FORM 10-KSB
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
(Mark One)
[ ] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 FOR THE FISCAL YEAR ENDED
JUNE 30, 2000
OR
[X] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
[NO FEE REQUIRED] for the transition period from
INCEPTION to JUNE 30, 2000
Commission file number: 000-25019
PVAXX CORPORATION
(Name of small business issuer in its charter)
COLORADO 000-25019 05-0499528
--------------- --------------------- -------------------
(State of (Commission File No.) (IRS Employer ID No.)
Incorporation)
1250 Turks Head Building
Providence, RI 02903
401-272-5800
--------------------------------------------------
(Address of Principal Executive Offices)
NADEAU & SIMMONS, P.C.
1250 TURKS HEAD BUILDING
PROVIDENCE, RI 02903
401-272-5800
--------------------------------------------------
(Name and Address of agent for service)
<PAGE>
Securities registered pursuant to Section 12(b) of the Securities
Exchange Act:
Title of each class Name of each exchange
on which registered
Not Applicable NONE
Securities registered pursuant to section 12(g) of the Securities
Exchange Act:
COMMON STOCK,
NO PAR VALUE PER SHARE NASD
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12
months (or for such shorter period that the registrant was required to file
such reports), and (2) has been subject to such filing requirements for the
past 90 days.
Yes [X] No [ ]
Check if there is no disclosure of delinquent filers in response to Item 405
of Regulation S-B contained in this form, and no disclosure will be contained,
to the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-KSB or any
amendment to this Form 10-KSB
[ ]
State issuer's revenues for its most recent fiscal year:
$ 0.00
The aggregate market value of the 16,633,815 shares of Common Stock held by
non-affiliates was $159,276 as of June 30, 2000. For purposes of the
foregoing calculation only, each of the issuer's officers and directors is
deemed to be an affiliate. The market value of the shares was calculated
based on the book value of such shares on such date.
As of June 30, 2000, 21,322,800 shares of the issuer's Common Stock
were outstanding.
<PAGE>
DOCUMENTS INCORPORATED BY REFERENCE:
The following documents are following by reference into the annual
report:
a)-1. PVAXX Corporation's Form 10-QSB, filed August 14, 2000 for the
quarter ending June 30, 2000;
PVAXX Corporation's Form 8-K, filed July 11, 2000;
Oak Brook Capital IV, Inc.'s Form 10-QSB, filed December 22, 1999
for the quarter ending September 30, 1999;
Oak Brook Capital IV, Inc.'s Form 10-QSB/A, filed October 19, 1999 for
the quarter ending June 30, 1999;
Oak Brook's Form 10-QSB, filed August 13, 1999 for the quarter ending
June 30, 1999;
Oak Brook's Form 10-QSB/A, filed July 30, 1999 for the quarter ending
March 31, 1999;
Oak Brook's Form 10-QSB, filed May 18, 1999 for the quarter ending
March 31, 1999;
all other reports filed pursuant to section 13(a) or 15(d) since the end of
the year covered by the above annual reports.
(a)-2. All documents filed by the Company pursuant to Section 13(a), 13(c), 14
or 15(d) of the Securities Exchange Act of 1934, as amended, subsequent to the
date hereof and prior to the filing of a post-effective amendment which
indicates that all securities offered hereby have been sold or which
de-registers all securities covered hereby then remaining unsold shall be
deemed to be incorporated by reference herein and to be a part hereof from the
date of filing of such documents, except as to any portion of any future
Annual or Quarterly Report to Stockholders which is deemed to be modified or
superseded for purposes of this Registration Statement to the extent that such
statement is replaced or modified by a statement contained in a subsequently
dated document incorporated by reference or contained in this Registration
Statement.
(a)-3 The description of the Company's common stock which is contained in the
Form 10SB12G, Registration Statement filed under Section 12 of the Securities
Exchange Act of 1934, including any amendments or reports filed for the
purpose of updating such description.
Transitional Small Business Disclosure Format: Yes [ ] No [X]
<PAGE> 1
PART I
ITEM 1. DESCRIPTION OF BUSINESS
BUSINESS DESCRIPTION
Nature of Activities
PVAXX CORPORATION is the parent company of the PVAXX group of companies. The
PVAXX CORPORATION group consists of:
-PVAXX Technologies Ltd, which holds patents and intellectual property;
-PVAXX Research & Development Ltd, the company undertaking all ongoing trials
and developments, which also does business as PVAXX Engineering, which
manufactures all our pelleting machines;
-PVAXX Pharmaceutical which manufactures and supplies capsule making
machinery; and
-PVAXX Europe, Ltd., which is the European sales company of the group.
