Marshall Holdings International, Inc. 2555 East Washburn Road North Las Vegas, NV 89081 United States - Map Phone: 702-317-2400 Fax: 702-940-1029
DETAILS Index Membership: N/A Sector: Financial Industry: Diversified Investments Full Time Employees: NaN
BUSINESS SUMMARY Gateway Distributors, Ltd. operates as a distributor of vitamins, nutritional supplements, whole health foods, and skin care products principally in the United States and Canada, as well as in Russia and Indonesia. Its nutritional products include Body Gard with Lactoferrin, Femme, Fulvic Factor, Lifetonic, LifeZymePlus, Master Formula powder and capsules, Natural Immunity, Superfood powder and capsules, and Vibrant 9 skin care product. The company distributes its products through distributors and wholesalers to the retail customers. Gateway Distributors was founded in 1993 and is based in North Las Vegas, Nevada.
Key Statistics
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KEY EXECUTIVES Pay Exercised Mr. Richard A. Bailey , 51 Chairman, Chief Exec. Officer and Pres $ 240.00K N/A Mr. Flo Ternes , 58 Chief Operating Officer, Sec. $ 204.00K N/A Mr. Jamie Plante , Chief Financial Officer N/A N/A
Dollar amounts are as of 31-Dec-05 and compensation values are for the last fiscal year ending on that date. "Pay" is salary, bonuses, etc. "Exercised" is the value of options exercised during the fiscal year.
-------------------- LIFE IS 10% HOW YOU MAKE IT AND 90% HOW YOU TAKE IT! Posts: 9276 | From: San Diego CA | Registered: Jul 2006
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Going to get pumped again tomorrow...price is right, but the past is up in the Pacel catergory of ineptitude:
Current Capital Change shs decreased by 1 for 1000 split Pay Date: Dec 4, 2006 * Capital Change=shs decreased by 1 for 500 split. Effective date=3-28-05 * Capital Change=shs decreased by 1 for 1000 split. Effective date=12-20-04 * Capital Change=shs decreased by 1 for 1000 split. Effective date=9-3-04 * Capital Change=shs decreased by 1 for 900 split. Effective date=6-28-04 * Capital Change=shs decreased by 1 for 3000 split. Effective date=4-16-03 * Capital Change=shs decreased by 1 for 25,000 split. Pay date=12/06/2002.
-------------------- I may be wrong, but I don't think so.... Posts: 837 | From: Madison, WI | Registered: Sep 2005
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SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549
FORM 10-QSB
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2007.
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
COMMISSION FILE NUMBER: 000-27879
Marshall Holdings International, Inc. (Name of small business issuer in its charter)
NEVADA 88-0301278 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.)
2555 EAST WASHBURN ROAD, NORTH LAS VEGAS, NEVADA 89081 (Address of principal executive offices) (Zip Code)
(702) 317-2400 (Issuer's telephone number)
Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 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 whether the registrant is a shell company as defined in Rule 12b-2 of the Exchange Act. Yes [ ] No [X]
State the number of shares outstanding of each of the issuer's classes of common equity, as of the latest practicable date: As of June 30, 2007, the issuer had 202,357,320 shares of its common stock issued and outstanding.
Transitional Small Business Disclosure Format (check one): Yes [ ] No [X]
As used herein, the term "Company" refers to Marshall Holdings International, Inc., a Nevada corporation, and its subsidiaries and predecessors unless otherwise indicated. Unaudited, interim, condensed, consolidated financial statements including a balance sheet for the Company as of the period June 30, 2007, and statements of operations, and statements of cash flows, for interim periods up to the date of such balance sheet and the comparable period of the preceding year are attached hereto as Pages F-1 through F-11 and are incorporated herein by this reference.
BASIS OF PRESENTATION
The accompanying consolidated interim unaudited financial statements are presented in accordance with accounting principles generally accepted in the United States of America for interim financial information and the instructions for Form 10-QSB and Item 310 under subpart A of Regulation S-B. Accordingly, they do not include all of the information and footnotes required by accounting principles generally accepted in the United States of America for complete financial statements. The accompanying statements should be read in conjunction with the audited financial statements for the year ended December 31, 2006. In the opinion of management, all adjustments considered necessary in order to make the financial statements not misleading have been included. Operating results for the quarter and period ended June 30, 2007 are not necessarily indicative of results that may be expected for the year ended December 31, 2007. The financial statements are presented on the accrual basis.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION.
FORWARD-LOOKING INFORMATION
Much of the discussion in this Item is "forward looking." Actual operations and results may materially differ from present plans and projections due to changes in economic conditions, new business opportunities, changed business conditions, and other developments. Other factors that could cause results to differ materially are described in the Company's filings with the Securities and Exchange Commission.
There are several factors that could cause actual results or events to differ materially from those anticipated, and include, but are not limited to general economic, financial and business conditions, changes in and compliance with governmental laws and regulations, including various state and federal environmental regulations, the ability to obtain additional financing from outside investors and/or bank and mezzanine lenders and the ability to generate sufficient revenues to cover operating losses and position Marshall to achieve positive cash flow.
Readers are cautioned not to place undue reliance on the forward-looking statements contained herein, which speak only as of the date hereof. Management believes the information contained in this Form 10-QSB to be accurate as of the date hereof. Changes may occur after that date. Marshall will not update that information except as required by law in the normal course of its public disclosure practices.
Additionally, the following discussion regarding the Company's financial condition and results of operations should be read in conjunction with the financial statements and related notes contained in Item 1 of Part I of this Form 10-QSB, as well as the financial statements in Item 7 of Part II of the Company's Form 10-KSB for the fiscal year ended, December 31, 2006.
MANAGEMENT'S PLAN OF OPERATIONS AND DESCRIPTION OF BUSINESS
GENERAL
The Company was originally incorporated in the State of Nevada on May 26, 1993. The Company markets and distributes various nutritional and/or health and skin care products. The products which the Company sells are intended to provide nutritional supplementation to the users; the products are not intended to diagnose, treat, cure or prevent any disease.
The Company has acquired the business operations and assets of Marshall Distributing, ("Marshall's"), a wholesale distribution company that has been in business since 1974. Marshall's distributes natural products to retail stores around the country as well as providing natural products for drop ship and internet fulfillment utilizing state of the art technology. Marshall's provides a significant marketing and distribution channel for natural products. It also allows the company to expand its product offering exponentially from over one hundred and fifty natural product manufacturers. The Distribution facility is capable of servicing customers world wide and provides many opportunities and capacity for growth.
CURRENT BUSINESS PLAN
Marshall Holdings International, Inc. is a public trading company that acquires or creates companies that have potential to grow in revenue to provide an opportunity in the field of Distribution of products or services that enhance the lives of individuals through modern technology.
The Company's current purpose is to seek, investigate and, if such investigation warrants, acquire an interest in business opportunities presented to the Company by persons or firms who or which desire to seek the perceived advantages of a corporation which is registered under the Securities Exchange Act of 1934, as amended. The Company does not restrict its search to any specific business; industry or geographical location and may participate in a business venture of virtually any kind or nature.
The Company may seek a business opportunity with entities which have recently commenced operations, or which wish to utilize the public marketplace in order to raise additional capital in order to expand into new products or markets, to develop a new product or service or for other corporate purposes. The Company may acquire assets and establish wholly owned subsidiaries in various businesses or acquire existing businesses as subsidiaries. The company will continue to seek out potential merger candidates, acquisitions or business opportunities that enable expansion of market channels for distribution and sales of product to benefit and enhance the lives of individuals around the world.
As part of the Company's investigation of potential merger candidates, the Company's officers and directors will meet personally with management and key personnel, may visit and inspect material facilities, obtain independent analysis or verification of certain information provided, check references of management and key personnel and take other reasonable investigative measures, to the extent of the Company's financial resources and management expertise. The manner in which the Company participates in an opportunity will depend on the nature of the opportunity, the respective needs and desires of the Company and other parties, the management of the opportunity, the Company's relative negotiation strength and that of the other management.
