UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
AMENDMENT NO. 2 TO FORM 10-SB
GENERAL FORM FOR REGISTRATION OF SEURITIES OF
SMALL BUSINESS ISSUERS Under Section 12(b) or
(g) of the Securities Exchange Act of 1934
INVESTAMERICA, INC.
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(Name of Small Business Issuer in its charter)
Nevada 87-0400797
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1776 Park Avenue, Park City, Utah 84060
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(Address of principal executive offices) (Zip code)
435-615-8801
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Issuer's telephone number
1330 Portside Way Salt Lake City, Utah 84123
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(Former name or former address, if changed, since last report)
Securities to be registered under section 12(b) of the Act:
Title of Each Class Name on each exchange on which
to be registered each class is to be registered
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Securities to be registered under section 12(g)of the Act:
Common Stock, $0.001 par value per share, 50,000,000 shares authorized,
9,790,443 issued and outstanding as of September 30, 1999. Preferred
Non-Voting Stock, $0.001 par value per share, 5,000,000 shares authorized,
none issued nor outstanding as of September 30, 1999.
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FORWARD LOOKING STATEMENTS
CAUTIONARY NOTICE REGARDING FORWARD LOOKING STATEMENTS
INVESTAMERICA, Inc., ("INVESTAMERICA," or "Company" or "INVT" or the
"Registrant") cautions readers that certain important factors may affect the
Company's actual results and could cause such results to differ materially
from any forward-looking statements that may be deemed to have been made in
this Document or that are otherwise made by or on behalf of the Company. For
this purpose, any statements contained in the Document that are not statements
of historical fact may be deemed to be forward-looking statements. This
Registration contains statements that constitute "forward-looking statements."
These forward-looking statements can be identified by the use of predictive,
future-tense or forward-looking terminology, such as "believes," "anticipates,"
"expects," "estimates," "plans," "may," "will," or similar terms. These
statements appear in a number of places in this Registration and include
statements regarding the intent, belief or current expectations of the
Company, its directors or its officers with respect to, among other things:
(i) trends affecting the Company's financial condition or results of
operations for its limited history; (ii) the Company's business and growth
strategies; (iii) the Company's financing plans.
Investors are cautioned that any such forward-looking statements are not
guarantees of future performance and involve significant risks and
uncertainties, and that actual results may differ materially from those
projected in the forward-looking statements as a result of various factors.
Factors that could adversely affect actual results and performance include,
among others, the Company's limited operating history, potential fluctuations
in quarterly operating results and expenses, government regulation,
technological change and competition.
The accompanying information contained in this Registration, including,
without limitation, the information set forth under the heading "Risk
Factors," "Management's Discussion and Analysis of Financial Condition and
Results of Operations" and "Business" identifies important additional factors
that could materially adversely affect actual results and performance. All of
these factors should be carefully considered and evaluated. All forward-
looking statements attributable to the Company are expressly qualified in
their entirety by the foregoing cautionary statement. Any forward-looking
statements in this report should be evaluated in light of these important risk
factors. The Company is also subject to other risks detailed herein or set
forth from time to time in the Company's filings with the Securities and
Exchange Commission.
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INFORMATION REQUIRED IN REGISTRATION STATEMENT
Part I ......................................................... 4
Item 1. Description of Business.................................. 4
Item 2. Management's Discussion and Analysis or Plan of
Operation................................................ 19
Item 3. Description of Property.................................. 21
Item 4. Security Ownership of Management and Others and Certain
Security Holders......................................... 21
Item 5. Directors, Executives, Officers and Significant
Employees................................................ 22
Item 6. Remuneration of Directors and Executive
Officers................................................. 25
Item 7. Certain Relationships and Related Transactions........... 26
Part II ......................................................... 27
Item 1. Market Price of and Dividends of the Registrant's
Common Equity and Other Stockholder Matters.............. 27
Item 2. Legal Proceedings........................................ 30
Item 3. Recent Sales of Unregistered Securities.................. 30
Item 4. Description of Securities................................ 31
Item 5. Indemnification of Directors and Officers................ 33
Part F/S ......................................................... 35
Item 1. Financial Statements..................................... 35
Item 2. Changes in and Disagreements With Accountants on
Accounting and Financial Disclosure..................... 35
Part III ........................................................ 38
Item 1. Index to Exhibits....................................... 38
Item 2. Description of Exhibits................................. 38
The following summary is qualified in its entirety by, and should be read in
conjunction with, the more detailed information and the Financial Statements
and Notes related thereto appearing elsewhere in this Registration. Except
where the context otherwise requires, all references in this Registration to
the "Registrant" or the "Company" or "INVT" refer to INVESTAMERICA, INC., a
Nevada corporation.
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Part I
Item 1. DESCRIPTION OF BUSINESS
A. Business Development, Organization and Acquisition Activities
The Company was incorporated under the laws of the State of Utah, on October
20, 1983. On or about December 18, 1986, the Company changed its domicile
from the State of Utah to the State of Nevada. This change in domicile was
accomplished by merging the Company into a Nevada corporation (File Number 8210-
1986) created solely for this purpose. This was filed with the Secretary of
State of Nevada pursuant to an Agreement and Plan of Merger and Reorganization
(see Exhibit 2.1) executed on December 18, 1986. In connection with the change
in domicile, the Company changed its corporate name from Technology Research,
Inc., to Balboa Investments, Inc. on December 18, 1986. On or about December
29, 1992, Balboa Investments, Inc., changed its name to Progressive Polymerics
International, Inc. (Parent) and acquired all of the issued and outstanding
common stock of Progressive Polymerics, Inc., (Subsidiary). On or about
April 17, 1997, the Company acquired 100% of the issued and outstanding
capital stock of InvestAmerica, Inc., thereby making it a wholly-owned
subsidiary. On or about May 14, 1997, the stockholders of the Company,
approved the merger of InvestAmerica, Inc., a wholly-owned subsidiary, with
and into the Company, with the Company the survivor of the merger. A change
of the Company's name to InvestAmerica, Inc., was also approved at that
time. During all of this transition, the Company has not commenced planned
principal operations and is considered a development stage company. The
Company is seeking selected merger candidates and acquisitions. The
Company's mailing address is: 1776 Park Avenue, Park City, Utah 84060,
Phone: 435-615-8801.
1) Principal Products, Services and Principal Markets.
InvestAmerica, Inc. (the "Company") was originally incorporated
on October 20, 1983 as Balboa Investments, Inc. under the laws of the State
of Utah to engage in any lawful corporate activity, including, but not limited
to, selected mergers and acquisitions. After a number of name changes as
described in " Business Development, Organization and Acquisition Activities,"
on or about May 14, 1997, the Company changed its name to InvestAmerica, Inc.
The Company has been in the developmental stage since inception and has no
Principal operations to date. Other than issuing shares to its shareholders,
the Company never commenced any operational activities. As such, the Company's
sole purpose at this time is to locate and consummate a merger or acquisition
with a private entity. The Board of Directors of the Company has elected to
commence implementation of the Company's principal business purpose described
below under "Item 2 - Plan of Operation."
The company has no operations and in accordance with SFAS #7, is considered a
development stage company.
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The Company is filing this registration statement to enhance investor
protection and to provide information if a trading market commences. On
December 11, 1997, the National Association of Securities Dealers, Inc.
(NASD) announced that its Board of Governors had approved a series of proposed
changes for the Over The Counter ("OTC") Bulletin Board and the OTC market.
The principal changes, which was approved by the Securities and Exchange
Commission on January 5, 1999 allows only those companies that report their
current financial information to the Securities and Exchange Commission,
banking, or insurance regulators to be quoted on the OTC Bulletin Board.
The rule provides for a phase-in period for those securities already quoted
on the OTC Bulletin Board. The Company stock is currently trading on the
OTC-BB under the symbol "INVT."
The Company is filing this registration statement in accordance with the
requirements of NASD Rule 6740, in that it will remain a primary vehicle
as a merger partner or acquisition vehicle utilizing its status as a public
company. Any business combination or transaction will likely result in a
significant issuance of shares and substantial dilution to present
stockholders of the Company.
A. Risk Factors
The Company's business is subject to numerous risk factors, including
the following:
1. Lack of History. The Company has had no operating history nor any
revenues or earnings from operations. The Company has no significant assets or
financial resources. The Company will, in all likelihood, sustain operating
expenses without corresponding revenues, at least until the consummation of a
business combination. This may result in the Company incurring a net operating
loss which will increase continuously until the Company can consummate a
business combination with a profitable business opportunity. There is no
assurance that the Company can identify such a business opportunity and
consummate such a business combination.
2. The Company's Speculative Proposed Operations. The success of the
Company's proposed plan of operation will depend to a great extent on the
operations, financial condition and management of the identified business
opportunity. While management intends to seek business combination(s) with
entities having established operating histories, there can be no assurance
that the Company will be successful in locating candidates meeting such
criteria. In the event the Company completes a business combination, of which
there can be no assurance, the success of the Company's operations may be
dependent upon management of the successor firm or venture partner firm and
numerous other factors beyond the Company's control.
3. Scarcity of and Competition for Business Opportunities and
Combinations. The Company is and will continue to be an insignificant
participant in the business of seeking mergers with, joint ventures with and
acquisitions of small private and public entities. A large number of
established and well-financed entities, including venture capital firms, are
active in mergers and acquisitions of companies which may be desirable target
candidates for the Company. Nearly all such entities have significantly
greater financial resources, technical expertise and managerial capabilities
than the Company and, consequently, the Company will be at a competitive
disadvantage in identifying possible business opportunities and successfully
completing a business combination. Moreover, the Company will also compete in
seeking merger or acquisition candidates with numerous other small public
companies.
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4. No Defined Standards for Business Combination. The Company has no
arrangement, agreement or understanding with respect to engaging in a merger
with, joint venture with or acquisition of, a private or public entity. There
can be no assurance the Company will be successful in identifying and
evaluating suitable business opportunities or in concluding a business
combination. Management has not identified any particular industry or specific
business within an industry for evaluation by the Company. There is no
assurance the Company will be able to negotiate a business combination on
terms favorable to the Company. The Company has not established a specific
length of operating history or a specified level of earnings, assets, net
worth or other criteria which it will require a target business opportunity to
have achieved, and without which the Company would not consider a business
combination in any form with such business opportunity. Accordingly, the
Company may enter into a business combination with a business opportunity
having no significant operating history, losses, limited or no potential for
earnings, limited assets, negative net worth or other negative characteristics.
5. Management Control, Limited Time Availability. While seeking a
business combination, management anticipates devoting up to ten hours per
month to the business of the Company. None of the Company's officers has
entered into a written employment agreement with the Company and none is
expected to do so in the foreseeable future. The Company has not obtained key
man life insurance on any of its officers or directors. Notwithstanding the
combined limited experience and time commitment of management, loss of the
services of any of these individuals would adversely affect development of the
Company's business and its likelihood of continuing operations. See "Item
5 -Directors, Executive Officers, Promoters and Control Persons."
6. Possible Conflicts of Interest. Officers and directors of the
Company may in the future participate in business ventures which could be
deemed to compete directly with the Company. Additional conflicts of interest
and non-arms length transactions may also arise in the future in the event the
Company's officers or directors are involved in the management of any firm
with which the Company transacts business. Management has adopted a policy
that the Company will not seek a merger with, or acquisition of, any entity in
which management serve as officers, directors or partners, or in which they or
their family members own or hold any ownership interest.