The Company recently taken possession of a newly built European HQ in England
near Malmesbury in Wiltshire, which includes:
-3000 square feet sales offices;
-2000 square feet engineering departments;
-2000 square feet development labs; and
-4000 square feet manufacturing areas.
The Product
PVAXX is a completely biodegradable polymer. We believe PVAXX represents a
genuine advance in polymer technology. Management feels that PVAXX will be a
significant contributor to the reduction of negative environmental and
ecological impacts of plastics. PVAXX offers the potential of practical
solutions to worldwide waste disposal problems, as all products manufactured
from PVAXX biodegrade into non-toxic elements when disposed of through water
immersion or in landfill.
PVAXX is a newly formulated polymer, created by a patented process and
manufactured from the chemical raw material Polyvinyl Alcohol 'pva' and other
food-grade additives, which have been used in consumer markets for over 25
years. Thus its properties, both physical and toxicological, as well as its
environmental impact from its bio-degradation on disposal, have been studied
in depth.
<PAGE> 2
PVAXX is a stable, flexible polymer similar to other everyday polymers. It is
available in various grades suitable for most product areas. PVAXX production
consumes a very low level of energy as no external heat is introduced,
creating potentially greater environmental advantages. PVAXX is significantly
less expensive than other biodegradable polymers currently in the market.
The various technologies that make up PVAXX were either acquired by or
developed within PVAXX Group. Development was undertaken within the Irish
Government Research and Development Department, PERA, Leeds University and
University of North London and within our own facilities both in England and
in the Isle of Man. These entities have a wide range of experience in the
development of laboratory led research and testing of polymers and plastic
processes and products. More than a decade of associated research and over
five years of laboratory and industrial assessment has gone into the
development of PVAXX. This includes full industrial, scientific and technical
assessment throughout its development.
PVAXX offers biodegradability at a cost that is competitive when compared with
other plastics. Alternative products based on starch additives, fragment, but
may not decompose. Those polymers that do biodegrade are generally expensive
and can be difficult to process.
PVAXX is particularly well-suited to filament and fibre formation, for use in
spunbond, non-woven and melt-blowing applications.
PVAXX can be processed on PVAXX Pharmaceutical Capsule machines to produce
and fill with powder or liquid medicines to make medical capsules or food
supplements.
The PVAXX manufacturing process enables highly accurate compounding and
pelleting with consistent quality.
Target Market
PVAXX is a competitively priced material thus it can be used in the
manufacture of basic and premium products. These include, but are not limited
to, the following areas listed together with some consumption examples.
- Agricultural Agro-chem sachets, Mulch films, Plant pots Household Bags,
Diapers, Drinking straws, Femcare products, Hangers, Incontinence pads,
Sachets, Six pack rings Industrial Chemical sachets, Disposable clothing,
Expanded foams, Gloves.
- Leisure Film canisters, Golf tees, Shotgun cartridges Medical Bedpans,
Bowls, Cotton buds, Hospital curtains, 'One-use' sterile products, Capsules.
PVAXX has test marketed using a UK chemical/polymer distributor, enabling
PVAXX to refine such things as packaging, grades and pricing before a
international launch. The manufacturing division is currently capable of
producing up to 10,000 tons per annum of PVAXX. PVAXX's management believes
the Company has the ability to manufacture further production capacity to
increase production by a further 20,000 tons every 14 weeks when required.
<PAGE> 3
The raw materials used are all sourced from the major manufacturers such as,
Nippon Gohsei, Omya, ECC, Chang Cheung, Unichema , Jordan Carbonate, etc.
SALES AND MARKETING
Markets
Plastic has become essential to the functioning of modern life around the
world. The plastics market has recently been valued at more than $200 billion
per year and continues to rise.
Eight percent of US household waste, over 13 million tons per year, is made
up of plastics and is consigned to landfill. This is repeated throughout the
developed world.
"... studies now confirm only 20 per cent of plastic waste could be
recycled..." said Mr. Reg. McCabe director of the Plastics Industries
Association of Ireland......in the light of growing public concern about
additional landfill sites.....business called on Government to help out with
136,000 tons of plastic packaging waste which are produced each year... PERA
has completed a detailed market study for the Company showing an immediate
market of 30 million tons in areas where PVAXX is cheaper or has other
attributes that make it immediately superior to current polymers being used
on the market today.
Marketing Plan
The marketing strategy for PVAXX is important as we are not just selling a
product by purely following a product marketing strategy. Management believes
PVAXX offers a solution to policy makers by offering the option of a "green"
(or environmentally friendly) polymer such as PVAXX.
