Attached files
| file | filename |
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| 8-K - MONGOLIA HOLDINGS, INC. | cnsv_8k.htm |
| EX-99.1 - MONGOLIA HOLDINGS, INC. | cnsv_ex99.htm |
EXHIBIT
99.2
CONSOLIDATION
SERVICES, INC.
2756
North Green Valley Parkway
Suite
225
Henderson,
NV 89014
(702)
614-5333
______________
INFORMATION
STATEMENT
______________
WE ARE
NOT ASKING YOU FOR A PROXY AND
YOU ARE
REQUESTED NOT TO SEND US A PROXY
On
January 1, 2010, the Board of Directors (the “Board”) of Consolidation Services,
Inc. (the “Company”) unanimously approved the separation of the Company’s
existing energy business into two independent businesses. The Company
has discontinued its coal mining operations and transferred (the “Spin-off”) its
coal assets and liabilities owned as of January 1, 2010 to Colt Resources, Inc.
(“Colt”), a recently formed Nevada corporation, with its oil and gas assets (but
not liabilities) remaining with the Company.
The Board
believes that it is in the best interest of the Company to divide certain assets
and liabilities of the Company into two separate legal entities, as doing so
will serve an important business purpose in that it will facilitate the ability
of the separate entities to more readily manage, obtain access to capital and
bank lending, facilitate staffing and employment, as well as certain other
business decisions, given the substantial differences in the business focuses
represented by such assets and liabilities.
In order
to accomplish this Spin-Off, the Board and at least a majority in interest of
the Company’s stockholders approved that the Company’s stockholders as of
January 31, 2010 (the “Record Date”) shall receive the same number of shares in
Colt (the “Colt Shares”) as they owned in the Company on a pro-rata, one-to-one
(1-to-1) basis and for no additional consideration. The Colt Shares
are “restricted securities”, exempt from registration under the Securities Act
of 1933, as amended (the “Securities Act”) and which will not be publicly
traded. There were 15,257,220 Company Shares issued and outstanding
on the Record Date.
THIS
INFORMATION STATEMENT IS BEING PROVIDED SOLELY FOR INFORMATIONAL PURPOSES TO
NOTIFY THE COMPANY’S STOCKHOLDERS OF SPIN-OFF OF ASSETS AND LIABILITIES TO
COLT. THE RECORD DATE FOR THE DISTRIBUTION OF SHARES OF COLT WAS
JANUARY 31, 2010.
On
February 12, 2010, the Company filed a Current Report on Form 8-K which
describes the Spin-Off and includes as an exhibit the Separation and
Distribution Agreement between the Company and Colt which is incorporated by
reference herein.
The
date of this Information Statement is March 3, 2010
Delaware
law permits stockholder action to be taken without a meeting if consent in
writing is received from a majority of all stockholders who would be entitled to
vote upon the action if such meeting were held. Delaware law then
requires prompt notice to those stockholders who did not consent in
writing. By written actions taken as of January 1, 2010, the
Company’s principal stockholders, who collectively own approximately 54% of the
outstanding shares of the Company’s Common Stock consented to the foregoing
corporate actions, as well as to the preparation and execution of all necessary
documentation to evidence and effectuate the transactions including this
Information Statement. The Company gave prompt notice to all
non-consenting stockholders. The Company had 15,257,220 shares of
Common Stock outstanding as of January 31, 2010. Each share of Common
Stock has one vote. This Information Statement is provided to the
stockholders of record as of January 31, 2010.
Dissenters’
Right of Appraisal
Not
Applicable.
Persons
Making the Solicitation
The
enclosed information statement is distributed by the Board of Directors of the
Company. The cost of distribution will be borne by the
Company. In addition to the distribution by mail, officers and
employees of the Company may distribute it in person.
Interest
of Certain Persons in or Opposition to Matters to be Acted Upon
Not
Applicable. The Company’s directors and executive officers shall
receive no extra or special benefit not shared on a pro rata basis by all other
common stockholders of the Company.