The Company intends to concentrate on identifying preliminary prospective business opportunities that may be brought to the Company's attention through present associations of its officers and directors, or by stockholders. In
analyzing prospective business opportunities, the Company will consider such matters as the available technical, financial and managerial resources; working capital and other financial requirements; history of operations, if any; prospects for the future; nature of present and expected competition; the quality and experience of management services which may be available and the depth of that management; the potential for further research, development or exploration; specific risk factors not now foreseeable but which then may be anticipated to impact the Company's proposed activities; the potential for growth or expansion; the potential for profit; the perceived public recognition or acceptance of products, services or trades; name identification; and other relevant factors.
The Company's officers and directors will meet personally with management and key personnel of the business opportunity as part of the investigation. The Company will not acquire or merge with any company for which audited financial statements cannot be obtained within a reasonable period of time after closing of the proposed transaction, as required by the Exchange Act.
The Company will not restrict its search to any specific kind of firms, but may acquire a venture which is in its preliminary or development stage, which is already in operation, or which is in essentially any stage of its corporate life. It is impossible to predict at this time the status of any business in which the Company may become engaged, in that such business may need to seek additional capital, may desire to have its shares publicly traded or may seek other perceived advantages which the Company may offer.
The Company will continue to seek out opportunities for its existing operating entities including but not limited to, product and equipment sourcing for sales with a focus on market penetration throughout the world. The Company will continue to seek out and retain highly talented individuals that can manage day to day operations and facilitate growth of the company through professional management services. These highly talented individuals may be consultants or employees depending upon the needs of the company.
RESULTS OF OPERATIONS
CONTINUING OPERATIONS
SECOND QUARTER COSTS AND CHANGES IN FINANCIAL CONDITIONS
The balance of current assets at December 31, 2006 was approximately $2,968,000 compared to a balance of $5,471,000 at June 30, 2007, an increase of $ 2,503,000. The balance of current liabilities was $10,031,000 and $10,970,000 respectively, for the same periods, an increase of $939,000. The resulting current ratio at December 31, 2006 was 0.30 to 1. The current ratio at June 30, 2007 is 0.50 to 1. The current ratio indicates that the Company's ability to pay the Company's obligations has improved since March 31, 2007.
REVENUE & OPERATING EXPENSES
THREE MONTHS ENDED JUNE 30, 2007 COMPARED TO THE THREE MONTHS ENDED JUNE 30, 2006
Total sales were at approximately $1,742,000 for the three months ended June 30, 2007 compared to $156,000 for the prior period a year earlier, an increase of over 1010%. This increase was a primary result of the acquired operations of Marshall Distributing wholesale natural products distributor and continued efforts of management to seek out opportunities to provide value for a broad customer base.
The Company's gross profit for the three months ended June 30, 2007 compared to 2006 increased to $1,291,000 from $140,000. Gross profit as a percentage of sales decreased to 74% in 2007 from 89% in 2006. This is a result of lower margins in the wholesale distribution business.
Total operating expenses (selling, general and administrative expenses) for the three months ended June 30, 2007 compared to 2006 decreased by $301,000 to $921,000 from $1,222,000 in the prior period. This was primarily due to a significant decrease in services paid with stock issuances for professional fees of the Company during the period.
Income from operations for the three months ended June 30, 2007 increased to an income of $ 369,000 from a loss of $(1,083,000) compared to the same period 2006, an increase of $ 1,452,000. The Company's increase in the operating income was primarily the result of the increase in gross profit from the acquisition of Marshall Distributing operations adding contribution margin to help service the general and administrative expenses of the company. Sales will need to continue at this rate in order for the company to cover the Company's operating needs.
Interest expense for the three months ended June 30, 2007 was $78,000 as compared to the same period in 2006 of $33,000, up $45,000. The interest expense increased as a result of the acquisition of Marshall Distributing assets and operations.
Net income increased $1,472,000 from a loss of $(1,116,000) to a gain of $ 356,000 for the six months ended June 30, 2007 and 2006 respectively. This net increase is primarily attributable to the increase in sales and the decrease of professional services paid with stock.
SIX MONTHS ENDED JUNE 30, 2007 COMPARED TO THE SIX MONTHS ENDED JUNE 30, 2006
Total sales were at approximately $4,483,000 for the six months ended June 30, 2007 compared to $359,000 for the prior period a year earlier, an increase of over 1,140%. This increase was a primary result of the acquired operations of Marshall Distributing wholesale natural products distributor and continued efforts of management to seek out opportunities to provide value for a broad customer base.
The Company's gross profit for the six months ended June 30, 2007 compared to 2006 increased to $3,309,000 from $299,000. Gross profit as a percentage of sales decreased to 74% in 2007 from 83% in 2006. This is a result of lower margins in the wholesale distribution business. It should be noted that the typical margins in the wholesale distribution of natural products are significantly lower than the 74% recognized and that through sales and service contracts of Marshall Corporate Administration the margins have remained high in the first and second quarters of 2007.
Total operating expenses (selling, general and administrative expenses) for the six months ended June 30, 2007 compared to 2006 decreased by $833,000 to $2,311,000 from $3,144,000 in the prior period. This was primarily due to a significant decrease in services paid with stock issuances for professional fees of the Company during the period.
Income from operations for the six months ended June 30, 2007 increased to an income of $ 998,000 from a loss of $(2,845,000) compared to the same period 2006, an increase of $ 3,843,000. The Company's increase in the operating income was primarily the result of the increase in gross profit from the acquisition of Marshall Distributing operations adding contribution margin to help service the general and administrative expenses of the company. Sales will need to continue at this rate in order for the company to cover the Company's operating needs.
Interest expense for the six months ended June 30, 2007 was $199,000 as compared to the same period in 2006 of $33,000, up $166,000. The interest expense increased as a result of the acquisition of Marshall Distributing assets and operations.
Net income increased $4,045,000 from a loss of $(3,038,000) to a gain of $ 1,007,000 for the six months ended June 30, 2007 and 2006 respectively. This net increase is primarily attributable to the increase in sales and the decrease of professional services paid with stock.
LIQUIDITY AND CAPITAL RESOURCES
Marshall's working capital needs and capital expenditure requirements have increased as a result of increased cost associated with hiring outside consultants. Required working capital and capital expenditure requirements are expected to be met from cash flows from operations, potential future acquisitions, borrowings, and the sale of Marshall's equity securities. For interim period ended June 30, 2007, Marshall's working capital decreased $335,000, or 89% to $42,000 at June 30, 2007 from $377,000 at December 31, 2006. This decrease was primarily attributable to a reduction of inventory of Marshall Distributing. For our purposes, we define working capital as Accounts Receivable plus Inventory less Accounts Payable.
For the interim period ended June 30, 2007, Marshall's operations used cash flow of $ 140,000 compared to net cash used of $1,675,000 for the period ending December 31, 2006, a decrease in cash used of $ 1,535,000. Marshall used cash flow from investing activities of $27,000 for the period ending June 30, 2007, as compared to cash used by investing activities of $6,513,000 for the period ending December 31, 2006.
Marshall's stockholders equity (deficiency) increased $1,454,000 to a positive stockholders equity of $1,841,000 for the second quarter of 2007 from $387,000 in 2006.
Cash, cash equivalents and marketable securities totaled $16,698 at June 30, 2007 compared to $61,083 at December 31, 2006, a decrease of $44,385.
Management anticipates that its expansion strategy will require significant expenditures for investment purposes as well as increased general and administrative expenses primarily due to the hiring of additional personnel and advertising expenses related to operations. These expenditures are expected to be funded by revenues from operations. The Company continues selling equity securities to fund expansion activities. Selling, general and administrative expenses are also expected to increase in future periods due to the increased legal and accounting expenses incurred by the Company in order to establish and maintain its reporting status with the Securities and Exchange Commission. In addition, the Company intends to pursue, as part of its business strategy, future growth through acquisitions which may involve the expenditure of significant funds. Depending upon the nature, size and timing of future acquisitions, the Company may be required to obtain additional debt or equity financing in connection with such future acquisitions. There can be no assurance, however, that additional financing will be available to the Company, when and if needed, on acceptable terms or at all. Management believes that future cash flow from operations and equity sales will be sufficient to fund these expenditures.
