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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10SB-12G/A1
General Form For Registration of Securities
of Small Business Issuers
Pursuant to Sections 12(b) and (g) of
the Securities Exchange Act of 1934
EQUICAP, INC.
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(Exact name of Small Business Issuer as specified in its charter)
California 33-0652593
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(State or other jurisdiction (I.R.S. Employer Identification Number)
of incorporation or organization)
12373 E. Cornell Avenue, Aurora, Colorado 80014
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(Address of Principal Executive Offices and Zip Code)
303-337-3384
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(Small Business Issuer's telephone number, including area code)
Securities to be registered pursuant to Section 12(b)of the Act:
Title of each Class Name of each exchange on which
to be so registered each class is to be registered
NONE NONE
Securities to be registered pursuant to Section 12(g) of the Act:
COMMON STOCK, No Par Value
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(Title of Class)
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TABLE OF CONTENTS
FORWARD LOOKING STATEMENTS ......................................... 4
PART I
Item 1. DESCRIPTION of BUSINESS ............................................ 4
Background......................................................... 4
Exchange Act Registration.......................................... 5
Proposed Business.................................................. 5
Pre-Combination Activities....................................... 6
Combination Suitability Standards ............................... 7
Form of Acquisition.............................................. 8
Post-Combination Activities...................................... 10
Potential Benefits to Insiders..................................... 10
Possible Origination of a Business ................................ 10
Use of Consultants and Finders .................................... 11
Risk Factors....................................................... 11
State Securities Law Considerations ............................... 12
No Investment Company Regulation .................................. 12
Competition........................................................ 12
Employees.......................................................... 13
Item 2. MANAGEMENT'S DISCUSSION and ANALYSIS or PLAN of OPERATION .......... 13
Results of Operations.............................................. 13
Liquidity and Capital Resources.................................... 14
Year 2000 Issues................................................... 15
Item 3. DESCRIPTION of PROPERTY ............................................ 15
Item 4. SECURITY OWNERSHIP of CERTAIN
BENEFICIAL OWNERS and MANAGEMENT ................................... 15
Beneficial Ownership............................................... 15
Changes in Control................................................. 16
Item 5. DIRECTORS, EXECUTIVE OFFICERS,
PROMOTERS and CONTROL PERSONS ...................................... 16
Biographical Information........................................... 16
Potential Conflicts of Interest.................................... 17
Indemnification of Directors and Officers ......................... 18
Exclusion of Director Liability.................................... 18
Item 6. EXECUTIVE COMPENSATION ............................................. 18
Cash and Other Compensation ....................................... 18
Compensation Pursuant to Plans .................................... 18
Employee Stock Compensation Plan .................................. 18
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Compensatory Stock Option Plan .................................... 19
Employment Contracts............................................... 19
Item 7. CERTAIN RELATIONSHIPS and RELATED TRANSACTIONS ..................... 19
Item 8. DESCRIPTION of SECURITIES .......................................... 19
Common Stock....................................................... 19
Preferred Stock.................................................... 20
Annual Reports..................................................... 20
Transfer Agent..................................................... 20
PART II
Item 1. MARKET PRICE of and DIVIDENDS on the REGISTRANT'S COMMON
EQUITY and OTHER SHAREHOLDER MATTERS ............................... 20
Price Range of the Common Stock ................................... 21
Dividends.......................................................... 21
Shareholders....................................................... 21
Public Market for the Common Shares ............................... 21
Rule 144 Resales................................................... 21
Item 2. LEGAL PROCEEDINGS................................................... 22
Item 3. CHANGES in and DISAGREEMENTS with ACCOUNTANTS
on ACCOUNTING and FINANCIAL DISCLOSURE ............................. 22
Item 4. RECENT SALES of UNREGISTERED SECURITIES ............................ 22
Item 5. INDEMNIFICATION of DIRECTORS and OFFICERS .......................... 23
PART F/S
FINANCIAL STATEMENTS ............................................... 23
PART III
Item 1. LIST of EXHIBITS ................................................... 24
SIGNATURES.......................................................... 25
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FORWARD-LOOKING STATEMENTS
This Registration Statement contains certain forward-looking statements and
information relating to EQUICAP, INC. ("EQUICAP" or "COMPANY") that are based on
the beliefs of its management as well as assumptions made by and information
currently available to its management. When used in this report, the words
"anticipate", "believe", "estimate", "expect", "intend", "plan" and similar
expressions, as they relate to EQUICAP or its management, are intended to
identify forward-looking statements. These statements reflect management's
current view of EQUICAP concerning future events and are subject to certain
risks, uncertainties and assumptions, including among many others: a general
economic downturn; a downturn in the securities markets; a general lack of
interest for any reason in going public by means of transactions involving
public blank check companies; federal or state laws or regulations having an
adverse effect on blank check companies, Securities and Exchange Commission
regulations which affect trading in the securities of "penny stocks," and other
risks and uncertainties.
Should any of these risks or uncertainties materialize, or should
underlying assumptions prove incorrect, actual results may vary materially from
those described in this report as anticipated, estimated or expected. Readers
should realize that EQUICAP has only very limited assets, and that for EQUICAP
to succeed requires that it either originate a successful business (for which it
lacks the funds) or acquire a successful business. EQUICAP's realization of its
business aims as stated herein will depend in the near future principally on the
successful completion of its acquisition of a business, as discussed below.
PART I
ITEM 1. DESCRIPTION of BUSINESS.
BACKGROUND
EQUICAP was incorporated under the laws of the State of California on March
1, 1995, under the name of VWR Acquisition Company, Inc. ("VWR"); the name was
later changed to EQUICAP, INC. EQUICAP is authorized to issue 100,000,000 shares
of common stock without par value and 10,000,000 shares of preferred stock
without par value. EQUICAP's business activities prior to July 1996 were that of
an investment banking and consulting firm whose business plan was to assist its
clients by infusing capital into them and utilizing its experience to assist its
client companies in getting their products or services to market and becoming
profitable. EQUICAP thus anticipated "incubating" client companies. EQUICAP has
not had operations since July 1996, has no significant assets and only modest
liabilities.
EQUICAP issued 5,500,000 shares of its common stock in March 1995, to its
founders in consideration of cash and services rendered. In March 1995, 200,000
shares of its common stock were issued to an investor for approximately $137,000
in cash. All such shares were treated as "restricted securities", meaning that
they were shares issued in transactions not involving any public offering, stop
transfer orders were entered into the stock books as to such shares, and all
certificates evidencing these shares bore a customary form of investment legend.
Then in October 1995, approximately 4,022,115 common shares were voluntarily
cancelled by the shareholders, reducing the number of outstanding shares to
1,677,885.
On December 29, 1995, BBU Systems Inc. ("BBU") was merged with and into
EQUICAP as the surviving entity pursuant to an Agreement and Plan of Merger. In
the merger EQUICAP issued 1,273,415 shares of its common stock and acquired all
of the issued and outstanding common shares of BBU. The merger was effected in
reliance upon the exemption from registration provided by Regulation D, Rule
504. In connection with the merger, an additional 509,295 shares were
voluntarily cancelled by the holders, reducing the number of outstanding shares
to 2,442,005. EQUICAP became dormant in July 1996 when the Company's board of
directors determined that its original business plan could not be executed, and
that the business of BBU could not be developed, due to lack of operating
capital and the lack of prospects to raise adequate funding.
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On June 19, 1998, EQUICAP issued 5,000,000 shares of its common stock to
Stephen M. Siedow, President of the Company, for services and costs advanced on
behalf of EQUICAP that were valued at $5,000 in the aggregate. These shares were
also treated as "restricted securities." Mr. Siedow has informed the Company
that he will not sell these shares in the public markets until they have been
registered for resale under the Securities Act of 1933, as amended (the "Act")
or otherwise in compliance with applicable law.
On July 31, 1998, EQUICAP's common stock underwent a reverse split in which
each 100 of the issued and outstanding shares were changed into one share, which
decreased the number of issued and outstanding shares from 7,442,005 to 74,732.
On December 29, 1999, EQUICAP issued 100,000 shares of its common stock to Mr.
Siedow for services and fees and costs advanced on behalf of EQUICAP that were
valued at $10,000 in the aggregate, which also were treated as "restricted
securities." Mr. Siedow has informed the Company that he will not sell these
shares in the public markets until they have been registered for resale under
the Act or otherwise in compliance with applicable law. On January 18, 2000,
EQUICAP's common stock underwent a reverse and forward split of the common
shares in which (i) each 50 of the issued and outstanding shares were changed
into one share, with each fraction being rounded up to a whole share, and (ii)
immediately following the reverse split, each resulting share was changed into
100 shares. Upon conclusion of this recapitalization, EQUICAP had 390,100 common
shares issued and outstanding.
EQUICAP owns no real estate and has no full time employees, and it will
have no operations of its own unless and until it engages in one or more of the
activities described below under this ITEM 1. EQUICAP is a blank check company
which intends to enter into a business combination with one or more as yet
unidentified privately held businesses.
EXCHANGE ACT REGISTRATION
EQUICAP has voluntarily filed this registration statement on Form 10-SB
with the Securities and Exchange Commission ("SEC" or "Commission") in order to
register EQUICAP's common stock under Section 12(g) of the Securities Exchange
Act of 1934, as amended ("Exchange Act"). Upon effectiveness of this
registration statement, EQUICAP will be required to file quarterly, annual and
other reports and other information with the SEC as required by the Exchange
Act. Management believes it is in the shareholders' best interests for EQUICAP
to register under the Exchange Act, in order that EQUICAP's common stock can be
quoted on the OTC Bulletin Board. Additionally, management believes that
potential combination candidates will find EQUICAP more attractive as a public
blank check company if it is subject to the Exchange Act reporting requirements
and files annual and quarterly financial statements with the SEC. If EQUICAP's
duty to file reports under the Exchange Act is suspended, EQUICAP intends to
nonetheless continue filing reports on a voluntary basis if it is able to do so.
PROPOSED BUSINESS
EQUICAP intends to enter into a business combination with one or more as
yet unidentified privately held businesses. Management believes that EQUICAP
will be attractive to privately held companies interested in becoming publicly
traded by means of a business combination with EQUICAP, without offering their
own securities to the public. EQUICAP intends to pursue negotiations with
qualified candidates after effectiveness of this Registration Statement. EQUICAP
will not be restricted in its search for business combination candidates to any
particular geographical area, industry or industry segment, and may enter into a
combination with a private business engaged in any line of business.
Management's discretion is, as a practical matter, unlimited in the selection of
a combination candidate. EQUICAP has not entered into any agreement, arrangement
or understanding of any kind with any person regarding a business combination.
EQUICAP does not intend to enter into any business combination involving any
business or venture with which its sole officer or director is affiliated.
Depending upon the nature of the transaction, the current officers and
directors of EQUICAP probably will resign their directorship and officer
positions with EQUICAP in connection with EQUICAP's consummation of a business
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combination. See "Form of Acquisition" below. EQUICAP's current management will
not have any control over the conduct of EQUICAP's business following EQUICAP's
completion of a business combination.
