FORM 10-K-SB
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OF THE SECURITIES EXCHANGE ACT OF 1934
Commission File Number: 0-29183
RICHMOND SERVICES, INC.
Nevada 76-0430898
(Incorporation) (IRS Number)
34700 Pacific Coast Highway, Suite 300, Capistrano Beach, CA 92624
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (949) 248-8933
Securities registered pursuant to Section 12(b) of the Act:
[None]
Securities registered pursuant to Section 12(g) of the Act: 5,047,991
Yes[x] No[] (Indicate by check mark whether the Registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports) and (2) has been subject to such
filing requirements for the past 90 days.)
[] (Indicate by check mark whether if disclosure of delinquent filers (Sec.
229.405) is not and will not to the best of Registrant's knowledge be contained
herein, in definitive proxy or information statements incorporated herein by
reference or any amendment hereto.)
As of 12/31/99 the aggregate number of shares held by non-affiliates was
approximately 2,647,991 shares.
As of December 31, 1999, the number of shares outstanding of the Registrant's
Common Stock was 5,047,991.
Exhibit Index is found on page 15
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PART I
UN-NUMBERED ITEM:INTRODUCTION
FORWARD LOOKING STATEMENTS: This Annual Report on Form 10-KSB includes
"forward-looking statements" within the meaning of section 27a of the Securities
Act of 1933, as amended and section 21e of the Securities Exchange Act of 1934,
as amended, which forward-looking statements can be identified by the use of
forward-looking terminology such as, "may," "believe," "expect," "intend,@
"anticipate," "estimate" or "continue" or the negative thereof or other
variations or comparable plain English terminology. Forward looking statements
are projections and not reports of known facts. All statements other than
statements of historical fact included in this Report are forward-looking
statements. Although the company believes that the expectations reflected in
such forward-looking statements are reasonable, it can give no assurance that
such expectations will prove to have been correct. We intend to identify
important factors with respect to any such forward-looking statements, including
certain risks and uncertainties that could cause actual results to differ
materially from the Company's expectations, whenever possible. For example, the
volume or discounted present value of its assets, its ability to service its
indebtedness, its strategic plans including its ability to identify and acquire
a development stage company and other matters, are forward-looking statements.
We may be the subject of a "Reverse Acquisition". A reverse acquisition is
the acquisition of a private ("Target") business by a public ("Registrant")
corporation, by which the private Target's shareholders acquire control of the
public Company. Some negotiations are in progress, and are disclosed. There is
no certainty that these negotiations no will ripen into an acquisition. Our
principal business plan has been to find such a target or targets, and attempt
to acquire them for stock. While no certainty exists as to any particular
acquisition, it would be expected that a reverse acquisition of a target
Registrant or business would be associated with some private placements and/or
limited offerings of common stock of this Registrant for cash. Such placements,
or offerings, if and when made or extended, would be made with disclosure and
reliance on the businesses and assets to be acquired, and not upon the present
condition of this Registrant.
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ITEM 1. DESCRIPTION OF BUSINESS.
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(A) HISTORICAL INFORMATION. As used herein, the personal pronouns "We", "Us" and
"Our" refers to Richmond Services, Inc., a Nevada corporation, and its
subsidiaries and predecessors, unless the context indicates otherwise. We were
incorporated in Delaware on June 14, 1993, as a "Close Corporation". We intended
to initiate commuter air service from the Sugarland Airport in Richmond, Texas.
We attempted to pursue the acquisition and operation of small niche-market air
carriers. Our efforts were not successful. We have been in the development stage
since our formation. On January 23, 1993, we authorized and directed an
amendment to our original Certificate of Incorporation, changing the number of
shares authorized from 1,500 to 50,000,000, changed the par value from no par to
$0.0001, and converted our Corporation from a "Close Corporation" to a "General
Law Corporation". On or about April 21, 1999, Richmond Services, Inc. moved its
place of incorporation from Delaware to Nevada.
On June 14 of 1993, 510 shares of common stock were issued in exchange for
organizational services and costs, valued by management at $5,000.00 and a stock
subscription receivable of $100.00. These shares were issued to the two founding
shareholders. On January 3, 1997, 5,100,000 shares were issued to the two
founding shareholder, in replacement for the 510 shares previously issued, and
in adjustment for the change in par value, with the same effect as a forward
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split of the shares then issued and outstanding. On January 15, 1997, 71,850
shares were issued for $1,608.00, pursuant to Regulation D, Rule 504. As of
December 9, 1998, there were 5,171,850 shares issued and outstanding, among 255
shareholders.
On September 12, 1998, the shareholders approved an additional issuance of
300,000 shares to a single investor, pursuant Regulation D, Rule 504, for
$3,000.00 cash. By oversight, these shares were not actually issued until
January 8, 1999. In December of 1998, our common stock was approved for listing
on the OTCBB. On or about March 10, 1999, we made a further placement, pursuant
to Regulation D, Rule 504, of 2,100,000 shares at $0.025, for a total of
$52,500.00. As a result of the foregoing, we had 7,571,850 shares of common
stock issued and outstanding, among approximately 268 shareholders.
On August 29, 1999, we approved a Plan of Reorganization by which we would
acquire as a wholly owned subsidiary, TechNature, Inc., a private Washington
state corporation engaged in the development of certain technologies relating to
the heating and refrigeration industries. This transaction was never consummated
and the Plan of Reorganization was rescinded. The name of the corporation had
been changed to TechNature, prematurely. It was restored to Richmond Services,
Inc.
On November 9, 1999 we authorized a reverse split of our common stock in a
ratio of 2 for 3. This action resulted in a reduction of the total number of
shares issued and outstanding to 5,047,825.
On February 29, 2000, we approved a Plan of Reorganization by which we
would acquire as a wholly owned subsidiary, eKnowledge Group, Inc., a private
Nevada state corporation engaged in providing supplemental, distance learning
over the internet. This transaction is scheduled to be consummated on April 7,
2000. The name of the corporation will be changed to eKnowledge Group, Inc. in
completion and closing of this acquisition. The preliminary terms of the
acquisition would provide for the acquisition of 100% of the total issued and
outstanding stock of eKnowledge Group, Inc. in exchange for a 77.5% of the total
issued and outstanding of the issuer. These acquisition shares would be newly
issued investment shares, and would be issued pursuant to Rule 145, and would,
if and when issued, be restricted securities as if so defined by Rule 144(a).
Additionally, we would provide $500,000 in equity financing to the combined
entities, once the acquisition is consummated. The equity contribution is
expected to be raised through the private placement of existing shares from the
majority shareholder. It is important to understand clearly, that any and all
funding arrangements would be made on the basis of the acquisition, and not in
reliance on our present pre-acquisition condition. This acquisition is subject
to approval by our shareholders at a meeting being called. Please see Item 6 of
this Part, Management's Discussion and Analysis or Plan of Operation, for more
information.
(B) THE BUSINESS OF REGISTRANT AND ITS SUBSIDIARIES. Because the possible
acquisition of eKnowledge Group, Inc. is not yet finalized, disclosure is
provided about that acquisition, should it close as planned; following which, we
will discuss the situation should this acquisition not ripen into a corporate
reorganization.
(1) THE BUSINESS OF EKNOWLEDGE GROUP, INC. The term "the Company" as used
in this section (b)(1) refers to the acquisition target, and not to us. The
initial eKnowledge product line consists of test preparatory courses for
students studying for the LSAT, SAT (Scholastic Assessment Test), PSAT
(Preliminary SAT), ACT (American College Testing Assessment), TOEIC (Test of
English for International Communication), TOEFL (Test of English as a Foreign
Language), GRE (Graduate Record Examination), and GMAT (Graduate Management
Admission Test). Home LSAT has been successfully launched and the SAT, TOEIC,
and ACT courses are scheduled to launch within the next 60 days. In addition,
eKnowledge will develop corporate training and compliance courses and K-12 after
school tutorials as its primary course offerings. Once these core products have
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been successfully launched, eKnowledge will create additional adult education
courses as well as literature reviews and college study aids. All offerings are
and will be integrated educational courses delivered via the Internet as
supplemental learning tools in these six categories and under the various "dot
com" name brands as follows: Test preparation B eTestPrep.com; Corporate
training & compliance B eCorpEd.com; K-12 after school learning B
eAfterSchool.com; Adult education B eLifeEd.com; Literature reviews B
eClassicNotes.com; College study aids B eCollegeNotes.com.
eKnowledge launched Home LSAT in September 1998 in video/audio format and
then offered it electronically via the Internet beginning in December 1998. The
company was the first to offer the equivalent of a live test preparation course
delivered via the Internet and effectively captured 4% of the 50,000 annual LSAT
test preparatory taker market through sales and beta testers by the second
quarter of 1999. Using a distance learning technology model of streaming video
and downloadable written study materials, eKnowledge capitalizes on the appeal
of both the Internet and distance learning. The company offers students
convenience, ease, and accessibility of the Internet as the medium through which
to receive educational content. All courses incorporate high-quality, digital
image-based streaming video lectures, convenient access available
anytime/anywhere, tracking and status reports, simulated practice tests and
quizzes, a multi-media format displaying text with hyperlinks to answer
questions, links to definitions and relevant portions of the study materials,
multi-cast streaming capabilities for "special live events," and web-based
course support including chat rooms, bulletin boards, and other resource links.
UN-AUDITED FINANCIAL INFORMATION EKNOWLEDGE GROUP, INC. Certain as yet
un-audited financial information has been presented to us concerning eKnowledge
Group, Inc.