Marshall relied heavily on the issuance of its common stock to pay consultants and other professionals pursuant to Form S-8 registration statements during 2006 and 2007. As a result of such issuances management initiated reverse stock splits, one in the first quarter of 2005 for 500 to 1 and one in the fourth quarter of 2006 for 1,000 to 1. In 2003 an Employee Stock Incentive Plan (ESIP) was set up and through stock issues to the public, Marshall raised $237,000 in 2005 and $0 in 2006 in cash to provide the vehicle to finance activities. Based upon Marshall's current financial situation and intention of procuring and marketing new products, it is likely that Marshall may rely on the issuance of its shares to pay consultants and other professionals during 2007.
CRITICAL ACCOUNTING POLICIES
The preparation of the Company's consolidated financial statements in conformity with accounting principles generally accepted in the United States requires the Company to make estimates and judgments that affect the Company's reported assets, liabilities, revenues, and expenses, and the disclosure of contingent assets and liabilities. The Company bases its estimates and judgments on historical experience and on various other assumptions believed to be reasonable under the circumstances. Future events, however, may differ markedly from current expectations and assumptions. While there are a number of significant accounting policies affecting the consolidated financial statements, the Company believes the following critical accounting policy involves the most complex, difficult and subjective estimates and judgments.
STOCK-BASED COMPENSATION
In December 2004, the FASB issued SFAS No. 123R - Share -Based Payment. This statement applies to all awards after the required effective date and to awards modified, repurchased, or cancelled after that date. The effective date for public entities that file as small business issuers is as of the beginning of the first interim or annual reporting period that begins after December 15, 2005.
This statement requires that the cost resulting from all share-based payment transactions be recognized in the financial statements. This statement establishes fair value as the measurement objective in accounting for share based payment arrangements and requires all entities to apply a fair value based measurement method in accounting for share-based payment transactions with employees except for equity instruments held by employee ownership plans.
The Company has appropriately adopted SFAS No.123R and applies the principles and guidance therein by recognizing all share based compensation in the financial statements using the fair market value at the grant date to determine the expense associated with the services rendered.
RECENT ACCOUNTING PRONOUNCEMENTS
The Company adopted SFAS No. 142. Under the new rules, the Company will no longer amortize goodwill and other intangible assets with indefinite lives, but such assets will be subject to periodic testing for impairment. On an annual basis, and when there is reason to suspect that their values have been diminished or impaired, these assets must be tested for impairment, and write-downs to be included in results from operations may be necessary. SFAS No. 142 also requires us to complete a transitional goodwill impairment test six months from the date of adoption. Based upon the information at the Company's disposal, Management elected not to adjust the value of goodwill after making the annual review.
Any goodwill impairment loss recognized as a result of the transitional goodwill impairment test will be recorded as a cumulative effect of a change in accounting principle no later than the end of fiscal year 2002. The adoption of SFAS No. 142 had no material impact on the consolidated financial statements. SFAS No. 143 establishes accounting standards for the recognition and measurement of an asset retirement obligation and its associated asset retirement cost. It also provides accounting guidance for legal obligations associated with the retirement of tangible long-lived assets. SFAS No. 143 is effective in fiscal years beginning after June 15, 2002, with early adoption permitted. The Company expects that the provisions of SFAS No. 143 will not have a material impact on the consolidated results of operations and financial position. We adopted SFAS No. 143 effective January 1, 2005.
SFAS No. 144 establishes a single accounting model for the impairment or disposal of long-lived assets, including discontinued operations. SFAS No. 144 superseded Statement of Financial Accounting Standards No. 121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of" (SFAS No. 121), and APB Opinion No. 30, "Reporting the Results of Operations - Reporting the Effects of Disposal of a Segment of a Business, and Extraordinary, Unusual and Infrequently Occurring Events and Transactions." The Company adopted SFAS No. 144 effective January 1, 2002. The adoption of SFAS No. 144 had no material impact on the consolidated financial statements.
In April 2002, the FASB issued Statement No. 145, "Rescission of FASB Statements No. 4, 44, and 64, Amendment of FASB Statement No. 13, and Technical Corrections." This Statement rescinds FASB Statement No. 4, "Reporting Gains and Losses from Extinguishment of Debt," and an amendment of that Statement, FASB Statement No. 64, "Extinguishments of Debt Made to Satisfy Sinking-Fund Requirements" and FASB Statement No. 44, "Accounting for Intangible Assets of Motor Carriers." This Statement amends FASB Statement No. 13, "Accounting for Leases," to eliminate an inconsistency between the required accounting for sale-leaseback transactions and the required accounting for certain lease modifications that have economic effects that are similar to sale-leaseback transactions. The Company does not expect the adoption to have a material impact to the financial position or results of operations.
In June 2002, the FASB issued Statement No. 146, "Accounting for Costs Associated with Exit or Disposal Activities." This statement addresses financial accounting and reporting for costs associated with exit or disposal activities and nullifies Emerging Issues Task Force (EITF) Issue No. 94-3, "Liability Recognition for Certain Employee Termination Benefits and Other Costs to Exit an Activity (including Certain Costs Incurred in a Restructuring)." The provisions of this statement are effective for exit or disposal activities that are initiated after December 31, 2002, with early application encouraged. The Company does not expect the adoption to have a material impact to the financial position or results of operations.
In October 2002, the FASB issued Statement No. 147, "Acquisitions of Certain Financial Institutions-an amendment of FASB Statements No. 72 and 144 and FASB Interpretation No. 9," which removes acquisitions of financial institutions from the scope of both Statement 72 and Interpretation 9 and requires that those transactions be accounted for in accordance with Statements No. 141, Business Combinations, and No. 142, Goodwill and Other Intangible Assets. In addition, this Statement amends SFAS No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets, to include in its scope long-term customer-relationship intangible assets of financial institutions such as depositor and borrower-relationship intangible assets and credit cardholder intangible assets. The requirements relating to acquisitions of financial institutions are effective for acquisitions for which the date of acquisition is on or after October 1, 2002. The provisions related to accounting for the impairment or disposal of certain long-term customer-relationship intangible assets are effective on October 1, 2002. The adoption of this statement did not have a material impact to the financial position or results of operations as the Company has not engaged in either of these activities.
In December 2004, the FASB issued SFAS No. 123R - Share -Based Payment. This statement applies to all awards after the required effective date and to awards modified, repurchased, or cancelled after that date. The effective date for public entities that file as small business issuers is as of the beginning of the first interim or annual reporting period that begins after December 15, 2005. This statement requires that the cost resulting from all share-based payment transactions be recognized in the financial statements. This statement establishes fair value as the measurement objective in accounting for share based payment arrangements and requires all entities to apply a fair value based measurement method in accounting for share-based payment transactions with employees except for equity instruments held by employee ownership plans.
In January 2003, the FASB issued Interpretation No. 46, "Consolidation of Variable Interest Entities." Interpretation 46 changes the criteria by which one company includes another entity in its consolidated financial statements. Previously, the criteria were based on control through voting interest. Interpretation 46 requires a variable interest entity to be consolidated by a company if that company is subject to a majority of the risk of loss from the variable interest entity's activities or entitled to receive a majority of the entity's residual returns or both. A company that consolidates a variable interest entity is called the primary beneficiary of that entity. The consolidation requirements of Interpretation 46 apply immediately to variable interest entities created after January 31, 2003. The consolidation requirements apply to older entities in the first fiscal year or interim period beginning after June 15, 2003. Certain of the disclosure requirements apply in all financial statements issued after January 31, 2003, regardless of when the variable interest entity was established. We do not expect the adoption to have a material impact to our financial position or results of operations.
Accounting Standards (SFAS) No. 149, Amendment of Statement No. 133 on Derivative Instruments and Hedging Activities. SFAS 149 amends SFAS No. 133 to provide clarification on the financial accounting and reporting of derivative instruments and hedging activities and requires that contracts with similar characteristics be accounted for on a comparable basis. The provisions of SFAS 149 are effective for contracts entered into or modified after June 30, 2003, and for hedging relationships designated after June 30, 2003. The adoption of SFAS 149 did not have a material impact on the results of operations or financial position.