Security
Ownership of Certain Beneficial Owners and Management
The
following table sets forth information known to us with respect to the
beneficial ownership of 15,257,220 shares of our common stock, the only voting
securities outstanding, as of January 31, 2010 Record Date by:
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|
·
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Each person
known by us to beneficially own 5% or more of our common
stock,
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|
·
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Each
of our executive officers and directors,
and
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|
·
|
All
of our executive officers and directors as a
group.
|
2
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Name
and Address
|
Table
of Class
|
Amount
and
Nature
of Beneficial Ownership (1)
|
Percentage
of Outstanding Shares Owned (2)
|
|
Johnny
R. Thomas(6)
|
Common
Stock
|
2,451,768
(3)
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16.1%
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|
John
C. Francis(6)
|
Common
Stock
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3,036,100
(4)
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19.9%
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|
Helen
Thomas(6)(7)
|
Common
Stock
|
3,051,768
(4)(5)
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20.0%
|
|
All
Officers and Directors
as
a Group (2 persons)
|
Common
Stock
|
5,487,868
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36%
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(1)
|
Unless
otherwise indicated, the Company has been advised that all individuals
listed have the sole power to vote and dispose of the number of Shares set
forth opposite their names. For purposes of computing the number and
percentage of Shares beneficially owned by a stockholder, any Shares which
such person has the right to acquire within 60 days are deemed to be
outstanding, but those Shares are not deemed to be outstanding for the
purpose of computing the percentage ownership of any other
stockholder.
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(2)
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Based
on 15,257,220 Shares issued and outstanding as of January 31,
2010.
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|
(3)
|
Includes
an aggregate of 2,451,768 of Common Stock issued and outstanding. Dr.
Thomas’ beneficial ownership includes the following, which share amounts
(as appearing in the above table) have been reduced to reflect the amount
of partial or shared ownership by Dr. Thomas, as noted below: 3,536 Shares
held by Meadow Lark Holdings LLC (of which Dr. Thomas is a 50% owner with
Helen Thomas), 20,000 Shares held individually by Dr. Thomas, 2,390,000
Shares held by JRT Trust, an entity established for estate planning
purposes, 60,000 Shares held by Serene Art LLC (of which Dr. Thomas is a
50% owner with Helen Thomas), and 10,000 shares held by Estancia LLC. Dr.
Thomas disclaims beneficial ownership of all Shares held by his wife,
Helen Thomas, Bosque FLP, Capilla Holdings LLC, Pikes LLC, and Manzano
Family Limited Partnership, and Helen Thomas disclaims beneficial
ownership of all Shares owned by Dr.
Thomas.
|
|
(4)
|
Includes
an aggregate of 3,036,100 shares of Common Stock issued and
outstanding. Mr. Francis’ beneficial ownership includes the
following, which share amounts (as appearing in the above table) have been
reduced to reflect the amount of partial or shared ownership by Mr.
Francis, as noted below: 51,100 Shares held individually by Mr.
Francis, 30,000 Shares held by Mr. Francis’s wife and two children,
1,505,000 held by Putun LLC (100% owned by John Francis), 100,000 Shares
owned by Excalibur Trust, of which Mr. Francis is sole trustee, 1,000,000
Shares owned by Unicorn Trust of which Mr. Francis’ wife is sole trustee
and 350,000 Shares held by Camelot, FLP an entity established for estate
planning purposes. Mr. Francis disclaims beneficial ownership of all
Shares held by his wife, Unicorn Trust and Camelot,
FLP.
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3
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(5)
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Includes
an aggregate of 3,051,768 shares of Common Stock issuable and outstanding.
