ITEM 1. LEGAL PROCEEDINGS.
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was reached that the compromise previously submitted to the IRS was withdrawn on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.
AI