In May 2003, the FASB issued SFAS No. 150, Accounting for Certain Financial Instruments with Characteristics of Both Liabilities and Equity. SFAS 150 establishes standards on the classification and measurement of certain financial instruments with characteristics of both liabilities and equity. The provisions of SFAS 150 are effective for financial instruments entered into or modified after May 31, 2003 and to all other instruments that exist as of the beginning of the first interim financial reporting period beginning after June 15, 2003. The adoption of SFAS 150 did not have a material impact on the results of operations or financial position.
The Company does not have any off-balance sheet arrangements.
ITEM 3. CONTROLS AND PROCEDURES.
Disclosure controls and procedures are controls and other procedures that are designed to ensure that information required to be disclosed by Marshall in the reports that are filed or submitted under the Exchange Act are recorded, processed, summarized and reported, within the time periods specified in the Securities and Exchange Commission's rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by Marshall in the reports that are filed under the Exchange Act are accumulated and communicated to management, including the principal executive and financial officers, as appropriate to allow timely decisions regarding required disclosure.
Evaluation of disclosure and controls and procedures. As of the end of the period covered by this Quarterly report, Marshall conducted an evaluation, under the supervision and with the participation of the chief executive officer and chief financial officer, of the disclosure controls and procedures (as defined in Rules 13a-15(e) of the Exchange Act). Based on this evaluation, the Chief Executive Officer and Chief Financial Officer concluded that Marshall's disclosure controls and procedures are effective to ensure that information required to be disclosed by Marshall in reports that are filed or submitted under the Exchange Act are recorded, processed, summarized and reported within the time periods specified in Securities and Exchange Commission rules and forms.
Changes in internal controls over financial reporting. There was no change in Marshall internal controls, which are included within disclosure controls and procedures, during the most recently completed fiscal quarter that has materially affected, or is reasonably likely to materially affect, Marshall internal controls. The Chief Financial Officer changed from Richard A. Bailey to Jamie Plante in 2006. Mr. Plante accepted the position/title in addition to his responsibilities with Marshall Distributing, Inc.
Reference is made to Item 3 of the Company's Annual Report on Form 10-KSB for the fiscal year ended December 31, 2006, filed with the Commission on April 16, 2007.
A creditor of the Company, Allergy Research group / Nutricology filed in the District Court of Clark County, Nevada an action against the Company on an unpaid open account for goods and merchandise, Case No. A-487334, in the amount of $168,000. The Company contested the amount claimed and has made payment toward the uncontested amount while negotiations with the plaintiff continued. The Company offered to pay, through counsel, the sum of $50,000 with a payment of $10,000 upon acceptance of the offer and $5,000 per month until paid. The offer was accepted and paid in full.
A settlement was made with the Maryland Attorney General on the investigation regarding a change in position by the Bureaus of Consumer Protection of Nevada and Maryland dealing with a now discontinued product the Company previously sold to the public. On May 4, 2006, Assurance of Voluntary Compliance documents were signed. On June 14, 2006 final judicial approval was received on the signed documents. This includes a Civil Penalty of $100,000 and restitution to consumers of $25,000. If the amount paid to consumers for claims is less than $25,000, the Civil Penalty will be increased to the difference between $25,000 and the amount paid in restitution. The Civil Penalty is payable in monthly installments of $5,000. The restitution paid was $9,164.85, so the additional Civil Penalty is $15,835.15. The total unpaid Civil Penalty as of June 30, 2007 is $65,835.15.
As of September 18, 2006, Management finalized negotiations, initiated in 2003, with the Internal Revenue Service ("IRS") to settle past taxes due. An agreement was reached that the compromise previously submitted to the IRS was withdrawn on July 24, 2006. The offer deposit of $250,000 was to be credited as the initial installment payment. A second installment payment of $75,000 was paid within 90 days of the agreement acceptance date, September 18, 2006. Payments of $50,000 per month began in the fourth month after the acceptance date and are to continue each month until the liability is paid in full, approximately 10 months. The payments are due by the 20th day of the month.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.
During the fiscal quarter ended March 31, 2007, Marshall sold 5,000,000 common shares in a private transaction not involving a public offering. The 5,000,000 shares bear a legend restricting their disposition. No common shares were sold in the fiscal quarter ended June 30, 2007.
DATE NAME LOCATION # SHARES CONSIDERATION 3/15/2007 Joel Boodoosingh USA 5,000,000 $ 50,000
The use of the proceeds from the sale of our securities were for general working capital needs and the repayment of debt.
The shares were issued in reliance upon an exemption from registration pursuant to Section 4(2) of the Securities Act or Rule 506 of Regulation D promulgated under the Securities Act. The investor took his securities for investment purposes without a view to distribution and had access to information concerning us and our business prospects, as required by the Securities Act. In addition, there was no general solicitation or advertising for the purchase of our shares. Our securities were sold only to an accredited investor, as defined in the Securities Act with whom we had a direct personal preexisting relationship, and after a thorough discussion. Finally, our stock transfer agent has been instructed not to transfer any of such shares, unless such shares are registered for resale or there is an exemption with respect to their transfer.
The purchaser was provided with access to our filings with the SEC, including the following:
- Our annual report to stockholders for the most recent fiscal year, the definitive proxy statement filed in connection with that annual report, and, if requested by the purchaser in writing, a copy of our most recent Form 10-KSB under the Exchange Act.
- The information contained in an annual report on Form 10-KSB under the Exchange Act.
- The information contained in any reports or documents required to be filed by Charys under sections 13(a), 14(a), 14(c), and 15(d) of the Exchange Act since the distribution or filing of the reports specified above.
- A brief description of the securities being offered, the use of the proceeds from the offering, and any material changes in Charys' affairs that are not disclosed in the documents furnished.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES.
None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
EXHIBIT ------- NO. IDENTIFICATION OF EXHIBIT -- -------------------------
31.1* Certification of Richard A. Bailey, Chief Executive Officer of Marshall Holdings International, Inc., pursuant to 18 U.S.C. Sec.1350, as adopted pursuant to Sec.302 of the Sarbanes-Oxley Act of 2002. 31.2* Certification of W. Jamie Plante, Chief Financial Officer of Marshall Holdings International, Inc., pursuant to 18 U.S.C. Sec.1350, as adopted pursuant to Sec.302 of the Sarbanes-Oxley Act of 2002. 32.1* Certification of Richard A. Bailey, Chief Executive Officer of Marshall Holdings International, Inc., pursuant to 18 U.S.C. Sec.1350, as adopted pursuant to Sec.906 of the Sarbanes-Oxley Act of 2002. 32.2* Certification of W. Jamie Plante, Chief Financial Officer of Marshall Holdings International, Inc., pursuant to 18 U.S.C. Sec.1350, as adopted pursuant to Sec.906 of the Sarbanes-Oxley Act of 2002. ______
* Filed Herewith ** Previously Filed
SIGNATURES
In accordance with the requirements of the Exchange Act, the Registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
Marshall Holdings International, Inc.
