Lotta questions there Chris, LOL I gotta do everything? Free Edgar won't find the symbol, that's common, and you have to type in the company name.
Monster long post coming here, free eddie links don't work so good.
freedgar.com
<from 500+ shares to 10M shares> Nope, 585,000 and 10MM (million)
Here ya go, I didn't read all gazillion pages, so maybe I missed something good.
parto uno:
Introduction
An investment in these securities involves risks. See "Risk Factors".
American Group, Inc. (the "Company"), a Nevada Corporation, was
incorporated in 1994. Since May 1998 the Company's principal business has been
the custom blending of soil mixes for the commercial nursery industry. The
Company through its wholly owned subsidiary LPS Acquisition Corp. ("LPS") does
business under the name Lantana Peat and Soil ("Lantana"). Lantana is a
distributor of custom blended soil mixes to several hundred wholesale nursery
customers located primarily in Florida. Prior to August, 1997 Lantana was owned
by Kedac, Inc. ("Kedac") See "History".
On August 15, 1999 the Company, through its wholly owned subsidiary
9075-7774 Quebec, Inc. acquired 9006-1474, Quebec, Inc.("Torland"), a Canadian
sphagnum peat moss bog and processing facility. The Company paid $400,000 at the
time of closing and is required to pay an additional $835,000 during the coming
year. Further, the Company issued an additional 700,000 shares of its common
stock pursuant to the Torland transaction. The Company is presently trying to
raise the remaining $835,000 in capital needed to fund the balance of the
transaction. There can be no assurance that the Company will be successful with
this or any other activity to raise additional capital.
History
In December, 1994 Kedac entered into an agreement to acquire the assets
and liabilities of Can-Flo International, Inc.("Can-Flo"), which consisted of
the operations of Lantana. Can-Flo received cash and notes from Kedac. Mr. Eric
Deckinger was the owner and executive officer of Kedac.
In December, 1994 Kedac acquired an option to purchase Torland directly
from the shareholders of Torland in exchange for an exclusive supply agreement
for Torland's quality sphagnum peat moss, to be purchased at a premium price by
Kedac. This option to purchase Torland subsequently expired in January, 1996.
Upon termination of the option Kedac entered into a new agreement with Torland
which provided Kedac with an exclusive supply agreement. Torland received an
exclusive supply agreement for its quality sphagnum peat moss at a premium price
and Kedac maintained a quality source of supply of Canadian sphagnum peat moss.
In July, 1997 Lator International, Inc. ("Lator"), obtained an option
to purchase Torland from the shareholders of Torland in exchange for a loan to
Torland, which loan was collateralized by inventory. This option served as the
basis of the Company's August, 1999 acquisition of Torland.
As a result of litigation filed against Kedac in May, 1995 by a creditor
of Can-Flo claiming a fraudulent transfer of assets from Can-Flo, Kedac filed
under Chapter 11 of the Bankruptcy Code in January, 1997 in order to stop the
litigation. In August, 1997, the Bankruptcy court (i) approved a liquidating
Chapter 11 plan for Kedac whereby LPS purchased the assets and assumed the
liabilities of Kedac for cash and (ii) discharged the lawsuit against Kedac. One
of the assets acquired by LPS was the name Lantana Peat and Soil and LPS has
continued to operate the Company under that name. Mr. Deckinger continued to be
general manager of LPS.
In September, 1997 the shareholders of LPS sold 100% of its outstanding
stock to Coventry Industries Corp. ("Coventry") for shares of stock in Coventry,
a Florida holding company. This transaction resulted in LPS becoming a wholly
owned subsidiary of Coventry. Mr. Deckinger remained general manager of LPS and
became a preferred stockholder of Coventry in exchange for his assumption of
existing indebtedness of LPS ("Indebtedness").
On May 31, 1998 the Company acquired all the common stock of LPS from
Coventry for 120,000 shares of the Company's common stock. As part of this
transaction Mr. Deckinger agreed to convey back his preferred stock in Coventry
and the Company agreed to assume his Indebtedness. In addition, the Company
purchased all the common stock of Lator for 30,000 shares of the Company's
common stock and assumption of accrued expenses and notes payable. Mr. Deckinger
continued to function in his capacity as general manager of LPS and became
president of the Company. In November, 1998 Mr. Deckinger assumed $750,000 of
the Company's debt in exchange for 7,500,000 shares of the Company's common
stock.