7. Reporting Requirements May Delay or Preclude Acquisitions. Sections
13 and 5(d) of the Securities Exchange Act of 1934 (the "1934 Act"), require
companies subject thereto to provide certain information about significant
acquisitions, including certified financial statements for the company
acquired, covering one, two, or three years, depending on the relative size of
the acquisition. The time and additional costs that may be incurred by some
target entities to prepare such statements may significantly delay or
essentially preclude consummation of an otherwise desirable acquisition by the
Company. Acquisition prospects that do not have or are unable to obtain the
required audited statements may not be appropriate for acquisition so long as
the reporting requirements of the 1934 Act are applicable.
8. Lack of Market Research or Marketing Organization. The Company has
neither conducted, nor have others made available to it, results of market
research indicating that market demand exists for the transactions
contemplated by the Company. Moreover, the Company does not have, and does not
plan to establish, a marketing organization. Even in the event demand is
identified for a merger or acquisition contemplated by the Company, there is
no assurance the Company will be successful in completing any such business
combination.
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9. Lack of Diversification. The Company's proposed operations, even if
successful, will in all likelihood result in the Company engaging in a
business combination with a business opportunity. Consequently, the Company's
activities may be limited to those engaged in by business opportunities which
the Company merges with or acquires. The Company's inability to diversify its
activities into a number of areas may subject the Company to economic
fluctuations within a particular business or industry and therefore increase
the risks associated with the Company's operations.
10. Regulation. Although the Company will be subject to regulation
under the 1934 Act, management believes the Company will not be subject to
regulation under the Investment Company Act of 1940, insofar as the Company
will not be engaged in the business of investing or trading in securities. In
the event the Company engages in business combinations which result in the
Company holding passive investment interests in a number of entities, the
Company could be subject to regulation under the Investment Company Act of
1940. In such event, the Company would be required to register as an
investment company and could be expected to incur significant registration and
compliance costs. The Company has obtained no formal determination from the
Securities and Exchange Commission as to the status of the Company under the
Investment Company Act of 1940 and, consequently, any violation of such Act
would subject the Company to material adverse consequences.
11. Probable Change in Control and Management. A business combination
involving the issuance of the Company's Common Shares will, in all likelihood,
result in shareholders of a private company obtaining a controlling interest
in the Company. Any such business combination may require management of the
Company to sell or transfer all or a portion of the Company's Common Shares
held by them, or resign as members of the Board of Directors of the Company.
The resulting change in control of the Company could result in removal of one
or more present officers and directors of the Company and a corresponding
reduction in or elimination of their participation in the future affairs of
the Company.
12. Reduction of Percentage Share Ownership Following Business
Combination. The Company's primary plan of operation is based upon a business
combination with a private concern which, in all likelihood, would result in
the Company issuing securities to shareholders of any such private company.
The issuance of previously authorized and unissued Common Shares of the
Company would result in reduction in percentage of shares owned by present and
prospective shareholders of the Company and may result in a change in control
or management of the Company.
13. Disadvantages of Acquisitions. The Company may enter into
a business combination with an entity that desires to establish a public
trading market for its shares. A business opportunity may attempt to avoid
what it deems to be adverse consequences of undertaking its own public
offering by seeking a business combination with the Company. Such consequences
may include, but are not limited to, time delays of the registration process,
significant expenses to be incurred in such an offering, loss of voting
control to public shareholders and the inability or unwillingness to comply
with various federal and state laws enacted for the protection of investors.
14. Taxation. Federal and state tax consequences will, in all
likelihood, be major considerations in any business combination the Company
may undertake. Currently, such transactions may be structured so as to result
in tax-free treatment to both companies, pursuant to various federal and state
tax provisions. The Company intends to structure any business combination so
as to minimize the federal and state tax consequences to both the Company and
the target entity; however, there can be no assurance that such business
combination will meet the statutory requirements of a tax-free reorganization
or that the parties will obtain the intended tax-free treatment upon a
transfer of stock or assets. A non-qualifying reorganization could result in
the imposition of both federal and state taxes which may have an adverse
effect on both parties to the transaction.
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15. Requirement of Audited Financial Statements May Disqualify
Business Opportunities. Management of the Company believes that any potential
business opportunity must provide audited financial statements for review, for
the protection of all parties to the business combination. One or more
attractive business opportunities may choose to forego the possibility of a
business combination with the Company, rather than incur the expenses
associated with preparing audited financial statements.
16. Dilution. Any merger or acquisition effected by the Company can be
expected to have a significant dilutive effect on the percentage of shares
held by the Company's then shareholders.
17. Required Year 2000 Compliance. A business combination will, in all
likelihood, result in the Company disclosing additional Year 2000 matters.
Many existing computer programs use only two digits to identify a year in the
date field. These programs were designed and developed without considering
the impact of the upcoming change in the century. If not corrected, many
computer applications could fail or create erroneous results by or at the Year
2000. The Year 2000 issue affects virtually all companies and organizations.
18. Disclosure by Public Companies Regarding the Year 2000 Issue. A
business combination will, in all likelihood, result in the Company disclosing
additional Year 2000 matters. Many existing computer programs use only two
digits to identify a year in the date field. These programs were designed
and developed without considering the impact of the upcoming change in the
century. If not corrected, many computer applications could fail or create
erroneous results by or at the Year 2000. The Year 2000 issue affects
virtually all companies and organizations.
Management of the Company believes that any potential business opportunity may
require a disclosure that many companies must undertake major project to
address the Year 2000 issue. The disclosure of the potential costs and
uncertainties will depend on a number of factors, including its software and
hardware and the nature of its industry. Companies also must coordinate with
other entities with which they electronically interact, both domestically and
globally, including suppliers, customers, creditors, borrowers, and financial
service organizations. If the Company does not successfully address its
Year 2000 issues, the Company may face material adverse consequences. The
Company will be required to review, on an ongoing basis, whether it needs to
disclose anticipated costs, problems and uncertainties associated with the
Year 2000 consequences, particularly in their filings with the Securities
and Exchange Commission. The Company may have to disclose this information
in the Securities and Exchange Commissions filings because (i) the form or
report may require the disclosure, or (ii) in addition to the information that
the Company is specifically required to disclose, the disclosure rules require
disclosure of any additional material information necessary to make the
required disclosure not misleading.
If the Company determines that is should make a Year 2000 disclosure,
applicable rules or regulations must be followed. If the Company has not
made an assessment of its Year 2000 issues or has not determined whether it
has material Year 2000 issues, a disclosure of this known uncertainty is
required. In addition, the Securities and Exchange Commission staff believes
that the determination as to whether the Company's Year 2000 issues should
be disclosed should be based on whether the Year 2000 issues are material
to the Company's business, operations, or financial condition, without regard
to related countervailing circumstances (such as Year 2000 remediation
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programs or contingency plans). If the Year 2000 issues are determined to
be material, without regard to countervailing circumstances, the nature and
potential impact of the Year 2000 issues as well as the countervailing
circumstances will be required. As part of this disclosure, the following
will be addressed:
The Company's general plans to address the Year 2000 issues relating to its
business, it operations (including operating systems) and, if material, its
relationships with customers, suppliers, and other constituents; and its
timetable for carrying out those plans; and
The total dollar amount that the Company estimates will be spent to remediate
its year 2000 issues, if such amount is expected to be material to the
Company's business, operations or financial condition, and any material impact
these expenditures are expected to have on the Company's results of operations,
liquidity and capital resources.
B. Plan of Operation
NOTE REGARDING PROJECTIONS AND FORWARD LOOKING STATEMENTS
This statement includes projections of future results and "forward-looking
statements" as that term is defined in Section 27A of the Securities Act of
1933 as amended (the "Securities Act"), and Section 21E of the Securities
Exchange Act of 1934 as amended (the "Exchange Act"). All statements that
are included in this Registration Statement, other than statements of
historical fact, are forward-looking statements. Although Management believes
that the expectations reflected in these forward-looking statements are
reasonable, it can give no assurance that such expectations will prove to have
been correct. Important factors that could cause actual results to differ
materially from the expectations are disclosed in this Statement, including,
without limitation, in conjunction with those forward-looking statements
contained in this Statement.
The Company's plan is to seek, investigate, and if such investigation
warrants, acquire an interest in one or more business opportunities presented
to it by persons or firms desiring the perceived advantages of a publicly
held corporation. The Company intends to seek to acquire assets or shares
of an entity actively engaged in business which generates revenues in exchange
for its securities. The Company has no particular acquisitions in mind and has
not entered into any negotiations regarding such an acquisition. None of the
Company's officers, directors, promoters or affiliates have engaged in any
preliminary contact or discussions with any representative of any other
company regarding the possibility of an acquisition or merger between the
Company and such other company as of the date of this registration statement.
The Company will not restrict its search to any specific business, industry, or
geographical location, and may participate in business ventures of virtually
any kind or nature. Discussion of the proposed business under this caption
and throughout this Registration Statement is purposefully general and is not
meant to restrict the Company's virtually unlimited discretion to search for
and enter into a business combination.
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1. General Business Plan
The Company's purpose is to seek, investigate and, if such
investigation warrants, acquire an interest in business opportunities
presented to it by persons or firms who or which desire to seek the advantages
of an Issuer who has complied with the 1934 Act. The Company will not restrict
its search to any specific business, industry, or geographical location and
the Company may participate in a business venture of virtually any kind or
nature. This discussion of the proposed business is purposefully general and
is not meant to be restrictive of the Company's virtually unlimited discretion
to search for and enter into potential business opportunities. Management
anticipates that it may be able to participate in only one potential business
venture because the Company has nominal assets and limited financial
resources. See Item F/S, "Financial Statements." This lack of diversification
should be considered a substantial risk to shareholders of the Company because
it will not permit the Company to offset potential losses from one venture
against gains from another.
Selecting a business opportunity will be complex and extremely risky. Because
of general economic conditions, rapid technological advances being made in
some industries, and shortages of available capital, management believes that
there are numerous firms seeking the benefits of a publicly-traded corporation.
Such perceived benefits of a publicly traded corporation may include
facilitating or improving the terms on which additional equity financing
may be sought, providing liquidity for the principals of a business, creating
a means for providing incentive stock options or similar benefits to key
employees, providing liquidity (subject to restrictions of applicable statues)
for all shareholders, and other items. Potentially available business
opportunities 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.
Management believes that the Company may be able to benefit from the use of
"leverage" to acquire a target company. Leveraging a transaction involves
acquiring a business while incurring significant indebtedness for a large
percentage of the purchase price of that business. Through leveraged
transactions, the Company would be required to use less of its available
funds to acquire a target company and, therefore, could commit those funds
to the operations of the business, to combinations with other target
companies, or to other activities. The borrowing involved in a leveraged
transaction will ordinarily be secured by the assets of the acquired
business. If that business is not able to generate sufficient revenues to
make payments on the debt incurred by the Company to acquire that business,
the lender would be able to exercise the remedies provided by law or by
contract. These leveraging techniques, while reducing the amount of funds
that the Company must commit to acquire a business, may correspondingly
increase the risk of loss to the Company. No assurance can be given as
to the terms or availability of financing for any acquisition by the Company.
During periods when interest rates are relatively high, the benefits of
leveraging are not as great as during periods of lower interest rates,
because the investment in the business held on a leveraged basis will only
be profitable if it generates sufficient revenues to cover the related debt
and other costs of the financing. Lenders from which the Company may obtain
funds for purposes of a leveraged buy-out may impose restrictions on the
future borrowing, distribution, and operating policies of the Company. It
is not possible at this time to predict the restrictions, if any, which
lenders may impose, or the impact thereof on the Company.