Dated: August 20, 2007. By /s/ Richard A. Bailey -------------------------------- Richard A. Bailey, Chief Executive Officer
By /s/ W. Jamie Plante -------------------------------- W. Jamie Plante, Chief Financial Officer
MARSHALL HOLDINGS INTERNATIONAL, INC AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEET
UNAUDITED June 30, December 31, 2007 2006 ------------ -------------- ASSETS
CURRENT ASSETS: Cash and cash equivalents $ 16,698 $ 61,083 Accounts Receivable Net Allowance of 14,133 185,761 193,071 Inventories 852,038 991,337 Notes Receivable 4,399,051 1,709,122 Prepaids 17,164 12,962 ------------ -------------- Total Current Assets 5,470,712 2,967,575 ------------ --------------
PROPERTY & EQUIPMENT Property and Equipment, at cost 3,667,780 3,627,972 (Less) accumulated depreciation and amortization (541,167) (477,296) ------------ -------------- Total Property & Equipment 3,126,613 3,150,676 ------------ --------------
OTHER ASSETS Customer Lists 500,000 500,000 Distributor Rights 1,779,500 1,779,500 Websites and e-Commerce Channels 1,750,000 1,750,000 Other Assets 2,273,622 2,286,016 ------------ -------------- Total Other Assets 6,303,122 6,315,516 ------------ --------------
Total Assets 14,900,447 12,433,767 ============ ==============
Accrued expenses: Payroll and employee benefits 536,318 402,105 Payroll taxes 238,658 233,435 Interest 420,944 420,944 Other 255,118 213,503 Notes Payable- Related Party 398,697 Stock Investors 188,940 149,000 Current maturities of long-term debt 7,935,994 7,804,917 ------------- -------------- Total current liabilities 10,970,339 10,030,881 ------------- --------------
LONG-TERM DEBT 2,089,185 2,016,001
Total Liabilities 13,059,524 12,046,882 ------------- --------------
STOCKHOLDERS' EQUITY
Series A Preferred stock - $.001 par value; Authorized - 100,000,000 shares; Issued and outstanding at June 30, 2007 and December 31,2006 32,915,125 and 32,972,125, 32,915 32,972 respectively
Series B Preferred stock - $.001 par value; Authorized at June 30, 2007 and December 31,2006 1,000,000,000 and 100,000,000 respectively; Issued and outstanding at June 30, 2007 and December 31, 2006 185,000,000 and 185,000,000, 185,000 185,000 respectively
Common stock, - $.001 par value Authorized - 25,000,000,000 shares Issued and outstanding at June 30,2007 and December 31, 2006 202,357,320 and 2,117,957,320 202,357 2,117,957 Additional paid-in capital 23,525,124 21,162,117 Accumulated (deficit) (22,104,473) (23,111,161)
------------- -------------- Net Stockholders' Equity 1,840,923 386,885 ------------- --------------
Total Liabilities & Stockholders' Equity $ 14,900,447 12,433,767 ============= ==============
GROSS PROFIT 1,291,013 139,598 3,309,417 299,049 --------------- ---------------- --------------- --------------- SELLING, GENERAL AND ADMINISTRATIVE EXPENSES: Depreciation Expense 31,936 15,701 63,872 22,967 Professional Services Not Classified Elsewhere 47,689 662,874 494,699 2,109,336 Product Development 16,482 58,990 52,421 157,504 All Other Selling, General and Administrative 825,301 484,435 1,700,394 854,195 --------------- ---------------- --------------- ---------------
TOTAL SELLING, GENERAL AND ADMINISTRATIVE EXPENSES 921,408 1,222,000 2,311,386 3,144,002 --------------- ---------------- --------------- ---------------
INCOME (LOSS) FROM OPERATIONS 369,605 (1,082,402) 998,031 (2,844,953) --------------- ---------------- --------------- --------------- OTHER INCOME (EXPENSE): Interest Income 64,008 97,186 (Loss) on QDS Investment - (200,000) Interest Expense (77,730) (33,403) (199,215) (33,402) Other Income 13 110,686 40,465 --------------- ---------------- --------------- --------------- TOTAL OTHER INCOME (EXPENSE): (13,709) (33,403) 8,657 (192,937) --------------- ---------------- --------------- ---------------
NET INCOME (LOSS) BEFORE MINORITY INTEREST 355,896 (1,115,805) 1,006,688 (3,037,890)
MINORITY INTEREST - - --------------- ---------------- --------------- --------------- NET INCOME (LOSS) BEFORE PROVISION FOR INCOME TAX 355,896 (1,115,805) 1,006,688 (3,037,890) PROVISION FOR INCOME TAX (342,274 less NOL Benefit 324,274) - - - - --------------- ---------------- --------------- ---------------
NET INCOME (LOSS) $ 355,896 (1,115,805) 1,006,688 (3,037,890) =============== ================ =============== ===============
BASIC AND DILUTED EARNINGS (LOSS) PER SHARE $ (0.00) $ (0.00) $ (0.00) $ (0.00) --------------- ---------------- --------------- ---------------
BASIC & DILUTED WEIGHTED AVERAGE SHARES OF COMMON STOCK 1,590,434,243 10,288,988,658 1,866,362,845 6,648,226,106 =============== ================ =============== ===============
MARSHALL HOLDINGS INTERNATIONAL, INC AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
UNAUDITED 6 Months Ended Year Ended June 30, December 31, 2007 2006 ---------------- -------------- CASH FLOW FROM OPERATING ACTIVITIES: Net Income $ 1,006,688 $ (3,735,237) Adjustments to reconcile Net Income to net cash provided by operating activities: Stock Issued for Services 397,350 2,819,780 Depreciation 63,872 82,035 Changes in operating assets and liabilities: (Increase) Decrease in Accounts Receivable 7,310 (169,315) (Increase) Decrease in Inventory 139,299 (618,061) (Increase) Decrease in Other Current Assets (2,694,133) (1,632,085) Increase (Decrease) in Accounts Payable 188,693 605,669 Increase in Other Current Liabilities 750,765 972,482 ---------------- -------------- Net cash (used)provided by operating activities (140,156) (1,674,731) ---------------- --------------
CASH FLOWS FROM INVESTING ACTIVITIES: Net (Purchase)/Sale of Prop., Plant & Equipment (39,808) (3,149,550) (Increase) in Other Assets 12,394 (3,363,021) ---------------- -------------- Net cash (used)provided by investing activities (27,414) (6,512,571) ---------------- --------------
CASH FLOWS FROM FINANCING ACTIVITIES: Increase (Decrease) in Long Term Debt 73,184 8,016,001 Stock Sales for Cash; Net 50,000 139,080 ---------------- -------------- Net cash provided (used)by financing activities 123,184 8,155,081 ---------------- --------------
Net cash Increase ((Decrease) for period (44,386) (32,221)
Cash at beginning of period 61,084 93,305 ---------------- --------------
Cash at end of period $ 16,698 $ 61,083 ================ ==============
NOTE 1 - ORGANIZATION, HISTORY AND BUSINESS ACTIVITY:
The Company incorporated on May 26th, 1993 as a Nevada corporation under the name of Gateway Distributors, Ltd. It has subsequently changed its name to Marshall Holdings International, Inc.("the Company").
The Company is a distributor of vitamins, nutritional supplements, whole health foods and skin care products mainly in the United States of America and Canada, with some sales in Russia and Indonesia. Many of the formulas used in the products the Company sells and distributes are made from its own formulas.
On August 15th, 2002, the Company purchased all of the operations and assets including formulas and trademark of Grandma Hammans Specialty Foods LLC. On June 4, 2003, the Company incorporated in Nevada Grandma Hammans Specialty Foods ("GH") and moved the operations, assets and liabilities related to this purchase into GH.
On December 31, 2002, the Company sold its ownership interest in TRSG Corporation ("TRSG") previously a majority owned subsidiary. TRSG is recognized in these consolidated financial statements to the point of sale, which is December 31, 2002.
On December 31, 2002, the Company bought all of the assets and assumed a significant portion of the debts of TRSG. This transaction is reported on the purchase method of accounting using the carrying value on the books of TRSG as the cost basis on the books of the Company.
On January 7, 2003, the Company organized The Right Solution Gateway, a wholly owned subsidiary ("TRS Gateway"). All operations of the Company that were previously handled via TRSG were transferred into TRS Gateway.
On April 30, 2004, Marshall formed a wholly owned subsidiary, Gateway Venture Holdings, Inc. ("GVH"). The Las Vegas property and fixed assets of Marshall are recorded in the financial statements of this subsidiary.
Also on April 30, 2004, Gateway formed a wholly owned subsidiary, Aspen Cove Resort Incorporated ("ACR") to run the operations of Aspen Cove Resort (formerly Beaver Dam Lodge) located in Panguitch Utah. The lodge had been purchased on April 15, 2004 and was listed as real estate in the financial statements of GVH.
On May 30, 2004, an agreement was signed with Quality Distribution Services of Nevada to create a new corporation, Quality Distribution Services of Arizona, Inc ("QDS"). QDS was incorporated in Nevada on June 7, 2004 and was 51% owned by Marshall. QDS was a wholesale beverage distributor in the Phoenix, Arizona area. The corporation has since been revoked and not in business and as such, the remaining carrying value was written down and taken as a loss in the first quarter of 2006.