<PAGE>
On August 15, 1999 the Company, through its wholly owned Canadian
subsidiary 9075-7774 Quebec, Inc. acquired Torland, 9006-1474 Quebec, Inc., a
Canadian sphagnum peat moss bog and processing facility. The purchase required
the Company to pay $400,000 at the time of closing and requires payment of an
additional $835,000 as follows: $200,000 on October 15, 1999, $70,000 on
November 15, 1999, $200,000 on January 15, 2000, $200,000 on May 15, 2000 and
$165,000 on August 17, 2000. This obligation is payable with interest at 8% per
annum. Further, the Company has issued an additional 700,000 shares of its
common stock to the shareholders of Torland. The Company has not made its
October payment under its agreement. The Company and representatives of the
former shareholders of Torland are presently negotiating a written extension on
the payment of this obligation. The Company has not been provided with any
notice of default under this obligation. The Company believes that it will be
able to negotiate a written extension for the payment to the former shareholders
of Torland. No assurance, however, can be given that the Company will be
successful in negotiating an extension of its payment obligations or that if
successful it will be able to raise the additional capital necessary to make its
payment.The Company is presently trying to raise the capital needed to fund the
balance of the transaction in an exempt offering of debt. There can be no
assurance that the Company will be successful with this or any other activity to
raise additional capital.
Business Activities
The Company, through its wholly owned subsidiary LPS, is a custom
blender of soil mixes for the commercial nursery industry. The Companys current
annual revenue is approximately $2,200,000. The Company's principal supplier of
sphagnum peat moss is Torland.
In February, 1999, the Company began construction of a new $1,500,000
soil blending facility located near Homestead, Florida, the heart of the Florida
nursery industry, which will have the capacity to produce upwards of $15,000,000
in blended soil products annually. In addition to the increased capacity, the
new facility is located within fifteen minutes drive time to the Homestead
markets. The plant is anticipated to be completed in February, 2000. The Company
is presently trying to raise the capital needed to finance the balance needed to
complete the construction of the new plant. There can be no assurance that the
Company will be successful with this or any other activity to raise additional
capital.
Soil Blending
The Company's ingredients for custom soil blending are Canadian and
Florida peat moss, sawdust, sand, wood chips, pine bark and wood mulch. The soil
blends are made for a specific purpose such as the germination of seeds, the
propagation of cuttings, growing plants and flowers in pots.
The Company obtains raw materials for its blending processes from
Torland and locations throughout Florida and Southern Georgia.
Differentiation From Competition
The Company differentiates itself from competitors by its relationship
with Torland, which allows it to purchase high quality sphagnum peat moss at
approximately 66% of the cost of other suppliers. Current market pricing for a
55 cubic foot bale of Canadian sphagnum peat moss is between $82 - $93 per bale.
The Company purchases the same size bale from Torland at $60 per bale. The
planned "state of the art" mixing plant located near Homestead, Florida will
significantly increase the Company's capacity to produce its custom blended soil
products with efficiencies that are expected to reduce the Company's current
unit costs, and enhance its commitment to customer service.
<PAGE>
Seasonality
The Company's customers are primarily commercial nurseries which
require soil mixes on a twelve month basis. The Company's strongest months for
delivery to customers occurs during April through June and mid-August through
November.
Marketing
The Company markets its products by direct sales. LPS's current
customer base is composed of approximately 350 commercial nurseries throughout
Florida.
Government Regulation
The Company is subject to federal, state and local regulations
including environmental protection regulations. Such regulations deal with the
handling, transport and disposal of materials the Company uses in its processes.
The Company believes that it is in compliance with these regulations.
Trademarks
The Company has registered trademarks for the names "AGRO PEAT & SOIL",
"AGROMIX" and "AGROMAX".
Employees
As of September, 1999, the Company had 12 employees of which four are
in management. The Company believes that its labor relations are good. No
employee is represented by a labor union.