<TABLE>
<CAPTION>
<S> <C> <C>
Description 12/31/99 12/31/98
- ------------------------------------------------
Net Sales 48,108 18,089
Cost of Goods (13,661) (135,288)
Gross Profit 34,447 (117,199)
- -------------------------- --------- ---------
Operating Expense:
- --------------------------
Wages & Salaries 6,813 34,038
Advertising/Market 6,167 64,486
Other Operating Expenses
22,500 52,415
Operating Expense: 35,480 150,939
Operating Income (Loss) (1,033) (268,138)
Other Income/Expense -0- 14,721
Net Income (1,033) (253,417)
- -------------------------- ========= =========
</TABLE>
This information has not been subjected to audit and may not be a reliable
indication of the value of the assets to be acquired.
(2) IF EKNOWLEDGE GROUP, INC IS NOT ACQUIRED. We would continue to search
for a profitable acquisition, if eKnowledge Group, Inc. should not be acquired
as planned. We would continue to have no current business. Our business plan
would continue to be to seek one or more profitable business combinations or
acquisitions to secure profitability for shareholders. We have no day-to-day
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operations at the present time. Our officers and directors devote only
insubstantial time and attention to the affairs of this Registrant at the
present time, for the reason that only such attention is presently required.
Management has adopted a conservative and patient policy of seeking
opportunities of exceptional quality, in management's view, and to accept that
it may have to wait longer, as a result, before consummating any transactions to
create profitability for its shareholders. For continued quotation on the OTC
Bulletin Board on or after March 23, 2000, Management has determined that it
must so qualify itself by this 1934 Act Registration of its common stock, as a
class, pursuant to Sec. 12(g) of the Securities Act of 1934, before it can
present itself as a viable competitor in the reverse acquisition arena.
LIMITED SCOPE AND NUMBER OF POSSIBLE ACQUISITIONS: We would not intend to
restrict our consideration to any particular business or industry segment, and
we might consider, among others, finance, brokerage, insurance, transportation,
communications, research and development, service, natural resources,
manufacturing or high-technology. Of course, because of our limited resources,
the scope and number of suitable candidate business ventures available will be
limited accordingly, and most likely we would not be able to participate in more
than a single business venture. Accordingly, it is anticipated that we would not
be able to diversify, but may be limited to one merger or acquisition because of
limited financing. This lack of diversification will not permit us to offset
potential losses from one business opportunity against profits from another. To
a large extent, a decision to participate in a specific business opportunity may
be made upon management's analysis of the quality of the other firm's management
and personnel, the anticipated acceptability of new products or marketing
concepts, the merit of technological changes and numerous other factors which
are difficult, if not impossible, to analyze through the application of any
objective criteria. In many instances, it is anticipated that the historical
operations of a specific firm may not necessarily be indicative of the potential
for the future because of the necessity to substantially shift a marketing
approach, expand operations, change product emphasis, change or substantially
augment management, or make other changes. We would be dependent upon the
management of a business opportunity to identify such problems and to implement,
or be primarily responsible for the implementation of, required changes. Because
we may participate in a business opportunity with a newly organized firm or with
a firm which is entering a new phase of growth, it should be emphasized that we
Registrant might incur further risk due to the failure of the target's
management to have proven its abilities or effectiveness, or the failure to
establish a market for the target's products or services, or the failure to
prove or predict profitability.
PROBABLE INDUSTRY SEGMENTS FOR ACQUISITION. While we do not intend to rule
out our consideration to any particular business or industry segment, Management
has determined to focus its principal interest in evaluating development stage
companies in the electronic commerce, high-technology, communication
technologies, information services and internet industry segments. It is
nevertheless possible that an outstanding opportunity may develop in other
industry segments, such as finance, brokerage, insurance, transportation,
communications, research and development, service, natural resources,
manufacturing or other high-technology areas.
REPORTING UNDER THE 1934 ACT. We have recently become effective as a 1934
Act Reporting Company, by registration of our common stock under section Sec.
12(g) of the Securities Exchange Act of 1934. Certain periodic reporting
requirements will be applicable to us. First and foremost, a 1934 Registrant is
required to file an Annual Report on Form 10-K or 10-KSB, 90 days following the
end of its fiscal year. The key element of such annual filing is Audited
Financial Statement prepared in accordance with standards established by the
Commission. A 1934 Act Registrant also reports on the share ownership of
affiliates and 5% owners, initially, currently and annually. In addition to the
annual reporting, a Registrant is required to file quarterly reports on Form
10-Q or 10-QSB, containing audited or un-audited financial statements, and
reporting other material events. Some events are deemed material enough to
require the filing of a Current Report on Form 8-K. Any events may be reported
currently, but some events, like changes or disagreements with auditors,
resignation of directors, major acquisitions and other changes require
aggressive current reporting. All reports are filed and become public
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information. The practical effects of the foregoing requirements on the criteria
for selection of a target Registrant are two-fold: first, the target must have
audited or auditable financial statements, and the target must complete an audit
for filing promptly upon the consummation of any acquisition; and, second, that
the target management must be ready, willing and able to carry forth those
reporting requirements or face de-listing from the OTCBB, if listed, and
delinquency and possible liability for failure to report.
LOAN FINANCING NOT ANTICIPATED. There are no foreseeable circumstances
under which loan financing will be sought or needed during our present
development stage. Should an acquisition be made, different circumstances may
well exist, along with different opportunities for financing the newly acquired
venture.
DEPENDENCE ON MANAGEMENT. We are required to rely on Management's skill,
experience and judgment, both in regard to extreme selectivity, and in any final
decision to pursue any particular business venture, as well as the form of any
business combination, should agreement be reached at some point to acquire or
combine. Please see Item 6 of this Part, Management's Discussion and Analysis or
Plan of Operation, and also Item 12 of this Part, Certain Relationships and
Related Transactions.
(1) PRINCIPAL PRODUCTS OR SERVICES AND THEIR MARKETS.
[None.]
(2) DISTRIBUTION METHODS OF THE PRODUCTS OR SERVICES.
[None.]
(3) STATUS OF ANY PUBLICLY ANNOUNCED NEW PRODUCT OR SERVICE.
[None.]
(4) OUR COMPETITIVE POSITION WITH RESPECT TO REVERSE ACQUISITION.
Adequately capitalized firms are engaged in the search for acquisitions or
business combinations that firms may be able to offer more and may be more
attractive to acquisition candidates. We became a candidate for reverse
acquisition transactions only this past August. Management, in evaluating market
conditions and unsolicited proposals, has formed the estimate that the selection
of a business combination is probable within the next twelve months. There is no
compelling reason why we Registrant should be preferred over other
reverse-acquisition public corporation candidates. We have no significant pool
of cash it can offer and no capital formation incentive for our selection. We
have a limited shareholder base insufficient for acquisition target wishing to
proceed for application to NASDAQ. In comparison to other "public shell
companies", we are unimpressive, in the judgment of management, and totally
lacking in unique features that would make us more attractive or competitive
than other "public shell companies". While management believes that the
competition of other "public shell companies" is intense and growing, it has no
basis on which to quantify its impression.
As disclosed we are not actively engaged in a search to find a
business partner, and believe that we have found a probable acquisition. If this
acquisition does not occur, we would begin our search anew. There can be no
assurance that we will ever prove competitively attractive to the kinds of
transactions it may seek or will ever participate in a Reverse Acquisition.
Please see Management's Discussion and Analysis, Item 6 of this part, for an
expanded discussion of these and related subjects of disclosure.
(5) SOURCES OF AND AVAILABILITY OF RAW MATERIALS AND THE NAMES OF
PRINCIPAL SUPPLIERS. Not Applicable.
(6) DEPENDENCE ON ONE OR A FEW MAJOR CUSTOMERS. Not applicable
(7) PATENTS, TRADEMARKS, LICENSES, FRANCHISES, CONCESSIONS, ROYALTY
AGREEMENTS OR LABOR CONTRACTS.
[None.]
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(8) NEED FOR ANY GOVERNMENT APPROVAL OF PRINCIPAL PRODUCTS OR SERVICES AND
STATUS. Not Applicable.
(9) EFFECT OF EXISTING OR PROBABLE GOVERNMENTAL REGULATIONS ON THE
BUSINESS. Not Applicable. However, we would expect to maintain our corporate
status with the State of our incorporation, and would file our tax returns and
reports that are required to be filed with the Commission. We wish to report and
provide disclosure voluntarily, and would file periodic reports even in the
event that our obligation to file such reports is suspended or excused under the
Exchange Act. We would expect to comply with NASD regulations, to the extent
that any such regulations are applicable to the conduct of the Registrant's
affairs, so that our common stock might continue to be quoted for trading in
brokerage transactions.
(10) ESTIMATE OF AMOUNT SPENT ON RESEARCH AND DEVELOPMENT IN EACH OF LAST
TWO YEARS.
[None.]
(11) COSTS AND EFFECTS OF COMPLIANCE WITH ENVIRONMENTAL LAWS Not
Applicable.
(12) NUMBER OF TOTAL EMPLOYEES AND FULL-TIME EMPLOYEES. None. The
President serves without compensation and is not considered an employee at this
time.
(13) YEAR 2000 COMPLIANCE, EFFECT ON CUSTOMERS AND SUPPLIERS. None. We
have no computers or digital equipment of its own, no suppliers or customers.
Accordingly, we have determined that we are faced with no year 2000 compliance
issues other than those shared by the public in general.
ITEM 2. DESCRIPTION OF PROPERTY.
We do not own or possess any property, plant or equipment, nor is it bound
or encumbered by any agreement pertaining to the acquisition of the same.
ITEM 3. LEGAL PROCEEDINGS.
There are no legal proceedings pending against us, as of the preparation of
this Report.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
On November 9, 1999 the Issuer authorized a reverse split of its stock in a
ratio of 2 for 3. This action was ratified by a majority of the Issuers
shareholders and its entire Board of Directors. It resulted in a reduction in
the total number of issued and outstanding shares from 7,571,850 to 5,047,825.