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The Company has insufficient capital with which to provide the owners of
businesses significant cash or other assets. Management believes the
Company will offer owners of businesses the opportunity to acquire a
controlling ownership interest in a public company at substantially less
cost than is required to conduct an initial public offering. The owners
of the businesses will, however, incur significant post-merger or acquisition
registration costs in the event they wish to register a portion of their
shares for subsequent sale. The Company will also incur significant legal
and accounting costs in connection with the acquisition of a business
opportunity, including the costs of preparing post-effective amendments,
Forms 8-K, agreements, and related reports and documents. Nevertheless,
the officers and directors of the Company have not conducted market research
and are not aware of statistical data which would support the perceived
benefits of a merger or acquisition transaction for the owners of a
businesses. The Company does not intend to make any loans to any prospective
merger or acquisition candidates or to unaffiliated third parties.
The Company will not restrict its search for any specific kind of firms,
but may acquire a venture which is in its preliminary or development stage,
which is already in operation, or in essentially any stage of its corporate
life. It is impossible to predict at this time the status of any business
in which the Company may become engaged, in that such business may need to
seek additional capital, may desire to have its shares publicly traded,
or may seek other perceived advantages which the Company may offer. However,
the Company does not intend to obtain funds in one or more private placements
to finance the operation of any acquired business opportunity until such
time as the Company has successfully consummated such a merger or acquisition.
The Company also has no plans to conduct any offerings under Regulation S.
The Company will not have sufficient funds to undertake any significant
development, marketing, and manufacturing of any products which may be
acquired. Accordingly, if it acquires the rights to a product, rather than
entering into a merger or acquisition, it most likely would need to seek debt
or equity financing or obtain funding from third parties, in exchange for
which the Company would probably be required to give up a substantial portion
of its interest in any acquired product. There is no assurance that the Company
will be able either to obtain additional financing or to interest third parties
in providing funding for the further development, marketing and manufacturing
of any products acquired.
The Company may seek a business opportunity with entities which have
recently commenced operations, or which wish to utilize the public marketplace
in order to raise additional capital in order to expand into new products or
markets, to develop a new product or service, or for other corporate purposes.
The Company may acquire assets and establish wholly owned subsidiaries in
various businesses or acquire existing businesses as subsidiaries.
The Company anticipates that the selection of a business opportunity
in which to participate will be complex and extremely risky. Due to general
economic conditions, rapid technological advances being made in some
industries and shortages of available capital, management believes that there
are numerous firms seeking the benefits of an Issuer who has complied with the
1934 Act. Such benefits may include facilitating or improving the terms on
which additional equity financing may be sought, providing liquidity for
incentive stock options or similar benefits to key employees, providing
liquidity (subject to restrictions of applicable statutes), for all
shareholders and other factors. Potentially, available business opportunities
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.
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The Company has, and will continue to have, no capital with which to
provide the owners of business opportunities with any significant cash or
other assets. However, management believes the Company will be able to offer
owners of acquisition candidates the opportunity to acquire a controlling
ownership interest in an Issuer who has complied with the 1934 Act without
incurring the cost and time required to conduct an initial public offering.
The owners of the business opportunities will, however, incur significant
legal and accounting costs in connection with acquisition of a business
opportunity, including the costs of preparing Form 8-K's, 10-K's or 10-KSB's,
agreements and related reports and documents. The 1934 Act, specifically
requires that any merger or acquisition candidate comply with all applicable
reporting requirements, which include providing audited financial statements
to be included within the numerous filings relevant to complying with the 1934
Act. Nevertheless, the officers and directors of the Company have not
conducted market research and are not aware of statistical data which would
support the benefits of a merger or acquisition transaction for the owners of
a business opportunity.
The analysis of new business opportunities will be undertaken by, or
under the supervision of, the officers and directors of the Company, none of
whom is a professional business analyst. Management intends to concentrate on
identifying preliminary prospective business opportunities which may be
brought to its attention through present associations of the Company's
officers and directors, or by the Company's shareholders. In analyzing
prospective business opportunities, management will consider such matters as
the available technical, financial and managerial resources; working capital
and other financial requirements; history of operations, if any; prospects for
the future; nature of present and expected competition; the quality and
experience of management services which may be available and the depth of that
management; the potential for further research, development, or exploration;
specific risk factors not now foreseeable but which then may be anticipated to
impact the proposed activities of the Company; the potential for growth or
expansion; the potential for profit; the public recognition of acceptance of
products, services, or trades; name identification; and other relevant
factors. Officers and directors of the Company expect to meet personally with
management and key personnel of the business opportunity as part of their
investigation. To the extent possible, the Company intends to utilize written
reports and personal investigation to evaluate the above factors. The Company
will not acquire or merge with any company for which audited financial
statements cannot be obtained within a reasonable period of time after closing
of the proposed transaction.
Management of the Company, while not especially experienced in matters
relating to the new business of the Company, will rely upon their own efforts
in accomplishing the business purposes of the Company. It is not anticipated
that any outside consultants or advisors will be utilized by the Company to
effectuate its business purposes described herein. However, if the Company
does retain such an outside consultant or advisor, any cash fee by such party
will need to be paid by the prospective merger acquisition candidate, as the
Company has no cash assets with which to pay such obligation. There have been
no contracts or agreements with any outside consultants and none are
anticipated in the future.
It is anticipated that the Company will incur nominal expenses in the
implementation of its business plan described herein. Because the Company has
no capital with which to pay these anticipated expenses, present management of
the Company will pay these charges with their personal funds, as interest free
loans to the Company or as capital contributions. However, if loans, the only
opportunity which management has to have these loans repaid will be from a
prospective merger or acquisition candidate. Management has agreed among
themselves that the repayment of any loans made on behalf of the Company will
not impede, or be made conditional in any manner, to consummation of a
proposed transaction. The Company has no plans, proposals, arrangements or
understandings with respect to the sale or issuance of additional securities
prior to the location of an acquisition or merger candidate.
13
<PAGE>
The Company has no plans, proposals, arrangements, or understanding
with respect to the sale or issuance of additional securities prior to the
location of an acquisition or merger candidate.
2. Acquisition of Opportunities
In implementing a structure for a particular business acquisition, the
Company may become a party to a merger, consolidation, reorganization, joint
venture, or licensing agreement with another corporation or entity. It may
also acquire stock or assets of an existing business. On the consummation of a
transaction, it is probable that the present management and shareholders of
the Company will no longer be in control of the Company. In addition, the
Company's directors may, as part of the terms of the acquisition transaction,
resign and be replaced by new directors without a vote of the Company's
shareholders or may sell their stock in the Company. Any terms of sale of the
shares presently held by officers and/or directors of the Company will be also
afforded to all other shareholders of the Company on similar terms and
conditions. Any and all such sales will only be made in compliance with the
securities laws of the United States and any applicable state.
It is anticipated that any securities issued in any such reorganization
would be issued in reliance upon exemption from registration under applicable
federal and state securities laws. In some circumstances, however, as a
negotiated element of its transaction, the Company may agree to register all
or a part of such securities immediately after the transaction is consummated
or at specified times thereafter. If such registration occurs, of which there
can be no assurance, it will be undertaken by the surviving entity after the
Company has successfully consummated a merger or acquisition and the Company
is no longer considered a "shell" company. The issuance of substantial
additional securities and their potential sale into any trading market which
may develop in the Company's securities may have a depressive effect on the
value of the Company's securities in the future, if such a market develops, of
which there is no assurance.
While the actual terms of a transaction to which the Company may be a
party cannot be predicted, it may be expected that the parties to the business
transaction will find it desirable to avoid the creation of a taxable event
and thereby structure the acquisition in a so-called "tax-free" reorganization
under Sections 368(a)(1) or 351 of the Internal Revenue Code (the "Code"). In
order to obtain tax-free treatment under the Code, it may be necessary for the
owners of the acquired business to own 80% or more of the voting stock of the
surviving entity. In such event, the shareholders of the Company, would retain
less than 20% of the issued and outstanding shares of the surviving entity,
which would result in significant dilution in the equity of such shareholders.
As part of the Company's investigation, officers and directors of the
Company will meet personally with management and key personnel, may visit and
inspect material facilities, obtain independent analysis of verification of
certain information provided, check references of management and key
personnel, and take other reasonable investigative measures, to the extent of
the Company's limited financial resources and management expertise. The manner
in which the Company participates in an opportunity will depend on the nature
of the opportunity, the respective needs and desires of the Company and other
parties, the management of the opportunity and the relative negotiation
strength of the Company and such other management.
14
<PAGE>
With respect to any merger or acquisition, negotiations with target
company management is expected to focus on the percentage of the Company which
the target company shareholders would acquire in exchange for all of their
shareholdings in the target company. Depending upon, among other things, the
target company's assets and liabilities, the Company's shareholders will in
all likelihood hold a substantially lesser percentage ownership interest in
the Company following any merger or acquisition. The percentage ownership may
be subject to significant reduction in the event the Company acquires a target
company with substantial assets. Any merger or acquisition effected by the
Company can be expected to have a significant dilutive effect on the
percentage of shares held by the Company's then shareholders.
The Company will participate in a business opportunity only after the
negotiation and execution of appropriate written agreements. Although the
terms of such agreements cannot be predicted, generally such agreements will
require some specific representations and warranties by all of the parties
thereto, will specify certain events of default, will detail the terms of
closing and the conditions which must be satisfied by each of the parties
prior to and after such closing, will outline the manner of bearing costs,
including costs associated with the Company's attorneys and accountants, will
set forth remedies on default and will include miscellaneous other terms.
As stated hereinabove, the Company will not acquire or merge with any
entity which cannot provide independent audited financial statements within a
reasonable period of time after closing of the proposed transaction. The
Company is subject to all of the reporting requirements included in the 1934
Act. Included in these requirements is the affirmative duty of the Company to
file independent audited financial statements as part of its Form 8-K to be
filed with the Securities and Exchange Commission upon consummation of a
merger or acquisition, as well as the Company's audited financial statements
included in its annual report on Form 10-K (or 10-KSB, as applicable). If such
audited financial statements are not available at closing, or within time
parameters necessary to insure the Company's compliance with the requirements
of the 1934 Act, or if the audited financial statements provided do not
conform to the representations made by the candidate to be acquired in the
closing documents, the closing documents will provide that the proposed
transaction will be voidable, at the discretion of the present management of
the Company. If such transaction is voided, the agreement will also contain a
provision providing for the acquisition entity to reimburse the Company for
all costs associated with the proposed transaction.
With respect to any mergers or acquisitions, negotiations with target company
management will be expected to focus on the percentage of the Company which
the target company's shareholders would acquire in exchange for their
shareholdings in the target company. Depending upon, among other things, the
target company's assets and liabilities, the Company's shareholders will, in
all likelihood, hold a lesser percentage ownership interest in the Company
following any merger or acquisition. The percentage ownership may be subject
to significant reduction in the event the Company acquires a target company
with substantial assets. Any merger or acquisition effected by the Company
can be expected to have a significant dilutive effect on the percentage of
shares held by the Company's then shareholders, including purchasers in
this offering.