Mrs. Thomas’ beneficial ownership includes the following, which share
amounts (as appearing in the above table) have been reduced to reflect the
amount of partial or shared ownership by Mrs. Thomas, as noted below:
20,000 held by Helen Thomas, wife of Johnny Thomas, individually, 920,000
Shares hold by HHT Trust, 20,000 held by Pikes LLC, 3,536 Shares held by
Meadow Lark Holdings LLC (of which Dr. Thomas is a 50% owner with Helen
Thomas), 2,020,000 Shares held by Bosque FLP, 40,000 Shares held by
Capilla Holdings LLC, 60,000 Shares held by Serene Art LLC (of which Helen
Thomas is a 50% owner with Johnny Thomas), all of which entities were
established for estate planning purposes. Does not include 120,000 shares
gifted to four family members in the amount of 30,000 shares
each.
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(6)
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Except
as otherwise noted each person's address is c/o the Company, 2756 N. Green
Valley Parkway, Suite 225, Henderson, NV
89014.
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(7)
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Helen
Thomas resigned from her position as Secretary/Treasurer and director of
the Company effective September 16,
2008.
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Directors
and Executive Officers
No action
is being taken with respect to the election of directors or executive
officers. The directors and executive officers of Colt, Johnny R.
Thomas and John C. Francis, the officers and directors of the Company, shall
hold the same positions with Colt.
Compensation
of Directors and Executive Officers
Not
Applicable.
Independent
Accountants
Not
Applicable.
Compensation
Plans
Not
Applicable.
Authorization
or Issuance of Securities Otherwise Than For Exchange
On
January 1, 2010, the Board authorized the Spin-off of its coal assets and
liabilities to a to-be-formed wholly-owned subsidiary. Colt
Resources, Inc. (“Colt”) was formed on February 10, 2010, under the laws of
Nevada with 16,000,000 shares of Common Stock, $.001 par value,
authorized. At least a majority in interest of the Company’s
stockholders approved the Spin-off. Notice was given under Delaware
law to the non-consenting stockholders. No further authorization will
be solicited for the issuance of the securities of Colt prior to such
issuance.
4
The
Company’s stockholders as of the January 31, 2010 Record Date shall receive the
same number of Shares of Common Stock of Colt as they owned in the Company on
January 31, 2010, on a pro-rata basis of one for one for no additional
consideration.
On
January 31, 2010, there were 15,257,220 shares of Common Stock of the Company
issued and outstanding. Thus, 15,257,220 shares of Common Stock of
Colt will be distributed to the stockholders of the Company as of January 31,
2010. Holders of Colt common stock shall be entitled to one vote for
each share held on all matters submitted to a vote of stockholders. Holders of
Colt common stock shall be entitled to receive dividends ratably, if any, as may
be declared by the board of directors out of legally available funds, subject to
any preferential dividend rights of any outstanding preferred stock, of which
there is none. Upon liquidation, dissolution or winding up, the holders of Colt
common stock are entitled to receive ratably net assets available after the
payment of all debts and other liabilities and subject to the prior rights of
any outstanding preferred stock.
Holders
of Colt common stock have no preemptive, subscription, redemption or conversion
rights. The shares of common stock of Colt when issued shall be fully paid and
nonassessable. The rights, preferences and privileges of holders of Colt common
stock shall subject to, and may be adversely affected by, the rights of holders
of shares of any series of preferred stock which Colt may designate and issue in
the future without further stockholder approval, although there is no intention
to do so.
The
shares of Colt common stock are restricted securities exempt from registration
under the Securities Act. Colt common stock will not be publicly
traded. Colt common stock certificate shall have appropriate
restrictive legends which describe the related transfer restrictions and Colt’s
stock transfer books shall include “stop transfer” instructions that include
such transfer limits. The Financial Industry Regulatory Authority
(“FINRA”) approved the Company’s Common Stock to continue trading under the
symbol “CNSV”.
The
reason for the Spin-off and issuance of Colt Common Stock is that the Company’s
Board believes that it is in the best interest of the Company to divide certain
assets and liabilities of the Company into two separate legal entities, as doing
so will serve an important business purpose in that it will facilitate the
ability of the separate entities to more readily manage, obtain access to
capital and bank lending, facilitate staffing and employment, as well as certain
other business decisions, given the substantial differences in the business
focuses represented by such assets and liabilities.