The Remainder of this Page is Intentionally left Blank
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PART II
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ITEM 5. MARKET FOR COMMON EQUITY AND STOCKHOLDER MATTERS.
(A) MARKET INFORMATION. We have one class of securities, Common Voting Equity
Shares ("Common Stock"). Our Securities may be quoted in the over-the-counter
market, but there is a young, sporadic and potentially volatile trading market
for them. Quotations for, and transactions in the Securities, and transactions
are capable of rapid fluctuations, resulting from the influence of supply and
demand on relatively thin volume. There may be buyers at a time when there are
no sellers, and sellers when there are no buyers, resulting in significant
variations of bid and ask quotations by market-making dealers, attempting to
adjust changes in demand and supply. A young market is also particularly
vulnerable to short selling, sell orders by persons owning no shares of stock,
but intending to drive down the market price so as to purchase the shares to be
delivered at a price below the price at which the shares were sold short. Our
Common Stock is currently quoted on the Electronic Bulletin Board under the
symbol "RHMS," but there is limited trading in the Common Stock. The following
table sets forth the high and low bid prices from January 1, 1998 through
December 31, 1999, based upon quotations periodically published on the OTC. All
price quotations represent prices between dealers, without retail mark-ups,
mark-downs or commissions and may not represent actual transactions.
<TABLE>
<CAPTION>
<S> <C> <C>
period high bid low bid
- ---------------------------
1st 1999 1.50 0.50
2nd 1999 1.50 0.75
3rd 1999 3.75 2.00
4th 1999 4.00 1.625
======== ======== =======
</TABLE>
(B) HOLDERS. According to the records of our transfer agent, there were 364
shareholders of record of the Common Stock on December 31, 1999 (including
nominee holders such as banks and brokerage firms who hold shares for beneficial
holders).
(C) DIVIDENDS. We have not paid any cash dividends on our Common Stock, and do
not anticipate paying cash dividends on its Common Stock in the next year. We
anticipate that any income generated in the foreseeable future will be retained
for the development and expansion of our business. Future dividend policy is
subject to the discretion of the Board of Directors and will depend upon a
number of factors, including future earnings, debt service, capital
requirements, business conditions, the financial condition of the Company and
other factors that the Board of Directors may deem relevant.
(D) SALES OF UNREGISTERED COMMON STOCK 1999.
On or about March 10, 1999, we made a placement, pursuant to Regulation D,
Rule 504, of 2,100,000 shares at $0.025, for a total of $52,500.00 to ten highly
sophisticated investors. On November 9, 1999 the Registrant authorized a reverse
split of its stock in a ratio of 2 for 3.
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ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION.
(A) PLAN OF OPERATION FOR THE NEXT TWELVE MONTHS. We have commenced a search
for a reverse-merger candidate who will acquire our domicile and corporate
status. As disclosed, we think we have found one. If that acquisition is not
made, we will continue the search for a reverse-merger candidate for the next
twelve months. In this Item we will discuss our present condition first, and the
possible acquisition second.
CASH REQUIREMENTS AND OF NEED FOR ADDITIONAL FUNDS, TWELVE MONTHS. We have no
immediate or foreseeable need for additional funding, from sources outside of
its circle of shareholders, if at all, during the next twelve months, to
continue our search for an acquisition, should the present proposed acquisition
fail. We have had no revenues and incurred $64,333 in General Administrative
expenses for 1999, consisting almost entirely of legal and professional fees,
accounting and auditing expenses. We would estimate that as much as $20,000 may
be advanced by our shareholders, if needed for corporate maintenance, legal and
accounting, if our present acquisition fails. No agreement by shareholders to
make such advances is in place, and no guarantee can presently be given that
additional funds, if needed, will be available. It is by far more likely that
advances will take the form of providing services on a deferred compensation
basis. Should further auditing be required, such services by the Independent
Auditor may not be the subject of deferred compensation. The expenses of
independent Audit cannot be deferred or compensated in stock or notes, or
otherwise than direct payment of invoices in cash.
We do not anticipate any contingency, upon which we would voluntarily cease
filing reports with the SEC, even though we may cease to be required to do so.
It is in our compelling interest to report its affairs quarterly, annually and
currently, or as the case may be. This generally is to provide accessible public
information to interested parties, and also specifically to maintain our
qualification for the OTCBB.
(B) DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.
We have had no material operation to date and have recorded no revenues. In 1999
we incurred General Expenses of $64,433, almost entirely in Legal and
Professional fees. We had an abortive acquisition in 1999. Management believes
that the expenses for legal, professional and accounting fees in that year were
extraordinary, and do not reflect the cost of maintaining our company in a
search for an acquisition target. In 1998 a modest reasonable $4,000 accounted
for our maintenance, and in 1997 a reasonable $8,984 was so incurred. Our loans
payable have increased in 1999. These are shareholder and related-party
advances.
Revenues. We had no revenues for the previous two years ending December
31, 1999.
COSTS AND EXPENSES. We had expenses of $4,000 in 1998 and $64,443 in 1999,
all of which were general and administrative expenses except for $500 in
amortization of organization costs in 1998.
NET INCOME (LOSS). Net loss for the fiscal year ended December 31, 1999 was
$79,443, or $0.02 per share, compared to a loss of $4,000, or $0.001 per share,
for the fiscal year ended December 31, 1998. This $75,443 increase was primarily
the result of the increase in general and administrative expenses relating to
costs associated with filing a registration statement with the SEC. Also
included in the general and administrative expense category are costs associated
with performing an audit of the Companys financial statements for the express
purpose of a registration filing. In 1999 we incurred a loss, charged as Bad
Debt, in connection with our abortive acquisition, representing funds advanced
by us, which are deemed to be un-collectible.
LIQUIDITY AND CAPITAL RESOURCES. We have virtually no cash on hand. This is
not a significant change from the previous year. Our advances from affiliates
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has increased from $6,960, last year, to $34,078 in 1999. The increase in our
Deficit Accumulated During the Development Stage is accountable to these
advances, and our General Administrative Expenses previously discussed. This is
consistent with our previous statement that we do not need additional cash,
outside of our circle of affiliates, to remain in operation as company with no
operations seeking a profitable acquisition; however, should our currently
proposed acquisition proceed to consummation, numerous other consideration would
be applicable. We would expect to provide $500,000 in equity financing to the
combined entities, once the acquisition is consummated. The equity contribution
is expected to be raised through the private placement of existing shares from
the majority shareholder as a part of that acquisition. It is important to
understand clearly, that any and all funding arrangements would be made on the
basis of the acquisition, and not in reliance on our present pre-acquisition
condition. This acquisition is subject to approval by our shareholders at a
meeting being called.
LONG-TERM DEBT. On December 31, 1999, the Company had no long-term debt.
FUTURE PROSPECTS. The Board of Directors is recommending that the
shareholders approve the acquisition of eKnowledge Group, Inc., as a wholly
owned subsidiary of us, by which the shareholder of that target would become
shareholders of our Company. The terms and conditions of this proposed
acquisition are that Richmond Services, Inc. would issue 15,155,556 shares (post
reverse split) of the common stock of the Company. These shares will not have
been registered under the Securities Act of 1933, as and may not be resold
unless the shares are registered under the Act or an exemption from such
registration is available. They would be Restricted Securities subject to the
holding periods of Rule 144. These shares shall be issued to the shareholders of
eKnowledge Group, Inc. As a part of the proposed reorganization and acquisition,
the representatives of eKnowledge Group, Inc. with our cooperation will attempt
to consummate a private placement offering on behalf of to-be-reorganized
Company, up to 500,000 new investment shares of our common stock on a
post-reverse stock split basis, by which approximately $500,000 in funding would
be obtained. Final consummation of this acquisition is not contingent upon the
completion of such offering, but up to 500,000 shares of eKnowledge Group on a
post-reverse stock split basis may be issued simultaneously with or subsequent
to the closing of this acquisition.
The current Internet media convergence creates a compelling opportunity to
dramatically alter and enhance the way in which supplemental, for-profit
education is taught and delivered. The eKnowledge Group management team has
successfully exploited this opportunity, capturing 4% market share, with the
introduction of its initial supplemental learning course, Home LSAT, a test
preparatory course for takers of the Law School Admission Test (LSAT) delivered
via the Internet and in video/audio format. eKnowledge will further develop its
unique value proposition by providing students of all levels with on-demand
access to courses delivered via streaming video over the Internet and including
downloadable written materials. Spending in this market is near $80 billion
annually with substantial room for growth and markets tapped will be in both the
business-to-business and business-to-consumer space. Management will leverage
its successful test preparation experience, marketing savvy, and technological
know-how to create the dominant brand name in lifelong online supplemental
education.
IF THE ACQUISITION FAILS, we would be unable to predict when we might
participate in a business opportunity. The reason for this uncertainty arises
from our limited resources, and competitive disadvantages with respect to other
public or semi-public Registrants. Notwithstanding the foregoing cautionary
statements, assuming the continuation of current conditions, we would expect to
proceed to select a business combination within no sooner than six months nor
expect to close an acquisition in a shorter period than within the next twelve
months. The acquisition of such an opportunity could and likely would result in
some change in control of our corporation at such time. This would likely take
the form of a reverse acquisition. That means that this Issuer would likely
acquire businesses and assets for stock in an amount that would effectively
transfer control of our corporation to the acquisition target Issuer or
ownership group. It is called a reverse-acquisition because it would be an
acquisition by this Issuer in form, but would be an acquisition of this Issuer
in substance. Capital formation issues for the future would arise only when
targeted business or assets have been identified. Until such time, we would have
no basis upon which to propose any substantial infusion of capital from sources
outside of its circle of affiliates. Targeted acquisitions for stock may be
accompanied by capital formation programs, involving knowledgeable investors
associated with or contacted by the owners of a target Issuer. If the currently
proposed acquisition fails, it would be expected that a reverse acquisition of a
target Issuer or business would be associated with some private placements
and/or limited offerings of common stock for cash. Such placements, or
offerings, if and when made or extended, would be made with disclosure of and
reliance on the businesses and assets to be acquired, and not upon our present
or future condition without revenues or substantial assets.