15
<PAGE>
Management has advanced, and will continue to advance, funds which shall be
used by the Company in identifying and pursuing agreements with target
companies. Management anticipates that these funds will be repaid from the
proceeds of any agreement with the target company, and that any such agreement
may, in fact, be contingent upon the repayment of those funds.
3. Competition
The Company will remain an insignificant participant among the firms
which engage in the acquisition of business opportunities. There are many
established management and financial consulting companies and venture capital
firms which have significantly greater financial and personnel resources and
technical expertise than the Company. In view of the Company's combined
extremely limited financial resources and limited management availability,
the Company will continue to be at a significant competitive disadvantage
compared to the Company's competitors.
4. Sources of Opportunities
The Company will seek a potential business opportunity from all known sources,
but will rely principally on personal contacts of its officers and directors
as well as indirect associations between them and other business and
professional people. It is not presently anticipated that the Company will
engage professional firms specializing in business acquisitions or
reorganizations.
Management, while not especially experienced in matters relating to the new
business of the Company, will rely upon their own efforts and, to a much
lesser extent, the efforts of the Company's shareholders, in accomplishing
the business purposes of the Company. It is not anticipated that any outside
consultants or advisors, other than the Company's legal counsel and
accountants, will be utilized by the Company to effectuate its business
purposes described herein. However, if the Company does retain such an outside
consultant or advisor, any cash fee earned by such party will need to be paid
by the prospective merger/acquisition candidate, as the Company has no cash
assets with which to pay such obligation. There have been no discussions,
understandings, contracts or agreements with any outside consultants and none
are anticipated in the future. In the past, the Company's management has
never used outside consultants or advisors in connection with a merger or
acquisition.
As is customary in the industry, the Company may pay a finder's fee for
locating an acquisition prospect. If any such fee is paid, it will be approved
by the Company's Board of Directors and will be in accordance with the
industry standards. Such fees are customarily between 1% and 5% of the size
of the transaction, based upon a sliding scale of the amount involved. Such
fees are typically in the range of 5% on a $1,000,000 transaction ratably
down to 1% in a $4,000,000 transaction. Management has adopted a policy that
such a finder's fee or real estate brokerage fee could, in certain
circumstances, be paid to any employee, officer, director or 5% shareholder
of the Company, if such person plays a material role in bringing a transaction
to the Company.
16
<PAGE>
5. Evaluation of Opportunities
The analysis of new business opportunities will be undertaken by or under the
supervision of the officers and directors of the Company (see "Management").
Management intends to concentrate on identifying prospective business
opportunities which may be brought to its attention through present
associations with management. In analyzing prospective business opportunities,
management will consider, among other factors, such matters as; the available
technical, financial and managerial resources working capital and other
financial requirements history of operation, if any prospects for the future
present and expected competition the quality and experience of management
services which may be available and the depth of that management the potential
for further research, development or exploration specific risk factors not now
foreseeable but which then may be anticipated to impact the proposed activities
of the Company the potential for growth or expansion the potential for profit
the perceived public recognition or acceptance of products, services or trades
name identification Management will meet personally with management and key
personnel of the firm sponsoring the business opportunity as part of their
investigation. To the extent possible, the Company intends to utilize written
reports and personal investigation to evaluate the above factors. The Company
will not acquire or merge with any company for which audited financial
statements cannot be obtained.
Opportunities in which the Company participates will present certain risks,
many of which cannot be identified adequately prior to selecting a specific
opportunity. The Company's shareholders must, therefore, depend on Management
to identify and evaluate such risks. Promoters of some opportunities may have
been unable to develop a going concern or may present a business in its
development stage (in that it has not generated significant revenues from
its principal business activities prior to the Company's participation.)
Even after the Company's participation, there is a risk that the combined
enterprise may not become a going concern or advance beyond the development
stage. Other opportunities may involve new and untested products, processes,
or market strategies which may not succeed. Such risks will be assumed by the
Company and, therefore, its shareholders.
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 as
well as substantial costs for accountants, attorneys, and others. If a
decision is made not to participate in a specific business opportunity the
costs incurred in the related investigation would not be recoverable.
Furthermore, even if an agreement is reached for the participation in a
specific business opportunity, the failure to consummate that transaction
may result in the loss by the Company of the related costs incurred.
There is the additional risk that the Company will not find a suitable target.
Management does not believe the Company will generate revenue without finding
and completing a transaction with a suitable target company. If no such target
is found, therefore, no return on an investment in the Company will be
realized, and there will not, most likely, be a market for the Company's stock.
17
<PAGE>
6. Investment Company Act of 1940
Although the Company will be subject to regulation under the
Securities Act of 1933, as amended, and the 1934 Act, management believes the
Company will not be subject to regulation under the Investment Company Act of
1940 insofar as the Company will not be engaged in the business of investing
or trading in securities. In the event the Company engages in business
combinations which result in the Company holding passive investment interests
in a number of entities, the Company could be subject to regulation under the
Investment Company Act of 1940. In such event, the Company would be required
to register as an investment company and could be expected to incur
significant registration and compliance costs. The Company has obtained no
formal determination from the Securities and Exchange Commission as to the
status of the Company under the Investment Company Act of 1940 and,
consequently, any violation of such Act would subject the Company to material
adverse consequences. The Company's Board of Directors unanimously approved a
resolution stating that it is the Company's desire to be exempt from the
Investment Company Act of 1940 under Regulation 3a-2 thereto.
7. Employees. The Company has no full time or part-time employees. None of
the officers and directors anticipates devoting more than twenty (20%) percent
of their time to Company activities. The Company's President and Secretary have
agreed to allocate a portion of said time to the activities of the Company,
without compensation. These officers anticipate that the business plan of the
Company can be implemented by their devoting minimal time per month to the
business affairs of the Company and, consequently, conflicts of interest may
arise with respect to the limited time commitment by such officers. See
"Item 5 - Directors, Executive Officers, Promoters and Control Persons -
Resumes."
18
<PAGE>
Item 2
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF PLAN OF OPERATIONS
Forward Looking Statements
This registration statement contains forward-looking statements. The Company's
expectation of results and other forward-looking statements contained in this
registration statement involve a number of risks and uncertainties. Among the
factors that could cause actual results to differ materially from those
expected are the following: business conditions and general economic
conditions, competitive factors, such as pricing and marketing efforts; and
the pace and success of product research and development. These and other
factors may cause expectations to differ.
All statements, trend analysis and other information contained in this
Registration relative to markets for the Company's products and trends in
revenues, gross margin and anticipated expense levels, as well as other
statements including words such as "believe," "anticipate," "expect,"
"estimate," "plan" and "intend" and other similar expressions, constitute
forward-looking statements. Those forward-looking statements are subject to
business and economic risks, and the Company's actual results of operations
may differ from those contained in the forward-looking statements.
The following discussion of the financial condition and results of operations
of the Company should also be read in conjunction with the Financial
Statements and Notes related thereto included elsewhere in this Registration.
1) Plan of Operations
The Company's purpose is to seek, investigate and, if such investigation
warrants, acquire an interest in business opportunities presented to it by
persons or firms who or which desire to seek the advantages of an Issuer who
has complied with the 1934 Act. The Company will not restrict its search to
any specific business, industry, or geographical location and the Company may
participate in a business venture of virtually any kind or nature. This
discussion of the proposed business is purposefully general and is not meant
to be restrictive of the Company's virtually unlimited discretion to search
for and enter into potential business opportunities. Management anticipates
that it may be able to participate in only one potential business venture
because the Company has nominal assets and limited financial resources.
2) In its twelve month operating period ended September 30, 1999, the Company
incurred a net loss of two hundred fifty-six thousand eight hundred sixty-five
($256,865) dollars from operating expenses. The Company generated no revenues
from operations from the same period.
19
<PAGE>
On September 30, 1996, the Company had 8,386,760 shares of common stock
outstanding. 0n or about April 17, 1997, the Company initiated a reverse
stock split of its common stock twenty (20) old share for one (1) new share.
This reverse split resulted in 419,338 shares of its common stock outstanding
on or about April 17, 1997. Prior to becoming listed on the NASD Bulletin
Board, the Company completed an exempt placement of securities of 362,544
Shares of common stock, pursuant to a Regulation D, Rule 504 exempt offering,
resulting in gross proceeds of $13,000. During 1998, the company sold an
additional 9,008,561 of its common shares resulting in gross proceeds of
$387,592. As of September 30, 1999, the Company has 9,790,443 shares of common
stock issued and outstanding held by approximately four hundred twenty-six
(426) shareholders of record.
The Company granted a ten (10) year option to purchase 1,000,000 common shares
at $.10 per share as a part of settlement agreement. The warrants expire ten
(10) years from the date of issue. This option has not yet been exercised.
The Company currently does not have enough available funds to meet its
anticipated needs for working capital, capital expenditures and business
expansion for the next 12 months. The Company expects that it will continue
to experience negative operating cash flow for the foreseeable future as a
result of significant spending on infrastructure and seeking acquisition
and merger candidates.
If the Company needs to raise additional funds in order to fund expansion,
develop new or enhanced services or products, respond to competitive
pressures or acquire complementary products, businesses or technologies, any
additional funds raised through the issuance of equity or convertible debt
securities, the percentage ownership of the stockholders of the Company will
be reduced, stockholders may experience additional dilution and such
securities may have rights, preferences or privileges senior to those of the
Company's Common Stock. The Company does not currently have any contractual
restrictions on its ability to incur debt and, accordingly, the Company could
incur significant amounts of indebtedness to finance its operations. Any
such indebtedness could contain covenants which would restrict the Company's
operations. There can be no assurance that additional financing will be
available on terms favorable to the Company, or at all. If adequate funds
are not available or are not available on acceptable terms, the Company may
not be able to continue in business, or to a lessor extent not be able to
take advantage of acquisition opportunities, develop or enhance services
or products or respond to competitive pressures.
3) No engineering, management or similar report has been prepared or provided
for external use by the Company in connection with the offer of its securities
to the public.
4) Management believes that the Company's future growth and success will
depend on its ability to find to negotiate a business acquisition or a
merger, consolidation, reorganization, joint venture, or licensing agreement
with another corporation or entity. It may also acquire stock or assets of an
existing business.
The Company has yet to incur any research and development costs October 1
through September 30, 1999. The only research and development the Company
plans to incur is seeking appropriate merger and acquisition candidates.
20
<PAGE>
(5) Management does not anticipate any significant changes in the number of
its employees over the next approximately twelve (12) months.
B. Segment Data
For fiscal year, ended September 30, 1999, 1998, and 1997, no sales
revenue has been generated by the Company. There is no table showing
percentage breakdown of revenue by business segment or product line is
included.
ITEM 3. DESCRIPTION OF PROPERTY
One of the Officers of the Company is providing office space and computer
use at no cost to the Company. The Company currently does not expect to
purchase or sell any of its equipment, since it owns no equipment. The
computer equipment to be utilized is equipment owned by the Officers of the
Company.
Management believes that this is currently suitable for the Company's needs
for the next twelve (12) months.
ITEM 4. SECURITIES OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information regarding the beneficial
ownership of the shares of Common Stock of the Company as of the end of the
fiscal year, 1999, by (i) each person who is known by the Company to be the
beneficial owner of more than five percent (5%) of the issued and outstanding
shares of common stock, (ii) each of the Company's directors and executive
officers, and (iii) all directors and executive officers as a group.