In order
to accomplish the Spin-off, the Board and a majority in interest of the
Company’s stockholders approved the issuance as of the Record Date for the
Company’s stockholders to receive the same number of shares in Colt as they
owned in the Company on a pro-rata, one-to-one (1-to-1) basis and for no
additional consideration. Thus, there is no dilution of the Company’s
Stockholders, as of the Record Date.
5
Acquisition
or Disposition of Property
THE
FOLLOWING INFORMATION CONCERNS COLT RESOURCES, INC. A PRIVATELY OWNED
NON-REPORTING COMPANY.
Corporate
Background:
Colt
Resources, Inc. (“Colt”) was formed on February 10, 2010, as a wholly owned
subsidiary of Consolidation Services Inc. (“CNSV”) as a private Nevada
corporation for the purpose of receiving all non-oil and gas assets of CNSV as
of January 1, 2010, plus a 12.5% overriding royalty on all oil and gas assets
owned by CNSV as of December 31, 2009, as well as all liabilities of CNSV except
Delaware franchise taxes. Colt common stock was spun off to all CNSV
shareholders of record on January 31, 2010. Colt has acquired several thousand
acres of land, coal rights and a 12.5% royalty on about 12,000 acres of oil and
gas rights (mineral rights) in eastern Kentucky, USA. The mineral rights are
strategically located in counties that have a proven history of producing
substantial amounts of coal, natural gas and oil. The Company used a
combination of restricted common stock and cash to acquire the mineral
rights.
Corporate
Strategy:
Colt’s
strategy is to become a dividend company by obtaining coal permits and lease the
mining of the coal to coal mining companies. Two mining companies, ICG and B
& W currently mine coal on Colt properties.
The
Spin-off:
Colt is a
privately held company, with the same shareholder base as CNSV, due to the
Spin-Off of Colt common stock to CNSV shareholders of record on a 1:1 ratio.
Colt received the land and coal assets, while CNSV retained the
oil and gas assets. The purpose of the spin-off was to allow Colt management to
focus on creating a dividend producing coal income base in Colt, while allowing
CNSV management to grow shareholder value through an aggressive oil and gas
asset acquisition program.
Properties:
The
following is the list of the coal and land properties and royalty rights owned
by Colt. All of the coal mineral rights are owned, not leased by Colt, while a
12.5% royalty rate is payable to Colt on oil and gas income from CNSV properties
owned as of December 31, 2009.
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Property
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Acres
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Minerals
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Owsley
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1,000
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Coal,
plus 12.5% royalty on Oil and Gas
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Buckhorn
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10,500
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Coal,
plus 12.5% royalty on Oil and Gas
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Breathitt
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1,200
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30%
interest on coal and 3.75% in the Oil & Gas
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Breathitt
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250
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30%
interest on coal and 3.75% in the Oil &
Gas
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6
Owsley Property. Colt owns
1,000 acres with all coal rights and 12.5% of the oil and natural gas
rights. This property is located in Owsley County, KY in close proximity to the
Buckhorn property, described below.
Buckhorn Property. Colt owns
50% of the land and coal on about 10,500 acres and 12.5% of the oil and natural
gas rights for the 10,500 acres, located in Perry and Leslie Counties of
Kentucky.
Breathitt Property. Colt owns
250 acres of land, 30% of the coal rights on about 1,200 acres and approximately
3.75% of the oil and gas mineral rights on 1,200 acres located in Breathitt
County, KY.
Mining
agreements and Permits:
Coal is
currently being mined on Colt’s Buckhorn properties by two mining operators, ICG
Hazard and B & W Resources. The first coal permit for LeeCo one mining has
been granted by KY and management is interviewing mining operators. The first
coal permit for Owsley East one is in the final stages of approval.