ITEM 7. FINANCIAL STATEMENTS.
Please see the Exhibit Index found on page 15 of this Report. The financial
statements listed therein, attached hereto and filed herewith are incorporated
herein by this reference as though fully set forth herein.
ITEM 8.
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
ON ACCOUNTING AND FINANCIAL DISCLOSURE.
[None.]
The Remainder of this Page is Intentionally left Blank
10
<PAGE>
PART III
ITEM 9.
DIRECTORS AND EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS;
COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT.
MARK ZOUVAS is presently our Sole Officer & Director. He was elected August
12, 1999 and will serve in such capacity until the next annual meeting of the
Issuer's shareholders or until their successors have been elected and qualified.
There are no familial relationships among the Issuer's officers and directors,
nor are there any arrangements or understandings between any of the officers or
directors of the Issuer or any other person pursuant to which any officer or
director was or is to be selected as an officer or director.
Mr. Zouvas is 37 years old. He was appointed to the Board of Directors of
the Company on October 5, 1999. From September 1993 to
September, 1997, Mr. Zouvas worked for Vantage Capital Management Company in
Chicago, Illinois. Mr. Zouvas has a BA from the University of California at
Berkeley (Accounting and Real Estate). As a staff auditor with Price Waterhouse,
he performed services for clients in the banking and real estate industries. Mr.
Zouvas has been involved in several venture capital transactions over the past
five years. He is a Licensed Real Estate Broker and an Accountant in California.
Mr. Zouvas is currently a principal in Delphi Consulting Group that specializes
in taking companies public through reverse-merger acquisitions. Mr. Zouvas is
also the Chief Financial Officer of Power Exploration, Inc., a publicly traded
oil exploration firm located in Fort Worth, Texas.
The present Board of Directors is recommending that Gary S. Saunders, Scott
Hildebrandt, Chris DeSantis, Mark S. Zouvas and Wayne Saunders be elected as
Directors of the Company and that said individuals be appointed as Directors on
behalf of the corporation until the next Meeting of Shareholders. Mr. Zouvas,
our existing director is recommended to remain on the Board of Directors. These
proposals are made in connection with our proposed acquisition of eKnowledge
Group, Inc. If that acquisition fails, these proposals for new directors will be
of no further effect.
The business experience and biographies of all the proposed Directors are
as follows:
GARY S. SAUNDERS is the President and Chief Executive Officer of
eKnowledge. Prior to starting eKnowledge, Mr. Saunders was the President of
Longacre/White Patent Education (ALWPE@), a company that offers Patent Bar
Review courses. He is widely credited with taking LWPE to the number one market
share position in less than a year in the face of stiff competition, a mature
market, and a company undergoing a name change. Mr. Saunders has produced an
Online Bar Exam Review Program for Practicing Law Institute, the Nations
leading Continuing Legal Education provider. Mr. Saunders was also the Director
of Operations for the Western United States for West Publishing=s West Bar
Review, Vice President of Bar Review Operations for American Professional
Testing Services, Inc., the parent company of Barpassers bar review, and on the
management team that oversaw the Sum & Substance product line, a line of
supplemental study aids for law students. Prior to APTS, Mr. Saunders was the
Director of GRE/GMAT/LSAT/MCAT Operations for the Western United States for
Bar/bris Professional Testing Centers, then a market leader in the field. A
leading expert in both test preparation and sales and marketing to the student
market, Mr. Saunders has participated in the start up of two other companies. He
is a member of the State Bar of California, a graduate of Brigham Young
University and University of San Diego School of Law, and is one of the
principal lecturers in eKnowledge=s initial Home LSAT program as well as the
eTestprep.com SAT program.
SCOTT HILDEBRANDT is the author and a principal lecturer in the Home LSAT
program and a coauthor and lecturer in the eTestprep SAT program. Mr.
11
<PAGE>
Hildebrandt is the Senior Vice President of Academics for eKnowledge as well as
a partner in the Silicon Valley law firm of Hildebrandt and Welker. Mr.
Hildebrandt formerly created the curriculum for a San Francisco test preparation
company, Columbia Review Course. When he taught for Bar/bri=s Professional
Testing Centers he was the Western United States top rated lecturer. Mr.
Hildebrandt is also the author of a line of study aids for law students. Mr.
Hildebrandt is a member of the State Bar of California, a graduate of Brigham
Young University and its J. Reuben Clark Law School.
CHRIS DESANTIS is currently the Director of the Online Bar Review Program
at Practicing Law Institute. PLI, a non-profit organization founded in 1933, is
the nation=s premier provider of continuing legal education programs. Prior to
PLI Mr. DeSantis was with The Washington Posts Kaplan Division working in both
the Test Preparation and Online Law School areas. As Director of Kaplan CPA
Review, Mr. DeSantis introduced the concept of Online Test Preparation for those
taking the CPA examination. He was on the management team that designed and
implemented the first Online Law School, Concord. Prior to Kaplan, Mr. DeSantis
was a Director for West Bar Review. A graduate of Swarthmore College and
California Western University School of Law, Mr. DeSantis is licensed to
practice law in California, New Jersey, New York, and Pennsylvania.
WAYNE SAUNDERS began his career in Consumer and Commercial Finance, rising
to the level of President of Universal Finance. From Finance Saunders went to
Manufacturing in the Plumbing and Air Conditioning Industries leading Wright
Manufacturing to the market share leader position. Saunders has successfully
started many businesses including, Life Insurance, Manufacturing, Equipment
Rental, Commodities Investment, Oil Development, and Real Estate Development
companies. Saunders is credited with starting TuneMatic, the quick auto tune up
with a 6 month or 6,000 mile guarantee that he originated and sold to Andy
Granatelli. Tune-up Masters continues to lead the tune up industry. Saunders is
a graduate of St. Marys with a BA in Business Administration.
COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT. Based solely upon a review of
Forms 3, 4 and 5 furnished to the Company, the Company is not aware of any
person who at any time during the fiscal year ended December 31, 1998 was a
director, officer, or beneficial owner of more than ten percent of the Common
Stock of the Company, and who failed to file, on a timely basis, reports
required by Section 16(a) of the Securities Exchange Act of 1934 during such
fiscal year.
ITEM 10. EXECUTIVE COMPENSATION.
There has been no compensation of Officers, Directors, Executives or
employees of our corporation and no plan of compensation is presently
contemplated.
12
<PAGE>
ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
CERTAIN BENEFICIAL OWNERS AND OWNERS OF 5% OR MORE
<TABLE>
<CAPTION>
<S> <C> <C>
Name and Address of Beneficial Owner Share % of Total
Common Stock Ownership
- -------------------------------------------------------------
J. Dan Sifford
34700 Pacific Coast Hwy, 2,100,000 41.60
Capistrano Beach, CA 92624
Total 5% Owners 2,100,000 41.60
Total Issued and Outstanding 5,047,991 100.00
====================================== ========= ==========
</TABLE>
TABLE B
OFFICERS AND DIRECTORS
<TABLE>
<CAPTION>
<S> <C> <C>
Name and Address of Beneficial Owner Share % of Total
Common Stock Ownership
- -------------------------------------------------------------
Mark Zouvas 300,000 5.94
34700 Pacific Coast Hwy,
Capistrano Beach, CA 92624
All Officers and Directors as a Group 300,000 5.94
Total Shares Issued and Outstanding 5,047,991 100.00
====================================== ========= ==========
</TABLE>
ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
[None.]
ITEM 13. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K.
(A) FINANCIAL STATEMENTS. Please see Exhibit Index following.
(B) FORM 8-K REPORTS.
[None.]
(C) EXHIBITS. Please see Exhibit Index following.
13
<PAGE>
Exhibit Index
FINANCIAL STATEMENTS AND DOCUMENTS
FURNISHED AS A PART OF THIS REGISTRATION STATEMENT
- --------------------------------------------------------------------------------
Page
Exhibit Table Category / Description of Exhibit Number
[2] PLAN OF ACQUISITION, REORGANIZATION, ARRANGEMENT, LIQUIDATION OR
SUCCESION
- --------------------------------------------------------------------------------
2.1 ARTICLES OF MERGER AND PLAN OF REORGANIZATION: Delaware to Nevada 17
- --------------------------------------------------------------------------------
[3] ARTICLES OF INCORPORATION AND BY-LAWS
- --------------------------------------------------------------------------------
3.1 ARTICLES OF INCORPORATION 22
3.2 RESTATED ARTICLES OF INCORPORATION 24
3.3 BY-LAWS 27
-------------------------------------------------------------------------------
FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
F-1 Audited Financial Statements for the years ended December 31, 1999, 1998
================================================================================
14
<PAGE>
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
Registrant and in the individual capacities and on the
date indicated.
RICHMOND SERVICES, INC.
Dated: March 29, 2000
_________/s/___________
Mark Zouvas
Sole Officer and Director
15
<PAGE>
EXHIBIT 2.1
ARTICLES OF MERGER AND PLAN OF REORGANIZATION
DELAWARE TO NEVADA
16
<PAGE>
- --------------------------------------------------------------------------------
ARTICLES OF MERGER
BY WHICH
RICHMOND SERVICES, INC.
(A DELAWARE CORPORATION)
SHALL MERGE WITH AND BECOME
RICHMOND SERVICES, INC.