It is anticipated that business opportunities will come to EQUICAP's
attention from various sources, including its management, its other
stockholders, professional advisors such as attorneys and accountants,
securities broker-dealers, venture capitalists, members of the financial
community, and others who may present unsolicited proposals. EQUICAP has no
plans, understandings, agreements, or commitments with any individual or entity
to act as a finder of or as a business consultant in regard to any business
opportunities for EQUICAP. There are no plans to use advertisements, notices or
any general solicitation in the search for combination candidates.
PRE-COMBINATION ACTIVITIES. EQUICAP is a "blank check" company, defined as
an inactive, publicly quoted company with nominal assets and liabilities. With
these characteristics, management believes that EQUICAP will be attractive to
privately held companies interested in becoming publicly traded by means of a
business combination with EQUICAP, without offering their own securities to the
public. EQUICAP intends to pursue negotiations with qualified candidates after
effectiveness of this Registration Statement and become publicly quoted.
The term "business combination" (or "combination") means the result of (i)
a statutory merger of a combination candidate into or its consolidation with
EQUICAP or a wholly owned subsidiary of EQUICAP formed for the purpose of the
merger or consolidation, (ii) the exchange of securities of EQUICAP for the
assets or outstanding equity securities of a privately held business, or (iii)
the sale of securities by EQUICAP for cash or other value to a business entity
or individual, and similar transactions. A combination may be structured in one
of the foregoing ways or in any other form which will result in the combined
entity being a publicly held corporation. It is unlikely that any proposed
combination will be submitted for the approval of EQUICAP's shareholders prior
to consummation. Pending negotiation and consummation of a combination, EQUICAP
anticipates that it will have no business activities or sources of revenues and
will incur no significant expenses or liabilities other than expenses related to
this Registration Statement, related to ongoing filings required by the Exchange
Act, or related to the negotiation and consummation of a combination.
EQUICAP anticipates that the business opportunities presented to it will
(1) be recently organized with no operating history, or a history of losses
attributable to under-capitalization or other factors; (2) be experiencing
financial or operating difficulties; (3) be in need of funds to develop a new
product or service or to expand into a new market; (4) be relying upon an
untested product or marketing concept; or (5) have a combination of the
foregoing characteristics. Given the above factors, it should be expected that
any acquisition candidate may have a history of losses or low profitability.
EQUICAP will not be restricted in its search for business combination
candidates to any particular geographical area, industry or industry segment,
and may enter into a combination with a private business engaged in any line of
business, including service, finance, mining, manufacturing, real estate, oil
and gas, distribution, transportation, medical, communications, high technology,
biotechnology or any other. Management's discretion is, as a practical matter,
unlimited in the selection of a combination candidate. Management of EQUICAP
will seek combination candidates in the United States and other countries, as
available time permits, through existing associations and by word of mouth.
EQUICAP has not entered into any agreement or understanding of any kind
with any person regarding a business combination. There is no assurance that
EQUICAP will be successful in locating a suitable combination candidate or in
concluding a business combination on terms acceptable to EQUICAP. EQUICAP's
Board of Directors has not established a time limitation by which it must
consummate a suitable combination; however, if EQUICAP is unable to consummate a
suitable combination within a reasonable period, such period to be determined at
the discretion of EQUICAP's Board of Directors, the Board of Directors will
probably recommend its liquidation and dissolution. It is anticipated that
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EQUICAP will not be able to diversify, but will essentially be limited to one
such venture because of EQUICAP's lack of capital. This lack of diversification
will not permit EQUICAP to offset potential losses from one acquisition against
profits from another, and should be considered an adverse factor affecting any
decision to purchase EQUICAP's securities.
EQUICAP's management has the authority and discretion to effect
transactions having a potentially adverse impact upon EQUICAP's shareholders and
to complete a combination without submitting any proposal to the stockholders
for their prior approval. EQUICAP's shareholders should not anticipate that they
will have any meaningful opportunity to consider or vote upon any candidate
selected by EQUICAP management for acquisition. However, it is anticipated that
EQUICAP's shareholders will, prior to completion of any combination, be given
information about the candidate company's business, financial condition,
management and other information required by ITEMs 6(a), (d), (e), 7 and 8 of
Schedule 14A of Regulation 14A under the Exchange Act.
COMBINATION SUITABILITY STANDARDS. The analysis of candidate companies will
be undertaken by or under the supervision of EQUICAP's President, who is not a
professional business analyst. See "MANAGEMENT" below.
To a large extent, a decision to participate in a specific combination may
be made upon management's analysis of the quality of the candidate company's
management and personnel, the anticipated acceptability of new products or
marketing concepts, the merit of technological changes, the perceived benefit
the candidate will derive from becoming a publicly held entity, and numerous
other factors which are difficult, if not impossible, to objectively quantify or
analyze. In many instances, it is anticipated that the historical operations of
a specific candidate may not necessarily be indicative of the potential for the
future because of the possible need to shift marketing approaches substantially,
expand significantly, change product emphasis, change or substantially augment
management, or make other changes. EQUICAP will be dependent upon the owners and
management of a candidate to identify any such problems which may exist and to
implement, or be primarily responsible for the implementation of, required
changes. Because EQUICAP may participate in a business combination with a newly
organized candidate or with a candidate which is entering a new phase of growth,
it should be emphasized that EQUICAP will incur further risks, because
management in many instances will not have proved its abilities or
effectiveness, the eventual market for the candidate's products or services will
likely not be established, and the candidate may not be profitable when
acquired.
Otherwise, EQUICAP anticipates that it may consider, among other things,
the following factors:
1. Potential for growth and profitability, indicated by new technology,
anticipated market expansion, or new products;
2. EQUICAP's perception of how any particular candidate will be received
by the investment community and by EQUICAP's stockholders;
3. Whether, following the business combination, the financial condition
of the candidate would be, or would have a significant prospect in the
foreseeable future of becoming sufficient to enable the securities of
EQUICAP to qualify for listing on an exchange or on NASDAQ, so as to
permit the trading of such securities to be exempt from the
requirements of the federal "penny stock" rules adopted by the SEC.
4. Capital requirements and anticipated availability of required funds,
to be provided by EQUICAP or from operations, through the sale of
additional securities, through joint ventures or similar arrangements,
or from other sources;
5. The extent to which the candidate can be advanced;
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6. Competitive position as compared to other companies of similar size
and experience within the industry segment as well as within the
industry as a whole;
7. Strength and diversity of existing management, or management prospects
that are scheduled for recruitment;
8. The cost of participation by EQUICAP as compared to the perceived
tangible and intangible values and potential; and
9. The accessibility of required management expertise, personnel, raw
materials, services, professional assistance, and other required
items.
No one of the factors described above will be controlling in the selection
of a candidate. Potentially available candidates may occur in many different
industries and at various stages of development, all of which will make the task
of comparative investigation and analysis of such business opportunities
extremely difficult and complex. It should be recognized that, because of
EQUICAP's limited capital available for investigation and management's limited
experience in business analysis, EQUICAP may not discover or adequately evaluate
adverse facts about the opportunity to be acquired. EQUICAP cannot predict when
it may participate in a business combination. It expects, however, that the
analysis of specific proposals and the selection of a candidate may take several
months or more.
Management believes that various types of potential merger or acquisition
candidates might find a business combination with EQUICAP to be attractive.
These include acquisition candidates desiring to create a public market for
their shares in order to enhance liquidity for current shareholders, acquisition
candidates which have long-term plans for raising capital through the public
sale of securities and believe that the possible prior existence of a public
market for their securities would be beneficial, and acquisition candidates
which plan to acquire additional assets through issuance of securities rather
than for cash, and believe that the possibility of development of a public
market for their securities will be of assistance in that process. Acquisition
candidates which have a need for an immediate cash infusion are not likely to
find a potential business combination with EQUICAP to be an attractive
alternative.
Prior to consummation of any combination (other than a mere sale by EQUICAP
insiders of a controlling interest in EQUICAP's common stock) EQUICAP intends to
require that the combination candidate provide EQUICAP the financial statements
required by ITEM 310 of Regulation S-B, including at the least an audited
balance sheet as of the most recent fiscal year end and statements of
operations, changes in stockholders' equity and cash flows for the two most
recent fiscal years, audited by certified public accountants acceptable to
EQUICAP's management, and the necessary unaudited interim financial statements.
Such financial statements must be adequate to satisfy EQUICAP's reporting
obligations under Section 15(d) or 13 of the Exchange Act. If the required
audited financial statements are not available at the time of closing, EQUICAP
management must reasonably believe that the audit can be obtained in less than
60 days. This requirement to provide audited financial statements may
significantly narrow the pool of potential combination candidates available,
since most private companies are not already audited. Some private companies
will either not be able to obtain an audit or will find the audit process too
expensive. In addition, some private companies on closer examination may find
the entire process of being a reporting company after a combination with EQUICAP
too burdensome and expensive in light of the perceived potential benefits from a
combination.
FORM OF ACQUISITION. It is impossible to predict the manner in which
EQUICAP may participate in a business opportunity. Specific business
opportunities will be reviewed as well as the respective needs and desires of
EQUICAP and the promoters of the opportunity and, upon the basis of that review
and the relative negotiating strength of EQUICAP and such promoters, the legal
structure or method deemed by management to be suitable will be selected. Such
structure may include, but is not limited to leases, purchase and sale
agreements, licenses, joint ventures and other contractual arrangements. EQUICAP
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may act directly or indirectly through an interest in a partnership, corporation
or other form of organization. Implementing such structure may require the
merger, consolidation or reorganization of EQUICAP with other corporations or
forms of business organization, and although it is likely, there is no assurance
that EQUICAP would be the surviving entity. In addition, the present management
and stockholders of EQUICAP most likely will not have control of a majority of
the voting shares of EQUICAP following a reorganization transaction. As part of
such a transaction, EQUICAP's existing directors may resign and new directors
may be appointed without any vote or opportunity for approval by EQUICAP's
shareholders.
It is likely that EQUICAP will acquire its participation in a business
opportunity through the issuance of Common Stock or other securities of EQUICAP.
Although the terms of any such transaction cannot be predicted, it should be
noted that in certain circumstances the criteria for determining whether or not
an acquisition is a so-called "tax free" reorganization under the Internal
Revenue Code of 1986, depends upon the issuance to the stockholders of the
acquired company of a controlling interest (i.e. 80% or more) of the common
stock of the combined entities immediately following the reorganization. If a
transaction were structured to take advantage of these provisions rather than
other "tax free" provisions provided under the Internal Revenue Code, EQUICAP's
current stockholders would retain in the aggregate 20% or less of the total
issued and outstanding shares. This could result in substantial additional
dilution in the equity of those who were stockholders of EQUICAP prior to such
reorganization. Any such issuance of additional shares might also be done
simultaneously with a sale or transfer of shares representing a controlling
interest in EQUICAP by the current officers, directors and principal
shareholders.
It is anticipated that any new securities issued in any reorganization
would be issued in reliance upon exemptions, if any are available, from
registration under applicable federal and state securities laws. In some
circumstances, however, as a negotiated element of the transaction, EQUICAP may
agree to register such securities either at the time the transaction is
consummated, or under certain conditions or at specified times thereafter. The
issuance of substantial additional securities and their potential sale into any
trading market that might develop in EQUICAP's securities may have a depressive
effect upon such market.