<TABLE>
<CAPTION>
Title Name & Address Amount of Percent
of of Beneficial Date shares of
Class Owner of Shares Acquired held by Owner Class
- ------ --------------- -------- ------------- --------
<S> <C> <C> <C> <C>
Common Douglas E. Smith(1) n/a None 0.00%
Common Brian Kitts(2) 05-07-98 12,500
10-05-99 2,000,000 20.55%
- ---------------------------------------------------------------------
All Executive Officers Beneficial Owners
and Directors as a Group (2 persons) 2,012,500 20.55 %
</TABLE>
(1) Douglas E. Smith, President/CEO and Chairman of the Board, #148 - 4664
Lougheed Highway, Burnaby, B.C. Canada.
(2) Brian A. Kitts, Secretary, Treasurer and Director, 1330 Portside Way, Salt
Lake City, UT 84123. Note, Christopher Kitts, son of Brian A. Kitts
beneficially owns 100,000 shares of the Company's common stock.
21
<PAGE>
B. Persons Sharing Ownership of Control of Shares
Brian Kitts, Corporate Secretary, Treasurer, and Director, owns or shares the
power to vote ten percent (10%) or more of the Company's securities.
C. Non-voting Securities and Principal Holders Thereof
The Company has not issued any non-voting securities.
D. Options, Warrants and Rights
The Company issued warrants to purchase 190,000 shares of Common Stock as
follows:
50,000 shares @ $ .05 per share
50,000 shares @ $ .10 per share
20,000 shares @ $ .20 per share
50,000 shares @ $ 1.00 per share
20,000 shares @ $ 5.00 per share
The warrants expire 10 years from date of issue.
The Company granted a ten (10) year option to purchase 1,000,000 common shares
at $.10 per share as a part of settlement agreement. This option has not yet
been exercised. (See: Management's Discussion And Analysis of Plan of
Operations)
E. Parents of Issuer
Under the definition of parent, as including any person or business entity
who controls substantially all (more than 80%) of the issuers of common
stock, the Company has no parents.
ITEM 5. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS
A. Directors, Executive Officers and Significant Employees
The listed officers and directors will serve until the next annual meeting of
the shareholders or until their death, resignation, retirement, removal, or
disqualification, or until their successors have been duly elected and
qualified. Vacancies in the existing Board of Directors are filled by majority
vote of the remaining Directors. There are no agreements or understandings for
any officers or director to resign at the request of another person and no
officer or director is acting on behalf of or will act at the direction on any
other person. A list of the current officers and directors of the Company
appears below. The officers serve at the pleasure of the Board of Directors.
The directors do not presently receive fees or other remuneration for their
services save for the reimbursement of travel and accommodation expenses
directly associated with the attendance of Board meetings.
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<PAGE>
The names, ages and positions of the Company's directors and executive
officers are as follows:
<TABLE>
<CAPTION>
Name Age Position
- -------- ------ ----------
<S> <C> <C>
Douglas E. Smith 44 President/CEO
Chairman of the Board
Brian A. Kitts 44 Secretary Treasurer and Director
</TABLE>
B. Family Relationships
None - Not Applicable
C. Work Experience
Douglas E. Smith is President, CEO and Chairman of the Board for InvestAmerica,
Inc., and cofounder in 1980 of Zed Data Systems Corp., a private company
operating as a value added reseller in the field of data communications.
He is also CEO and President of Pacific Bancorp Inc. (June 1993 to present),
a venture capital and merchant banking company. From June 1993 to October
1996, he held various positions as Chairman, CEO and President of Trionics
industries Ltd. (now Comptec Industries Ltd.). Prior to November 1998 he was
an Attorney and a partner in a law firm. He is still a member of the Law
Society of British Columbia.
Mr. Smith has a Bachelor of Arts (Honoris) in Economics from the University
of Calgary and a Bachelor of Laws from the University of British Columbia.
Brian A. Kitts, Secretary Treasurer and Director, of InvestAmerica, Inc.
Mr. attended school in 1975 completing his studies in Architectural Design at
which time he joined his fathers business (Commercial Photography, Exhibit
Design & Manufacturing). After learning the basics of business management he
became self-employed and founded his own company (Beechwood Design) in 1983, a
private company that specialized in Store Fixture design and manufacturing.
The company had 4 employees when it started with sales in the first
year of approximately $300,000 and grew to a high of 140 employees with
sales of approximately $7,000,000 in 1995 at which time Mr. Kitts sold the
company to pursue other interests. Mr. Kitts still maintains a foothold in the
industry as a consultant for various clients and manufacturers.
In 1996 Mr. Kitts gained interest in public trading companies and in
December, 1997 he purchased a controlling interest in InvestAmerica, Inc.
23
<PAGE>
Conflicts of Interest
Members of the Company's management are associated with other firms
involved in a range of business activities. Consequently, there are potential
inherent conflicts of interest in their acting as officers and directors of
the Company. Insofar as the officers and directors are engaged in other
business activities, management anticipates it will devote only a minor amount
of time to the Company's affairs.
The officers and directors of the Company are now and may in the
future become shareholders, officers or directors of other companies which may
be engaged in business activities similar to those conducted by the Company.
Accordingly, additional direct conflicts of interest may arise in the future
with respect to such individuals acting on behalf of the Company or other
entities. Moreover, additional conflicts of interest may arise with respect to
opportunities which come to the attention of such individuals in the
performance of their duties or otherwise. The Company does not currently have
a right of first refusal pertaining to opportunities that come to management's
attention insofar as such opportunities may relate to the Company's proposed
business operations.
The officers and directors are, so long as they are officers or
directors of the Company, subject to the restriction that all opportunities
contemplated by the Company's plan of operation which come to their attention,
either in the performance of their duties or in any other manner, will be
considered opportunities of, and be made available to the Company and the
companies that they are affiliated with on an equal basis. A breach of this
requirement will be a breach of the fiduciary duties of the officer or
director. If the Company or the companies in which the officers and directors
are affiliated with both desire to take advantage of an opportunity, then said
officers and directors would abstain from negotiating and voting upon the
opportunity. However, all directors may still individually take advantage of
opportunities if the Company should decline to do so. Except as set forth
above, the Company has not adopted any other conflict of interest policy with
respect to such transactions.
D. Involvement on Certain Material Legal Proceedings During the Last Five
Years.
(1) No director, officer, significant employee or consultant has been
convicted in a criminal proceeding, exclusive of traffic violations.
(2) No bankruptcy petitions have been filed by or against any business or
property of any director, officer, significant employee or consultant of the
Company nor has any bankruptcy petition been filed against a partnership or
business association where these persons were general partners or executive
officers.
(3) No director, officer, significant employee or consultant has been
permanently or temporarily enjoined, barred, suspended or otherwise limited
from involvement in any type of business, securities or banking activities.
(4) No director, officer or significant employee has been convicted of
violating a federal or state securities or commodities law.
24
<PAGE>
(5) The directors serve for a term of one year, as stated in the Company's
By-laws, the directors are elected at the annual meeting of the stockholders
which shall be held on the third Friday in February.
Members of the Board of Directors hold office and serve until the next annual
meeting of the shareholders of the Company or until their respective
successors have been elected and qualified. Executive officers are appointed
by and serve at the discretion of the Board of Directors. The Company's
directors do not currently receive any cash compensation for service on the
Board of Directors save for the reimbursement of travel and accommodation
expenses directly associated with the attendance of Board meetings.
ITEM 6. EXECUTIVE COMPENSATION
A. Remuneration of Directors and Executive Officers
The following table sets forth the cash and noncash compensation paid by the
Company to its Chief Executive Officer and all other executive officers for
services rendered during the fiscal year ended September 30, 1999.
<TABLE>
<CAPTION>
Annual Compensation
Deferred
Name Position Salary Bonus Salary
- ------- - --------- ---------- ------ ---------
<S> <C> <C> <C> <C>
Douglas E. Smith(1) President/CEO 0 0 0
Brian Kitts(1) Secretary/
Treasurer/
Director 0 0 0
</TABLE>
(1) The Company entered into Compensation agreement with its key officers.
The key terms of the agreement include:
"4.1 No employee shall receive Total Direct Compensation for any year of
employment greater than twenty-five (25) times the wages paid to the lowest
paid full time employee, using the lowest hourly wage rate for a 40-hour week
for a 52-week year. Example: The lowest paid full time employee earns $6.72
per hour. For a 40-hour week, that is $268.80, which for a 52-week year is
$13,977.60. The limitation for Total Direct Compensation is $349,440,
calculated as 25 times $13,977.60.
4.2 No employee who receives fixed-base compensation in excess of twelve and
one-half (12.5) times the hourly wage rate paid to the lowest paid full time
employee shall also receive commission-based compensation in an amount which,
when combined with the fixed-base compensation, exceeds the restriction under
4.1 above.
4.3 Except as provided in 4.2 above, there shall be no limitation on
commission-based compensation payable to any employee of InvestAmerica, Inc.
provided that the variable basis selected to measure the employee's performance
is reasonably related to such employee's responsibilities (ability to affect
such basis) and the commission calculation reasonably reflects such employee's
contribution to the basis, and the commission rate is commercially reasonable.
25
<PAGE>
4.4 The limitations imposed by Paragraphs 4.1 and 4.2 shall be increased for
non-U.S. based employees to the extent that the cost-of-living at the non-U.S.
base exceeds the equivalent cost in the United states." (See Exhibit 10.1
"--Compensation Plan.")
The Company has also adopted a "Key Employee Stock Option Plan, the key terms
of this Plan state:
"6. Price. The purchase price per share of Common Stock purchasable under
options granted pursuant to the Plan shall not be less than 100 percent of the
fair market value at the time the options are granted. The purchase price per
share of Common Stock purchasable under options granted pursuant to this Plan
to a person who owns more than ten percent (10%) of the voting power of the
Corporation's vesting stock shall not be less than 110 percent of the fair
market value of such shares, at the time the options are granted." (See Exhibit
10.2 "--Key Employee Stock Option Plan.")
B. Compensation of Directors
There were no arrangements pursuant to which any director of the Company was
compensated for any service provided as a director. In addition, no such
arrangement is contemplated for the foreseeable future as the Company's only
directors are its current executive officers.
ITEM 7. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
There have been no transactions since the beginning of fiscal year 1999, or
any currently proposed transactions, or series of similar transactions, to
which the Company was or is to be a party, in which the amount involved
exceeds $60,000, and in which any of the officers, or directors, or holders of
over 5% of the Company's stock have or will have any direct or indirect
material interest. The Company does not currently have any policy toward
entering into any future transactions with related parties.
There have been no related party transactions, or any other transactions or
relationships required to be disclosed pursuant to Item 404 of Regulation S-B.
The Board of Directors has passed a resolution which contains a policy that
the Company will not seek an acquisition or merger with any entity in which
any of the Company's Officers, Directors, principal shareholders or their
affiliates or associates serve as officer or director or hold any ownership
interest. Management is not aware of any circumstances under which this policy
may be changed through their own initiative.
26
<PAGE>
PART II
ITEM 1. MARKET PRICE OF AND DIVIDENDS OF THE REGISTRANT'S COMMON EQUITY AND
OTHER STOCKHOLDER MATTERS
A. Market Information
(1) The Company's common stock is listed and trading on the NASD Over The
Counter Bulletin Board under trading symbol INVT.
CERTAIN MARKET INFORMATION
The Company's Common Stock is traded on the OTC Bulletin Board under the
symbol "INVT" and commenced its trading under that symbol on or about
May 25, 1997. The following table sets forth the high and low bid quotations
for the Common Stock for the periods indicated. These quotations reflect
prices between dealers, do not include retail mark-ups, mark-downs, and
commissions and may not necessarily represent actual transactions. These bid
quotations have not been adjusted retroactively by any stock split.
