock
of USBL which consists of both common and preferred stock. The principals of MCI and
members of their immediate family (the "Meisenheimer Family") and affiliated entities own
approximately 31% and the balance of 17% is owned by members of the public. MCI
owns all of the issued and outstanding stock of Cadcom and MCR.
USBL Subsidiary
USBL owns and manages the United States Basketball League (the
"League"). The League was established to provide a professional summer basketball
league. The participating players are either recent college graduates or free agents not under
contract with teams in the National Basketball Association (the "NBA") or are players
under contract to foreign teams but who are permitted to play in the United States in their
off-season. The League
provides a vehicle to these players to improve their skills and further affords the players the
opportunity to showcase their professional ability and possibly be selected by one of the
teams in the NBA. The League's season, from early May to early July of each year, was
designed specifically to give the players the opportunity to be scouted by NBA teams and
possibly be selected to participate
in the various summer camps of the individual teams comprising the NBA, which summer
camps are normally held in the latter part of July and August of each year. To date,
approximately 107 USBL players have made NBA rosters after playing with teams in the
League. USBL also provides a training program for referees who aspire to referee in the
NBA.
Each team comprising the League has an active roster of ten players during the season, and
each team plays 26 games per season. The League also has playoffs at the conclusion of
the regular season.
Since the inception of the League to the present time, the number of active franchises has
fluctuated from seven to its present high for the 1997 season of twelve franchises. The
current active franchises, divided into two divisions, the Southern Division and the Northern
Division, are located in Atlanta, Georgia (the Atlanta Trojans); Jacksonville, Florida (the
Jacksonville Barracudas); Raleigh, North Carolina (the Raleigh Cougars); Sarasota, Florida
(the Florida Sharks); Tampa, Florida (the Tampa Bay Windjammers); Atlantic City, New
Jersey (the Atlantic City Seagulls); Hooksett, New Hampshire (the New Hampshire
Thunder Loons); Milford, Connecticut (the Connecticut Skyhawks); Oyster Bay, New
York (the Long Island Surf);
Philadelphia, Pennsylvania (the Philadelphia Power); Portland, Maine (the Portland Wave);
and White Plains, New York (the Westchester Kings). In addition, there are two inactive
franchises owned by MCI which pay annual royalty fees.
Also, the Portland Wave franchise is owned in part (75%) by MCI.
Since 1984, USBL has sold a total of 29 franchises at various prices ranging from $10,000
to $75,000. An affiliate of the company also paid $100,000 for a franchise. The current
asking price for a franchise is $300,000; however, the Company has not been able to
consummate a sale at that price.
During the past four fiscal years, 1994 through 1997, the Company sold franchises to
non-affiliates for cash as set forth below:
Franchise Sales Price Cash Received
1.Mississippi Coast Gamblers $100,000 $25,000
2.Memphis Fires $100,000 $15,000
3.Florida Sharks $ 75,000 $75,000
4.Carolina Cardinals $250,000 $25,000
5.Atlantic City Seagulls $150,000 $50,000
6.Philadelphia Power $300,000 $50,000
Unless the sales price has been paid in full at time of purchase, each of the foregoing
franchises is required to pay the full sales price over time, and in the event payments are not
met, USBL will repossess the franchise.
At least 15 franchises previously sold have been terminated
because of non-payment of franchise obligations. In addition and during the fiscal year
ended February 29, 1996 ("Fiscal 1996"), USBL sold five (5)
franchises in a barter transaction receiving in exchange 2,000,000 units of negotiable
television advertising due bills, and during the first quarter of Fiscal 1997 USBL entered
into an agreement to receive an additional 2,000,000 units of negotiable television
advertising due bills in exchange for five additional franchises. The 4,000,000 units of
advertising time are with American
Independent Network ("AIN") which employs satellite transmissions to certain affiliated
television stations in approximately 90 cities throughout the United States. Management has
valued the advertising due bills received in Fiscal 1996 and the first quarter of Fiscal 1997
at $500,000. (See Financial Information.)