Subsidiaries
The Company has three wholly-owned subsidiaries, LPS Acquisition Corp.,
a Florida corporation, dba Lantana Peat and Soil, Lator International, Inc., a
Florida corporation and 9075-7774 Quebec, Inc. d/b/a/ Torland. LPS operates the
soil mixing business of the Company. Lator was acquired in order to obtain its
right to acquire Torland. 9075-7774 Quebec, Inc. acquired Torland on August 15,
1999.
The principal executive offices of the Company are located at 10570
Hagen Ranch Road, Boynton Beach, Florida 33437, tel. (888) 328-9322. The
Company's stock symbol on the OTCBB is "MOSS".
Risk Factors
Going Concern Considerations
In Note 2 to the audited financial statements, the Company's
independent auditors have reported that the Company has suffered recurring
losses from operations that raise substantial doubt about its ability to
continue as a going concern. The Company's operating losses and the Company's
need for financing raises substantial doubt about the Company's ability to
continue as a going concern. During the year ended May 31, 1999, the Company
incurred net losses of $925,599 and during the year ended May 31, 1998, the
Company incurred a net loss of $818,088. Also, during the year ended May 31,
1999, the Company had negative working capital of $585,516. These factors along
with an accumulated deficit of $1,746,002 at May 31, 1999 raise substantial
doubt about the Company's ability to continue as a going concern.
<PAGE>
In the event that the Company is unable to generate sufficient revenues
from operations, or is unable to obtain additional financing, it may be unable
to provide for its present cost levels, and this raises substantial doubt about
the Company's ability to continue as a going concern and the stockholders may
lose their entire investment.
Management's plans in regard to this matter are to raise capital,
become profitable by integrating its operations with Torland and increase
efficiency by relocating its operations into a new state of the art soil
blending facility near Homestead, Florida, close to the major portion of its
customer base. Additionally, the Company plans, along with the integration with
Torland, to begin utilizing this state of the art soil blending plant, which
management believes will substantially decrease its operating costs. Management
believes these efforts will generate positive cash flow. There can be no
assurance that the Company's planned financing activities will be successful or
that the Company will have the ability to implement its business plan and
ultimately attain profitability. The Company's long-term viability as a going
concern is dependent upon three key factors, as follows:
1. The Company's ability to obtain adequate sources of debt or
equity funding to meet current levels of operations and fund
the expansion of its business operations;
2. The ability of the Company to acquire or internally develop
viable businesses and assets; and
3. The ability of the Company to ultimately achieve adequate
profitability and cash flows from operations to sustain and
expand its operations.
Torland Obligation
In connection with its acquisition of Torland, the Company is obligated
to pay, in addition to the $400,000 it paid at the time of closing, an
additional $835,000 as follows: $200,000 on October 15, 1999; $70,000 on
November 15, 1999; $200,000 on January 15, 2000; $200,000 on May 15, 2000; and
$165,000 on August 17, 2000.
The Company has not made the October payment. The Company and
representatives of the former shareholders of Torland are presently negotiating
a written extension on the payment of this obligation. The Company has not been
provided with any notice of default under this obligation. The Company believes
that it will be able to negotiate a written extension for the payment of its
obligation to the former shareholders of Torland. No assurance, however, can be
given that the Company will be successful in negotiating an extension of its
payment obligations or that if successful it will be able to raise the
additional capital necessary to make its payment.
Financing
Until such time as the operating results of the Company improve
sufficiently, the Company must obtain outside financing to fund the expansion of
the business and to meet the obligations of the Company as they become due. Any
additional debt or equity financing may be dilutive to the interests of the
shareholders of the Company. Such outside financing must be provided from the
sale of equity securities, borrowing, or other sources of third party financing.
Further, the sale of equity securities could dilute the Company's existing
stockholders' interest, and borrowings from third parties could result in assets
of the Company being pledged as collateral and loan terms which would increase
its debt service requirements and could restrict the Company's operations. There
is no assurance that capital will be available from any of these sources, or, if
available, upon terms and conditions acceptable to the Company.