EQUICAP will participate in a business opportunity only after the
negotiation and execution of a written agreement. Although the terms of such
agreement cannot be predicted, generally such an agreement would require
specific representations and warranties by all of the parties thereto, specify
certain events of default, detail the terms of closing and the conditions which
must be satisfied by each of the parties thereto prior to such closing, outline
the manner of bearing costs if the transaction is not closed, set forth remedies
upon default, and include miscellaneous other terms.
As a general matter, EQUICAP anticipates that it, and/or its officers and
principal shareholders will enter into a letter of intent with the management,
principals or owners of a prospective business opportunity prior to signing a
binding agreement. Such a letter of intent will set forth the terms of the
proposed acquisition but will not bind any of the parties to consummate the
transaction. Execution of a letter of intent will by no means indicate that
consummation of an acquisition is probable. Neither EQUICAP nor any of the other
parties to the letter of intent will be bound to consummate the acquisition
unless and until a definitive agreement concerning the acquisition as described
in the preceding paragraph is executed. Even after a definitive agreement is
executed, it is possible that the acquisition would not be consummated should
any party elect to exercise any right provided in the agreement to terminate it
on specified grounds.
It is anticipated that the investigation of specific business opportunities
and the negotiation, drafting and execution of relevant agreements, disclosure
documents and other instruments will require substantial management time and
attention and substantial costs for accountants, attorneys and others. If a
decision is made not to participate in a specific business opportunity, the
costs theretofore incurred in the related investigation would not be
recoverable. Moreover, because many providers of goods and services require
compensation at the time or soon after the goods and services are provided, the
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inability of EQUICAP to pay until an indeterminate future time may make it
impossible to procure goods and services.
POST-COMBINATION ACTIVITIES. Management anticipates that, following
consummation of a combination, control of EQUICAP will change as a result of the
issuance of additional Common Stock to the shareholders of the business acquired
in the combination. Once ownership control has changed, it is likely that the
new controlling shareholders will call a meeting for the purpose of replacing
the incumbent directors of EQUICAP with candidates of their own, and that the
new directors will then replace the incumbent officers with their own nominees.
Rule 14f-1 under the Exchange Act requires that, if in connection with a
business combination or sale of control of EQUICAP there should arise any
arrangement or understanding for a change in a majority of EQUICAP's directors
and the change in the board of directors is not approved in advance by EQUICAP's
shareholders at a shareholder meeting, then none of the new directors may take
office until at least ten (10) days after an information statement has been
filed with the Securities and Exchange Commission and sent to EQUICAP's
shareholders. The information statement furnished must as a practical matter
include the information required by ITEMs 6(a), (d) and (e), 7 and 8 of Schedule
14A of Regulation 14A in a proxy statement.
Following consummation of a combination, management anticipates that
EQUICAP will file a current report on Form 8-K with the Commission which
discloses among other things the date and manner of the combination, material
terms of the definitive agreement, the assets and consideration involved, the
identity of the person or persons from whom the assets or other property was
acquired, changes in management and biographies of the new directors and
executive officers, identity of principal shareholders following the
combination, and contains the required financial statements. The Form 8-K report
also will be required to include all information as to the business acquired
called for by ITEM 101 of Regulation S-B.
POTENTIAL BENEFITS to INSIDERS
In connection with a business combination, it is possible that shares of
common stock constituting control of EQUICAP may be purchased from the current
principal shareholders ("insiders") of EQUICAP by the acquiring entity or its
affiliates. If stock is purchased from the insiders, the transaction is very
likely to result in substantial gains to them relative to the price they
originally paid for the stock. In EQUICAP's judgment, none of its officers and
directors would as a result of such a sale become an "underwriter" within the
meaning of the Section 2(11) of the Securities Act of 1933, as amended. No bylaw
or charter provision of EQUICAP prevents insiders from negotiating or
consummating such a sale of their shares. The sale of a controlling interest by
EQUICAP insiders could occur at a time when the other shareholders of the
Company remain subject to restrictions on the transfer of their shares, and it
is unlikely that EQUICAP shareholders generally will be given the opportunity to
participate in any such sale of shares. Moreover, EQUICAP shareholders probably
will not be afforded any opportunity to review or approve any such buyout of
shares held by an officer, director or other affiliate, should such a buyout
occur.
EQUICAP may require that a company being acquired repay all advances made
to EQUICAP by EQUICAP shareholders and management, at or prior to closing of a
combination. Otherwise, there are no conditions that any combination or
combination candidate must meet, such as buying stock from EQUICAP insiders or
paying compensation to any EQUICAP officer, director or shareholder or their
respective affiliates.
POSSIBLE ORIGINATION of a BUSINESS
The Board of Directors has left open the possibility that, instead of
seeking a business combination, EQUICAP may instead raise funding in order to
originate an operating business, which may be in any industry or line of
business, and could involve EQUICAP's origination of a start-up business,
purchase and development of a business already originated by third parties,
joint venture of a new or existing business, or take any other lawful form. It
is also possible that EQUICAP may engage in one or more combinations, as
discussed above, and originate a business in addition. Potential shareholders
should consider that management has the widest possible discretion in choosing a
business direction for EQUICAP.
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Any funds needed to originate and develop a business would almost certainly
be raised from the sale of EQUICAP'S securities, since EQUICAP lacks the
creditworthiness to obtain a loan. Management does not believe that the
principal shareholders, directors or executive officers of EQUICAP would be
willing to guarantee any debt taken on, and obtaining a loan without personal
guarantees is unlikely. Capital could possibly be raised from the sale of debt
instruments convertible into common stock upon the occurrence of certain defined
events, but no such funding has been offered. EQUICAP has no current plans to
offer or sell its securities, but would be agreeable do so if a worthy business
opportunity presents itself and adequate funding then appears to be available.
USE OF CONSULTANTS and FINDERS
Although there are no current plans to do so, EQUICAP management might hire
and pay an outside consultant to assist in the investigation and selection of
candidates, and might pay a finder's fee to a person who introduces a candidate
with which EQUICAP completes a combination. Since EQUICAP management has no
current plans to use any outside consultants or finders to assist in the
investigation and selection of candidates, no policies have been adopted
regarding use of consultants or finders, the criteria to be used in selecting
such consultants or finders, the services to be provided, the term of service,
or the structure or amount of fees that may be paid to them. However, because of
the limited resources of EQUICAP, it is likely that any such fee EQUICAP agrees
to pay would be paid in stock and not in cash. EQUICAP has had no discussions,
and has entered into no arrangements or understandings, with any consultant or
finder. EQUICAP's officers and directors have not in the past used any
particular consultant or finder on a regular basis and have no plan to either
use any consultant or recommend that any particular consultant be engaged by
EQUICAP on any basis.
It is possible that compensation in the form of common stock, options,
warrants or other securities of EQUICAP, cash or any combination thereof, may be
paid to outside consultants or finders. No securities of EQUICAP will be paid to
officers, directors or promoters of EQUICAP nor any of their respective
affiliates. Any payments of cash to a consultant or finder would be made by the
business acquired or persons affiliated or associated with it, and not by
EQUICAP. It is possible that the payment of such compensation may become a
factor in any negotiations for EQUICAP's acquisition of a business opportunity.
Any such negotiations and compensation may present conflicts of interest between
the interests of persons seeking compensation and those of EQUICAP's
shareholders, and there is no assurance that any such conflicts will be resolved
in favor of EQUICAP's shareholders.
RISK FACTORS
At this time the shares of EQUICAP are speculative and involve a high
degree of risk, for the reasons following. EQUICAP is in the development stage
with no operations or revenues, thus there are no financial results upon which
anyone may base an assessment of its potential. No combination candidate has
been identified for acquisition by management, nor has any determination been
made as to any business for EQUICAP to enter, and shareholders will have no
meaningful voice in any such determinations. There is no assurance that EQUICAP
will be successful in completing a combination or originating a business, nor
that EQUICAP will be successful or that its shares will have any value even if a
combination is completed or a business originated.
EQUICAP's officers and directors, who serve only on a part-time basis, have
had limited experience in the business activities contemplated by EQUICAP, yet
EQUICAP will be solely dependent on them. EQUICAP lacks the funds or other
incentive to hire full-time experienced management. Each of EQUICAP's management
members has other employment or business interests to which he devotes his
primary attention and will continue to do so, devoting time to EQUICAP only on
an as-needed basis. Moreover, members of management are involved in other
companies also seeking to engage in a combination, and conflicts of interest
could arise in the event they come across a desirable combination candidate. No
assurance exists that all or any such conflicts will be resolved in favor of
EQUICAP.
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After completion of a combination, the current shareholders of EQUICAP may
experience severe dilution of their ownership due to the issuance of shares in
the combination. Any combination effected by EQUICAP almost certainly will
require its existing management and board members to resign, thus shareholders
have no way of knowing what persons ultimately will direct EQUICAP and may not
have an effective voice in their selection.
STATE SECURITIES LAWS CONSIDERATIONS
Section 18 of the Securities Act of 1933, as amended in 1996, provides that
no law, rule, regulation, order or administrative action of any state may
require registration or qualification of securities or securities transactions
that involve the sale of a "covered security." The term "covered security" is
defined in Section 18 to include among other things transactions by "any person
not an issuer, underwriter or dealer," (in other words, secondary transactions
in securities already outstanding) that are exempted from registration by
Section 4(1) of the Securities Act of 1933, provided the issuer of the security
is a "reporting company," meaning that it files reports with the SEC pursuant to
Section 13 or 15(d) of the Exchange Act.
Section 18 as amended preserves the authority of the states to require
certain limited notice filings by issuers and to collect fees as to certain
categories of covered securities, specifically including Section 4(1) secondary
transactions in the securities of reporting companies. Section 18 expressly
provides, however, that a state may not "directly or indirectly prohibit, limit,
or impose conditions based on the merits of such offering or issuer, upon the
offer or sale of any (covered) security." This provision prohibits states from
requiring registration or qualification of securities of an Exchange Act
reporting company which is current in its filings with the SEC.
The states generally are free to enact legislation or adopt rules that
prohibit secondary trading in the securities of "blank check" companies like
EQUICAP. Section 18, however, of the Act preempts state law as to covered
securities of reporting companies. Thus, while the states may require certain
limited notice filings and payment of filing fees by EQUICAP as a precondition
to secondary trading of its shares in those states, they cannot, so long as
EQUICAP is a reporting issuer, prohibit, limit or condition trading in EQUICAP's
securities based on the fact that EQUICAP is or ever was a blank check company.
EQUICAP will comply with such state limited notice filings as may be necessary
in regard to secondary trading. At this time, EQUICAP's stock is not actively
traded in any market, and an active market in its common stock is not expected
to arise, if ever, until after completion of a business combination.
NO INVESTMENT COMPANY ACT REGULATION
Prior to completing a combination, EQUICAP will not engage in the business
of investing or reinvesting in, or owning, holding or trading in securities, or
otherwise engaging in activities which would cause it to be classified as an
"investment company" under the 1940 Act. To avoid becoming an investment
company, not more than 40% of the value of EQUICAP's assets (excluding
government securities and cash and cash equivalents) may consist of "investment
securities," which is defined to include all securities other than U.S.
government securities and securities of majority-owned subsidiaries. Because
EQUICAP will not own less than a majority of any assets or business acquired, it
will not be regulated as an investment company. EQUICAP will not pursue any
combination unless it will result in EQUICAP owning at least a majority interest
in the business acquired.