Press, Public Relations and Lobbying
Given the range of applications in all kinds of sectors in many parts of the
world, Management feels the public relations potential for PVAXX is
significant. PVAXX is beginning to create a multi language media relations
program embracing both trade and technical media, together with national
newspapers and magazines in appropriate sectors, such as food, fashion,
pharmaceuticals etc.
PVAXX also presents the opportunity for a media event in which we can
effectively demonstrate the biodegradability of PVAXX. We can also supply all
media and key people we target with a small case of samples that enables them
to carry out their own experiments.
In this era of over consumption and plastic use, Management believes policy
makers are looking to promote new plastics which are environmentally
friendlier than existing plastics, particularly those with biodegradable
features. Environmental attributes such as complete biodegradability are
highly sought after by industry and policy makers especially due to plastic
related issues such as:
<PAGE> 4
-Low environmental rating from cradle to grave
-Endocrine mimicry
-Waste and packaging problems including landfill over capacity, incineration
and dioxin issue, take back requirements, recycling requirements, agricultural
leaching etc.
Due to new research on phthalates and similar plastics that can cause
endocrine mimicry, policy makers are looking at substitutes for such plastics
to justify a ban. In addition, governments are also looking to find solutions
to the mountains of plastic waste accumulating in their landfills, the
toxicity problems of plastic residue in soil, groundwater or via leaching
directly into foodstuffs, and to the dioxin emissions when plastics are
burned. These issues have led to interim solutions such as recycling, take
back policies etc.. but policy makers believe that the ultimate solution
remains the complete biodegradability of plastics.
Marketing Strategy
In order to properly "inform" policy makers of the existence and benefits of
PVAXX, Management intends to employ a two-tiered approach as follows:
(i) First, all relevant actors at the senior government level must be
personally informed of the environmental attributes of PVAXX. This
informing process is a delicate balancing act based on knowledge of
institutional and political interplay.
As the debate on plastic products and waste develops, PVAXX must be seen
developing in a pro-active industry producing a new, environmentally safe
product.
Provided the Company convinces officials through sound research,
development and environmental proof, new legislation adopted in its favor
will likely be forthcoming, as long as the "informing" process has been
conducted in a professional and diplomatic manner; and
(ii)Second, local and state governments and local authorities must also
be approached.
Throughout the entire "informing process" new elements or developments must
be integrated into the strategy and used to influence each actor. In addition,
we hope to forge alliances with parties also interested in changing national
legislation to benefit cleaner plastics. These parties could be industry
federations or representatives as well as respected non-governmental
organizations.
<PAGE> 5
Interactive Website
A "live" website, initially cast in 5 languages, with an active inquiry office
and updateable news section, is at the heart of the marketing strategy. The
selling of PVAXX via the Internet, supported by our technical centre at
www.pvaxx.com, provides 24-hour access to sales and technical information.
PVAXX has already started to appoint polymer and chemical distribution
agents, therefore increasing active promotion of PVAXX worldwide.
There is no advertising on our web site, nor are we entertaining potential
advertising at this time. Accordingly, the Company has not been involved in
the negotiation of preliminary agreements or understandings with any
advertisers.
Profile Document
We have produced a publication about PVAXX and the environment. It is
reflective of the website; but is presented specifically for individuals who
influence the purchase of plastics.
Advertising
Through advertising, the Company has an opportunity to gain exposure both to
potential purchasers and those who can influence purchases. Media coverage of
the Company will provide useful additional advertising for the product. We
intend to place announcements of our product development in the FT, the Wall
Street Journal, Paris Match etc. together with product advertisements in
magazines in sectors such as food and drink, pharmaceuticals, etc.
Advertising Expenditure
We have budgeted approximately $160,000 for advertising with a possible growth
from earnings to $800,000. We hope to have good exposure that will enable us
to put PVAXX forward as a highly visible global brand. Of course, there can
be no assurances that such advertising budget can be generated through the
Offering, internal operations or growth from earnings.
COMPETITIVE AND ENVIRONMENTAL ISSUES
General
The biodegradable plastics industry in which the Company operates is highly
competitive. Some of the company's principal competitors in certain business
lines are substantially larger and better capitalized than the Company.
Because of these resources, these companies may be better able than the
Company to obtain new customers and to pursue new business opportunities or
to survive periods of industry consolidation.
Plastics have considerable utility but also result in significant amounts of
waste--both during manufacture and following their use as products.