<TABLE>
<CAPTION>
Common Stock
PERIOD HIGH LOW
- ------ ---- ---
<S> <C> <C>
Calendar Year 1998
- ------------------
Fourth Quarter ended 12/31/99 $0.05 $0.01
Calendar Year 1999
- ------------------
First Quarter ended 3/31/99 $0.04 $0.01
Second Quarter ended 6/30/99 $0.04 $0.01
Third Quarter ended 9/30/99 $0.18 $0.01
</TABLE>
(2)(i) There is currently no Common Stock which is subject to outstanding
options or warrants to purchase, or securities convertible into, the Company's
Common Stock.
(ii) There are currently 327,564 shares common Stock of the Company, owned
by approximately one hundred seventy-two shareholders which could be sold
under Rule 144 under the Securities Act of 1933, as amended.
(iii) There is currently no common equity that is being or is proposed to be
publicly offered by the registrant, the offering of which could have a
material effect on the market price of the issuer's common equity.
B. Dividends
The Company has not paid any cash dividends since its inception and does not
contemplate paying any in the foreseeable future. It is anticipated that
earnings, if any, will be retained for the operation of the Company's
business.
27
<PAGE>
C. Holders
As of September 30, 1999, the Company has approximately four hundred twenty-
six (426) stockholders of common stock on record.
On April 17, 1997, the Company reverse-split its Common Stock twenty (20)
old share for one (1) new Share. This represented 8,386,760 common shares
reversed to 419,338 common Shares. The Company subsequently issued another
362,544 common shares for gross proceeds of $13,000; and 9,008,561 common
shares for gross proceeds of $387,592. There are currently 9,790,443 common
shares issued and outstanding. All of the issued and outstanding shares of the
Company's Common Stock were issued in accordance with the exemption from
registration afforded by Section 4(2) of the Securities Act of 1933, as amended.
As of the date of this registration statement, 327,564 shares of the
Company's Common Stock are eligible for sale under Rule 144 promulgated under
the Securities Act of 1933, as amended, subject to certain limitations
included in said Rule, owned by approximately 172 shareholders. In general,
under Rule 144, a person (or persons whose shares are aggregated), who has
satisfied a one year holding period, under certain circumstances, may sell
within any three-month period a number of shares which does not exceed the
greater of one percent of the then outstanding Common Stock or the average
weekly trading volume during the four calendar weeks prior to such sale. Rule
144 also permits, under certain circumstances, the sale of shares without any
quantity limitation by a person who has satisfied a two-year holding period and
who is not, and has not been for the preceding three months, an affiliate of
the Company.
D. Reports to Shareholders
The Company intends to furnish its shareholders with annual reports containing
audited financial statements and such other periodic reports as the Company
may determine to be appropriate or as may be required by law. Upon the
effectiveness of this Registration Statement, the Company will be required to
comply with periodic reporting, proxy solicitation and certain other
requirements by the Securities Exchange Act of 1934.
E. Transfer Agent and Registrar
The Transfer Agent for the shares of common voting stock of the Company is
Olde Monmouth Stock Transfer Company Inc., 77 Memorial Parkway, Atlantic
Highlands, NJ 07716.
28
<PAGE>
F. OTHER STOCKHOLDER MATTERS
The Securities and Exchange Commission adopted Rule 15g-9, which established
the definition of a "penny stock," for purposes relevant to the Company, as
any equity security that has a market price of less than $5.00 per share or
with an exercise price of less than $5.00 per share, subject to certain
exceptions. For any transaction involving a penny stock, unless exempt, the
rules require: (i) that a broker or dealer approve a person's account for
transactions in penny stocks; and (ii) the broker or dealer receive from the
investor a written agreement to the transaction, setting forth the identity
and quantity of the penny stock to be purchased. In order to approve a person's
account for transactions in penny stocks, the broker or dealer must (i) obtain
financial information and investment experience and objectives of the person;
and (ii) make a reasonable determination that the transactions in penny stocks
are suitable for that person and that person has sufficient knowledge and
experience in financial matters to be capable of evaluating the risks of
transactions in penny stocks. The broker or dealer must also deliver, prior to
any transaction in a penny stock, a disclosure schedule prepared by the
Commission relating to the penny stock market, which, in highlight form,
(i) sets forth the basis on which the broker or dealer made the suitability
determination; and (ii) that the broker or dealer received a signed, written
agreement from the investor prior to the transaction. Disclosure also has to
be made about the risks of investing in penny stock in both public offering and
in secondary trading, and about commissions payable to both the broker-dealer
and the registered representative, current quotations for the securities and
the rights and remedies available to an investor in cases of fraud in penny
stock transactions. Finally, monthly statements have to be sent disclosing
recent price information for the penny stock held in the account and
information on the limited market in penny stocks.
For the initial listing in the NASDAQ SmallCap market, a company must
have net tangible assets of $4 million or market capitalization of $50 million
or a net income (in the latest fiscal year or two of the last fiscal years) of
$750,000, a public float of 1,000,000 shares with a market value of $5
million. The minimum bid price must be $4.00 and there must be 3 market
makers. In addition, there must be 300 shareholders holding 100 shares or
more, and the company must have an operating history of at least one year or a
market capitalization of $50 million.
For continued listing in the NASDAQ SmallCap market, a company must
have net tangible assets of $2 million or market capitalization of $35 million
or a net income (in the latest fiscal year or two of the last fiscal years) of
$500,000, a public float of 500,000 shares with a market value of $1 million.
The minimum bid price must be $1.00 and there must be 2 market makers. In
addition, there must be 300 shareholders holding 100 shares or more.
Management intends to strongly consider undertaking a transaction with
any merger or acquisition candidate which will allow the Company's securities
to be traded without the aforesaid limitations. However, there can be no
assurances that, upon a successful merger or acquisition, the Company will
qualify its securities for listing on NASDAQ or some other national exchange,
or be able to maintain the maintenance criteria necessary to insure continued
listing. The failure of the Company to qualify its securities or to meet the
relevant maintenance criteria after such qualification in the future may result
in the discontinuance of the inclusion of the Company's securities on a
national market exchange. As a result, a shareholder may find it more
difficult to dispose of, or to obtain accurate quotations as to the market
value of, the Company's securities.
29
<PAGE>
ITEM 2. LEGAL PROCEEDINGS
The Company settled a lawsuit with a former consultant to the Company. Terms
of the settlement called for a payment of $80,000 and the issuance of 525,000
shares of the Company's Common stock. At the time of the issuance, the shares
had a market value of $.50 per share. The settlement resulted in a loss of
$342,000. There are no other litigations pending or threatened by or against
the Company.
ITEM 3. RECENT SALES OF UNREGISTERED SECURITIES
The Company has not issued any of its securities during the two year
period preceding the date of this registration statement. All of the shares of
Common Stock of the Company previously issued have been issued for investment
purposes in a "private transaction" and are "restricted" shares as defined in
Rule 144 under the Securities Act of 1933, as amended. These shares may not be
offered for public sale except under Rule 144, or otherwise, pursuant to said
Act.
In summary, Rule 144 applies to affiliates (that is, control persons)
and nonaffiliates when they resell restricted securities (those purchased from
the issuer or an affiliate of the issuer in nonpublic transactions).
Nonaffiliates reselling restricted securities, as well as affiliates selling
restricted or nonrestricted securities, are not considered to be engaged in a
distribution and, therefore, are not deemed to be underwriters as defined in
Section 2(11), if six conditions are met:
(1) Current public information must be available about the issuer
unless sales are limited to those made by non-affiliates after two years.
(2) When restricted securities are sold, generally there must be a
one-year holding period.
(3) When either restricted or nonrestricted securities are sold by
an affiliate after one year, there are limitations on the amount of
securities that may be sold; when restricted securities are sold
by non-affiliates between the first and second years, there are
identical limitations; after two years, there are no volume
limitations for resales by non-affiliates.
(4) Except for sales of restricted securities made by non-affiliates
after two years, all sales must be made in brokers' transactions
as defined in Section 4(4) of the Securities Act of 1933, as
amended, or a transaction directly with a "market maker" as that
term is defined in Section 3(a)(38) of the 1934 Act.
(5) Except for sales of restricted securities made by non-affiliates
after two years, a notice of proposed sale must be filed for all
sales in excess of 500 shares or with an aggregate sales price
in excess of $10,000.
(6) There must be a bona fide intention to sell within a reasonable
time after the filing of the notice referred to in (5) above.
30
<PAGE>
The Company's shares of Common Stock are not registered with the U.S.
Securities and Exchange Commission under the Securities Act of 1933, as
amended (hereinafter referred to as the "Act"), and with the exception of
certain shares issued pursuant to Regulation D-504, are "restricted
securities." Rule 144 of the Act provides, in essence, that holders of
restricted securities for a period of one year (unless an affiliate of the
Company) may, every three months, sell to a market maker or in ordinary
brokerage transactions an amount equal to one percent of the Company's
then outstanding securities. Affiliates may be required to hold for two
years. Non affiliates of the Company who hold restricted securities for a
period of two years may sell their securities without regard to volume
limitations or other restriction. A total of 7,450,379 shares are
unrestricted and the balance of common shares i. e., 2,340,064 are restricted.
Sales of shares of Common Stock under Rule 144 may have a depressive effect on
the market price of the Company's Common Stock, should a public market develop
for such stock. Such sales might also impede future financing by the Company.
Since its inception in 1983, the Company has not paid cash dividends on its
Common Stock. It is the present policy of the Company not to pay cash
dividends and to retain future earnings to support the Company's growth. Any
payments of cash dividends in the future will be dependent upon, among other
things, the amount of funds available therefor, the Company's earnings,
financial condition, capital requirements, and other factors which the Board
of Directors deem relevant. As of September 30, 1999 there were approximately
four hundred twenty-six (426) Common Shareholders of record.
Private Placements
On September 30, 1996, the Company had 8,386,760 shares of common stock
outstanding. 0n or about April 17, 1997, the Company initiated a reverse
stock split of its common stock twenty (20) old share for one (1) new share.
This reverse split resulted in 419,338 shares of its common stock outstanding
on or about April 17, 1997. Prior to becoming listed on the NASD Bulletin
Board, the Company completed an exempt placement of securities of 362,544
Shares of common stock, pursuant to a Regulation D, Rule 504 exempt offering,
resulting in gross proceeds of $13,000. During 1998, the company sold an
additional 9,008,561 of its common shares resulting in gross proceeds of
$387,592. As of September 30, 1999, the Company has 9,790,443 shares of common
stock issued and outstanding held by approximately four hundred twenty-six
(426) shareholders of record.
ITEM 4. DESCRIPTION OF SECURITIES
A. Common Stock
The Company is authorized to issue 50,000,000 shares of Common Stock, at $0.001
par value, of which, as of 9,790,443 shares are issued and outstanding and held
of record by approximately four hundred twenty-six (426) stockholders at
Sept 30, 1999, per information as supplied by the Company's Transfer Agent,
Olde Monmouth Stock Transfer Company Inc. The Company can not indicate the
number of shareholders which exist outside of those who have requested physical
delivery of shares or are trading the stock on a daily basis, with any degree
of accuracy. Holders of shares of Common Stock are entitled to one vote per
share on all matters to be voted upon by the stockholders generally. The
approval of proposals submitted to stockholders at a meeting other than for the
election of directors requires the favorable vote of a majority of the shares
voting, except in the case of certain fundamental matters (such as certain
amendments to the Certificate of Incorporation, and certain mergers and
reorganizations), in which cases Nevada law and the Company's By-Laws require
the favorable vote of at least a majority of all outstanding shares.