COMPETITION
EQUICAP will be in direct competition with many entities in its efforts to
locate suitable business opportunities. Included in the competition will be
business development companies, venture capital partnerships and corporations,
small business investment companies, venture capital affiliates of industrial
and financial companies, broker-dealers and investment bankers, management and
management consultant firms and private individual investors. Most of these
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entities will possess greater financial resources and will be able to assume
greater risks than those which EQUICAP, with its limited capital, could
consider. Many of these competing entities will also possess significantly
greater experience and contacts than EQUICAP's Management. Moreover, EQUICAP
also will be competing with numerous other blank check companies for such
opportunities.
EMPLOYEES
EQUICAP has no full-time employees, and its only employees currently are
its officers. It is not expected that EQUICAP will have additional full-time or
other employees except as a result of completing a combination.
ITEM 2. MANAGEMENT'S DISCUSSION and ANALYSIS or PLAN of OPERATION.
EQUICAP is a blank check company whose plan of operation over the next
twelve months is to seek and, if possible, acquire an operating business or
valuable assets by entering into a business combination. EQUICAP will not be
restricted in its search for business combination candidates to any particular
geographical area, industry or industry segment, and may enter into a
combination with a private business engaged in any line of business, including
service, finance, mining, manufacturing, real estate, oil and gas, distribution,
transportation, medical, communications, high technology, biotechnology or any
other. Management's discretion is, as a practical matter, unlimited in the
selection of a combination candidate. Management of EQUICAP will seek
combination candidates in the United States and other countries, as available
time and resources permit, through existing associations and by word of mouth.
This plan of operation has been adopted in order to attempt to create value for
EQUICAP's shareholders. For further information on EQUICAP's plan of operation
and business, see PART I, Item 1 above.
EQUICAP does not intend to do any product research or development. EQUICAP
does not expect to buy or sell any real estate, plant or equipment except as
such a purchase might occur by way of a business combination that is structured
as an asset purchase, and no such asset purchase currently is anticipated.
Similarly, EQUICAP does not expect to add additional employees or any full-time
employees except as a result of completing a business combination, and any such
employees likely will be persons already then employed by the company acquired.
RESULTS of OPERATIONS
EQUICAP's business activities prior to July 1996 were that of an investment
banking and consulting firm whose business plan was to assist its clients by
infusing capital into them and utilizing its experience to assist its clients in
getting products or services to market and becoming profitable. EQUICAP thus
anticipated incubating client companies. EQUICAP has not had any operations or
revenues since July 1996. EQUICAP anticipates no operations unless and until it
completes a business combination as described above.
Comparison of 1999 to 1998
For the year ended December 31, 1999, EQUICAP had no revenues and incurred
a net loss of $14,149, as compared to a net loss of $15,965 for the year ended
December 31, 1998. Expenses in calendar 1999 related primarily to accounting and
legal fees, franchise taxes, transfer agent fees and miscellaneous general and
administrative fees.
Comparison of 1998 to 1997
For the year ended December 31, 1998, EQUICAP had no revenues and incurred
a net loss of $15,965, as compared to a net loss of $2,784 for 1997. Expenses in
calendar 1998 related primarily to accounting fees, franchise taxes, transfer
agent fees and miscellaneous general and administrative fees.
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LIQUIDITY and CAPITAL RESOURCES
EQUICAP had no cash on hand at December 31, 1999 and has no significant
other assets to meet ongoing expenses or debts that may accumulate. As of such
date, EQUICAP has accumulated a deficit (net loss) of $200,578. EQUICAP has
debts totaling $26,213, owed to its President and control shareholder and to its
trade vendors for costs advanced on its behalf.
EQUICAP has no commitment for any capital expenditure and foresees none.
However, EQUICAP will incur routine fees and expenses incident to its reporting
duties as a public company, and it will incur expenses in finding and
investigating possible acquisitions and other fees and expenses in the event it
makes an acquisition or attempts but is unable to complete an acquisition.
EQUICAP's cash requirements for the next twelve months are relatively modest,
principally accounting expenses and other expenses relating to making filings
required under the Securities Exchange Act of 1934 (the "Exchange Act"), which
should not exceed $10,000 in the fiscal year ending December 31, 2000. Any
travel, lodging or other expenses which may arise related to finding,
investigating and attempting to complete a combination with one or more
potential acquisitions could also amount to thousands of dollars.
EQUICAP's current management have informally agreed to continue rendering
services to EQUICAP and to not demand payment of sums owed unless and until
EQUICAP completes an acquisition. The terms of any such payment will have to be
negotiated with the principals of any business acquired. The existence and
amounts of EQUICAP debt may make it more difficult to complete, or prevent
completion of, a desirable acquisition. In addition, offices are provided to
EQUICAP without charge.
EQUICAP will only be able to pay its future debts and meet operating
expenses by raising additional funds, acquiring a profitable company or
otherwise generating positive cash flow. As a practical matter, EQUICAP is
unlikely to generate positive cash flow by any means other than acquiring a
company with such cash flow. EQUICAP believes that management members or
shareholders will loan funds to EQUICAP as needed for operations prior to
completion of an acquisition. Management and the shareholders are not obligated
to provide funds to EQUICAP, however, and it is not certain they will always
want or be financially able to do so. EQUICAP shareholders and management
members who advance money to EQUICAP to cover operating expenses will expect to
be reimbursed, either by EQUICAP or by the company acquired, prior to or at the
time of completing a combination. EQUICAP has no intention of borrowing money to
reimburse or pay salaries to any EQUICAP officer, director or shareholder or
their affiliates. There currently are no plans to sell additional securities of
EQUICAP to raise capital, although sales of securities may be necessary to
obtain needed funds. EQUICAP's current management and its counsel have agreed to
continue their services to EQUICAP and to accrue sums owed them for services and
expenses and expect payment reimbursement only.
Should existing management or shareholders refuse to advance needed funds,
however, EQUICAP would be forced to turn to outside parties to either loan money
to EQUICAP or buy EQUICAP securities. There is no assurance whatever that
EQUICAP will be able at need to raise necessary funds from outside sources. Such
a lack of funds could result in severe consequences to EQUICAP, including among
others:
1. failure to make timely filings with the SEC as required by the
Exchange Act, which also probably would result in suspension of
trading or quotation in EQUICAP's stock and could result in fines and
penalties to EQUICAP under the Exchange Act;
2. curtailing or eliminating EQUICAP's ability to locate and perform
suitable investigations of potential acquisitions; or
3. inability to complete a desirable acquisition due to lack of funds to
pay legal and accounting fees and acquisition-related expenses.
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EQUICAP hopes to require potential candidate companies to deposit funds
with EQUICAP that it can use to defray professional fees and travel, lodging and
other due diligence expenses incurred by EQUICAP's management related to finding
and investigating a candidate company and negotiating and consummating a
business combination. There is no assurance that any potential candidate will
agree to make such a deposit.
YEAR 2000 ISSUES
EQUICAP has not suffered any Y2K-related problems and does not anticipate
that it will suffer any losses as a result of Y2K problems. However, if general
economic problems resulting from Y2K issues were to be severe and prolonged,
demand for blank check companies such as EQUICAP could be reduced or eliminated
for an unknown period of time. Because EQUICAP regularly backs up its records
and documents maintained on computer, any computer failure should not directly
cause EQUICAP more than a modest inconvenience at worst.
ITEM 3. DESCRIPTION of PROPERTY.
EQUICAP neither owns nor leases any real estate or other properties.
EQUICAP's offices are located at 12373 E. Cornell Avenue, Aurora, Colorado
80014, and are provided at no charge by its President. This arrangement is
entirely adequate for EQUICAP's current needs. EQUICAP does not have any plans
to acquire any properties or lease offices, and management does not anticipate
that EQUICAP will take office space unless and until it has completed a business
combination, in which case EQUICAP's offices almost certainly will be the same
as those of the business opportunity acquired.
ITEM 4. SECURITY OWNERSHIP of CERTAIN BENEFICIAL OWNERS and MANAGEMENT.
BENEFICIAL OWNERSHIP
The following table sets forth, as of the date of this Registration
Statement, the stock ownership of each executive officer and director of
EQUICAP, of all executive officers and directors of EQUICAP as a group, and of
each person known by EQUICAP to be a beneficial owner of 5% or more of its
Common Stock. Except as otherwise noted, each person listed below is the sole
beneficial owner of the shares and has sole investment and voting power as such
shares. No person listed below has any option, warrant or other right to acquire
additional securities of EQUICAP, except as may be otherwise noted.
Name and Address Amount & Nature
of Beneficial of Beneficial Percent
Owner Ownership of Class
--------------- ----------- ----------
*Stephen M. Siedow 300,000 76.9%
13047 W. Iliff Drive
Lakewood, Colorado 80228
Paul J. Abbondante 20,400 5.2%
700 East Lake Drive, Suite 50
Orange, California 92866
*All directors & officers 300,000 76.9%
as a group (1 person)
Despite not having received any compensation and not having otherwise
engaged in any transactions involving the acquisition or disposition of assets
with EQUICAP, the current officers and directors of EQUICAP may be deemed to be
"promoters" and "founders" of EQUICAP.
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CHANGES in CONTROL
A change of control of EQUICAP probably will occur upon consummation of a
business combination, which is anticipated to involve significant change in
ownership of EQUICAP and in the membership of the board of directors. The extent
of any such change of control in ownership or board composition cannot be
predicted at this time.
ITEM 5. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS and CONTROL PERSONS.
Directors are elected for one-year terms or until the next annual meeting
of shareholders and until their successors are duly elected and qualified.
Executive officers (none of whom have an employment or similar contract)
continue in office at the pleasure of the Board of Directors. The following
table sets forth the name, age, position held and tenure of each director and
executive officer:
Name Age Position Held and Tenure
----------------- ----- ------------------------
Stephen M. Siedow 50 President, CEO, Director,
Chairman of the Board,
since May 1998
There are no family relationships among the officers and directors. There
is no arrangement or understanding between EQUICAP (or any of its directors or
officers) and any other person pursuant to which such person was or is to be
selected as a director or officer, or under which any officer or director will
resign at the request of another person, and no officer or director is acting or
will act on behalf of or at the direction of any other person. The directors and
officers are expected to devote their time to EQUICAP's affairs on an "as
needed" basis, but are not required to make any specific portion of their time
available to EQUICAP. It is anticipated that officers and directors will, on the
average, devote no more than 15 hours per week to EQUICAP's affairs.
BIOGRAPHICAL INFORMATION
STEPHEN M. SIEDOW. Mr. Siedow is president and sole shareholder of Stephen
M. Siedow, P.C., a professional accounting firm providing auditing, management
consulting, tax services and write-up services to corporations, partnerships and
individuals since 1982. Mr. Siedow specializes in public and SEC accounting and
has experience in industries including mining (gold and coal), oil and gas,
construction, and mergers/acquisitions/liquidations. Prior to that, he was with
the audit department of Ernst & Young, Certified Public Accountants in Denver,
Colorado, for eight years. Mr. Siedow is a member of the American Institute of
Certified Public Accountants and the Colorado Society of Certified Public
Accountants.