Unfortunately this waste has a highly visible profile which, combined with its
indefinite lifespan, does not allow the problem to diminish. As environmental
issues become increasingly voiced, the use and disposal of 'traditional'
plastic materials (which currently are non biodegradable,) are becoming a
<PAGE> 6
cause for concern. Public opinion, i.e. regarding the threat to the
environment, has caused the European Union (EU) to outline quality standards
for products, production standards and pollution levels which will enable
countries within the EU to tighten their legislation.
Incineration
Apart from requiring considerable amounts of energy, incineration will also
produce vast quantities of gases, contributing to the 'greenhouse effect'.
PVC, one of the commonest pollutants, produces hydrogen chloride when
combusted, requiring expensive materials in the construction of incinerators
along with downstream acid gas scrubbing equipment. Overall, incineration is
expensive and creates further pollution.
Landfill
Landfill sites are expensive in terms of construction and management and tie
up valuable land for indefinite periods. They are filling up and closing at a
high rate so reducing the number of available sites.
Recycling
Recycling requires the physical separation on each waste site of all plastic
from non plastic material. This process then has to be followed by the
attempted sorting and segregation of different types of plastic from each
other, without the benefit of chemical analysis. Next, the waste is
transported to the recycling site for treating and re-analyzing before
re-inclusion into a manufacturing process.
Recycling is a daunting, time consuming and expensive task, which is open to
accidental miss-sorting and subsequent abortive processing. To quote the
British Plastics Federation Statistics Handbook:-"the problem for industry is
that reprocess feedstocks are often of inconsistent quality and there remain
concerns about incorporating reclaimed material into food or technical
applications."
The problem is not confined to Western Europe. In the USA, where household
waste stands at 190 million tons per annum, thirteen million of this
represents plastic products that are delivered to landfill. Because of such
pollution issues Japan now exports its waste and countries like Canada,
Australia and France are in a similar position.
Other Degradable Polymers
Many plastics are now being marketed, at least partially, on their
environmental merits. This may be for very different reasons based upon the
following list of some degradable polymer manufacturers being divided into
Synthetic polymers, Starch-based polymers, Biopolymers and Biocompostibles as
follows:
Synthetic Polymers
-Carbonnages de France - have developed a polyurethane material used for
mortuary shrouds.
<PAGE> 7
-Union Carbide--have developed Caprolactone polyester for tree seedling
containers.
Starch-based Polymers
-Warner-Lambert, USA. - 'Novon' product claimed to be suitable as a
replacement for PS and PE in disposable product applications e.g. injection
moulding of pharmaceutical capsules.
Biopolymers
(Plastic materials produced by micro-organisms)
-Monsanto, England - 'Biopol' (predominately polyhydroybutyrate)--promoted as
"Nature's Plastic". Basically a thermoplastic linear polyester used for
bottles and mouldings. This relatively stiff material produced by biological
fermentation of sugars to produce carbohydrates from which 'Biopol' is
manufactured. Fully biodegradable.
Biocompostibles
(standard plastics with a starch additive)
-There are many companies in this category, but as only the starch additive
biodegrades and the starch loaded derivatives do not fully biodegrade, they
leave small particles of undegraded polyethylene, or other polymer and cause
ecological dangers which have been under investigation.
IMPORTANT FACTORS RELATED TO
FORWARD-LOOKING STATEMENTS AND ASSOCIATED RISKS
The statements contained in this report that are not purely historical are
forward-looking statements within the meaning of 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"), including
statements regarding the Company's expectations, hopes, intentions or
strategies regarding the future. All forward-looking statements included
herein are based on information available to the Company on the date hereof,
and the Company assumes no obligation to update any such forward-looking
statements. It is important to note that the Company's actual results could
differ materially from those in such forward-looking statements. Among the
factors that could cause actual results to differ materially are the risk
factors which may be listed from time to time in the Company's reports on Form
10-QSB, 10-KSB and registration statements filed under the Securities Act.
Forward-looking statements encompass the (i) expectation that the Company can
secure additional capital, (ii) continued expansion of the Company's
operations through joint ventures and acquisitions, (iii) success of existing
and new marketing initiatives undertaken by the Company, and (iv) success in
controlling the cost of services provided and general administrative expenses
as a percentage of revenues.
The forward-looking statements included herein are based on current
expectations that involve a number of risks and uncertainties.