31
<PAGE>
Stockholders are entitled to receive such dividends as may be declared from
time to time by the Board of Directors out of funds legally available
therefor, and in the event of liquidation, dissolution or winding up of the
Company to share ratably in all assets remaining after payment of liabilities.
The holders of shares of Common Stock have no preemptive, conversion,
subscription or cumulative voting rights.
(1) Description of Rights and Liabilities of Common Stockholders
i. Dividend Rights - The holders of outstanding shares of common stock are
entitled to receive dividends out of assets legally available therefore at
such times and in such amounts as the Board of Directors of the Company may
from time to time determine. The board of directors of the Company will
review its dividend policy from time to time to determine the desirability and
feasibility of paying dividends after giving consideration the Company's
earnings, financial condition, capital requirements and such other factors as
the board may deem relevant.
ii. Voting Rights - Each holder of the Company's common stock are entitled
to one vote for each share held of record on all matters submitted to the vote
of stockholders, including the election of directors. All voting is
noncumulative, which means that the holder of fifty percent (50%) of the
shares voting for the election of the directors can elect all the directors.
The board of directors may issue shares for consideration of previously
authorized but unissued common stock without future stockholder action.
Shares of Common Stock do not have cumulative voting rights, which means that
the holders of a majority of the shareholder votes eligible to vote and voting
for the election of the Board of Directors can elect all members of the Board
of Directors. There are a total of 20,000,000 authorized regular common
shares.
iii. Liquidation Rights - Upon liquidation, the holders of the common stock
are entitled to receive pro rata all of the assets of the Company available
for distribution to such holders.
iv. Preemptive Rights - Holders of common stock are not entitled to
preemptive rights.
v. Conversion Rights - No shares of common stock are currently subject to
outstanding options, warrants, or other convertible securities.
vi. Redemption rights - no redemption rights exist for shares of common
stock.
vii. Sinking Fund Provisions - No sinking fund provisions exist.
viii. Further Liability For Calls - No shares of common stock are subject to
further call or assessment by the issuer. The Company has not issued stock
options as of the date of this registration statement.
(2) Potential Liabilities of Common Stockholders to State and Local
Authorities
No material potential liabilities are anticipated to be imposed on stockholders
under state statutes. Certain Nevada regulations, however, require regulation
of beneficial owners of more than 5% of the voting securities. Stockholders
that fall into this category, therefore, may be subject to fines in
circumstances where non-compliance with these regulations are established.
32
<PAGE>
B. Preferred Stock
The Company has 5,000,000 shares of Preferred Non-Voting Stock at $0.001 par
Value authorized with none issued nor outstanding.
C. Debt Securities
The Company is not registering any debt securities, nor are any outstanding.
D. Other Securities To Be Registered
The Company is not registering any security other than its Common Stock.
ITEM 5. INDEMNIFICATION OF DIRECTORS AND OFFICERS
The Amended Articles of Incorporation for the Company do contain provisions
for indemnification of the officers and directors; in addition, Section 78.751
of the Nevada General Corporation Laws provides as follows: 78.751
Indemnification of officers, directors, employees and agents; advance of
expenses.
1) A corporation may indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending or completed action,
suit or proceeding, whether civil, criminal, administrative or investigative,
except an action by or in the right of the corporation, by reason of the fact
that he is or was a director, officer, employee or agent of the corporation,
or is or was serving at the request of the corporation as a director, officer,
employee or agent of another corporation, partnership, joint venture, trust or
other enterprise, against expenses, including attorney's fees, judgments,
fines and amounts paid in settlement actually and reasonably incurred by him
in connection with the action, suitor proceeding if he acted in good faith and
in a manner which he reasonably believed to be in or not opposed to the best
interests of the corporation, and, with respect to any criminal action or
proceeding, had no reasonable cause to believe his conduct was unlawful. The
termination of any action, suit or proceeding by judgment, order, settlement,
conviction, or upon a plea of nolo contendere or its equivalent, does not, of
itself, create a presumption that the person did not act in good faith and in
a manner which he reasonably believed to be in or not opposed to the best
interests of the corporation, and that, with respect to any criminal action or
proceeding, he had reasonable cause to believe that his conduct was unlawful.
2. A corporation may indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending or completed action
or suit by or in the right of the corporation to procure a judgment in its
favor by reason of the fact that he is or was a director, officer, employee or
agent of the corporation, or is or was serving at the request of the
corporation as a director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise against expenses,
including amounts paid in settlement and attorneys' fees actually and
reasonably incurred by him in connection with the defense or settlement of the
action or suit if he acted in good faith and in a manner which he reasonably
believed to be in or not opposed to the best interests of the corporation.
Indemnification may not be made for any claim, issue or matter as to which
such a person has been adjudged by a court of competent jurisdiction, after
exhaustion of all appeals therefrom, to be liable to the corporation or for
amounts paid in settlement to the corporation, unless and only to the extent
that the court in which the action or suit was brought or other court of
competent jurisdiction determines upon application that in view of all the
circumstances of the case, the person is fairly and reasonably entitled to
indemnity for such expenses as the court deems proper.
33
<PAGE>
3. To the extent that a director, officer, employee or agent of a corporation
has been successful on the merits or otherwise in defense of any action, suit
or proceeding referred to in subsections 1 and 2, or in defense of any claim,
issue or matter therein, he must be indemnified by the corporation against
expenses, including attorneys' fees, actually and reasonably incurred by him
in connection with the defense.
4. Any indemnification under subsections 1 and 2, unless ordered by a court or
advanced pursuant to subsection 5, must be made by the corporation only as
authorized in the specific case upon a determination that indemnification of
the director, officer, employee or agent is proper in the circumstances. The
determination must be made: (a) By the stockholders: (b) By the board of
directors by majority vote of a quorum consisting o directors who were not
parties to act, suit or proceeding; (c) If a majority vote of a quorum
consisting of directors who were not parties to the act, suit or proceeding so
orders, by independent legal counsel in a written opinion; or (d) If a quorum
consisting of directors who were not parties to the act, suit or proceeding
cannot to obtained, by independent legal counsel in a written opinion; or
5. The Articles of Incorporation, the Bylaws or an agreement made by the
corporation may provide that the expenses of officers and directors incurred
in defending a civil or criminal, suit or proceeding must be paid by the
corporation as they are incurred and in advance of the final disposition of
the action, suit or proceeding, upon receipt of an undertaking by or on behalf
of the director or officer to repay the amount if it is ultimately determined
by a court of competent jurisdiction that he is not entitled to be indemnified
by corporation. The provisions of this subsection do not affect any rights to
advancement of expenses to which corporate personnel other than the directors
or officers may be entitled under any contract or otherwise by law.
6. The indemnification and advancement of expenses authorized in or ordered by
a court pursuant to this section: (a) Does not exclude any other rights to
which a person seeking indemnification or advancement of expenses may be
entitled under the articles of incorporation or any bylaw, agreement, vote of
stockholders or disinterested directors or otherwise, for either an action in
his official capacity or an action in another capacity while holding his
office, except that indemnification, unless ordered by a court pursuant to
subsection 2 or for the advancement of expenses made pursuant to subsection 5,
may not be made to or on behalf of any director or officer if a final
adjudication establishes that his act or omissions involved intentional
misconduct, fraud or a knowing violation of the law and was material to the
cause of action. (b) Continues for a person who has ceased to be a director,
officer, employee or agent and endures to the benefit of the heirs, executors
and administrators of such a person.
Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the foregoing provisions, or otherwise, the Registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Securities
Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a director, officer or controlling
person of the Registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the Registrant will, unless
in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the
Securities Act and will be governed by the final adjudication of such issue.
34
<PAGE>
Part F/S
Item 1. Financial Statements
The following documents are filed as part of this report:
a) InvestAmerica, Inc.
Financial Statements, report from Baverman & Company, CPA;
and notes to Financial Statements
b) Interim Financial Statements are not provided at this time as they
are not applicable at this time.
c) Financial Statements of Businesses Acquired or to be acquired are not
provided at this time, as they are not applicable at this time.
d) Proforma Financial Information is not provided at this time, as it is
not applicable at this time.
Item 2. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure.
None -- Not Applicable.
35
<PAGE>
Financial Statements
INVESTAMERICA, INCORPORATED
(Formerly Progressive Polymerics International, Incorporated)
CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 1999, 1998, AND 1997
INVESTAMERICA, INCORPORATED
1330 Portside Way
Salt Lake City, Utah 84123
TEL: 436-615-8801/801-808-6096 - FAX: 485-658-4833
INVT-(NASD Bulletin Board)
36
<PAGE>
INVESTAMERICA, INCORPORATED
(Formerly Progressive Polymerics International, Incorporated)
<TABLE>
<CAPTION>
TABLE OF CONTENTS
<S> <C>
Accountants Opinion Letter.....................................F-1
Financial Statements:
Consolidated Balance Sheets...............................F-2
Consolidated Statements of Income.........................F-3
Consolidated Statements of Cash Flows.....................F-4
Notes to Financial Statements.................................F-5-8
</TABLE>
37
<PAGE>
BRAVERMAN & COMPANY
Certified Public Accountants
To: The Shareholders of
INVESTAMERICA, INC.
We have audited the consolidated balance sheets of InvestAmerica, Inc.,
formerly Progressive Polymerics International, Inc. and its subsidiary at
September 30, 1999, 1998 and 1997 and the related consolidated statements of
income and cash flows for the years then ended. These financial statements
are the responsibility of Invest America's management. Our responsibility is
to express an opinion on these financial statements based on our audit.
We conducted our audits 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 audits provide a reasonable basis
for our opinion.
In our opinion the financial statements referred to above present fairly, in
all material respects, the consolidated financial position of InvestAmerica,
Incorporated and its subsidiary at September 30, 1999, 1998 and 1997 and the
consolidated results of their operations and their cash flows for the year
then ended in conformity with generally accepted accounting principles.