USBL has already used approximately 300,000 units to broadcast certain selective League
games. The Company may use the remainder of the available television time to broadcast
its games or, in the alternative, sell off the available television time assuming that USBL can
locate buyers. The barter transaction requires
that the 10 franchise teams must be established within ten years from the date of the
transactions. To date, none of these franchises have been activated. The Company has no
assurance that any of the franchises will ever be established. In addition, the Company
retains the right to approve or disapprove the ultimate franchisee.
In addition, during the fiscal year ended February 28, 1997 ("Fiscal 1997"), USBL also
sold the New Hampshire Thunderloons and received in exchange 300,000 Units of
negotiable credits in a barter network which entitles USBL to receive products and services
(travel, advertising and lodging).
Under the standard franchise agreement employed by USBL, the term of the franchise is
for ten (10) years with rights of renewal. In addition to the initial purchase price for the
franchise, the franchisees are currently required to pay an annual royalty fee of $15,000 per
year. Currently, four of the franchises are in arrears in their annual royalty fees. The
Company has the
right to terminate these franchises but has not elected to do so. In addition, because of the
Company's desire to have the League expand, the Company, in the past, has waived annual
royalty fees under certain circumstances.
The Franchise Agreement employed by USBL also entitles USBL to receive television
revenues on a sharing basis with the teams in connection with any television broadcasting of
national or regional games. To date, USBL has not received any revenues. The Franchise
Agreement also provides for USBL to receive
revenues from the sale of team and league merchandise. Revenues from these sources have
been negligible. The Franchise Agreement also requires USBL to use its good faith efforts
to obtain sponsorships for each team and the league. Such sponsorship is generally from
local or national corporations. The sponsorships,
which for the last several years have been negligible, have generally taken the form of free
basketballs, uniforms, air line tickets and discount accommodations for traveling teams.
Since the inception of the League and to date, only one of the franchises has operated
profitably. This has been primarily due to the inability of USBL, because of insufficient
capital, to properly promote the League, and USBL's inability to attract any meaningful
sponsorships for the individual teams. Likewise, gate attendance for some teams has
historically been poor. As a result, the sale of additional franchises either to maintain a
constant level of active franchises or to enlarge the League has historically proven difficult
for USBL.
From the inception of the League, USBL has operated at a loss. This has been due to the
poor sales of franchises and the inability of the franchisees to pay their annual royalty fees.
As a result, both MCI and USBL have been dependent on loans and advances from
officers, directors and their affiliates. (See "Financial Information" and "Certain
Relationships and Related
Transactions".) For Fiscal years ended 1995, 1996 and Fiscal 1997, the Company's
auditors and USBL's auditors have expressed concerns in their opinion as to the ability of
both MCI and USBL to continue as going concerns. See "Financial Information".
USBL currently employs four full time employees consisting of the President, Daniel T.
Meisenheimer III, who also acts as Commissioner of the League; a Director of
Administration; a Director of Public Relations, and a Director of Operations. During the
League season, the Company employs additional staff including approximately 50 referees
who are paid on a per game basis. In
addition, USBL plans to establish an advisory board consisting of former basketball stars
and franchise owners.
Future Plans of USBL
USBL has, as its ultimate goal, the establishment of at least sixty (60) franchises throughout
the United States, consisting of fifteen (15) teams in four regional divisions. This would
result in regional play-off games and then a final championship series. The Company is also
attempting to develop a formal association with the NBA. At the present time, the
Continental
Basketball Association (the "CBA"), a league consisting of 13 teams, is regarded as the
minor league of the NBA, and as such, receives financial support from the NBA. The
Company believes that a formal association with the NBA would enhance the value of the
franchises and attract more significant gate attendance.