Proven
Management:
A proven
management team leads Colt with over 25 years experience in founding and
operating publicly traded companies. CEO Johnny R. Thomas and CFO John C.
Francis grew revenues in one publicly traded company from $29,000 to over $350
million in approximately four years while at the same time increasing its market
capitalization to over $1 billion, primarily through thirty four
acquisitions.
Financial
Information:
Due to
the recent spin-off of certain coal related assets, Colt is working with
accountants and auditors to prepare financial statements, which accurately
reflect the non oil and gas assets transferred into Colt by CNSV, as part of the
Spin-Off transaction.
Separation
and Distribution Agreements:
On
February 12, 2010, the Company filed a Current Report on Form 8-K which
disclosed the Spin-off and includes as an exhibit the Separation and
Distribution Agreement (the “Agreement”) dated as of January 1, 2010 by and
between the Company and Colt, which is incorporated by reference
herein. The following Summary of the Agreement is not complete and is
subject to and qualified in its entirety by reference to, the provision of the
Agreement.
Effective
as of January 1, 2010, for tax and accounting purposes, the Company transferred
and assigned to Colt all of the assets (“Colt Assets”) relating to the coal
business of the Company as listed on Schedule A attached
hereto, as well as the overriding Parent Royalty of 12.5% in the oil and gas
assets retained by the Company. The Company is in the process of
filing the necessary assignments, mineral deeds, or similar filings with the
appropriate Government Entities (as defined) in order to reflect the royalty
assignments. Colt assumed the liabilities (“Colt Liabilities”) set
forth on Schedule
B attached hereto, relating to all liabilities of the Company as of
December 31, 2009 except for Delaware franchise taxes; the Company’s coal
business and any liabilities arising out of the operations of Colt’s business
after January 1, 2010; and any and
7
all
liabilities of the Company under which it is an obligor by reason of any
guarantee or contractual commitment. The consideration for the
Spin-off was all of the shares of Colt common stock to be distributed to the
Company’s stockholders of record as of January 31, 2010. Together
with this Information Statement, Colt has issued, distributed and delivered
certificates representing 100% of the shares of Colt common stock to each
shareholder of the Company’s Common Stock on the Record Date on a pro-rata
basis, of one (1) share of Colt common stock for each one (1) share of Company’s
Common Stock so held by such record holder. The certificates for the
Colt common stock shall be delivered directly to each record holder by mail at
their respective addresses as listed in the Company’s transfer agent’s books and
records.
The
Company and Colt both acknowledged that Colt is and shall continue to be a
non-reporting privately held company and that there will not be a public market
in the Colt Common Stock, nor is one expected to develop, and that the Colt
Common Stock that record holders receive shall be “restricted
securities.” In that connection both parties agree: (1) the Colt
Common Stock shall have the appropriate restrictive legends which describe the
transfer restrictions related thereto; and (ii) Colt’s stock transfer books
shall include “stop transfer” instructions that indicate such transfer
limits.
Assets:
Colt’s assets are listed in Schedule A, attached
hereto.
Liabilities:
Colt’s liabilities are listed in Schedule B, attached
hereto.
Stock
Subscription: is listed in Schedule C, attached
hereto.
The
properties and the risks associated with these assets are more fully explained
in CNSV’s SEC filings. Shareholders of Colt are encouraged to read these
documents available at the SEC’s website, www.sec.gov.