Mr. Siedow also is a director, executive officer, promoter or control
person of the following companies with business plans substantially identical to
those of EQUICAP:
o Chairman, CEO, President and significant shareholder of GALLAGHER
RESEARCH (NEV.) CORPORATION, a formerly active Colorado corporation no
longer in the development stage but which has scant assets.
o Chairman, CEO, President and significant shareholder of MNS EAGLE
EQUITY GROUP, INC., MNS EAGLE EQUITY GROUP II, INC., MNS EAGLE EQUITY
GROUP III, INC., and MNS EAGLE EQUITY GROUP IV, INC., all Nevada
corporations in the development stage.
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POTENTIAL CONFLICTS of INTEREST
The Company's Officers and Directors are affiliated with other companies
having a similar business plan to that of EQUICAP ("Affiliated Companies") which
may compete directly or indirectly with EQUICAP. EQUICAP has not identified a
specific business area, industry or industry segment in which it will seek
combination candidates. EQUICAP has made a determination that it will not
concentrate its search for combination candidates in any particular business,
industry or industry segment, since any such determination is potentially
limiting and confers no advantage to EQUICAP or its shareholders. Certain
specific conflicts of interest may include those discussed below.
1. The interests of any Affiliated Companies from time to time may be
inconsistent in some respects with the interests of EQUICAP. The nature of these
conflicts of interest may vary. There may be circumstances in which an
Affiliated Company may take advantage of an opportunity that might be suitable
for EQUICAP. Although there can be no assurance that conflicts of interest will
not arise or that resolutions of any such conflicts will be made in a manner
most favorable to EQUICAP and its shareholders, the officers and directors of
EQUICAP have a fiduciary responsibility to EQUICAP and its shareholders and,
therefore, must adhere to a standard of good faith and integrity in their
dealings with and for EQUICAP and its shareholders.
2. The officers and directors of EQUICAP serve as officers or directors of
one or more Affiliated Companies and may serve as officers and directors of
other Affiliated Companies in the future. EQUICAP's officers and directors are
required to devote only so much of their time to EQUICAP's affairs as they deem
appropriate, in their sole discretion. As a result, EQUICAP's officers and
directors may have conflicts of interest in allocating their management time,
services, and functions among EQUICAP and any current and future Affiliated
Companies which they may serve, as well as any other business ventures in which
they are now or may later become involved.
3. The Affiliated Companies may compete directly or indirectly with that of
EQUICAP for the acquisition of available, desirable combination candidates.
There may be factors unique to EQUICAP or an Affiliated Company which
respectively makes it more or less desirable to a potential combination
candidate, such as age of the company, name, capitalization, state of
incorporation, contents of the articles of incorporation, etc. However, any such
direct conflicts are not expected to be resolved through arm's-length
negotiation, but rather in the discretion of management. While any such
resolution will be made with due regard to the fiduciary duty owed to EQUICAP
and its shareholders, there can be no assurance that all potential conflicts can
be resolved in a manner most favorable to EQUICAP as if no conflicts existed.
Members of EQUICAP's management who also are members of management of another
Affiliated Company will also owe the same fiduciary duty to the shareholders of
the other Affiliated Company.
4. Certain conflicts of interest exist and will continue to exist between
EQUICAP and its officers and directors due to the fact that each has other
employment or business interests to which he devotes his primary attention. Each
officer and director is expected to continue to do so in order to make a living,
notwithstanding the fact that management time should be devoted to EQUICAP's
affairs. EQUICAP has not established policies or procedures for the resolution
of current or potential conflicts of interest between EQUICAP and its
management.
As a practical matter, such potential conflicts could be alleviated only if
the Affiliated Companies either are not seeking a combination candidate at the
same time as the Company, have already identified a combination candidate, are
seeking a combination candidate in a specifically identified business area, or
are seeking a combination candidate that would not otherwise meet EQUICAP's
selection criteria. It is likely, however, that the combination criteria of
EQUICAP and any Affiliated Companies will be substantially identical.
Ultimately, EQUICAP's shareholders ultimately must rely on the fiduciary
responsibility owed to them by EQUICAP's officers and directors.
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There can be no assurance that members of management will resolve all
conflicts of interest in EQUICAP's favor. The officers and directors are
accountable to EQUICAP and its shareholders as fiduciaries, which means that
they are legally obligated to exercise good faith and integrity in handling
EQUICAP's affairs and in their dealings with EQUICAP. Failure by them to conduct
EQUICAP's business in its best interests may result in liability to them. The
area of fiduciary responsibility is a rapidly developing area of law, and
persons who have questions concerning the duties of the officers and directors
to EQUICAP should consult their counsel.
INDEMNIFICATION of DIRECTORS and OFFICERS
See discussion under Part II, ITEM 5 below.
EXCLUSION of DIRECTOR LIABILITY
Pursuant to the General Corporation Law of California, EQUICAP's
Certificate of Incorporation excludes personal liability on the part of its
directors to EQUICAP for monetary damages based upon any violation of their
fiduciary duties as directors, except as to liability for any acts or omissions
which involve intentional misconduct, fraud or a knowing violation of law or for
improper payment of dividends. This exclusion of liability does not limit any
right which a director may have to be indemnified and does not affect any
director's liability under federal or applicable state securities laws.
ITEM 6. EXECUTIVE COMPENSATION.
CASH and OTHER COMPENSATION
For the years ended December 31, 1999 and 1998 and through the date of this
Registration Statement, no director or executive officer of EQUICAP has received
cash or cash equivalent compensation. EQUICAP has no other agreement or
understanding, express or implied, with any director or executive officer
concerning employment or cash or other compensation for services. EQUICAP will
undoubtedly pay compensation to officers and other employees should it succeed
in acquiring a business and funds exist for compensation.
COMPENSATION PURSUANT to PLANS
Since inception of EQUICAP and through the date of this Registration
Statement, no director or executive officer has received compensation from
EQUICAP pursuant to any compensatory or benefit plan. There is no plan or
understanding, express or implied, to pay any compensation to any director or
executive officer pursuant to any compensatory or benefit plan of EQUICAP,
although EQUICAP anticipates that it will compensate its officers and directors
for services to EQUICAP with stock or options to purchase stock, in lieu of
cash.
EQUICAP currently has in place an employee stock compensation plan and
compensatory stock option plan. EQUICAP has no long-term incentive plans, as
that term is defined in the rules and regulations of the Securities and Exchange
Commission. There are no other compensatory or benefit plans, such as retirement
or pension plans, in effect or anticipated to be adopted, although other plans
may be adopted by new management following completion of a business combination.
EMPLOYEE STOCK COMPENSATION PLAN
EQUICAP has adopted the 1998 Employee Stock Compensation Plan for
employees, officers, directors of EQUICAP and advisors to EQUICAP (the "ESC
Plan"). EQUICAP has reserved a maximum of 1,000,000 Common Shares to be issued
upon the grant of awards under the ESC Plan. Employees will recognize taxable
income upon the grant of Common Stock equal to the fair market value of the
Common Stock on the date of the grant and EQUICAP will recognize a compensating
deduction for compensation expense at such time. The ESC Plan will be
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administered by the Board of Directors or a committee of directors. No shares
have been awarded or currently are anticipated to be awarded under the ESC Plan.
COMPENSATORY STOCK OPTION PLAN
EQUICAP has adopted the 1998 Compensatory Stock Option Plan for officers,
employees, directors and advisors (the "CSO Plan"). EQUICAP has reserved a
maximum of 1,500,000 Common Shares to be issued upon the exercise of options
granted under the CSO Plan. The CSO Plan will not qualify as an "incentive stock
option" plan under Section 422 of the Internal Revenue Code of 1986, as amended.
Options will be granted under the CSO Plan at exercise prices to be determined
by the Board of Directors or other CSO Plan administrator. With respect to
options granted pursuant to the CSO Plan, optionees will not recognize taxable
income upon the grant of options granted at or in excess of fair market value.
However, optionees will realize income at the time of exercising an option to
the extent the market price of the common stock at that time exceeds the option
exercise price, and EQUICAP must recognize a compensation expense in an amount
equal to any taxable income realized by an optionee as a result of exercising
the option. The CSO Plan will be administered by the Board of Directors or a
committee of directors. No options have been granted or currently are
anticipated to granted under the CSO Plan.
EMPLOYMENT CONTRACTS
No person has entered into any employment or similar contract with EQUICAP.
It is not anticipated that EQUICAP will enter into any employment or similar
contract unless in conjunction with or following completion of a business
combination.
ITEM 7. CERTAIN RELATIONSHIPS and RELATED TRANSACTIONS.
EQUICAP was indebted to its President and control shareholder, Stephen M.
Siedow, at December 31, 1999 and 1998 in the amounts of $8,931 and $8,305,
respectively, for services and costs advanced on behalf of the Company. EQUICAP
is not indebted to any former officers, directors, promoters or other control
persons. EQUICAP has no understanding with its officers, directors or
shareholders, pursuant to which such persons are required to contribute capital
to EQUICAP, loan money or otherwise provide funds to EQUICAP, although
management expects that one or more of such persons may make funds available to
EQUICAP in the event of need to cover operating expenses.
There were no transactions, or series of transactions, for the years ended
December 31, 1999 and 1998 nor are there any currently proposed transactions, or
series of transactions, to which EQUICAP is a party, in which the amount exceeds
$60,000, and in which to the knowledge of EQUICAP any director, executive
officer, nominee, five percent or greater shareholder, or any member of the
immediate family of any of the foregoing persons, have or will have any direct
or indirect material interest.
ITEM 8. DESCRIPTION of SECURITIES.
The authorized capital stock of EQUICAP consists of 100,000,000 shares of
Common Stock, no par value, and 10,000,000 shares of Preferred Stock, no par
value.
COMMON STOCK
At June 30, 2000, there were 390,100 shares of Common Stock outstanding.
The holders of Common Stock are entitled to one vote for each share held.
EQUICAP's Certificate of Incorporation provides that the affirmative vote of a
majority of the votes cast at a shareholder's meeting is sufficient to effect
any corporate action upon which shareholders may or must vote. Common Shares do
not carry cumulative voting rights, thus holders of more than 50% of Common
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Stock have the power to elect all directors if they wish and, as a practical
matter, to control EQUICAP. Holders of Common Stock are not entitled to
preemptive rights, and the Common Stock is not subject to redemption.
EQUICAP's bylaws provide for a board of one director, all of whom are
elected for one-year terms at the annual meeting of shareholders. The
affirmative vote of a simple majority of the outstanding Common Stock is
necessary to remove a director. A special meeting of shareholders may be called
by the Chairman of the Board, the President, a majority of the Board of
Directors, or shareholders owning in the aggregate 10% or more of the Common
Stock. Holders of Common Stock are entitled to receive, pro rata, dividends if,
when and as declared by the Board of Directors out of funds legally available
therefor.
Upon liquidation, dissolution or winding up of EQUICAP, holders of Common
Stock are entitled to share ratably in EQUICAP's assets legally available for
distribution to its shareholders after payment of liquidation preference and
outstanding redemption rights (if any) on any Preferred Stock outstanding and
are not subject to further calls or assessments.