Likewise, the Company intends to use some of the television time available to it to
broadcast more games which the Company believes would create additional fan interest
and serve to attract additional franchisees. However and given the difficulties encountered
by the Company to date in the sale of additional
franchises, the Company may not be able to achieve its long-range goals without additional
capital to properly promote the League. While gate attendance has been poor historically,
there has been steady growth over the past three seasons. If gate attendance continues to
increase, the Company believes that this will facilitate franchise sales.
Cadcom, Inc.
MCI's other operating subsidiary is Cadcom Inc. ("Cadcom") which was incorporated in
Connecticut in 1987. Cadcom is wholly owned by MCI and was acquired by MCI in
February, 1992 from Synercom Inc. ("Synercom"), a corporation owned and controlled by
the President of MCI and members of the Meisenheimer Family.
Cadcom operates as a subcontractor manufacturing aluminum and stainless steel
components for high tolerance aircraft parts for both fixed wing aircraft and helicopters
which components are mainly used in pressure switches, fuel valves and various indicators
and instruments. Ninety-nine percent (99%) of Cadcom's business is derived from orders it
receives from Spectrum Associates
Inc. ("Spectrum"), a Connecticut corporation owned and controlled by Synercom.
Spectrum manufacturers crash resistant breakaway valves, pressure switches, indicators
and other specialized components for the aircraft industry.
Approximately twenty-five (25%) percent of Spectrum's revenues are derived from orders
from Sikorsky Aircraft Inc. and thirty-five (35%) percent is derived from orders from
various divisions of the U.S. Armed Forces and the Department of Defense. The balance of
Spectrum's orders are from other major aircraft manufacturers. Spectrum contracts with
Cadcom as a subcontractor for
approximately 70% of Spectrum's requirements for aluminum and stainless steel
components. Cadcom is presently making efforts to diversify its customer base to eliminate
its dependence upon Spectrum; however, there can be no assurances that Cadcom will be
able to diversify its customer base.
Cadcom's manufacturing process is controlled by rigid standards established by both the
Federal Aviation Authority ("FAA") and the Department of Defense. The manufacturing
process utilizes highly sophisticated computer-controlled turning and milling machinery.
Approximately sixty (60%) of the equipment is rented by Cadcom under capital leases
from Synercom. In Fiscal
1997, Cadcom contributed approximately 58% of the total revenues generated by MCI. In
prior years, Cadcom accounted for almost all of MCI's revenues. Because of Cadcom's
dependency on Spectrum, any decline in Spectrum's business would have an adverse
impact on Cadcom's results of operations. Cadcom is actively seeking other outside
business to lessen its dependency on Spectrum.
Cadcom employs nine (9) people consisting of a plant manager and office manager and
seven factory personnel.
Government Regulation
Because USBL is actively engaged in the sale of franchises, it is required to comply with the
laws established by those states in which it has offered and currently offers franchises. Such
compliance includes registering as a franchisor and approval of the Franchise Agreement
with appropriate State agencies. USBL is currently in full compliance.
Cadcom is subject to manufacturing standards established by both the FAA and the
Department of Defense. As such, it is subject to inspection by the FAA and the
Department of Defense to insure that the manufacturing process and the end products
comply with such regulations. Likewise, Cadcom is subject to both local and state
environmental regulations. As of this date,
Cadcom is in full compliance with all local and state regulations.
Revenues for the nine month period ended November 30, 1997, totaled $1,329,370. This
represented a 25% increase from the corresponding period ended November 30, 1996.
This increase was due, mainly, to the increase of USBL revenues by approximately
$270,000, including $250,000 in initial franchise fees collected in a noncash transaction for
advertising credits. Machined parts sales by the Company's Cadcom subsidiary remained
substantially, the same as in prior year period.
The Company is making efforts to revitalize the USBL by seeking additional equity capital
and making new USBL franchisees. In addition, the Company is seeking to expand its
machine shop business (Cadcom) by finding new customers for its services. The Company
also hopes to increase exposure to the USBL to new potential fans and franchise owners
by airing additional games on cable television
More DD to follow
Joe PTG&LI !!!
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