<PAGE> 8
These forward-looking statements were based on assumptions that the Company
would continue to expand, that capital will be available to fund the Company's
growth at a reasonable cost, that competitive conditions within the industry
would not change materially or adversely, that demand for the Company's
services would remain strong, that there would be no material adverse change
in the Company's operations or business, and that changes in laws and
regulations or court decisions will not adversely or significantly alter the
operations of the Company. Assumptions relating to the foregoing involve
judgments with respect to, among other things, future economic, competitive,
regulatory and market conditions, and future business decisions, all of which
are difficult or impossible to predict accurately and many of which are beyond
the control of the Company. Although the Company believes that the
assumptions underlying the forward-looking statements are reasonable, any of
the assumptions could prove inaccurate and, therefore, there can be no
assurance that the forward-looking information will prove to be accurate.
In light of the significant uncertainties inherent in the forward-looking
information included herein, the inclusion of such information should not be
regarded as a representation by the Company or any other person that the
objectives or plans of the Company will be achieved.
ITEM 2. DESCRIPTION OF PROPERTY
Administrative Offices
Our corporate headquarters are located at 12730 New Brittany Boulevard, Ft.
Myers, Florida 33907, (941) 274-9355. Our transfer agent is Nadeau & Simmons,
P.C., 1250 Turks Head Building, Providence, Rhode Island 02903 (401) 272-5800.
ITEM 3. LEGAL PROCEEDINGS
No material legal proceedings to which the Company (or any of its directors
and officers in their capacities as such) is party or to which property of
the Company is subject is pending and no such material proceeding is known by
management of the Company to be contemplated.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Not applicable
<PAGE> 9
PART II
ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
There has been no public trading market for the Company's Common Stock.
Holders of Common Stock are entitled to receive such dividends as may be
declared by the Company's Board of Directors. No dividends on the Common
Stock have been paid by the Company, nor does the Company anticipate that
dividends will be paid in the foreseeable future.
ITEM 6. SELECTED FINANCIAL DATA
Not applicable
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS OR
PLAN OF OPERATION
The following discussion should be read in conjunction with the Financial
Statements and notes thereto.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
June 30, 2000
=====================================
YEAR ENDING JUNE 30, 2000
=====================================
Except for historical information, the discussion in this Form SB-2 contains
forward-looking statements that involve risks and uncertainties. These
statements may refer to the Company's future plans, objectives, expectations
and intentions. These statements may be identified by the use of words such
as "expect", "anticipate", "believe", "intend", "plan" and similar expressions.
The Company's actual results could differ materially from those anticipated
in such forward-looking statements. Factors that could contribute to these
differences include, but are not limited to, the risks discussed in the
section titled "Market Risks and other Business Factors" later in this Form
SB-2.
MARKET RISKS AND OTHER BUSINESS FACTORS
In passing the Private Securities Litigation Reform Act of 1995 (the "Reform
Act"), Congress encouraged public companies to make "forward looking
statements" by creating a safe harbor to protect companies from securities law
liability in connection with forward looking statements. We intend to qualify
both our written and oral forward looking statements for protection under the
Reform Act and any other similar safe harbor provisions.
<PAGE> 10
Generally, forward looking statements include expressed expectations of future
events and the assumptions on which the expressed expectations are based. All
forward looking statements are inherently uncertain as they are based on
various expectations and assumptions concerning future events and they are
subject to numerous known and unknown risks and uncertainties which could
cause actual events or results to differ materially from those projected.
Due to those uncertainties and risks, the investment community is urged not to
place undue reliance on our written or oral forward looking statements. We
undertake no obligation to update or revise our for forward looking statements
to reflect future developments. In addition, we undertake no obligation to
update or revise forward looking statements to reflect changed assumptions,
the occurrence of unanticipated events or changes to future operating results
over time.
PLAN OF OPERATION
The Company has been established to produce and market a range of
biodegradable polymers for various applications in the agricultural,
pharmaceutical, adhesives and food market sectors. The Research and
Development unit is located in Kemble, Nr. Malmesbury, Wilts, United Kingdom,
and has been the main site for all development and commercial activities.
A pva based polymer, PVAXX biodegrades authentically into non-toxic residues.
When subjected to aerobic or anaerobic action, the bacteriological
decomposition of PVAXX entirely fulfils the ecological need for plastic waste
disposal. Recent development allows the polymer to be dry-compacted into
pellet form, for cost-effective and practical use by plastic product
manufacturers.
The Company has spent the past several years developing its technology and
producing samples for various industries. During the preceding twelve month
period, the Company has been active in contacting potential customers and has
focused on the following industries:
-Pharmaceutical;
-Industrial;
-Retail;
-Household;
-Agricultural;
-Leisure and Distributors.
It is the intention of the Company to appoint a global distributor in the
fourth quarter of 2000.