PREFERRED STOCK
Although no shares of Preferred Stock are being registered in this
Registration Statement or have previously been registered under the Exchange
Act, this discussion is included to enhance the reader's understanding of
EQUICAP. No Preferred Shares are issued or outstanding, and EQUICAP has no plans
to issue any Preferred Shares. The Board of Directors has the authority to issue
Preferred Stock in one or more series and to fix the voting powers, conversion
rights, other special rights and qualifications, limitations and restrictions of
each series, without any further vote or action by the shareholders. It is not
possible to state the actual effect of the authorization of any Preferred Stock
upon the rights of holders of the Common Stock, until the Board of Directors
determines the specific rights of the holders of the Preferred Stock. However,
the Preferred Stock may have adverse effects upon the holders of the Common
Stock, including (i) restrictions on dividends on the Common Stock if dividends
on the Preferred Stock have not been paid, (ii) dilution of the voting power of
the Common Stock to the extent that the Preferred Stock has voting rights, (iii)
dilution of the equity interest of the Common Stock to the extent that the
Preferred Stock is converted into Common Stock, or (iv) the Common Stock not
being entitled to share in EQUICAP's assets upon liquidation until satisfaction
of any liquidation preference granted the holders of the Preferred Stock.
EQUICAP does not currently anticipate that it will issue Preferred Stock in
connection with any business combination, but issuance for this purpose is a
possibility. EQUICAP has not authorized such number of Preferred Shares for
anti-takeover or similar purposes.
ANNUAL REPORTS
EQUICAP will furnish its shareholders with annual reports containing
financial statements of EQUICAP as examined and reported upon by independent
certified public accountants. EQUICAP will distribute other reports as
determined by the Board of Directors.
TRANSFER AGENT
EQUICAP's transfer agent or registrar for its Common Shares, since December
1995, is United Stock Transfer, Inc., 3615 S. Huron Street, Suite 104,
Englewood, Colorado 80110.
PART II
ITEM 1. MARKET PRICE of and DIVIDENDS on the REGISTRANT'S COMMON EQUITY and
OTHER SHAREHOLDER MATTERS.
20
<PAGE>
PRICE RANGE of the COMMON STOCK
The common stock of EQUICAP is the subject of an unpriced quotation
(meaning that it is quoted "name only" without bid or asked prices posted) in
the NQB Pink Sheets maintained by the National Association of Securities
Dealers, Inc. The common stock has not traded to management's knowledge. No
active trading market is expected to arise (if one ever arises), unless and
until EQUICAP successfully completes a business combination. No shareholder has
entered into a lock-up or similar agreement as to his common shares.
DIVIDENDS
EQUICAP has not declared or paid any dividends on its Common Stock to date.
Management anticipates that any future earnings will be retained as working
capital and used for business purposes. Accordingly, it is unlikely that EQUICAP
will declare or pay any such dividends in the foreseeable future.
SHAREHOLDERS
EQUICAP has approximately 405 shareholders of record.
PUBLIC MARKET for the COMMON SHARES
EQUICAP has 390,100 common shares issued and outstanding, of which (i)
53,800 shares are unrestricted and not held by affiliates, (ii) 36,300 shares
are restricted but subject to Rule 144 and not held by affiliates, and (iii)
300,000 shares are restricted and held by Stephen M. Siedow, President of the
Company. Mr. Siedow has informed the Company that he will not sell these shares
in the public markets until they have been registered for resale under the Act
or otherwise in compliance with applicable law. There currently is no public
market for EQUICAP's common stock, and no assurance can be given that a market
will develop or that a shareholder ever will be able to liquidate his investment
without considerable delay, if at all. If a market should develop, the price may
be highly volatile. Unless and until EQUICAP's common shares are quoted on the
NASDAQ system or listed on a national securities exchange, it is likely that the
common shares will be defined as "penny stocks" under the Exchange Act and SEC
rules thereunder. The Exchange Act and penny stock rules generally impose
additional sales practice and disclosure requirements upon broker-dealers who
sell penny stocks to persons other than certain "accredited investors"
(generally, institutions with assets in excess of $5,000,000 or individuals with
net worth in excess of $1,000,000 or annual income exceeding $200,000, or
$300,000 jointly with spouse) or in transactions not recommended by the
broker-dealer.
For transactions covered by the penny stock rules, the broker-dealer must
make a suitability determination for each purchaser and receive the purchaser's
written agreement prior to the sale. In addition, the broker-dealer must make
certain mandated disclosures in penny stock transactions, including the actual
sale or purchase price and actual bid and offer quotations, the compensation to
be received by the broker-dealer and certain associated persons, and deliver
certain disclosures required by the SEC. So long as EQUICAP's common shares are
considered "penny stocks", many brokers will be reluctant or will refuse to
effect transactions in EQUICAP's shares, and many lending institutions will not
permit the use of penny stocks as collateral for any loans.
RULE 144 RESALES
EQUICAP has approximately 36,300 common shares held by non-affiliates which
have been issued and outstanding, and beneficially owned and fully paid, for
more than two years which could be resold pursuant to subparagraph (k) of Rule
144 under the Securities Act of 1933 as amended ("Act"). There are in additional
approximately 300,000 common shares, which have been issued and outstanding, and
beneficially owned and fully paid, which are held by Stephen M. Siedow,
President of the Company. Approximately 100,000 of these common shares were
issued on June 18, 1998 and 200,000 of these common shares were issued on
December 28, 1999. Mr. Siedow has informed the Company that he will not sell
21
<PAGE>
these shares in the public markets until they have been registered for resale
under the Act or otherwise in compliance with applicable law. Rule 144 under the
Act provides that a person who acquired securities in a private placement
transaction and has beneficially owned those securities, fully paid, for a
period of at least one year may, under certain conditions, sell every three
months, in brokerage transactions, a number of shares that does not exceed one
percent (1%) of the issuer's outstanding common stock. For issuers whose shares
are listed on a stock exchange or NASDAQ, a shareholder may alternatively sell a
number of shares that does not exceed the average weekly trading volume during
the four calendar weeks prior to his or her sale.
However, if a person has beneficially owned securities for a period of two
years and has not been an affiliate (control person) of the issuer for the
preceding three-month period, the person may under authority of Rule 144(k)
request that all restrictive legends affecting the securities be removed, and
there is no limit on the number of shares that the non-affiliate may then sell.
The sale of a substantial number of shares of EQUICAP under Rule 144 or under
any other exemption from the Act could have a depressive effect upon the price
of EQUICAP's common shares in any market that may develop. Under current SEC
rules, no EQUICAP common shares may be resold under Rule 144 during the ninety
(90)-day period following effectiveness of this Registration Statement.
ITEM 2. LEGAL PROCEEDINGS.
There are no legal proceedings which are pending or have been threatened
against EQUICAP or any officer, director or control person of which management
is aware.
ITEM 3. CHANGES in and DISAGREEMENTS with ACCOUNTANTS on ACCOUNTING and
FINANCIAL DISCLOSURE.
Not applicable.
ITEM 4. RECENT SALES of UNREGISTERED SECURITIES.
The following sets forth certain information with respect to all common
stock of EQUICAP sold during the three-year period prior to the filing of this
Registration Statement.
1. On June 19, 1998, the Company issued 5,000,000 shares of its common
stock to Stephen M. Siedow, its President (100,000 shares adjusted for the June
24, 1998 reverse stock split and the January 10, 2000 reverse stock split
followed by an immediate forward stock split) for accounting services and costs
advanced on behalf of the Company. These common shares were valued at $.001 per
share. These securities were issued without registration under the Securities
Act of 1933, as amended, and exemption for such sale(s) from registration under
such Act is claimed under Section 4(2) thereof on the basis that such sale was a
transaction not involving any public offering. The shareholders executed a
customary form of investment letter concerning such purchase. Appropriate
precautions against transfer were taken, including the placement of an
investment legend on the certificate(s) evidencing such shares and placement of
a stop transfer notation in the stock records concerning such shares. Mr. Siedow
has informed the Company that he will not sell these shares in the public
markets until they have been registered for resale under the Act or otherwise in
compliance with applicable law.
2. On December 29, 1999, the Company issued 100,000 shares of its common
stock to Stephen M. Siedow, its President and control shareholder (200,000
shares adjusted for the January 10, 2000 reverse stock split followed by an
immediate forward stock split) for accounting services and costs advanced on
behalf of the Company. These common shares were valued at $.10 per share. These
securities were issued without registration under the Securities Act of 1933, as
amended, and exemption for such sale(s) from registration under such Act is
claimed under Section 4(2) thereof on the basis that such sale was a transaction
not involving any public offering. The shareholder executed a customary form of
22
<PAGE>
investment letter concerning such purchase. Appropriate precautions against
transfer were taken, including the placement of an investment legend on the
certificate(s) evidencing such shares and placement of a stop transfer notation
in the stock records concerning such shares. Mr. Siedow has informed the Company
that he will not sell these shares in the public markets until they have been
registered for resale under the Act or otherwise in compliance with applicable
law.
ITEM 5. INDEMNIFICATION of DIRECTORS and OFFICERS.
As permitted by California law, EQUICAP's Certificate of Incorporation
provides that EQUICAP will indemnify its officers and directors against
attorneys' fees and other expenses and liabilities they incur to defend, settle
or satisfy any civil or criminal action brought against them arising out of
their association with or activities on behalf of EQUICAP unless, in any such
action, they are adjudged to have acted with gross negligence or to have engaged
in willful misconduct. EQUICAP may also bear the expenses of such litigation for
any such persons upon their promise to repay such sums if it is ultimately
determined that they are not entitled to indemnification. Such expenditures
could be substantial and may not be recouped, even if EQUICAP is so entitled.
Insofar as indemnification for liabilities arising under the Securities Act of
1933 may be permitted to directors, officers or persons controlling EQUICAP
pursuant to the foregoing provisions, EQUICAP has been informed that, in the
opinion of the Securities and Exchange Commission, such indemnification is
against public policy as expressed in that Act and is, therefore, unenforceable.
Furthermore, it should be noted that a successful indemnification of any officer
or director could deplete the assets of EQUICAP.
PART F/S
(1) AUDITED FINANCIAL STATEMENTS.
Independent Auditor's Report..................................... F-1
Balance Sheets as of December 31, 1999 and 1998.................. F-2
Statements of Operations for the years ended
December 31, 1999 and 1998 ..................................... F-3
Statements of Changes in Stockholders' Deficit for
the years ended December 31, 1999 and 1998...................... F-4
Statements of Cash Flows for the years ended
December 31, 1999 and 1998...................................... F-5
Notes to Financial Statements.................................... F-6
(2) MANAGEMENT PREPARED INTERIM FINANCIAL STATEMENTS (UNAUDITED).
Balance Sheets as of June 30, 2000 and
December 31, 1999 (audited)..................................... F-10
Statements of Operations for the six months ended
June 30, 2000 and 1999.......................................... F-11
Statements of Operations for the three months ended
June 30, 2000 and 1999 ......................................... F-12
Statements of Changes in Stockholders' Deficit for the
period from January 1, 1998 to June 30, 2000.................... F-13
Statements of Cash Flows for the six months ended
June 30, 2000 and 1999.......................................... F-14
Notes to Financial Statements.................................... F-15
23
<PAGE>
Larry O'Donnell, CPA, P.C.
Telephone (303) 745-4545 2280 South Xanadu Way
Suite 370
Aurora, Colorado 80014
Independent Auditor's Report
Board of Directors and Stockholders
Equicap, Inc.
I have audited the accompanying balance sheets of Equicap, Inc. as of December
31, 1999 and 1998 and the related statements of operations, changes in
stockholders' deficit and cash flows for the years then ended. These financial
statements are the responsibility of the Company's management. My responsibility
is to express an opinion on these financial statements based on my audit.