(A NEVADA CORPORATION)
- --------------------------------------------------------------------------------
FIRST, THE PLAN OF MERGER FOR CHANGE OF SITUS:
(1) That certain Plan of Merger for Change of Situs, dated April 21, 1999, is
attached hereto and incorporated herein by this reference as though fully set
forth herein.
SECOND, INFORMATION RE SHAREHOLDER ACTION:
(2) Shareholder Action is not required, for the reason that the former
shareholders and the resulting shareholders are the same without dilution or
change, and that the exchange of shares is in effect merely an exchange of
situs. (Nevada: NRS 78.454)(Texas: TxBusCop Act Art 5.03).
THIRD, CORPORATE AUTHORITY:
(3) The Plan of Merger for Change of Situs and the performance of the terms of
the Plan of Merger for Change of Situs, by the each and all of the parties and
entities mentioned in the Plan of Merger for Change of Situs were duly
authorized by all action required by the laws under which each was incorporated
or organized and by its constituent documents, to which representation each of
the undersigned duly certifies and attests.
FOURTH, EFFECTIVE DATE:
(4) The exchange shall become effective at the earliest date provided or allowed
by law, and not later than certification by each applicable State Official of
that this document has been accepted for filing and filed.
FIFTH SIGNING:
(5) These Articles of Merger are signed by the duly authorized Officers of the
each applicable entity as follows:
the remainder of this page is intentionally left blank
signatures appear on the following page or pages
17
<PAGE>
RICHMOND SERVICES, INC. RICHMOND SERVICES, INC.
(A DELAWARE CORPORATION) (A NEVADA CORPORATION)
by by
_______/s/_______ ________/s/_______
J. Dan Sifford J. Dan Sifford
President President
______/s/_______ ________/s/________
Laurencio Jaen Laurencio Jaen
Secretary Secretary
PLAN ATTACHED
18
<PAGE>
PLAN OF MERGER FOR CHANGE OF SITUS
APRIL 21, 1999 PAGE 10
PLAN OF MERGER FOR CHANGE OF SITUS
PLAN OF MERGER FOR CHANGE OF SITUS
APRIL 21, 1999 PAGE 88
BY WHICH
RICHMOND SERVICES, INC.
(A DELAWARE CORPORATION)
WILL MERGE WITH AND INTO
RICHMOND SERVICES, INC.
(A NEVADA CORPORATION)
FOR THE PURPOSE OF CHANGING THE PLACE OF INCORPORATION
THIS PLAN OF REORGANIZATION is made effective and dated this day of April
21, 1999, by and between the above referenced corporations, sometimes referred
to herein as "the Public Company" and "the Private Company", respectively.
I. RECITALS
A. THE PARTIES TO THIS AGREEMENT
1. RICHMOND SERVICES, INC. ("the Public Company") is a Delaware
Corporation.
2. RICHMOND SERVICES, INC. ("the Private Company") is a Nevada
Corporation, having been created (or to be created) on behalf of Richmond
Services, Inc. for the purpose of changing the place of incorporation from
Delaware to Nevada.
B. THE CAPITAL OF THE PARTIES:
1. THE CAPITAL OF THE PUBLIC COMPANY consists of 50,000,000 shares of
common voting stock of $0.0001 par value authorized, of which 15,000,000 shares
are issued and outstanding.
2. THE CAPITAL OF THE PRIVATE COMPANY consists of 50,000,000 shares of
common voting stock of $0.001 par value authorized, of which no shares have been
or are issued or outstanding.
C. THE DECISION TO REORGANIZE TO CHANGE SITUS: The Parties have resolved,
accordingly, to merge and relocated the place of incorporation, by means of the
following reorganization, by which the Public Company will merge with and into
the Private Company move to Nevada.
II. Plan of Reorganization
A. CHANGE OF SITUS: The Public Company (Delaware) and the Private Company
(Nevada) are hereby reorganized for the sole and singular purpose of changing
the place of incorporation of Richmond Services, Inc.; such that immediately
following the Reorganization the Delaware Public Company will move to Nevada.
19
<PAGE>
1. The Public Company: Richmond Services, Inc. of Delaware will merge with
and into and thereafter be Richmond Services, Inc.of Nevada. The Public Company
will retain its corporate personality and status, and will continue its
corporate existence uninterrupted, in and through, and only in and through the
Nevada Corporation.
2. CONVERSION OF OUTSTANDING SHARES: Forthwith upon the effective date
hereof, each and every one share of stock of the Public Delaware Company shall
be converted to one share of the Nevada Company. Any such holders of shares may
surrender them to the transfer agent for common stock of the Public Delaware
Company, which transfer agent shall remain and continue as transfer agent for
the Nevada Company.
3. EFFECTIVE DATE: This Plan of Reorganization shall become effective
immediately upon approval and adoption by Corporate parties hereto, in the
manner provided by the law of its place of incorporation and its constituent
corporate documents, the time of such effectiveness being called the effective
date hereof.
4. SURVIVING CORPORATIONS: The Nevada Company shall survive the
Reorganization after Reorganization, with the operational history of the
Delaware Company before the Reorganization, and with the management, duties and
relationships to its shareholders unchanged by the Reorganization and with all
of its property and with its shareholder list unchanged.
5. FURTHER ASSURANCE, GOOD FAITH AND FAIR DEALING: the Directors of each
Company shall and will execute and deliver any and all necessary documents,
acknowledgments and assurances and do all things proper to confirm or
acknowledge any and all rights, titles and interests created or confirmed
herein; and both companies covenant hereby to deal fairly and good faith with
each other and each others shareholders.
This Reorganization Agreement is executed on behalf of each Company by its
duly authorized representatives, and attested to, pursuant to the laws of its
respective place of incorporation and in accordance with its constituent
documents.
RICHMOND SERVICES, INC. RICHMOND SERVICES, INC.
(A DELAWARE CORPORATION) (A NEVADA CORPORATION)
by by
________/s/_______ ________/s/_________
J. Dan Sifford J. Dan Sifford
PRESIDENT, DIRECTOR PRESIDENT, DIRECTOR
_____/s/_______ __________/s/________
Laurencio Jaen Laurencio Jaen
SECRETARY, DIRECTOR SECRETARY, DIRECTOR
20
<PAGE>
- --------------------------------------------------------------------------------
EXHIBIT 3.1
ORIGINAL ARTICLES OF INCORPORATION
- --------------------------------------------------------------------------------
21
<PAGE>
CERTIFICATE OF INCORPORATION OF
Richmond Services, Inc. State of Delaware
A CLOSE CORPORATION Secretary of State
Division of Corporations
Filed 09:00 AM 06/14/93
763165043 - 2340077
FIRST: The name of the corporation is Richmond Services, Inc.
SECOND: Its registered office in the State of Delaware is to be located at Three
Christina Center, 201 N. Walnut Street, Wilmington DE 19801 in the county of New
Castle. The registered agent in charge thereof is The Company Corporation,
address same as above.
THIRD: The nature of the business and the objects and purposes proposed to be
transacted, promoted and carried on, are to engage in any lawful act or activity
for which corporations may be organized under the General Corporation Law of
Delaware.
FOURTH: The amount of total authorized shares of stock of this corporation is
1500 shares of No par value.
FIFTH: The name and mailing address of the incorporator is Vanessa Foster, Three
Christina Center, 201 N. Walnut Street, Wilmington DE 19801.
SIXTH: The powers of the incorporator are to terminate upon filing of the
certificate of incorporation. All of the corporation's issued stock, exclusive
of treasury shares, shall be held of record by not more than thirty (30)
persons.
SEVENTH: All of the issued stock of all classes shall be subject to one or more
of the restrictions on transfer permitted by Section 202 of the General
Corporation Law.
EIGHTH: The corporation shall make no offering of any of its stock of any class
which would constitute a "public offering" within the meaning of the United
States Securities Act of 1933, as it may be amended from time to time.
NINTH: Directors of the corporation shall not be liable to either the
corporation or its stockholders for monetary damages for a breach of fiduciary
duties unless the breach involves: (1) a director's duty of loyalty to the
corporation or its stockholders; (2) acts or omissions not in good faith or
which involve intentional misconduct or a knowing violation of law; (3)
liability for unlawful payments of dividends or unlawful stock purchases or
redemption by the corporation; or (4) a transaction from which the director
derived an improper personal benefit.
I, THE UNDERSIGNED, for the purpose of forming a corporation under the laws of
the State of Delaware, do make, file and record this Certificate and do certify
that the facts herein are true, and I have accordingly hereunto set my hand.
DATED: June 14, 1993 ______/s/_______
Vanessa Foster
22
<PAGE>
- --------------------------------------------------------------------------------
EXHIBIT 3.2
RESTATED ARTICLES OF INCORPORATION
- --------------------------------------------------------------------------------
23
<PAGE>
ARTICLES OF INCORPORATION
OF
RICHMOND SERVICES, INC.
ARTICLE I. The name of the Corporation is RICHMOND SERVICES, INC.
ARTICLE II. Its principal office in the State of Nevada is 774 Mays Blvd. #10,
Incline Village NV 89452. The initial resident agent for services of process at
that address is N&R Ltd. Group, Inc
ARTICLE III. The purposes for which the corporation is organized are to engage
in any activity or business not in conflict with the laws of the State of Nevada
or of the United States of America. The period of existence of the corporation
shall be perpetual.
ARTICLE IV. The corporation shall have authority to issue an aggregate of
50,000,000 shares of common voting equity stock of par value one mil ($0.001)
per share, and no other class or classes of stock, for a total capitalization of
$50,000. The corporation's capital stock may be sold from time to time for such
consideration as may be fixed by the Board of Directors, provided that no
consideration so fixed shall be less than par value.