First production quantities will be shipped to customers late in the first
quarter of 2001. Average selling prices will be $1,650 per ton for
non-pharmaceutical grade and $6,000 per ton for pharmaceutical grade. The
company anticipates shipping 2,000 tons of non-pharmaceutical grade PVA in the
fiscal year ending June 30, 2001. The anticipated revenues of $3,300,000 will
enable the company to operate at a break-even level. Should the company need
additional financing prior to achieving greater levels of sales, the President
and majority shareholder may contribute additional capital to the company, or
the company may decide to raise capital through the sale of equity.
<PAGE> 11
The Company anticipates sales doubling in the second year of operation due to
the demand for the product at the customer and distributor level. This is
based on demonstrated and genuine interest where the parties have received
technical information and product samples for analysis and are progressing to
batch trial development. Initial projections detail a net profit margin of
14% after sales have exceeded $3,000,000.
All PVAXX components have received EU and FDA approval for human consumption,
via pharmaceuticals or food, allowing e.g. gelatine replacement in drug
capsules and fertilizer and seed coatings.
PVAXX applications include:
Fibre diapers, absorbent/wet wipes, solvent/chemical wipes,
soluble netting for detergent tablets, netting/packaging,
cigarette filters
Film supermarket/carrier bags, refuse sacks, laundry bags,
garment sleeving, mulch/silage wrapping, impervious
gas/odor barriers, food wrap, balloons
Extrusion bottles, medical disposables & tubing, toothpaste tubes,
& Blow moulding oilcans, drinking straws, ballpoint pen
refills
Profile/Injection medical capsules, golf tees, clothes hangers, bath pearls,
paint moulding balls, film canisters, shotgun cartridge
wadding, medical disposables, garden products,
multipack
beverage ring collars, bottle pre-forms, vacuum-formed
sandwich clams
Hot melt adhesives film & coating adhesive for board packaging, labeling,
reseals, construction materials
Demand for PVAXX
There is a proven potential demand for truly biodegradable plastic world-wide,
led by consumers and various pressure groups, and sanctioned by the
authorities in most countries, with impending legislative enforcement.
<PAGE> 12
Specific requests from customers/development partners give the following
potential orders by market sector:
Potential List Price Order Value
Annual Orders (MT) (000's)
------------------ ----------- -----------------
Pharmaceutical 50,000 $6,000 $300,000
Industrial 35,000 $1,650 $ 57,750
Retail 35,000 $1,650 $ 57,750
Household 14,000 $1,650 $ 23,100
Agricultural 5,000 $1,650 $ 8,250
Leisure 5,000 $1,650 $ 8,250
Distributor 60,000 $1,485 $ 89,100
Total 204,000 $244,500
Company Sales & Distribution Schedule
Period Orders (MT) Sales (000's)
First 6 months: Oct 2000 - Mar 2001 - -
Second 6 months: Apr 2001 - Sep 2001 7,000* $11,550
Third 6 months: Oct 2001 - Mar 2002 30,000 $33,750
[*Financial year 1 Jun 2000 - Jun 2001 2,000 $ 3,300]
Initial sales will be to the Italian market, where new legislation to ban a
number of plastic applications is currently in implementation phase. A
development partner in each market sector has been identified and these
customers will receive first deliveries. The pharma sector is being developed
over the mid-term, and offers higher-margin opportunities. A PVAXX consumer
awareness program will be also be implemented during this period, and a trade
marketing program will support the distributor sales effort.
LIQUIDITY AND CAPITAL RESOURCES
The Company remains in the development stage and, since inception, has
experienced no significant change in liquidity or capital resources or
stockholder's equity. The Company's balance sheet as of June 30, 2000,
reflects a current asset value of $441,589, and a total asset value of
$1,225,804 in the form of cash and capitalized organizational costs.
The Company is hereby registering for the sale of equity in connection with
the sale of 2,400,000 shares at approximately $1.00/share. The Company does
not have any underwriting commitments for such sale of equity. There can be no
assurance that any such sale will close or that the Company will continue to
consider such an offering.
Notwithstanding the steps taken by us to restructure our debt and raise
additional capital, our immediate cash requirements are significant. We cannot
assure you that we will be able to successfully realize cash flow from
operations or that such cash flow will be sufficient. We believe that our
existing and anticipated capital resources will enable us to fund our planned
operations through Fiscal 2001 as outlined above.
<PAGE> 13
In addition, our annual and quarterly operating results may be affected by a
number of factors, including the following:
-our ability to manage inventories, shortages of components or labor;
-the degree of automation used in the assembly process;
-fluctuations in material costs and the mix of material costs versus labor;
-manufacturing and overhead costs price competition;
-price competition;
-the inability to pass on excess costs to customers;
-the timing of expenditures in anticipation of increased sales; and
-customer product delivery requirements.