Competition
There are a number of companies which provide soil mixes to commercial
nurseries. Other companies emphasize service, price, or distribution as
competitive strategies. Many of the Company's competitors are well established
companies with substantially greater capital resources, research and development
staffs and facilities, and substantially greater marketing capabilities than the
Company. No assurances can be given that the Company will be able to
successfully compete with such companies or alternative technologies.
<PAGE>
Penny Stock Securities Law Considerations
The Company's stock is considered penny stock and subject to the penny
stock rules promulgated under the Securities Exchange Act of 1934, Rules 15g-1
to 15g-9. The penny stock rules require broker-dealers to take steps under
certain circumstances prior to executing any penny stock transactions in
customer accounts. Among other things, Rule 15g-3 requires a broker or dealer to
advise potential purchasers of a penny stock of the lowest offer and highest bid
quotations for such stock, and Rule 15g-4 requires a broker or dealer to
disclose to the potential purchaser its compensation in connection with such
transaction. Under Rule 15g-9, a broker or dealer who recommends such securities
to persons other than established customers must make a special written
suitability determination for the purchaser and receive the purchaser's prior
agreement to such a transaction. The effect of these regulations may be to delay
transactions in stocks that are deemed to be penny stocks, and therefore sales
of the Company's common stock by brokers or dealer and resales by investors
could be adversely affected.
Shares Eligible for Future Sale
Of the outstanding shares of common stock of the Company as of
September 15, 1999, the Company had outstanding 18,815,000 shares of common of
which approximately 10,535,000 are free trading shares, and approximately
7,580,000 shares are restricted securities as that term is defined in Rule 144
adopted under the Act ("Restricted Securities"). Rule 144 governs resales of
Restricted Securities for the account of any person, other than an issuer, and
restricted and unrestricted securities for the account of an "affiliate" of the
issuer. Restricted securities generally include any securities acquired directly
or indirectly from an issuer or its affiliates which were not issued or sold in
connection with a public offering registered under the Securities Act. An
affiliate of the issuer is any person who directly or indirectly controls, is
controlled by, or is under common control with, the issuer. Affiliates of the
Company may include its directors, executive officers, and persons directly or
indirectly owning 10% or more of the outstanding common stock. Under Rule 144,
unregistered resales of restricted common stock cannot be made until it has been
held for one year from the later of its acquisition from the Company or an
affiliate of the Company. Thereafter, shares of common stock may be resold
without registration subject to Rule 144's volume limitation, aggregation,
broker transaction, notice filing requirements, and requirements concerning
publicly available information about the Company ("Applicable Requirements").
Resales by the Company's affiliates of restricted and unrestricted common stock
are subject to the Applicable Requirements. The volume limitations provide that
a person, or persons who must aggregate their sales, cannot, within any
three-month period, sell more than the greater of (i) one percent of the then
outstanding shares, or (ii) the average weekly reported trading volume during
the four calendar weeks preceding each such sale. A person who is not deemed an
"affiliate" of the Company and who has beneficially owned shares for at least
two years would be entitled to sell such shares under Rule 144 without regard to
the Applicable Requirements. The Company believes that approximately no shares
of its restricted common stock have been held for more than two years, and
therefore may not be sold by non-affiliates without limitation. No prediction
can be made as to the effect, if any, that sales of shares of common stock or
the availability of such shares for sale will have on the market prices
prevailing from time to time. Nevertheless, the possibility that substantial
amounts of common stock may be sold in the public market would likely have a
material adverse effect on prevailing market prices for the common stock and
could impair the Company's ability to raise capital through the sale of its
equity securities.
Item 2. Management Discussion and Analysis of Financial Condition
The following Management Discussion and Analysis of Financial Condition
is qualified by reference to and should be read in conjunction with, the
Company's Consolidated Financial Statements and the Notes thereto as set forth
beginning on page F-1.