ARTICLE V. No shareholder shall be entitled to any preemptive or preferential
rights to subscribe to any unissued stock or any other securities which the
corporation may now or hereafter be authorized to issue, nor shall any
shareholder possess cumulative voting rights at any shareholders meeting, for
the purpose of electing Directors, or otherwise.
ARTICLE VI. The name and address of the Incorporator of the corporation is
William Stocker, Attorney at Law, 34700 Pacific Coast Highway, Suite 303,
Capistrano Beach CA 92624, phone (949) 248-9561, fax (949) 248-1688. The
affairs of the corporation shall be governed by a Board of Directors of not less
than one (1) nor more than (7) persons. The Incorporator shall act as Sole
Initial Director.
ARTICLE VII. The Capital Stock, after the amount of the subscription price or
par value, shall not be subject to assessment to pay the debts of the
corporation, and no stock issued, as paid up, shall ever be assessable or
assessed.
ARTICLE VIII. The initial By-laws of the corporation shall be adopted by its
Board of Directors. The power to alter, amend or repeal the By-laws, or adopt
new By-laws, shall be vested in the Board of Directors, except as otherwise may
be specifically provided in the By-laws.
24
<PAGE>
I THE UNDERSIGNED, being the Incorporator hereinbefore named for the purpose of
forming a corporation pursuant the General Corporation Law of the State of
Nevada, do make and file these Articles of Incorporation, hereby declaring and
certifying that the facts herein stated are true, and accordingly have set my
hand hereunto this Day,
April 19, 1999
______/s/_______
William Stocker
attorney at law
Incorporator
25
<PAGE>
- --------------------------------------------------------------------------------
EXHIBIT 3.3
BY-LAWS
- --------------------------------------------------------------------------------
26
<PAGE>
BY-LAWS
OF
RICHMOND SERVICES, INC.
A NEVADA CORPORATION
ARTICLE I
CORPORATE OFFICES
The principal office of the corporation in the State of Nevada shall be
located at 774 Mays Blvd. Suite 10, Incline Village NV 89451. The corporation
may have such other offices, either within or without the State of incorporation
as the board of directors may designate or as the business of the corporation
may from time to time require.
ARTICLE II
SHAREHOLDERS' MEETINGS
SECTION 1. PLACE OF MEETINGS
The directors may designate any place, either within or without the State
unless otherwise prescribed by statute, as the place of meeting for any annual
meeting or for any special meeting called by the directors. A waiver of notice
signed by all stockholders entitled to vote at a meeting may designate any
place, either within or without the State unless otherwise prescribed by
statute, as the place for holding such meeting. If no designation is made, or if
a special meeting be otherwise called, the place of meeting shall be the
principal office of the corporation.
SECTION 2. ANNUAL MEETINGS
The time and date for the annual meeting of the shareholders shall be set
by the Board of Directors of the Corporation, at which time the shareholders
shall elect a Board of Directors and transact any other proper business. Unless
the Board of Directors shall determine otherwise, the annual meeting of the
shareholders shall be held on the second Monday of March in each year, if not a
holiday, at Ten o'clock A.M., at which time the shareholders shall elect a Board
of Directors and transact any other proper business. If this date falls on a
holiday, then the meeting shall be held on the following business day at the
same hour.
SECTION 3. SPECIAL MEETINGS
Special meetings of the shareholders may be called by the President, the
Board of Directors, by the holders of at least ten percent of all the shares
entitled to vote at the proposed special meeting, or such other person or
persons as may be authorized in the Articles of Incorporation.
SECTION 4. NOTICES OF MEETINGS
Written or printed notice stating the place, day and hour of the meeting
and, in the case of a special meeting, the purpose or purposes for which the
meeting is called, shall be delivered not less than ten (10) days nor more than
sixty (60) days before the date of the meeting, either personally or by mail, by
the direction of the president, or secretary, or the officer or persons calling
the meeting. If mailed, such notice shall be deemed to be delivered when
deposited in the United States mail, addressed to the stockholder at his address
as it appears on the stock transfer books of the corporation, with postage
thereon prepaid.
Closing of Transfer Books or Fixing Record Date.
(a) For the purpose of determining stockholders entitled to notice of or to
vote at any meeting of stockholders or any adjournment thereof, or stockholders
entitled to receive payment of any dividend, or in order to make a determination
of stockholders for any other proper purpose, the directors of the corporation
may provide that the stock transfer books shall be closed for a stated period
but not to exceed, in any case twenty (20) days. If the stock transfer books be
closed for the purpose of determining stockholders entitled to notice or to vote
at a meeting of stockholders, such books shall be closed for at least twenty
(20) days immediately preceding such meeting.
27
<PAGE>
(b) In lieu of closing the stock transfer books, the directors may
prescribe a day not more than sixty (60) days before the holding of any such
meeting as the day as of which stockholders entitled to notice of the and to
vote at such meeting must be determined. Only stockholders of record on that day
are entitled to notice or to vote at such meeting
(c) The directors may adopt a resolution prescribing a date upon which the
stockholders of record are entitled to give written consent to actions in lieu
of meeting. The date prescribed by the directors may not precede nor be more
than ten (10) days after the date the resolution is adopted by directors.
SECTION 5. VOTING LIST.
The officer or agent having charge of the stock transfer books for the
shares of the corporation shall make, at least ten (10) days before each meeting
of stockholders, a complete list of stockholders entitled to vote at such
meeting, or any adjournment thereof, arranged in alphabetical order, with the
address of and number of shares held by each, which list, for a period of ten
(10) days prior to such meeting, shall be kept on file at the principal office
of the corporation and shall be subject to inspection by any stockholder at any
time during usual business hours. Such list shall also be produced and kept open
at the time and place of the meeting and shall be subject to the inspection of
any stockholder during the whole time of the meeting. The original stock
transfer book shall be prima facie evidence as to who are the stockholders
entitled to examine such list or transfer books or to vote at the meeting of
stockholders.
SECTION 6. QUORUM.
At any meeting of stockholders, a majority of fifty percent plus one vote,
of the outstanding shares of the corporation entitled to vote, represented in
person or by proxy, shall constitute a quorum at a meeting of stockholders. If
less than said number of the outstanding shares are represented at a meeting, a
majority of the outstanding shares so represented may adjourn the meeting from
time to time without further notice. At such adjourned meeting at which a quorum
shall be present or represented, any business may be transacted which might have
been transacted at the meeting originally notified. The stockholders present at
a duly organized meeting may continue to transact business until adjournment,
notwithstanding the withdrawal of enough stockholders to leave less than a
quorum.
SECTION 7. PROXIES.
At all meetings of the stockholders, a stockholder may vote by proxy
executed in writing by the stockholder or by his duly authorized attorney in
fact. Such proxy shall be filed with the secretary of the corporation before or
at the time of the meeting. Such proxies may be deposited by electronic
transmission.
SECTION 8. VOTING.
Each stockholder entitled to vote in accordance with the terms and
provisions of the certificate of incorporation and these by-laws shall be
entitled to one vote, in person or by proxy, for each share of stock entitled to
vote held by such shareholder. Upon the demand of any stockholder, the vote for
directors and upon any question before the meeting shall be by ballot. All
elections for directors shall be decided by plurality vote; all other questions
shall be decided by majority vote except as otherwise provided by the
Certificate of Incorporation or the laws of Nevada.
SECTION 9. ORDER OF BUSINESS.
The order of business at all meetings of the stockholders, shall be as
follows:
a. Roll Call.
b. Proof of notice of meeting or waiver of notice.
c. Reading of minutes of preceding meeting.
d. Reports of Officers.
e. Reports of Committees.
f. Election of Directors.
g. Unfinished Business.
h. New Business.
SECTION 10. INFORMAL ACTION BY STOCKHOLDERS.
Unless otherwise provided by law, any action required to be taken, or any
other action which may be taken, at a meeting of the stockholders, may be taken
without a meeting if a consent in writing, setting forth the action so taken,
shall be signed by all of the stockholders entitled to vote with respect to the
subject matter thereof. Unless otherwise provided by law, any action required to
be taken, or any other action which may be taken, at a meeting of the
stockholders, may be taken without a meeting if a consent in writing, setting
forth the action so taken, shall be signed by a Majority of all of the
stockholders entitled to vote with respect to the subject matter thereof at any
regular meeting called on notice, and if written notice to all shareholders is
promptly given of all action so taken.
SECTION 11. BOOKS AND RECORDS.
The Books, Accounts, and Records of the corporation, except as may be
otherwise required by the laws of the State of Nevada, may be kept outside of
the State of Nevada, at such place or places as the Board of Directors may from
time to time appoint. The Board of Directors shall determine whether and to what
extent the accounts and the books of the corporation, or any of them, other than
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the stock ledgers, shall be open to the inspection of the stockholders, and no
stockholder shall have any right to inspect any account or book or document of
this Corporation, except as conferred by law or by resolution of the
stockholders or directors. In the event such right of inspection is granted to
the Stockholder(s) all fees associated with such inspection shall be the sole
expense of the Stockholder(s) demanding the inspection. No book, account, or
record of the Corporation may be inspected without the legal counsel and the
accountants of the Corporation being present. The fees charged by legal counsel
and accountants to attend such inspections shall be paid for by the Stockholder
demanding the inspection.
ARTICLE III
BOARD OF DIRECTORS
SECTION 1. GENERAL POWERS.
The business and affairs of the corporation shall be managed by its board
of directors. The directors shall in all cases act as a board, and they may
adopt such rules and regulations for the conduct of their meetings and the
management of the corporation, as they may deem proper, not inconsistent with
these by-laws and the laws of this State.
SECTION 2. NUMBER, TENURE, AND QUALIFICATIONS.
The number of directors of the corporation shall be a minimum of one (1)
and a maximum of nine (9), or such other number as may be provided in the
Articles of Incorporation, or amendment thereof. Each director shall hold office
until the next annual meeting of stockholders and until his successor shall have
been elected and qualified.