/s/ BRAVERMAN & COMPANY
November 18, 1999
Calabasas, California
23679 Calabasas Road #149, Calabasas CA 91302
F-1
<PAGE>
InvestAmerica, Inc. and Subsidiary formerly
Progressive Polymerics International, Inc. and Subsidiary
- ---------------------------------------------------------
Consolidated Balance Sheets
- ---------------------------------------------------------
September 30, 1999, 1998 and 1997
<TABLE>
<CAPTION>
BALANCE SHEET
1999 1998 1997
- ---------------------------------------------------------------------------
<S> <C> <C> <C>
Assets
Current Assets:
Cash $ - $ - $ -
Receivable from sale of assets - - 419,701
-------------------------------------
Total Current Assets $ - $ - $ 419,701
-------------------------------------
Liabilities and Stockholders' Equity
Current Liabilities:
Accounts Payable and
Accrued Expenses $ 810,036 $ 622,536 $ 431,193
Notes Payable 381,546 312,181 -
-------------------------------------
Total Current Assets 1,191,582 934,717 431,193
-------------------------------------
Stockholders Equity:
Preferred Shares, par value
$.001 per share
Authorized Shares 5,000,000
Outstanding Shares None
Common Shares, par value
$.001 per share
Authorized Shares 50,000,000 9,791 9,791 782
Outstanding Shares
781,882 - 1997
9,790,443 - 1998
9,790,443 - 1999
Additional Paid - In Capital 1,989,840 1,989,840 1,611,257
Accumulated Deficit (3,191,213) (2,934,348) (1,623,531)
-------------------------------------
Total Stockholders (Deficiency) (1,191,582) (934,717) (11,492)
-------------------------------------
Total Liabilities and Stockholders $ - $ - $ 419,701
(Deficiency) -------------------------------------
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
F-2
<PAGE>
InvestAmerica, Inc. and Subsidiary formerly
Progressive Polymerics International, Inc. and Subsidiary
- ---------------------------------------------------------
Consolidated Statements of Income
- ---------------------------------------------------------
September 30, 1999, 1998 and 1997
<TABLE>
<CAPTION>
STATEMENTS OF INCOME
1999 1998 1997
- --------------------------------------------------------------------------
<S> <C> <C> <C>
Revenue $ - $ - $ -
Operating expenses 256,865 1,108,317 317,326
------------------------------------
Loss before other items (256,865) (1,108,317) (317,326)
------------------------------------
Other items
Loss from write-off
of investment - 202,500 -
------------------------------------
Net Loss $(256,865) $(1,310,817) $(137,326)
-------------------------------------
Weighted average common
shares outstanding 9,790,443 5,286,163 600,600
------------------------------------
Net loss per common share $ (.03) $ (2.48) $ (.23)
------------------------------------
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
F-3
<PAGE>
InvestAmerica, Inc. and Subsidiary formerly
Progressive Polymerics International, Inc. and Subsidiary
- ---------------------------------------------------------
Consolidated Statements of Cash Flows
- ---------------------------------------------------------
September 30, 1999, 1998 and 1997
<TABLE>
<CAPTION>
STATEMENT OF CASH FLOWS
1999 1998 1997
- ---------------------------------------------------------------------------
<S> <C> <C> <C>
Cash Flows From (To) Operating Activities:
Net (Loss) $(256,865) $(1,310,817) $(137,326)
Adjustments to reconcile net
income to net cash provided
by operating activities:
Decrease in accounts and
loans receivable - - 39,115
Decrease in receivables
from sales assets - 419,701 80,299
Increase in notes payable 69,365 312,181 -
Increase in accounts payable
and accrued expenses 187,500 191,343 13,912
----------------------------------
Net cash used by operating activities - 387,592 4,000
----------------------------------
Cash Flows from (To) Financing Activities:
(Decrease) in loans payable - - (9,000)
Proceeds from issuance of common stock - 387,592 13,000
----------------------------------
Net cash flow from financing activities - 387,592 4,000
----------------------------------
Increase (Decrease) in Cash 0 0 0
Cash at Beginning of Year 0 0 0
----------------------------------
Cash at End of Year $ 0 $ 0 $ 0
----------------------------------
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
F-4
<PAGE>
InvestAmerica, Inc. and Subsidiary formerly
Progressive Polymerics International, Inc. and Subsidiary
- ---------------------------------------------------------
Notes to Financial Statements
- ---------------------------------------------------------
September 30, 1999, 1998 and 1997
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Organization - Balboa Investments, Inc. (Parent) was organized under the laws
of the State of Utah on October 20, 1983. The Company changed its domicile
from the State of Utah to the State of Nevada on December 18, 1986. This
change in domicile was accomplished by merging the Company into a Nevada
corporation created solely for this purpose. In connection with the change in
domicile, the Company changed its corporate name from Technology Research
Inc., to Balboa Investments, Inc. effective December 18, 1986. The Company
has not commenced planned principal operations and is considered a development
stage company as defined in SFAS No. 7.
On December 29, 1992, Balboa Investments, Inc. changed its name to Progressive
Polymerics International, Inc., (Parent) and acquired all of the issued and
outstanding common stock of Progressive Polymerics, Inc., (Subsidiary).
In April of 1997, the Board of Directors of the Company approved a Plan of
Reorganization, including a partial liquidation of the Company's current
assets to a Liquidating Trust in order to effectuate the partial liquidation
portion of the Plan. The Liquidating Trust received a transfer of all the
assets of the Company subject to the assumption by the Trust of all the
Company's liabilities and those being incurred in the Reorganization. The
Trust exists solely for the purpose of liquidating the Trust Estate and
distributing the proceeds of liquidation to the Shareholders. The Trust will
serve as a temporary vehicle for the maintenance and operation of the Trust
Estate, with a view to its liquidation and not the conduct of a continuing
business.
On April 17, 1997, the Company reverse-split its Common Stock twenty (20) old
shares for one (1) new share.
On April 17, 1997, the Company acquired 100% of the issued and outstanding
capital stock of InvestAmerica, Inc., thereby making it a wholly-owned
subsidiary.
On May 14, 1997, the stockholders of the Company approved the merger of
InvestAmerica, Int., a wholly-owned subsidiary, with and into the company,
with the Company's name to InvestAmerica., was also approved.
Principles of Consolidation - The consolidated financial statements include
the accounts of the Company and its wholly-owned subsidiary. All significant
intercompany transactions between the parent and the subsidiary have been
eliminated in consolidation.
Cash and Cash Equivalents - For purposes of the statements of cash flow, cash
and cash equivalents are defined as demand deposits at banks.
F-5
<PAGE>
InvestAmerica, Inc. and Subsidiary formerly
Progressive Polymerics International, Inc. and Subsidiary
- ---------------------------------------------------------
Notes to Financial Statements (continued)
- ---------------------------------------------------------
September 30, 1999, 1998 and 1997
NOTE 2 - NOTES PAYABLE
Demand notes payable in the amount of $312,181 were issued for services and
expenses. These notes carry an interest rate of 10% per annum. Accrued
interest has been added to principal balance on notes annually.
NOTE 3 - INCOME TAXES
Income tax expense, if applicable, includes state taxes currently payable.
There are no deferred taxes or benefits arising from timing differences
between financial statement and tax a basis income. For the period presented
the Companies were able to utilize net operating loss carry overs to reduce
Federal taxes.
NOTE 4 - WARRANTS
The Company issued warrants to purchase 190,000 shares of Common Stock as
follows:
50,000 shares @ $ .05 per share
50,000 shares @ $ .10 per share
20,000 shares @ $ .20 per share
50,000 shares @ $ 1.00 per share
20,000 shares @ $ 5.00 per share
The warrants expire 10 years from date of issue.
NOTE 5 - STOCK OPTIONS
The Company granted a ten (10) year option to purchase 1,000,000 common shares
at $.10 per share as a part of settlement agreement. This option has not yet
been exercised.
F-6
<PAGE>
InvestAmerica, Inc. and Subsidiary formerly
Progressive Polymerics International, Inc. and Subsidiary
- ---------------------------------------------------------
Notes to Financial Statements (continued)
- ---------------------------------------------------------
September 30, 1999, 1998 and 1997
NOTE 6 - SHAREHOLDER'S EQUITY
<TABLE>
<CAPTION>
SHAREHOLDER'S EQUITY
Common Stock Additional
------------ paid-in Accumulated
Shares Amount Capital Deficit
------ ------ ---------- -----------
<S> <C> <C> <C> <C>
Balances,
September 30, 1996 419,338 $ 419 $1,598,620 $(1,486,205)
As Adjusted for
1 for 20 Reverse
Stock Split
Net(Loss) For the Year
Ended Sept 30, 1997 (137,326)
Issue of Common Stock 362,544 363 12,637
----------------------------------------------
Balances,
September 30, 1997 781,882 782 1,611,257 (1,623,531)
Net(Loss) For the Year
Ended Sept 30, 1998 (1,310,817)
Issuance of Common Stock 9,008,561 9,009 378,583
-----------------------------------------------
Balances,
September 30, 1998 9,790,443 9,791 1,989,840 (2,934,348)
Net(Loss) For the Year Ended
September 30, 1999 (256,865)
-----------------------------------------------
Balances,
September 30, 1999 9,790,443 $9,791 $1,989,840 $(3,191,213)
------------------------------------------------
</TABLE>
NOTE 7 - SALE OF ASSETS
In November of 1995, the Company sold the two Patents and related assets
attributable to its "Armored Conduit". The sale resulted in a loss of
$194,946.
Terms of the Sale - Fidelity Holdings, Inc., acquired the two patents for a
purchase price of $500,000 payable in $100,000 cash and the balance in
Eighty-Thousand (80,000) unregistered Units of Fidelity Holdings, Inc.,
securities. Each Unit consists of Two (2) shares of Common Stock (160,000
shares) and Two (2) Warrants, each Warrant being for the purchase of One (1)
share of Fidelity Holdings, Inc., Common Stock at an exercise (purchase) price
of $3,125 per share exercisable for One (1) year. For this One (1) year
exercise period, Fidelity has the irrevocable option to repurchase/redeem up
to Eighty thousand (80,000) shares of its Common Stock at a price of Two Dollars
and Fifty Cents ($2.50) per share. In addition to the purchase price, the
Company will receive royalty payments from Fidelity over the life of the two
patents. The payments will be calculated at the greater of 5% of the
manufactured cost of the conduit or 2% of the net sales.
F-7
<PAGE>
InvestAmerica, Inc. and Subsidiary formerly
Progressive Polymerics International, Inc. and Subsidiary
---------------------------------------------------------
Notes to Financial Statements (continued)
- ---------------------------------------------------------
September 30, 1999, 1998 and 1997
NOTE 8 - SETTLEMENT
The Company settled a lawsuit with a former consultant to the Company. Terms
of the settlement called for a payment of $80,000 and the issuance of 525,000
shares of the Company's Common stock. At the time of the issuance, the shares
had a market value of $.50 per share. The settlement resulted in a loss of
$342,000.
F-8
<PAGE>
Part III
ITEM 1. EXHIBIT INDEX
- -----------------------------------------------------------------------------
2. Plan of Acquisition, Reorganization, Arrangement, Liquidation, or
Succession.
2.1 AGREEMENT AND PLAN OF MERGER AND REORGANIZATION, adopted by Technology
Research, Inc. and Balboa Investments, Inc. filed December 18, 1986*
2.2 ARTICLES OF MERGER, Merger of InvestAmerica, Inc., with and into
Progressive Polymerics International, Inc., Filed May 27, 1997*
3. Articles of Incorporation & By-Laws
3.1 Articles of Incorporation of the Company Filed October 20, 1983*
3.2 Amended Articles of Incorporation Filed on December 18, 1986*
3.3 By-Laws of the Company adopted October 20, 1983*
10. Material Contracts
10.1 Compensation Plan*
10.2 Key Employee Stock Option Plan*
23. Consent of Experts and Counsel
23.1 Statement from Braverman & Company, Certified Public Accountants*
27. Financial Data Schedule
27.1 Financial Data Schedule*
* Previously filed as an exhibit to the Company's Form 10-SB.
38
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 12 of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on its behalf by
the undersigned, thereunto duly authorized.
InvestAmerica, Inc.
/s/ Douglas E. Smith
- -----------------------
Douglas E. Smith
President and Chairman
Date: March 17, 2000
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 capacities and on the dates indicated.
InvestAmerica, Inc.
/s/ Brian A. Kitts
- ------------------------
Brian A. Kitts, SECRETARY
Date: March 17, 2000
39
<PAGE>