Any one of these factors, or a combination thereof, could adversely affect us.
The Company believes that the net proceeds of this Offering will permit it to
repay the outstanding short-term debt, to continue to meet its working capital
obligations and fund the further development of its business for the next 12
months. There can be no assurance that any additional financing will be
available to the Company on acceptable terms, or at all. If adequate funds are
not available, the Company may be required to delay, scale back or eliminate
its research, engineering and development or manufacturing programs or obtain
funds through arrangements with partners or others that may require the
Company to relinquish rights to certain of its technologies or potential
products or other assets. Accordingly, the inability to obtain such financing
could have a material adverse effect on the Company's business, financial
condition and results of operations.
A substantial amount of the proceeds from this Offering will be used to
purchase manufacturing and test equipment ($1,010,000) and research,
engineering and development related expenditures ($550,000).
ENVIRONMENTAL REGULATIONS
The Company is subject to Federal, state and local governmental regulations
relating to the storage, discharge, handling, emissions, generation,
manufacture and disposal of toxic or other hazardous substances used to
manufacture the Company's products. The Company believes that it is currently
in compliance in all material respects with such regulations. Failure to
comply with current or future regulations could result in the imposition of
substantial fines on the Company, suspension of production, alteration of its
manufacturing process, cessation of operations or other actions which could
<PAGE> 14
materially and adversely affect the Company's business, financial condition
and results of operations.
EVOLVING INDUSTRY STANDARDS; RAPID TECHNOLOGICAL CHANGES
The Company's success in its business will depend in part upon its continued
ability to enhance its existing products and services, to introduce new
products and services quickly and cost effectively to meet evolving customer
needs, to achieve market acceptance for new product and service offerings and
to respond to emerging industry standards and other technological changes.
There can be no assurance that the Company will be able to respond effectively
to technological changes or new industry standards. Moreover, there can be no
assurance that competitors of the Company will not develop competitive
products, or that any such competitive products will not have an adverse
effect upon the Company's operating results.
Moreover, management intends to continue to implement "best practices" and
other established process improvements in its operations going forward. There
can be no assurance that the Company will be successful in refining, enhancing
and developing its operating strategies and systems going forward, that the
costs associated with refining, enhancing and developing such strategies and
systems will not increase significantly in future periods or that the
Company's existing software and technology will not become obsolete as a
result of ongoing technological developments in the marketplace.
VOLATILITY OF STOCK PRICE
The Company believes factors such as the Company's liquidity and financial
resources, quarter to quarter and year to year variations in financial results
could cause the market price of the Company's common stock to fluctuate
substantially. Any adverse announcement with respect to such matters or any
shortfall in revenue or earnings from levels expected by management could have
an immediate and material adverse effect on the trading price of the Company's
common stock in any given period. As a result, the market for the Company's
common stock may experience material adverse price and volume fluctuations and
an investment in the Company's common stock is not suitable for any investor
who is unwilling to assume the risk associated with any such price and volume
fluctuations.
The Company is considering the sale of equity in connection with a secondary
offering prior to the end of 2000. The Company has not received any
commitment for such an offering, and no assurance can be provided that the
Company will receive any such commitment, or that any such offering, if
undertaken, will be successful.
SUFFICIENCY OF CASH FLOWS
The Company believes that current cash balances and any cash generated from
operations and from available debt or equity financing will be sufficient to
meet its cash needs for working capital and capital expenditures for at least
the next twelve months. Thereafter, if cash generated from operations is
insufficient to satisfy the Company's liquidity requirements, management may
seek to sell additional equity or obtain credit facilities. The sale of
additional equity could result in additional dilution to the Company's
<PAGE> 15
shareholders. A portion of the Company's cash may be used to acquire or invest
in complementary businesses or products or to obtain the right to use
complementary technologies. From time to time, in the ordinary course of
business, the Company evaluates potential acquisitions of such
businesses, products or technologies.
RESULTS OF OPERATIONS
During the period from May 16, 2000 (inception) through June 30, 2000, the
Company has engaged in no significant operations other than organizational
activities, research and development, sales and marketing and the acquisition
of capital and preparation for reporting as a registrant under Section 12 of
the Securities Exchange Act of 1934, as amended. No revenues were received
by the Company during this period.