SECTION 3. REGULAR MEETINGS.
A regular meeting of the directors, shall be held without other notice than
this by-law immediately after, and at the same place as, the annual meeting of
stockholders. The directors may provide, by resolution, the time and place for
holding of additional regular meetings without other notice than such
resolution.
SECTION 4. SPECIAL MEETINGS.
Special meetings of the directors may be called by or at the request of the
president or any two directors. The person or persons authorized to call special
meetings of the directors may fix the place for holding any special meeting of
the directors called by them.
SECTION 5. NOTICE.
Notice of any special meeting shall be given at least one day previously
thereto by written notice delivered personally, or by telegram or mailed to each
director at his business address. If mailed, such notice shall be deemed to be
delivered when deposited in the United States mail so addressed, with postage
thereon prepaid. The attendance of a director at a meeting shall constitute a
waiver of notice of such meeting, except where a director attends a meeting for
the express purpose of objecting to the transaction of any business because the
meeting is not lawfully called or convened.
SECTION 6. QUORUM.
At any meeting of the directors fifty (50) percent shall constitute a
quorum for the transaction of business, but if less than said number is present
at a meeting, a majority of the directors present may adjourn the meeting from
time to time without further notice.
SECTION 7. MANNER OF ACTING.
The act of the majority of the directors present at a meeting at which a
quorum is present shall be the act of the directors.
SECTION 8. NEWLY CREATED DIRECTORSHIPS AND VACANCIES.
Newly created directorships resulting from an increase in the number of
directors and vacancies occurring in the board for any reason except the removal
of directors without cause may be filled by a vote of the majority of the
directors then in office, although less than a quorum exists. Vacancies
occurring by reason of the removal of directors without cause shall be filled by
vote of the stockholders. A director elected to fill a vacancy caused by
resignation, death or removal shall be elected to hold office for the unexpired
term of his predecessor.
SECTION 9. REMOVAL OF DIRECTORS.
Any or all of the directors may be removed for cause by vote of the
stockholders or by action of the board. Directors may be removed without cause
only by vote of the stockholders.
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<PAGE>
SECTION 10. RESIGNATION.
A director may resign at any time by giving written notice to the board,
the president or the secretary of the corporation. Unless otherwise specified in
the notice, the resignation shall take effect upon receipt thereof by the board
or such officer, and the acceptance of the resignation shall not be necessary to
make it effective.
SECTION 11. COMPENSATION.
No compensation shall be paid to directors, as such, for their services,
but by resolution of the board a fixed sum and expenses for actual attendance at
each regular or special meeting of the board may be authorized. Nothing herein
contained shall be construed to preclude any director from serving the
corporation in any other capacity and receiving compensation therefor.
SECTION 12. EXECUTIVE AND OTHER COMMITTEES.
The board, by resolution, may designate from among its members an executive
committee and other committees, each consisting of one (1) or more directors.
Each such committee shall serve at the pleasure of the board.
ARTICLE IV
OFFICERS
SECTION 1. NUMBER.
The officers of the corporation shall be the president, a secretary and a
treasurer, each of whom shall be elected by the directors. Such other officers
and assistant officers as may be deemed necessary may be elected or appointed by
the directors.
SECTION 2. ELECTION AND TERM OF OFFICE.
The officers of the corporation to be elected by the directors shall be
elected annually at the first meeting of the directors held after each annual
meeting of the stockholders. Each officer shall hold office until his successor
shall have been duly elected and shall have qualified or until his death or
until he shall resign or shall have been removed in the manner hereinafter
provided. In the event that no election of officers be held by the directors at
that time, the existing officers shall be deemed to have been confirmed in
office by the directors.
SECTION 3. REMOVAL.
Any officer or agent elected or appointed by the directors may be removed
by the directors whenever in their judgement the best interest of the
corporation would be served thereby, but such removal shall be without prejudice
to contract rights, if any, of the person so removed.
SECTION 4. VACANCIES.
A vacancy in any office because of death, resignation, removal,
disqualification or otherwise, may be filled by the directors for the unexpired
portion of the term.
SECTION 5. PRESIDENT.
The president shall be the principal executive officer of the corporation
and, subject to the control of the directors, shall in general supervise and
control all of the business and affairs of the corporation. He shall, when
present, preside at all meetings of the stockholders and of the directors. He
may sign, with the secretary or any other proper officer of the corporation
thereunto authorized by the directors, certificates for shares of the
corporation, any deeds, mortgages, bonds, contracts, or other instruments which
the directors have authorized to be executed, except in cases where the
directors or by these By-Laws to some other officer or agent of the corporation,
or shall be required by law to be otherwise signed or executed; and in general
shall perform all duties incident to the office of president and such other
duties as may be prescribed by the directors from time to time.
SECTION 6. CHAIRMAN OF THE BOARD.
In the absence of the president or in the event of his death, inability or
refusal to act, the chairman of the board of directors shall perform the duties
of the president, and when so acting, shall have all the powers of and be
subject to all the restrictions upon the president. The chairman of the board of
directors shall perform such other duties as from time to time may be assigned
to him by the directors.
SECTION 7. SECRETARY.
The secretary shall keep the minutes of the stockholders' and of the
directors' meetings in one or more books provided for that purpose, see that all
notices are duly given in accordance with the provisions of these by-laws or as
required, be custodian of the corporate records and of the seal of the
30
<PAGE>
corporation and keep a register of the post office address of each stockholder
which shall be furnished to the secretary by such stockholder, have general
charge of the stock transfer books of the corporation and in general perform all
the duties incident to the office of secretary and such other duties as from
time to time may be assigned to him by the president or by the directors.
SECTION 8. TREASURER.
If required by the directors, the treasurer shall give a bond for the
faithful discharge of his duties in such sum and with such surety or sureties as
the directors shall determine. He shall have charge and custody of and be
responsible for all funds and securities of the corporation; receive and give
receipts for moneys due and payable to the corporation from any source
whatsoever, and deposit all such moneys in the name of the corporation in such
banks, trust companies or other depositories as shall be selected in accordance
with these By-Laws and in general perform all of the duties incident to the
office of treasurer and such other duties as from time to time may be assigned
to him by the president or by the directors.
SECTION 9. SALARIES.
The salaries of the officers shall be fixed from time to time by the
directors and no officer shall be prevented from receiving such salary by reason
of fact that he is also a director of the corporation.
ARTICLE V
CONTRACTS, LOANS, CHECKS AND DEPOSITS
SECTION 1. CONTRACTS.
The directors may authorize any officer or officers, agent or agents to
enter into any contract or execute and deliver any instrument in the name of and
on behalf of the corporation, and such authority may be general or confined to
specific instances.
SECTION 2. LOANS.
No loans shall be contracted on behalf of the corporation and no evidences
of indebtedness shall be issued in its name unless authorized by a resolution of
the directors. Such authority may be general or confined to specific instances.
SECTION 3. CHECKS, DRAFTS, ETC.
All checks, drafts or other orders for the payment of money, notes or other
evidences of indebtedness issued in the name of the corporation, shall be signed
by such officer or officers, agent or agents of the corporation and in such
manner as shall from time to time be determined by resolution of the directors.
SECTION 4. DEPOSITS.
All funds of the corporation not otherwise employed shall be deposited from
time to time to the credit of the corporation in such banks, trust companies or
other depositories as the directors may select.
ARTICLE VI
FISCAL YEAR
The fiscal year of the corporation shall begin on the 1st day of January in
each year, or on such other day as the Board of Directors shall fix.
ARTICLE VII
DIVIDENDS
The directors may from time to time declare, and the corporation may pay,
dividends on its outstanding shares in the manner and upon the terms and
conditions provided by law.
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ARTICLE VIII
SEAL
The directors may provide a corporate seal which shall have inscribed
thereon the name of the corporation, the state of incorporation, year of
incorporation and the words, "Corporate Seal".
ARTICLE IX
WAIVER OF NOTICE
Unless otherwise provided by law, whenever any notice is required to be
given to any stockholder or director of the corporation under the provisions of
these by-laws or under the provisions of the articles of incorporation, a waiver
thereof in writing, signed by the person or persons entitled to such notice,
whether before or after the time stated therein, shall be deemed equivalent to
the giving of such notice.
ARTICLE X
AMENDMENTS
These by-laws may be altered, amended or repealed and new by-laws may be
adopted in the same manner as their adoption, by the Board of Directors if so
adopted; by a vote of the stockholders representing a majority of all the shares
issued and outstanding, if so adopted or adopted by the Board of Directors; or,
in any case, at any annual stockholders' meeting or at any special stockholders'
meeting when the proposed amendment has been set out in the notice of such
meeting.
CERTIFICATION
THE SECRETARY of the Corporation hereby certifies that the foregoing is a
true and correct copy of the By-Laws of the Corporation named in the title
thereto and that such By-Laws were duly adopted by the Board of Directors of
said Corporation on the date set forth below.
EXECUTED, AND CORPORATE SEAL AFFIXED, this day of April 21, 1999.
_____/s/______
Mark Zouvas
President
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<PAGE>
- --------------------------------------------------------------------------------
EXHIBIT F-1
AUDITED FINANCIAL STATEMENTS
FOR YEARS ENDING DECEMBER 31, 1999, 1998
- --------------------------------------------------------------------------------
33
<PAGE>
INDEPENDENT AUDITOR S REPORT
To the Board of Directors and Stockholders of
Richmond Services, Inc.