Forward
Looking Statements
This
Financial Statement contains forward-looking statements within the meaning of
Section 27A of the Securities Act of 1933, as amended, Section 21E of the
Securities Exchange Act of 1934, as amended, and under the ‘safe harbor’
provisions of the Private Securities Litigation Reform Act of 1995. All
statements other than statements of historical facts included in this Financial
Statement are forward-looking statements. Without limiting the foregoing, the
words “believe,” “anticipate,” “plan,” “expect,” “seek,” “potential,”
“estimate,” and similar expressions are intended to identify forward-looking
statements. These statements relate to future events or to the Company’s future
financial performance, and involve known and unknown risks, uncertainties and
other factors that may cause our actual results, levels of activity, performance
or achievements to be materially different from any future results, levels of
activity, performance or achievements expressed or implied by these
forward-looking statements. Investors should not place any undue reliance on
forward-looking statements since they involve known and unknown uncertainties
and other factors which are, in some cases, beyond the company’s control which
could, and likely will, materially affect actual results, levels of activity,
performance or achievements.
8
Any
forward-looking statement reflects the Company’s current views with respect to
future events and is subject to these and other risks, uncertainties and
assumptions relating to operations, results of operations, growth strategy and
liquidity. Such risks, uncertainties and other factors which could
impact the Company and the forward-looking statements contained herein are
included in the Company’s filings with the SEC. The Company assumes no
obligation to publicly update or revise these forward-looking statements for any
reason, or to update the reasons actual results could differ materially from
those anticipated in these forward-looking statements, even if new information
becomes available in the future.
Action
with Respect to Reports
Not
Applicable.
Matters
Not Required to be Submitted
Not
Applicable.
Amendment
of Charter, By-laws, or Other Documents
Not
Applicable.
Other
Proposed Action
Not
Applicable.
Modification
or Exchange of Securities
Not
Applicable.
Financial
and Other Information
The Company’s Annual Report on Form
10-KSB, for the fiscal year ended December 31, 2008 and the Company’s Quarterly
Report on Form 10-Q, for the quarterly period ended September 30, 2009,
including the financial statements and exhibits thereto, as filed with the
Securities and Exchange Commission, will be furnished without charge to any
stockholder upon written request addressed to CONSOLIDATION SERVICES, INC., 2756
North Green Valley Parkway, Suite 225, Henderson, NV 89014.
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By
order of the
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Board
of Directors
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_____________________
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John
C. Francis, Secretary
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Henderson,
Nevada
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March
3, 2010
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9
SCHEDULES
A AND B AND C FOR SEPARATION AGREEMENT
BETWEEN
PARENT (CNSV) AND SPINCO (COLT) JAN. 1, 2010
SCHEDULE
A: SPINCO Assets, are generally defined as all assets owned by CNSV as of
December 31, 2009; except for all oil and gas rights, minus a 12.5% overriding
royalty payable to SPINCO. Specifically, the SPINCO assets are listed
as follows:
SPINCO
(COLT) Assets
--------------------------------
Buckhorn
Resources LLC, 50%; surface and coal on about 10,500 acres.
Leeco
Development LLC, 50%; leases and permits coal mineral rights.
Larry
Herald Property, Owsley County, about 1,000 acres (fee, including all mineral,
except 87.5% of Oil and Gas mineral rights).
Breathitt
Property, about 250 acres, one/third of all coal mineral rights on about 1200
acres and about 3.75% of the oil and gas rights on 1200 acres.
Prepaid
Services from AMS Development to Colt for permitting Owsley.
SCHEDULE
B: SPINCO liabilities are generally defined as all liabilities owed by CNSV as
of December 31, 2009, except taxes directly associated with CNSV as a Delaware
company. Specifically, the SPINCO liabilities are listed as
follows:
SPINCO
(COLT) Liabilities:
------------------------------------
Buckhorn,
unpaid balance owed to owners per the purchase agreement.
Buckhorn,
contributions owed for operating capital requirements.
Buckhorn,
accounts payable to Napier and others.
LeeCo,
accounts payable.
Balance
due on purchase of 1,000 acre Owsly property.
All
Accounts payable by Parent, as of December 31, 2009, except taxes.
Obligations
for All Share guarantees for the purchase of Buckhorn, LeeCo., EK Land and AMS
Development services.
SCHEDULE
C: Stock Subscription for 770,000 shares of CNSV to SPINCO (COLT).
10