Forward-looking Statement and Information
The Company is including the following cautionary statement in this
Form 10-SB for any forward-looking statements made by, or on behalf of, the
Company. Forward-looking statements include statements concerning plans,
objectives, goals, strategies, expectations, future events or performance and
underlying assumptions and other statements which are other than statements of
historical facts. Certain statements contained herein are forward-looking
<PAGE>
statements and, accordingly, involve risks and uncertainties which could cause
actual results or outcomes to differ materially from those expressed in the
forward-looking statements. The Company's expectations, beliefs and projections
are expressed in good faith and are believed by the Company to have a reasonable
basis, including without limitations, management's examination of historical
operating trends, data contained in the Company's records and other data
available from third parties, but there can be no assurance that management's
expectations, beliefs or projections will result or be achieved or accomplished.
In addition to other factors and matters discussed elsewhere herein, the
following are important factors that, in the view of the Company, could cause
actual results to differ materially from those discussed in the forward-looking
statements: the ability of the Company to effectuate and successfully operate
acquisitions and the ability of the Company to obtain acceptable forms and
amounts of financing to fund planned acquisitions.
Introduction
The Company's continued existence is dependent upon its ability to
resolve its liquidity problems, principally by obtaining equity capital and
commencing profitable operations. While pursuing equity capital, the Company
must continue to operate on cash flow generated from operations and financing
activity. The Company experienced a loss of $925,599 for the year ended May
31, 1999 and has a negative working capital of $585,516. In 1998 and 1999, the
Company loaned Torland $967,500 (in connection with four different agreements
totaling $967,500) to fund its operations and to acquire capital assets. In that
the Company completed its acquisition of Torland this indebtedness has become an
intercorporate liability. These factors raise substantial doubt about the
Company's ability to continue as a going concern. Management's plans in regard
to this matter are to raise capital, become profitable by integrating its
operations with Torland and increase efficiency by relocating its operations
into a new state of the art soil blending facility in Homestead, Florida, close
to the major portion of its customer base. Additionally, the Company plans,
along with the integration with Torland, to begin utilizing this state of the
art soil blending plant, which management believes will substantially decrease
its operating costs. Management believes these efforts will generate positive
cash flow.
Year Ended May 31, 1999 compared to for the period ended June 18, 1997 (date of
inception) through May 31, 1998
Revenues for the year ended May 31, 1999 were $2,240,995 compared to
$1,769,179 for the period ended June 18, 1997 (date of inception) through May
31, 1998. The increase in sales can be attributed to sales to an expanded
customer base.
Gross profit margins as a percentage of revenues for the year ended May
31, 1999 and 1998 were 6.9% and 17.3%, respectively. The decrease in the gross
profit margin can be attributed to increased labor and material costs as a
percentage of sales.
Operating expenses for the year ended May 31, 1999 and 1998 were
$1,000,860 and $1,048,212, respectively, consisting of selling, general and
administrative expenses, including the payment-in-kind of common stock of the
Company valued at $8,000 during the year ended May 31, 1999.
The net loss of $925,599 for the year ended May 31, 1999 consists of
non-cash losses of $82,591 (which includes depreciation and amortization costs
of $74,591) and operating losses of $843,008. The net loss of $818,088 for the
year ended May 31, 1998 consists of operating losses.
At May 31, 1999, the Company had cash and cash equivalents of $13,397
which was an increase of $9,850 compared to the cash held at May 31, 1998.
During the year ended May 31, 1999, the Company used net cash for operations of
$531,863, which was primarily due to the Company's operating loss. This was
funded by additional borrowings. In addition, the Company had a working capital
deficit of $483,529 at May 31, 1999.
<PAGE>
Three months Ended August 31, 1999 compared to for the three months ended August
31, 1998
Revenues for the three months ended August 31, 1999 were $572,141
compared to $620,605 for the three months ended August 31, 1998. The decrease in
sales can be attributed to seasonal fluxuation due to changing weather patterns
in 1999.
Gross profit margins as a percentage of revenues for the three months
ended August 31, 1999 and 1998 were (1.2%) and 18.2%, respectively. The decrease
in the gross profit margin can be attributed to increased labor and material
costs as a percentage of sales. The Company's current facility is not adequate
to handle the volume of business currently in place. The Company is currently
relocating to Homestead, FL where it is expected to reverse this trend.
Operating expenses for the three months ended May 31, 1999 and 1998
were $130,929 and $145,586, respectively, consisting of selling, general and
administrative expenses.
The net losses for the three months ended August 31, |