We have audited the accompanying balance sheet of Richmond Services, Inc. (a
Development Stage Company) as of December 31, 1999 and 1998 and the related
statements of operations, stockholders equity and cash flows for the years then
ended and from inception on June 14, 1993 through December 31, 1999. These
financial statements are the responsibility of the Company s management. Our
responsibility is to express an opinion on these financial statements based on
our audit. The financial statements of Richmond Services, Inc for the period
from inception at June 14, 1993 through December 31, 1997 were audited by other
auditors whose report dated March 31, 1998, expressed an unqualified opinion on
these statements.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we 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.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Richmond Services, Inc. (a
Development Stage Company) as of December 31, 1999 and 1998 and the results of
its operations and cash flows for the years then ended and from inception on
June 14, 1993 through December 31, 1999 in conformity with generally accepted
accounting principles.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note 2 to the
financial statements, the Company is a development stage company with no
significant operating results to date. These conditions raise substantial doubt
about its ability to continue as a going concern. Management s plan in regard
to these matters are also described in Note 2. The financial statements do not
include any adjustments that might result from the outcome of this uncertainty.
______/s/_______
Crouch, Bierwolf & Chisholm
Salt Lake City, Utah
March 16, 2000
34
<PAGE>
Richmond Services, Inc.
(a development Stage Company)
Balance Sheets
<TABLE>
<CAPTION>
<S> <C> <C>
December 31,
1999 1998
- ----------------------------------------------------------------------
ASSETS
Current Assets
Cash $ 269 $ 84
Total Current Assets $ 269 $ 84
Total Assets $ 269 $ 84
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities
Advance from affiliate $ 34,078 $ 6,960
Total Laibilities 34,078 6,960
Stockholders' Equity
Common Stock, authorized
50,000,000 shares of $.0001 par value
authorized, 5,471,850 and 5,171,850
shares issued and outstanding, respectively 505 365
Additional Paid-In Capital 61,703 9,343
Stock Subscription Receivable (100) (100)
Deficit Accumulated During the
Development Stage (95,917) (16,484)
Total Stockholders' Equity (33,809) (6,876)
Total Liabilities and Stockholders' Equity $ 269 $ 84
</TABLE>
The accompanying notes are an integral part of the financial statements.
35
<PAGE>
Richmond Services, Inc.
(a development Stage Company)
Statement of Operations
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
From Inception
On June 14,
1993 through
For the years ended December 31, December 31,
1999 1998 1997 1999
- -------------------------------------------------------------------------------------------------
Revenues $ 0 $ 0 $ 0 $ 0
Expenses:
Amortization & Depreciation 0 500 1,000 5,000
General & Administrative 64,433 3,500 7,984 75,917
Total Expenses 64,433 4,000 8,984 80,917
Other Income (Expense):
Bad Debt (15,000) 0 0 (15,000)
Total Expenses (15,000) 0 0 (15,000)
Net Loss ($79,433) ($4,000) ($8,984) ($95,917)
Net Loss Per Share ($0.02) $ (0.00) $ (0.00) ($0.03)
Weighted Average shares
outstanding 4,814,643 3,502,845 3,442,636 3,377,684
</TABLE>
The accompanying notes are an integral part of the financial statements
36
<PAGE>
Richmond Services, Inc.
(a development Stage Company)
Statement of Stockholders' Equity
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Deficit
Accumulated
Additional Stock During the
Common Stock Paid In Subscription Development
Shares Amount Capital Receivable Stage
- ----------------------------------------------------------------------------------------------------
Balance, June 14, 1993 0 $ 0 $ 0 $ 0 $ 0
Common Stock issued for
organizational costs at $.001
per share June 15, 1993 3,333,333 $ 333 $ 4,667 $ 0 $ 0
Common Stock issued
for stock subscription receivable
at $.001 per share June 15, 1993 66,667 $ 7 $ 93 $ 0 $ 0
Stock subscription receivable 0 $ 0 $ 0 ($100) $ 0
Net Loss from inception to
December 31, 1993 0 $ 0 $ 0 $ 0 ($500)
Balance December 31, 1993 3,400,000 $ 340 $ 4,760 ($100) ($500)
Net Loss for the year ended
December 31, 1994 0 $ 0 $ 0 $ 0 ($1,000)
Balance December 31, 1994 3,400,000 $ 340 $ 4,760 ($100) ($1,500)
Net Loss for the year ended
December 31, 1995 0 $ 0 $ 0 $ 0 ($1,000)
Balance December 31, 1995 3,400,000 $ 340 $ 4,760 ($100) ($2,500)
Net Loss for the year ended
December 31, 1996 0 $ 0 $ 0 $ 0 ($1,000)
Balance December 31, 1996 3,400,000 $ 340 $ 4,760 ($100) ($3,500)
Common Stock issued for
cash at $.022 per share
February 10, 1997 47,900 $ 5 $ 1,603 $ 0 $ 0
Net Loss for the year ended
December 31, 1997
Balance December 31, 1997 0 $ 0 $ 0 $ 0 ($8,984)
3,447,900 $ 345 $ 6,363 ($100) ($12,484)
Common Stock issued for
services at $.001 per share
September 22, 1998 200,000 $ 20 $ 2,980 $ 0 $ 0
Net Loss for the year ended
December 31, 1998 0 $ 0 $ 0 $ 0 ($4,000)
Balance, December 31, 1998 3,647,900 $ 365 $ 9,343 ($100) ($16,484)
Common Stock issued for
Cash t $.0375 per share 1,400,000 $ 140 $ 52,360 $ 0 $ 0
Fractional shares issued in
reverse split 91 $ 0 $ 0 $ 0 $ 0
Net Loss for the year ended
December 31, 1999 0 $ 0 $ 0 $ 0 ($79,433)
Balance, December 31, 1999 5,047,991 $ 505 $ 61,703 ($100) ($95,917)
</TABLE>
The accompanying notes are an integral part of the financial statements
37
<PAGE>
Richmond Services, Inc.
(a development Stage Company)
Statement of Cash Flows
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
From Inception
14-Jun-93
through
For the years ended December 31, December 31,
1999 1998 1997 1999
- ----------------------------------------------------------------------------------------------------
Cash Flows from Operating
Activities:
Loss from operations ($79,433) ($4,000) ($8,984) ($95,917)
Adjustments to reconcile net
loss to net cash used by
operating activities:
Amortization & Depreciation 0 500 1,000 5,000
Stock issued for services 0 3,000 0 3,000
Changes in assets and
Liabilities:
Accounts Payable 27,118 0 0 34,078
Net Cash Provided (Used)
by Operating Activities (52,315) (500) (1,024) (53,839)
Cash Flows from investment
Activities:
Other 0 0 0 0
Net Cash paid for
Investing Activities 0 0 0 0
Cash Flows from Financing
Activities:
Common Stock issued for cash 52,500 0 1,608 54,108
Net Cash Provided by
Financing Activities 52,500 0 0 54,108
Net increase (decrease) in cash 185 (500) 584 269
Cash, beginning of year 84 584 0 0
Cash, end of year $ 269 $ 84 $ 584 $ 269
Cash, paid during
the year for:
Interest $ 0 $ 0 $ 0 $ 0
Income taxes $ 0 $ 0 $ 0 $ 0
Noncash Financing Transactions:
Issuance of common stock
for services $ 0 $ 3,000 $ 0 $ 3,000
</TABLE>
The accompanying notes are an integral part of the financial statements
38
<PAGE>
RICHMOND SERVICES, INC.
(a Development Stage Company)
Notes to the Financial Statements
December 31, 1999 and 1998
NOTE 1 - Summary of Significant Accounting Policies
a. Organization
The Company was incorporated in the State of Delaware on June 14, 1993.
The Company was organized for the purpose of initiating commuter air service
from Sugar Land Airport in Richmond, Texas. The Company now intends to acquire
and operate small niche market air carriers. The Company has been in the
development stage since its formation on June 14, 1993.
b. Accounting Method
The Company s financial statements are prepared using the accrual
method of accounting. The Company has elected a calendar year end.
c. Cash and Cash Equivalents
Cash equivalents include short-term highly liquid investments with
maturities of three months or less at the time of acquisition.
d. Loss Per Share
The computations of loss per share of common stock are based on the
weighted average number of outstanding shares during the period of the financial
statements.
e. Provision for Income Taxes
At December 31, 1999, the Company has net operating loss carryforwards
totaling approximately $95,917 that may be offset against future taxable income
through 2012. No tax benefit has been reported in the 1999 and 1998 financial
statements, because the Company believes there is a 50% or greater chance the
net operating loss carryforwards will expire unused. Accordingly, the potential
tax benefits of the loss carryforwards are offset by a valuation allowance of
the same amount. The valuation allowance increased in the amount of $27,000 and
$1,000 for the years ended December 31, 1999 and 1998, respectively.
f. Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
NOTE 2 - Going Concern
The Company s financial statements are prepared using generally accepted
accounting principles applicable to a going concern which contemplates the
realization of assets and liquidation of liabilities in the normal course of
business. However, the Company has current liabilities in excess of current
assets and has experienced losses from inception. The financial statements do
not include any adjustments that might result from the outcome of these
uncertainties. It is management s plan to find an operating company to merge
with providing necessary operating capital.
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<PAGE>
RICHMOND SERVICES, INC.
(A Development Stage Company)
Notes to the Financial Statements
December 31, 1999 and 1998
NOTE 3 - Shareholders Equity
In September 1998 the Company issued 300,000 shares of its common stock
in exchange for services.
In February 1999 the Company issued 1,400,000 shares of its common
stock for cash of $52,500.
NOTE 4 - Reverse Stock Split
In June 1999, the board of directors authorized a two for three reverse
split of its common stock. These financial statements have been retroactively
restated to reflect the reverse split.
NOTE 5 - Related Party Transactions
During 1999 and 1998, the Company received advances from common
ownership affiliates of $27,118 and $0, respectively. The balance due these
affiliates at December 31, 1999 and 1998 is $34,078 and $6,960, respectively.