I conducted my audits in accordance with generally accepted auditing standards.
Those standards require that I plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
I believe my audit provides a reasonable basis for my opinion.
In my opinion, the financial statements referred to above present fairly, in all
material respects, the financial position of Equicap, Inc. as of December 31,
1999 and 1998 and the results of its operations and their cash flows for the
years then ended in conformity with generally accepted accounting principles.
Larry O'Donnell, CPA, P.C.
January 21, 2000
F-1
<PAGE>
<TABLE>
<CAPTION>
EQUICAP, INC.
Balance Sheets
ASSETS
------
December 31,
1999 1998
--------- ---------
<S> <C> <C>
Other assets:
Organization costs, net $ -- $ 1,087
========= =========
LIABILITIES AND STOCKHOLDERS' DEFICIT
-------------------------------------
Current liabilities:
Accounts payable $ 15,682 $ 14,046
Franchise taxes 1,600 800
Due to an officer/stockholder 8,931 8,305
--------- ---------
26,213 23,151
--------- ---------
Stockholders' deficit:
Preferred stock; no par value; authorized -
10,000,000 shares; issued - none -- --
Common stock; no par value; authorized -
100,000,000 shares; issued and outstanding -
174,732 and 74,732 shares, respectively 167,685 157,685
Contributed capital 6,680 6,680
Retained earnings (deficit) (200,578) (186,429)
--------- ---------
Total stockholders' deficit (26,213) (22,064)
--------- ---------
$ -- $ 1,087
========= =========
The accompanying notes are an integral part of the financial statements.
F-2
<PAGE>
EQUICAP, INC.
Statements of Operations
Year ended December 31,
------------------------
1999 1998
--------- ---------
Costs and expenses:
Amortization $ 1,087 $ 900
General and administrative 13,062 15,065
--------- ---------
Net loss $ (14,149) $ (15,965)
========= =========
Loss per common share $ (.081) $ (.214)
========= =========
Weighted average common shares outstanding 174,732 74,732
========= =========
The accompanying notes are an integral part of the financial statements.
F-3
<PAGE>
EQUICAP, INC.
Statements of Changes in Stockholders' Deficit
Common Stock Retained
----------------------------- Contributed Earnings
Shares Amount Capital (Deficit)
--------- --------- --------- ---------
Balances, December 31, 1997 24,732 $ 152,685 $ 5,880 $(170,464)
Capital contribution 800 --
Common stock issued for cash
advances and services, valued
at $.10 per share 50,000 5,000 -- --
Net loss (15,965)
--------- --------- --------- ---------
Balances, December 31, 1998 74,732 157,685 6,680 (186,429)
Common stock issued for cash
advances and services, valued
at $.10 per share 100,000 10,000 -- --
Net loss (14,149)
--------- --------- --------- ---------
Balances, December 31, 1999 174,732 $ 167,685 $ 6,680 $(200,578)
========= ========= ========= =========
The accompanying notes are an integral part of the financial statements.
F-4
<PAGE>
EQUICAP, INC.
Statements of Cash Flows
Year ended December 31,
--------------------------
1999 1998
-------- --------
Cash flows from operating activities:
Net loss $(14,149) $(15,965)
Adjustments to reconcile net loss to net
cash provided by operating activities:
Amortization 1,087 900
Capital contribution -- 800
Common stock issued for services 10,000 5,000
Changes in assets and liabilities:
Increase (decrease) in accounts payable 1,636 960
Increase (decrease) in franchise taxes 800 --
Increase (decrease) in amounts
due to an officer/stockholder 626 8,305
-------- --------
Net cash used in operating activities -- --
-------- --------
Cash flows from investing activities:
Organization costs -- --
-------- --------
Net cash used in investing activities -- --
-------- --------
Cash flows from financing activities:
Proceeds from sale of common stock -- --
-------- --------
Net cash provided by financing activities -- --
-------- --------
Net increase (decrease) in cash -- --
Cash at beginning of year -- --
-------- --------
Cash at end of year $ -- $ --
======== ========
Supplemental disclosure of noncash investing and
financing activities:
Common stock issued for services and costs advanced $ 10,000 $ 5,000
======== ========
The accompanying notes are an integral part of the financial statements.
F-5
</TABLE>
<PAGE>
EQUICAP, INC.
Notes to Financial Statements
Note 1 - Summary of Significant Accounting Policies
Description of Business
-----------------------
The financial statements presented are those of Equicap, Inc. (the "Company").
The Company was incorporated under the laws of the State of California on March
1, 1995. Prior to July 1996, the Company operated as a business development
company and since that time, the Company has been inactive.
The Company has been exploring sources to obtain additional equity or debt
financing. The Company has also indicated its intention to participate in one or
more as yet unidentified business ventures, which management will select after
reviewing the business opportunities for their profit or growth potential.
Use of Estimates in the Preparation of Financial Statements
-----------------------------------------------------------
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reporting 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 period. Actual results
could differ from those estimates.
Organization Costs
------------------
Organization costs are expensed as incurred. Prior to December 31, 1998
organization costs were capitalized and amortized over five years.
Fair Value of Financial Instruments
-----------------------------------
The fair value of the Company's payables due to an officer/stockholder is not
practicable to estimate due to the related party nature of the underlying
transactions and the indefinite payment terms.
Income Taxes
------------
Deferred tax assets and liabilities are recognized for the future tax
consequences attributable to differences between the financial statement
carrying amounts of existing assets and liabilities and their respective tax
bases. Deferred tax assets and liabilities are measured using enacted tax rates
expected to apply to taxable income in the years in which those temporary
differences are expected to reverse. The effect on deferred tax assets and
liabilities of a change in tax rates is recognized in the statement of
operations in the period that includes the enactment date.
F-6
<PAGE>
EQUICAP, INC.
Notes to Financial Statements
Loss Per Common Share
---------------------
Loss per common share is computed by dividing the net loss by the weighted
average shares outstanding during the period.
Note 2 - Stockholders' Deficit
Common Stock
------------
During the year ended December 31, 1998, the Company's previous
president/director/ stockholder contributed capital of $800 for costs advanced
on behalf of the Company. The Company has recorded this amount as capital
contribution.
On June 19, 1998, the Company issued 50,000 shares of common stock to an
officer/director of the Company, for accounting fees and costs advanced on
behalf of the Company. These shares were valued at $.10 per share or $5,000.
On June 24, 1998, the Company's shareholders approved a 1 for 100 reverse stock
split effective July 31, 1998. All shares and per share amounts have been
restated to reflect this restructuring of the Company.
On December 29, 1999, the Company issued 100,000 shares of common stock to an
officer/director of the Company, for accounting fees and costs advanced on
behalf of the Company. These shares were valued at $.10 per share or $10,000.
Dividends may be paid on outstanding shares as declared by the Board of
Directors. Each share of common stock is entitled to one vote.
Preferred Stock
---------------
No shares of preferred stock have been issued or are outstanding. Dividends,
voting rights and other terms, rights and preferences of the preferred shares
have not been designated but may be designated by the Board of Directors from
time to time.
1998 Stock Option Plan
----------------------
The Company has adopted a compensation stock option plan (the "CSO Plan") which
allows for the issuance of options to purchase up to 1,500,000 shares of stock
to employees, officers, directors and consultants of the Company. The CSO Plan
is not intended to qualify as an "incentive stock option plan" under Section 422
of the Internal Revenue Code. Options will be granted under the CSO Plan at
exercise prices to be determined by the Board of Directors or other CSO Plan
administrator. The Company will incur compensation expense to the extent that
the market value of the stock at date of grant exceeds the amount the grantee is
required to pay for the options. No options have been granted under the CSO Plan
to date.
F-7
<PAGE>
EQUICAP, INC.
Notes to Financial Statements
1998 Employee Stock Compensation Plan
-------------------------------------
The Company has adopted an employee stock compensation plan (the "ESC Plan")
which allows for the issuance of up to 1,000,000 shares of stock to employees,
officers, directors and consultants of the Company. The Company will incur
compensation expense to the extent the market value of the stock at date of
grant exceeds the amount the employee is required to pay for the stock (if any).
The ESC Plan will be administered by the Board of Directors or a committee of
directors. No stock has been awarded under the ESC Plan to date.
Note 3 - Income Taxes
There is no provision for income taxes since the Company has incurred net
operating losses.
Income taxes at the federal statutory rate is reconciled to the Company's actual
income taxes as follows:
<TABLE>
<CAPTION>
December 31,
----------------------------
1999 1998
------------- -----------
<S> <C> <C>
Federal income tax benefit at statutory rate (15%) $ (622) $ ( 1,645)
State income tax benefit net of federal tax effect -- --
Deferred income tax valuation allowance 622 1,645
---------- -----------
$ -- $ --
========== ===========
The Company's deferred tax assets are as follows:
Accrued expenses $ 739 $ 1,069
Net operating loss carryforward 45,411 44,459
Valuation allowance (46,150) (45,528)
---------- -----------
$ -- $ --
========== ===========
</TABLE>
At December 31, 1999, the Company has net operating loss carryforwards of
$180,653 which may be available to offset future taxable income through 2019.
Note 4 - Related Party Transactions
On June 19, 1998, the Company issued 50,000 shares of common stock to an
officer/director of the Company, for accounting fees and costs advanced on
behalf of the Company. These shares were valued at $.10 per share or $5,000.
On December 29, 1999, the Company issued 100,000 shares of common stock to an
officer/director of the Company, for accounting fees and costs advanced on
behalf of the Company. These shares were valued at $.10 per share or $10,000.
F-8
<PAGE>
EQUICAP, INC.
Notes to Financial Statements
The Company was indebted to an officer/director/stockholder for accounting fees
and expenses advanced on behalf of the Company, in the amount of $8,931 and
$8,305 at December 31, 1999 and 1998, respectively.
Note 5- Subsequent Events
On January 10, 2000, the Company's shareholders approved a 1 for 50 reverse
stock split followed by an immediate forward stock split of 100 for 1, effective
January 18, 2000. All shares and per share amounts have not been restated to
reflect this restructuring of the Company.
F-9
<PAGE>
EQUICAP, INC.
Balance Sheets (Unaudited)
<TABLE>
<CAPTION>
ASSETS
------
June 30, December 31,
2000 1999
--------- ---------
<S> <C> <C>
Total assets $ -- $ --
========= =========
LIABILITIES AND STOCKHOLDERS' DEFICIT
-------------------------------------
Current liabilities:
Accounts payable $ 16,472 $ 15,682
Franchise taxes 2,000 1,600
Due to an officer/stockholder 25,526 8,931
--------- ---------
43,998 26,213
--------- ---------
Stockholders' deficit:
Preferred stock; no par value; authorized -
10,000,000 shares; issued - none -- --
Common stock; no par value; authorized -
100,000,000 shares; issued and outstanding -
390,100 and 174,732 shares, respectively 167,685 167,685
Contributed capital 6,680 6,680
Retained earnings (deficit) (218,363) (200,578)
--------- ---------
Total stockholders' deficit (43,998) (26,213)
--------- ---------
$ -- $ --
========= =========
The accompanying notes are an integral part of the financial statements.
F-10
</TABLE>
<PAGE>
EQUICAP, INC.