On November 30, 2004, Gateway formed a wholly owned subsidiary, Gateway Corporate Administration, Inc. On August 31, 2006 the name of the corporation was changed to Marshall Corporate Administration ("MCA"). The company is engaged in marketing and management services.
In December, 2004 Marshall moved its corporate office and warehouse location to 3220 Pepper Lane, Las Vegas, Nevada 89120.
On December 21, 2004 the Company entered an Asset Purchase Agreement for 51% of Los Cabos Beverage, then owned by Blaine Wendtland ("Wendtland"). The 51% interest in Loc Cabos Beverage and its assets were acquired by the Company in exchange for Wendtland receiving all rights to Grandma Hamman's GHF product and Wendtland assuming and paying off the debts of $193,833 Grandma Hamman owed to Los Cabos Freedom Movement LLC and to Ed Wendtland.
On December 30, 2004, Marshall formed a 51% owned subsidiary, Los Cabos Beverage Inc ("Los Cabos") to handle the operations of the sale of private label water.
On February 28, 2005, the sales of Los Cabos did not meet expectations and the Company entered into an agreement with Blaine Wendtland wherein he assumed all ownership and obligations and the Company terminated its commitments and relationships with Los Cabos and Blaine Wendtland.
On June 2, 2005, the Company sold its wholly owned subsidiary, Aspen Cove Resort Incorporated ("ACR"), in combination with selling the building and real estate of the resort. The gain was reported as Gain on Sale of Property under Other Income on the 2005 financials.
On September 30, 2005, the Company sold its property which housed the corporate offices and warehouse located at 3220 Pepper Lane, Las Vegas, Nevada 89120. The gain was reported as Gain on Sale of Property under Other Income on the 2005 financials.
In March, 2006 Gateway purchased warehouse property and moved its corporate warehouse location to 2555 East Washburn Road, North Las Vegas, Nevada 89081. The corporate offices are housed temporarily offsite, until the offices can be built out in the building.
On June 30, 2006, The Company purchased all of the operations and assets of Marshall Distributing Company in Salt Lake City, UT. Marshall Distributing distributes over 150 different manufacturers lines and over 6,000 natural health products.
On August 31, 2006, Marshall formed a wholly owned subsidiary Mountain West Holdings, Inc. to facilitate the website and e-commerce operations.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
(a) - PRINCIPLES OF CONSOLIDATION As of June 30, 2007, the Company has the following wholly owned subsidiaries:
- The Right Solution Gateway (multilevel marketing and retail sales) - Marshall Distributing, Inc. formerly Grandma Hammans Specialty Foods, (wholesale distribution) - Gateway Venture Holdings, Inc. (house and manage the real estate, vehicles and equipment of the Company) - Marshall Corporate Administration formerly Gateway Corporate Administration, Inc. (Marketing and Management) - Mountain West Holdings, Inc. (website and e-commerce sales)
The Company has completed the acquisition of the business assets and operations of Marshall Distributing, LLC, a Utah limited liability company and a portion of EMS Business Development, Inc., a California corporation. These assets have been assigned to the previously inactive subsidiary Grandma Hammans Specialty Foods and the subsidiary has appropriately changed its name to Marshall Distributing, Inc. ("Marshall Dist"). The asset purchase includes the operations and warehouse facility.
The Company created a new subsidiary corporation, Mountain West Holdings, Inc. which includes some of the assets acquired from EMS Business Development, Inc. a California corporation. The operation includes website and e-commerce channels of distributions and retail sales.
The Company has utilized and appropriately changed the name of Gateway Corporate Administration to Marshall Corporate Administration ("MCA"). MCA is a marketing and management company that utilizes new technology and personnel to facilitate market penetration directly to the end consumer and to provide management services directly related to the facilitation of rapid growth.
The accompanying consolidated financial statements include the accounts of its subsidiaries. All significant intercompany balances and transactions have been eliminated.
(b) - CASH AND CASH EQUIVALENTS
For purposes of the statement of cash flows, cash equivalents include cash in banks and all highly liquid investments with original maturities of three months or less.
Management uses the allowance for bad debt method in accordance with the generally accepted accounting principles to account for bad debts.
(d) - RECEIVABLE ESIP STOCK PLAN
Stock sales through the Employee Stock Incentive Plan (ESIP) sold at year end are reported as a receivable rather than negative equity provided they are received within 60 days after year end. There were no funds due at June 30, 2007.
(e) - INVENTORIES
Inventories, consisting primarily of nutritional, health, beauty products, and beverages, are stated at cost computed by the first-in, first-out (FIFO) method of accounting.
(f) - PROPERTY AND EQUIPMENT
Property and equipment are stated at cost. Major replacements and refurbishings are capitalized while replacements, maintenance and repairs which do not improve or extend the life of the respective assets are expensed.
(g) - DEPRECIATION AND AMORTIZATION
The Company provides for depreciation of property, plant and equipment principally by use of declining balance and straight-line methods for financial reporting purposes. Property and equipment are depreciated over the following estimated useful lives:
Property - Real Estate 39 years Leasehold improvements 39 years Furniture and fixtures 5 - 7 years Machinery and equipment 3 - 5 years Transportation equipment 5 - 7 years
Depreciation expense for the quarters ended June 30, 2007 and 2006 were $63,872 and $22,967, respectively.
(h) - INTANGIBLE ASSETS
Through the Company's acquisition activities, intangible assets have been recorded in the financial statements. The Company performs annual impairment testing of its intangible assets under the provisions of statement of Financial Accounting Standards No. 142, using the expected present value technique as provided for by FASB Concepts Statement No. 7 "Using Cash Flow Information and Present Value In Accounting Measurements".
(i) - OTHER ASSETS
The amount in other assets is condensed and includes distributor rights, customer lists, website and e-commerce sites and programs, products pending production, formulas, and other various assets.
(j) - INCOME TAXES
The Company has adopted the provisions of statements of Financial Accounting Standards No. 109, "Accounting for Income Taxes," which incorporates the use of the asset and liability approach of accounting for income taxes. The asset and liability approach requires the recognition of deferred tax assets and liabilities for the expected future consequences of temporary differences between the financial reporting basis and the income tax basis of assets and liabilities.
(k) - FAIR VALUES OF FINANCIAL INSTRUMENTS
The carrying amounts of the Company's cash, accounts receivable, accounts payable and accrued expenses approximate fair value because of the short maturity of these items. Term debt secured by various properties have interest rates attached to them commensurate with the finance market at the time and management believes
approximate fair values in the short as well as the long term. It is currently not practicable to estimate the fair value of the other debt obligations because these note agreements contain unique terms, conditions, covenants and restrictions which were negotiated at arm's length with the Company's lenders, and there is no readily determinable similar instrument on which to base an estimate of fair value. Accordingly, no computation or adjustment to fair value has been determined.
(l) - COMPREHENSIVE INCOME
The Company has adopted SFAS No. 130 Reporting Comprehensive Income. The Company has no reportable differences between net income and comprehensive income, therefore a statement of comprehensive income has not been presented.
(m) - REVENUE RECOGNITION
Revenue is recognized in the period in which the products are shipped or services are performed.
(n) - EARNINGS (LOSS) PER SHARE
Basic and diluted earnings (loss) per share are computed on a weighted average of shares issued and outstanding through the year. The only common stock equivalents relate to outstanding stock options (which have been measured to have immaterial fair value at June 30, 2007 and 2006); as a result, the common stock equivalents would be anti-dilutive. Therefore, basic and diluted EPS are the same.
(o) - ADVERTISING COSTS.
The Company conducts non-direct response advertising for which the costs are expensed when incurred. Total advertising costs of $4,350 and $ 14,903 were incurred for the periods ended June 30, 2007 and 2006, respectively.
The Company has capitalized the advertising costs associated with the production of an infomercial and will begin amortizing those costs in the period in which the infomercial is first used. This is in accordance with the Statement of Position 93-7 Reporting on Advertising Costs.
(p) - RECLASSIFICATIONS
Certain amounts in 2006 have been reclassified and represented to conform to the current financial statement presentation.
(q) - USE OF ESTIMATES
The preparation of financial statements in conformity with accounting principles generally accepted in the United States 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 may differ from those estimates.