Statements of Operations (Unaudited)
Six Months Ended
June 30,
------------------------
2000 1999
--------- ---------
Costs and expenses:
Amortization $ -- $ 1,087
General and administrative 17,785 7,203
--------- ---------
Net loss $ (17,785) $ (8,290)
========= =========
Loss per common share $ (.046) $ (.047)
========= =========
Weighted average common shares outstanding 390,100 174,732
========= =========
The accompanying notes are an integral part of the financial statements.
F-11
<PAGE>
EQUICAP, INC.
Statements of Operations (Unaudited)
Three Months Ended
June 30,
------------------------
2000 1999
--------- ---------
Costs and expenses:
Amortization $ -- $ --
General and administrative 7,145 6,638
--------- ---------
Net loss $ (7,145) $ (6,638)
========= =========
Loss per common share $ (.018) $ (.038)
========= =========
Weighted average common shares outstanding 390,100 174,732
========= =========
The accompanying notes are an integral part of the financial statements.
F-12
<PAGE>
<TABLE>
<CAPTION>
EQUICAP, INC.
Statements of Changes in Stockholders' Deficit (Unaudited)
Common Stock Retained
------------------------------ Contributed Earnings
Shares Amount Capital (Deficit)
------------ ------------ ------------- -------------
<S> <C> <C> <C> <C>
Balances, December 31, 1997 24,732 $ 152,685 $ 5,880 $ (170,464)
Capital contribution 800 --
Common stock issued for cash
advances and services, valued
at $.10 per share 50,000 5,000 -- --
Net loss (15,965)
----------- ----------- ----------- ------------
Balances, December 31, 1998 74,732 157,685 6,680 (186,429)
Common stock issued for cash
advances and services, valued
at $.10 per share 100,000 10,000 -- --
Net loss (14,149)
----------- ----------- ----------- ------------
Balances, December 31, 1999 174,732 167,685 6,680 (200,578)
Reverse stock split of 1 for 50 including
406 fractional shares issued (170,831) -- -- --
Forward stock split of 100 for 1 386,199 -- -- --
Net loss for the period (17,785)
----------- ----------- ----------- ------------
Balances, June 30, 2000 390,100 $ 167,685 $ 6,680 $ (218,363)
=========== ============ ============ =============
The accompanying notes are an integral part of the financial statements.
F-13
<PAGE>
EQUICAP, INC.
Statements of Cash Flows (Unaudited)
Six Months Ended
June 30,
--------------------------
2000 1999
-------- --------
Cash flows from operating activities:
Net loss $(17,785) $ (8,290)
Adjustments to reconcile net loss to net
cash provided by operating activities:
Amortization -- 1,087
Capital contribution -- --
Common stock issued for services -- --
Changes in assets and liabilities:
Increase (decrease) in accounts payable 790 2,178
Increase (decrease) in franchise taxes 400 400
Increase (decrease) in amounts
due to an officer/stockholder 16,595 4,625
-------- --------
Net cash used in operating activities -- --
-------- --------
Cash flows from investing activities:
Organization costs -- --
-------- --------
Net cash used in investing activities -- --
-------- --------
Cash flows from financing activities:
Proceeds from sale of common stock -- --
-------- --------
Net cash provided by financing activities -- --
-------- --------
Net increase (decrease) in cash -- --
Cash at beginning of year -- --
-------- --------
Cash at end of period $ -- $ --
======== ========
Supplemental disclosure of noncash investing and
financing activities:
Common stock issued for services and costs advanced $ -- $ --
======== ========
The accompanying notes are an integral part of the financial statements.
F-14
</TABLE>
<PAGE>
EQUICAP, INC.
Notes to Financial Statements (Unaudited)
Note 1 - Summary of Significant Accounting Policies
Description of Business
-----------------------
The financial statements presented are those of Equicap, Inc. (the "Company").
The Company was incorporated under the laws of the State of California on March
1, 1995. Prior to July 1996, the Company operated as a business development
company and since that time, the Company has been inactive.
The Company has been exploring sources to obtain additional equity or debt
financing. The Company has also indicated its intention to participate in one or
more as yet unidentified business ventures, which management will select after
reviewing the business opportunities for their profit or growth potential.
Use of Estimates in the Preparation of Financial Statements
-----------------------------------------------------------
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reporting 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 period. Actual results
could differ from those estimates.
Organization Costs
------------------
Organization costs are expensed as incurred. Prior to December 31, 1998
organization costs were capitalized and amortized over five years.
Fair Value of Financial Instruments
-----------------------------------
The fair value of the Company's payables due to an officer/stockholder is not
practicable to estimate due to the related party nature of the underlying
transactions and the indefinite payment terms.
Income Taxes
------------
Deferred tax assets and liabilities are recognized for the future tax
consequences attributable to differences between the financial statement
carrying amounts of existing assets and liabilities and their respective tax
bases. Deferred tax assets and liabilities are measured using enacted tax rate
expected to apply to taxable income in the years in which those temporary
differences are expected to reverse. The effect on deferred tax assets and
liabilities of a change in tax rates is recognized in the statement of
operations in the period that includes the enactment date.
F-15
<PAGE>
EQUICAP, INC.
Notes to Financial Statements (Unaudited)
Loss Per Common Share
---------------------
Loss per common share is computed by dividing the net loss by the weighted
average shares outstanding during the period.
Unaudited Financial Statements
------------------------------
The unaudited financial statements of the Company have been prepared on the
accrual basis and includes all of the information and footnotes required by
generally accepted accounting principles. In the opinion of management, all
adjustments (consisting of normal recurring accruals) considered necessary for a
fair presentation have been included.
Note 2 - Stockholders' Deficit
Common Stock
------------
During the year ended December 31, 1998, the Company's previous
president/director and stockholder contributed capital of $800 for costs
advanced on behalf of the Company. The Company has recorded this amount as a
capital contribution.
On June 19, 1998, the Company issued 50,000 shares of common stock to an
officer/director of the Company, for accounting fees and costs advanced on
behalf of the Company. These shares were valued at $.10 per share or $5,000.
On June 24, 1998, the Company's shareholders approved a 1 for 100 reverse stock
split effective July 31, 1998. All shares and per share amounts have been
restated to reflect this restructuring of the Company.
On December 29, 1999, the Company issued 100,000 shares of common stock to an
officer/director of the Company, for accounting fees and costs advanced on
behalf of the Company. These shares were valued at $.10 per share or $10,000.
On January 10, 2000, the Company's shareholders approved a 1 for 50 reverse
stock split followed by an immediate forward stock split of 100 for 1, effective
January 18, 2000. All shares and per share amounts have not been restated to
reflect this restructuring of the Company.
Dividends may be paid on outstanding shares as declared by the Board of
Directors. Each share of common stock is entitled to one vote.
Preferred Stock
---------------
No shares of the Company's no par value preferred stock have been issued or are
outstanding. Dividends, voting rights and other terms, rights and preferences of
the preferred shares have not been designated but may be designated by the Board
of Directors from time to time.
F-16
<PAGE>
EQUICAP, INC.
Notes to Financial Statements (Unaudited)
1998 Compensatory Stock Option Plan
-----------------------------------
The Company has adopted a compensation stock option plan (the "CSO Plan") which
allows for the issuance of options to purchase up to 1,500,000 shares of stock
to employees, officers, directors and consultants of the Company. The CSO Plan
is not intended to qualify as an "incentive stock option plan" under Section 422
of the Internal Revenue Code. Options will be granted under the CSO Plan at
exercise prices to be determined by the Board of Directors or other CSO Plan
administrator. The Company will incur compensation expense to the extent that
the market value of the stock at date of grant exceeds the amount the grantee is
required to pay for the options. No options have been granted under the CSO Plan
to date.
1998 Employee Stock Compensation Plan
-------------------------------------
The Company has adopted an employee stock compensation plan (the "ESC Plan")
which allows for the issuance of up to 1,000,000 shares of stock to employees,
officers, directors and consultants of the Company. The Company will incur
compensation expense to the extent the market value of the stock at date of
grant exceeds the amount the employee is required to pay for the stock (if any).
The ESC Plan will be administered by the Board of Directors or a committee of
directors. No stock has been awarded under the ESC Plan to date.
Note 3 - Income Taxes
There is no provision for income taxes since the Company has incurred net
operating losses.
Income taxes at the federal statutory rate is reconciled to the Company's actual
income taxes as follows:
<TABLE>
<CAPTION>
June 30,
----------------------------
2000 1999
----------- -----------
<S> <C> <C>
Federal income tax benefit at statutory rate (15%) $ (2,668) $ (1,244)
State income tax benefit net of federal tax effect -- --
Deferred income tax valuation allowance 2,668 1,244
---------- ----------
$ -- $ --
========== ==========
The Company's deferred tax assets are as follows:
Accrued expenses $ 1,639 $ 1,564
Net operating loss carryforward 47,179 45,208
Valuation allowance (48,818) (46,772)
---------- ----------
$ -- $ --
========== ==========
F-17
</TABLE>
<PAGE>
EQUICAP, INC.
Notes to Financial Statements (Unaudited)
At June 30, 2000, the Company has net operating loss carryforwards of $198,363
which may be available to offset future taxable income through 2020.
Note 4 - Related Party Transactions
On June 19, 1998, the Company issued 50,000 shares of common stock to an
officer/director of the Company, for accounting fees and costs advanced on
behalf of the Company. These shares were valued at $.10 per share or $5,000.
On December 29, 1999, the Company issued 100,000 shares of common stock to an
officer/director of the Company, for accounting fees and costs advanced on
behalf of the Company. These shares were valued at $.10 per share or $10,000.
The Company was indebted to an officer/director/stockholder for accounting fees
and expenses advanced on behalf of the Company, in the amount of $25,526 at June
30, 2000.
F-18
<PAGE>
PART III
ITEM 1. LIST OF EXHIBITS.
The following exhibits are either filed with this registration statement or
have previously been filed with the Securities and Exchange Commission and are
incorporated by reference to another report, registration statement or form. As
to any shareholder of record requesting a paper copy of this registration
statement, EQUICAP will furnish any exhibit indicated in the list below as filed
with this registration statement upon payment to EQUICAP of its expenses in
furnishing the information.
3.1 Articles of Incorporation of VWR ACQUISITION
COMPANY, INC. as filed with the California
Secretary of State on March 1, 1995............................ 2
3.2 Certificate of Amendment of Articles of Incorporation
changing name to EQUICAP, INC. as filed with the
California Secretary of State on November 15, 1995 ............. 2
3.3 Bylaws of EQUICAP............................................... 2
4.1 Specimen common stock certificate .............................. 2
10.1 1998 Compensatory Stock Option Plan of EQUICAP ................. 2
10.2 1998 Employee Stock Compensation Plan of EQUICAP ............... 2
1 - Filed herewith as an exhibit.
2 - Previously filed as an exhibit to the Registration Statement on
Form 10SB-12G (Registration No. 0-31091) filed on July 20, 2000.
24
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 12 of the Securities Exchange Act
of 1934, the Company has duly caused this registration statement to be signed on
its behalf by the undersigned, thereunto duly authorized.
DATED: August 15, 2000
EQUICAP, INC.
By /s/ Stephen M. Siedow
--------------------------
Stephen M. Siedow, President
and CEO
25