(r) - CONCENTRATION RISK
The Company reports no significant concentrations.
(s) - OTHER RECENT ACCOUNTING PRONOUNCEMENTS
The Company does not expect that the adoption of other recent accounting pronouncements to have any material impact on its financial statements.
(t) - BASIS OF PRESENTATION
The financial statements are prepared in accordance with the requirements for unaudited interim periods, and consequently do not include all disclosures required to be in conformity with accounting principles generally accepted in the United States of America.
In the opinion of management, the accompanying financial statements contain all adjustments, consisting only of normal recurring accruals, necessary for a fair presentation of the Company's financial position as of June 30, 2007 and the results of operations and cash flows for the six months then ended.
NOTE 3 -RELATED PARTIES:
The company owes Rick Bailey CEO and Flo Ternes COO for shareholder loans and accrued payroll for services rendered the amounts of $294,397 and $104,300 respectively for a total of $398,697. These amounts have been properly reflected on the balance sheet and are a result of previous period activities.
The Company entered into an agreement December 12, 2003 with The Chelsea Collection Inc, a Nevada corporation ("Chelsea Collection") that was finalized on March 15, 2004 and later clarified on a few points on May 4, 2004. Chelsea Collection is majority owned by the officers of the Company and Francois Vautour, an unrelated third party. Chelsea Collection, in an agreement dated November 25, 2003, acquired among other things from Francois Vautour and others all United States and Canada rights, trademarks, formulas and licenses of the Jeunesse by Francois Vautour and the GH3 skin care line. In the agreement the Company has with Chelsea Collection, the Company will have the opportunity to acquire the same Francois Vautour skin care line from Chelsea Collection for virtually the same price and terms as Chelsea Collection is buying it from Francois Vautour. The terms of the agreement involves a purchase price of $4,000,000, payments are computed based on 15% of the gross sales less cost of goods sold with a minimum weekly payment of $10,000. Once the purchase price is paid, then a royalty of up to 15% of the gross sales less cost of goods sold steps into place and continues thereafter. The cost outlays have been charged to the statement of operations as a selling, general and administrative expense, which were $129,719 for the interim period of 2006 and $31,104 for the interim period ended June 30, 2007. No title or ownership passes to the Company or to Chelsea Collection until the November 25, 2003 agreement between Chelsea Collection and Francois Vautour is satisfied, the payment of which is described in the prior paragraph. The Company has opted not to capitalize the purchase price. Therefore, all monies paid have been expensed. On September 29, 2006, The Chelsea Collection, Inc. changed its name to G-H-3 International, Inc ("GH3").
The Company is responsible for all product research and development of the Chelsea Collection for current and future marketing as well as carrying inventory on all Marshall Holding's products. An infomercial developed late in 2004 has been recorded as an asset under "Prepaid Advertising" in the amount of $230,573. This remained unchanged for the interim period ending June 30, 2007.
NOTE 4 - EQUITY
(a) EMPLOYEE STOCK INCENTIVE PLAN ("ESIP"):
Since 2003, the Company has filed with the Security and Exchange Commission ("SEC") several forms S-8 notifying of Employee Stock Incentive Plans ("ESIP") and its increases in stock approved to issue under such plans. No additional increases in stock have been submitted or approved to issue under such plans since August 2004.
During January 1 through June 30, 2006 no stock was issued out of the ESIP plan.
During January1 through June 30, 2007 no stock was issued out of the ESIP plan. There are currently no shares issued and unsold under the ESIP plan.
(b) NON-EMPLOYEE, DIRECTORS AND CONSULTANTS RETAINER STOCK PLANS ("RSP"):
The Company continually seeks to improve its financial position by seeking investors in exchange for equity in the Company. The value assigned to the stock for these transactions will vary based on the market value of the stock or services performed at the time, whichever is more readily ascertainable.
Since 2003, the Company has filed with the Security and Exchange Commission ("SEC") several forms S-8 notifying of Non-Employee Directors and Consultants Retainer Stock Plans ("RSP") and its increases in stock approved to issue under such plans. On July 27, 2006 a Form S-8, Non-Employee Consultants Retainer Stock Plan for the Year 2006, was submitted for 7,000,000,000 (7 billion) shares.
As of June 30, 2007, the total remaining unissued shares under the RSP plans are 0. All unissued shares were deregistered on May 25, 2007.
During January 1 through June 30, 2006, the Company issued 6,150,000,000 shares out of the RSP plan.
During January 1 through June 30, 2007 the company issued 22,400,000 shares out of the RSP plan.
(c) AUTHORIZATION OF SERIES "B" PREFERRED STOCK AND ISSUANCE OF RESTRICTED PREFERRED "B" STOCK TO CONSULTANTS:
On January 18, 2005, the Company authorized 100,000,000 shares of Series B Preferred Stock with a par value of 0.001 per share. Series B preferred stock is convertible to common stock on a one for one basis and has no voting rights.
On August 29, 2006, the Company authorized an increase of Series B Preferred Stock with a par value of 0.001 per share to 1,000,000,000 shares.
During January 1 through June 30, 2006, the Company did not issue any shares of Series B preferred stock.
During January 1 through June 30, 2007 the company did not issue any shares of Series B preferred stock.
(d) RESTRICTED STOCK ISSUED TO OFFICERS (RELATED PARTY TRANSACTIONS):
During January 1 through June 30, 2006, the Company did not issue any restricted preferred A stock.
During January 1 through June 30, 2007 the Company did not issue any restricted preferred A stock. During June 2007, 57,000 shares of preferred A stock were converted to common stock.
(e) COMMON STOCK
During January 1 through June 30, 2006, The company issued 6,150,000,000 shares out of the RSP plan for services rendered with a value of $1,960,000.
During January 1 through June 30, 2007, The company issued 22,400,000 shares out of the RSP plan for services rendered with a value of $397,350 and 5,000,000 shares of R144 stock with a value of $50,000.
NOTE 5 - OTHER ASSETS:
Other Assets consist of costs incurred to develop an infomercial which is completed and ready for release. Amortization of this prepaid advertising will begin when the advertising campaigns begin, expected to be sometime in 2007 and will be amortized over an estimated useful life yet to be determined.
Other assets also include costs incurred to develop a new product line. These costs will not be recognized as inventory until a marketing plan has been developed and implemented. Management is of the opinion that the estimated fair value of product awaiting marketing exceeds the cost recognized on the Balance Sheet.
NOTE 6 - DEFERRED INCOME TAXES
The company has a significant income tax benefit that consists of a cumulative Net Operating Loss Carryforward in excess of $20,000,000. The company will not recognize the deferred tax asset of this benefit until it can provide evidence of sustained profitability as a result of its history of net operating losses in order to ascertain the viability of the deferred tax asset in accordance with FAS 109 paragraph 23.
NOTE 7 - GOING CONCERN:
There have been significant recurring losses and negative cash flows from operations, which have resulted in a working capital deficiency. In the event the Company is unable to raise additional operating capital, the aforementioned conditions raise substantial doubt about the Company's ability to continue as a going concern. The financial statements do not include any adjustments that might result from the occurrence of such conditions, and have been prepared assuming that the Company will continue as a going concern.
The Company plans to raise the working capital it needs through equity financing and other debt funding.
In the normal course of business the Company experienced a change in position by the Bureaus of Consumer Protection of Nevada and Maryland dealing with a now discontinued product the Company previously sold to the public. A settlement was made with the Maryland Attorney General on the investigation regarding a change in position by the Bureaus of Consumer Protection of Nevada and Maryland dealing with a now discontinued product the Company previously sold to the public. On May 4, 2006, Assurance of Voluntary Compliance documents were signed. This includes a Civil Penalty of $100,000 and restitution to consumers of $25,000. If the amount paid to consumers for claims is less than $25,000, the Civil Penalty will be increased to the difference between $25,000 and the amount paid in restitution. The Civil Penalty is payable in monthly installments of $5,000. The restitution paid was $9,164.85, so the additional Civil Penalty is $15,835.15. The Company has accrued a liability as of December 31, 2006 in the amount of $125,000 for the above contingency. The total unpaid Civil Penalty as of June 30, 2007 is $65,835.15.
On January 11, 2001, the Company acquired approximately 76% of the outstanding shares of common stock of TRSG Corporation ("TRSG"). The Company sold its interests in TRSG as of December 31, 2002 for $15,000. At this time the Company also acquired all of the assets and accrued certain liabilities of TRSG. The creditors of TRSG continue to assert claims against the Company. Management is unable to estimate the possible loss exposure, but believes the ultimate losses would be minimal for the Company because the debts of TRSG paid by the Company are debts of TRSG and not the Company.
The Securities and Exchange Commission has filed complaints against Suburban Capital and the Company and its CEO. At this juncture, legal counsel is unable to predict what the possible outcome of these matters will be.
As of September 18, 2006, Management finalized negotiations, initiated in 2003, with the Internal Revenue Service ("IRS") to settle past taxes due. An agreement was reached that the compromise previously submitted to the IRS was withdrawn on July 24, 2006. The offer deposit of $250,000 was to be credited as the initial installment payment. A second installment payment of $75,000 was to be paid within 90 days of the agreement acceptance date, September 18, 2006. Payments of $50,000 per month will begin in the fourth month after the acceptance date and will continue each month until the liability is paid in full, approximately 10 months. The payments will be due by the 20th day of the month. The company has accrued a contingent liability for the above in the amounts of $594,057 and $537,336 for the quarters ended June 30, 2006 and 2007 respectively.
There has been a breech of contract suit filed by Global Media Corp., a company located in New York City, that alleges that a single meeting held on January 28, 2004 resulted in a series of agreements entered into by four entities for licensing and marketing of a hair removal product known as "Forever Gone". Among those agreements, Plaintiff alleges that defendant Gateway Distributors, Ltd. agreed to pay $2,000,000 in Gateway stock for marketing and materials and services. Plaintiff thus claims that it assembled a team of consultants, provided materials, work, labor and services to defendant Gateway Distributors and that Gateway has failed to issue the stock. The plaintiff has not yet identified the so-called agreements, consultants, nominees and the work and materials allegedly delivered. The Plaintiff has confirmed that the so-called agreement with Gateway has never been reduced to writing. Rather, counsel represented that its claim of an agreement with Gateway is based upon a combination of verbal statements and miscellaneous albeit unidentified, writings.
Gateway asserts that it did not receive the consulting services and materials and expects the suit to be dismissed and is contemplating a counter suit against Global Media Inc.
CERTIFICATION OF CHIEF EXECUTIVE OFFICER AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, Richard A. Bailey, certify that:
1. I have reviewed this Form 10-QSB of Marshall Holdings International, Inc.;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the small business issuer as of, and for, the periods present in this report;
4. The small business issuer's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13-a-15(f) and 15d-15(f)) for the small business issuer and have:
(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the small business issuer, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principals;
(c) Evaluated the effectiveness of the small business issuer's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d) Disclosed in this report any change in the small business issuer's internal control over financing reporting that occurred during the small business issuer's most recent fiscal quarter (the small business issuer's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the small business issuer's internal control over financial reporting; and
5. The small business issuer's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the small business issuer's auditors and the audit committee of the small business issuer's board of directors (or persons performing the equivalent functions):
(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonable likely to adversely affect the small business issuer's ability to record, process, summarize and report financial information; and
(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the small business issuer's internal control over financial reporting.
Date: August 20, 2007.
/s/ Richard A. Bailey --------------------------------------------- Richard A. Bailey, Chief Executive Officer
CERTIFICATION OF CHIEF FINANCIAL OFFICER AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, W. Jamie Plante, certify that:
1. I have reviewed this Form 10-QSB of Marshall Holdings International, Inc.;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the small business issuer as of, and for, the periods present in this report;
4. The small business issuer's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13-a-15(f) and 15d-15(f)) for the small business issuer and have:
(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the small business issuer, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principals;
(c) Evaluated the effectiveness of the small business issuer's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d) Disclosed in this report any change in the small business issuer's internal control over financing reporting that occurred during the small business issuer's most recent fiscal quarter (the small business issuer's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the small business issuer's internal control over financial reporting; and
5. The small business issuer's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the small business issuer's auditors and the audit committee of the small business issuer's board of directors (or persons performing the equivalent functions):
(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonable likely to adversely affect the small business issuer's ability to record, process, summarize and report financial information; and
(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the small business issuer's internal control over financial reporting.
Date: August 20, 2007.
/s/ W. Jamie Plante ------------------------------------------- W. Jamie Plante, Chief Financial Officer
CERTIFICATION OF CHIEF EXECUTIVE OFFICER PURSUANT TO 18 U.S.C. SECTION 1350 AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the accompanying Quarterly Report on Form 10-QSB of Marshall Holdings International, Inc. for the second quarter ending June 30, 2007, I, Richard A. Bailey, Chief Executive Officer of Marshall Holdings International, Inc., hereby certify pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, to the best of my knowledge and belief, that:
1. Such Quarterly Report on Form 10-QSB for the second quarter ending June 30, 2007, fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
2. The information contained in such Quarterly Report on Form 10-QSB for the second quarter ending June 30, 2007, fairly presents, in all material respects, the financial condition and results of operations of Marshall Holdings International, Inc.
Dated: August 20, 2007.
/s/ Richard A. Bailey --------------------------------------------- Richard A. Bailey, Chief Executive Officer of Marshall Holdings International, Inc.
CERTIFICATION OF CHIEF FINANCIAL OFFICER PURSUANT TO 18 U.S.C. SECTION 1350 AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the accompanying Quarterly Report on Form 10-QSB of Marshall Holdings International, Inc. for the second quarter ending June 30, 2007, I, W. Jamie Plante, Chief Financial Officer of Marshall Holdings International, Inc., hereby certify pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, to the best of my knowledge and belief, that:
1. Such Quarterly Report on Form 10-QSB for the second quarter ending June 30, 2007, fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
2. The information contained in such Quarterly Report on Form 10-QSB for the second quarter ending June 30, 2007, fairly presents, in all material respects, the financial condition and results of operations of Marshall Holdings International, Inc.
Dated: August 20, 2007.
/s/ W. Jamie Plante ------------------------------------------- W. Jamie Plante, Chief Financial Officer of Marshall Holdings International, Inc.
-------------------- LIFE IS 10% HOW YOU MAKE IT AND 90% HOW YOU TAKE IT! Posts: 9276 | From: San Diego CA | Registered: Jul 2006
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Press Release Source: Marshall Holdings International, Inc.
Marshall Holdings International Inc. Announces Revenues of $4,483,000 with Profits of $1,007,000 for the First Six Months Ending June 30, 2007 Thursday August 23, 6:30 am ET
LAS VEGAS--(BUSINESS WIRE)--Marshall Holdings International, Inc. (OTCBB: MHII - News) announced that the Company had excess of one million in profits for the six month period ending June 30, 2007. ADVERTISEMENT
President Rick Bailey said, "Revenues of $4,483,000 is a 1,147% increase in revenues over the same period last year."
About Marshall Holdings International, Inc:
The principal activity of Marshall Holdings (MHII) is to distribute whole food nutrition, health and dietary supplements through our internet sales, distributors, and over 3500 health food stores. The product line has over 6,000 products, which includes top brands such as Natures Way, and Dr. Christopher, and Twin Labs. The Company's mission is to bring wellness to every household.
Additional information can be found at www.mhii.net.
FORWARD LOOKING SAFE HARBOR STATEMENT
A number of statements contained in this press release are forward-looking statements, which are made pursuant to the Safe Harbor Provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements involve a number of risks and uncertainties, including the timely development, and market acceptance conditions, successful integration of acquisitions and the ability to secure additional sources of financing. The actual results that MHII may achieve could differ materially from any forward-looking statements due to such risks and uncertainties.
Contact: Marshall Holdings, Inc., Las Vegas Public Relations, 702-317-2400
-------------------------------------------------------------------------------- Source: Marshall Holdings International, Inc.
-------------------- LIFE IS 10% HOW YOU MAKE IT AND 90% HOW YOU TAKE IT! Posts: 9276 | From: San Diego CA | Registered: Jul 2006
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