INCOME TAXES
The Company accounts for income taxes in accordance with Statement of
Financial Accounting Standards No. 109, "Accounting for Income Taxes" ("SFAS
109") issued by the Financial Accounting Standards Board ("FASB"), under which
deferred tax assets and liabilities are provided on differences between the
carrying amounts for financial reporting and the tax basis of assets and
liabilities for income tax purposes using the enacted tax rates. Under SFAS
109, deferred tax assets may be recognized for temporary differences that
will result in deductible amounts in future periods. A valuation allowance is
recognized, if on the weight of available evidence, it is more likely than
not that some portion or the entire deferred tax asset will not be realized.
FEDERAL INCOME TAX ASPECTS OF INVESTMENT IN THE COMPANY
The discussion contained herein has been prepared by the Company and is based
on existing law as contained in the Code, amended United States Treasury
Regulations ("Treasury Regulations"), administrative rulings and court
decisions as of the date of this Registration Statement. No assurance can be
given that future legislative enactments, administrative rulings or court
decisions will not modify the legal basis for statements contained in this
discussion. Any such development may be applied retroactively to transactions
completed prior to the date thereof, and could contain provisions having an
adverse affect upon the Company and the holders of the Common Stock. In
addition, several of the issues dealt with in this summary are the subjects of
proposed and temporary Treasury Regulations. No assurance can be given that
these regulations will be finally adopted in their present form.
ITEM 8. FINANCIAL STATEMENTS
The financial statements are included beginning at F-2. See page F-1
for the Index to the Financial Statements.
<PAGE> F-1
PVAXX CORPORATION
FINANCIAL STATEMENTS
PVAXX CORPORATION (FORMERLY OAK BROOK CAPITAL IV, INC.) & SUBSIDIARIES
(DEVELOPMENT STAGE COMPANIES)
FINANCIAL STATEMENTS
June 30, 2000
The following financial statements include a balance sheet as of June 30,
2000, statements of operations and deficit accumulated during
development stage, statements of changes in stockholders' equity and
statements of cash flows for the six months ended June 30, 2000 and for
the period from May 1, 1998 (inception) through June 30, 2000.
PVAXX CORPORATION & SUBSIDIARIES
Index to Financial Statements 1
Report of Independent Auditor 2
Balance Sheet 3
Pro Forma Statements of Operations & Deficit Accumulated
During Development Stage 4
Statement of Changes in Stockholders' Equity 5
Statement of Cash Flows 6
Notes to Financial Statements 7
<PAGE> F-2
September 20, 2000
Shareholders and Board of Directors
PVAXX CORPORATION
Fort Myers, Florida
REPORT OF INDEPENDENT AUDITOR
We have audited the accompanying balance sheet of PVAXX Corporation (formerly
Oak Brook Capital IV, Inc.) & Subsidiaries ( a development stage company) as
of June 30, 2000, and the related pro forma statements of operations and
deficit accumulated during development stage, changes in stockholders' equity,
and cash flows for the six months ended June 30, 2000 and for the period from
May 1, 1998 (inception) through June 30, 2000. These financial statements are
the responsibility of the Company's management. Our responsibility is to
express an opinion on these financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles
used and significant estimates by management, as well as evaluating the
overall financial statement presentation. We believe that our audit
provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of PVAXX Corporation &
Subsidiaries as of June 30, 2000, the operations during the development stage,
and its cash flows for the period ended June 30, 2000 in conformity with
generally accepted accounting principles.
The accompanying financial statements have been prepared assuming that the
company will develop into a going concern. As discussed in Note #1 to the
financial statements, the Company and all of its subsidiaries are in a
development stage, and have yet to realize any revenue. This raises
substantial doubt about the company's ability to continue as a going concern.
Management's plan in regard to these matters are discussed in Note # 10. The
financial statements do not include any adjustments that might result from
the outcome of this uncertainty.
/s/ Dennis W. Bersch, CPA
DENNIS W. BERSCH, CPA
Milwaukee, WI
9/28/00
<PAGE> F-3
PVAXX CORPORATION (FORMERLY OAK BROOK CAPITAL IV, INC.) & SUBSIDIARIES
(Development Stage Companies)
(with Auditor's Report on September 20, 2000)
BALANCE SHEET
June 30, 2000
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 118,631
Restricted cash and cash equivalents (Note 6) 299,970
VAT tax refund receivable 22,989
Total current assets $ 441,589
FIXED ASSETS
Machinery & equipment $ 596,851
Office Equipment 9,698
Furniture & fixtures 45,496
Motor vehicles 51,648
Less: accumulated depreciation (20,000)
Net fixed assets 683,694
OTHER ASSETS:
Prepaid expenses $ 31,469
Deposits 4,349
Patent rights (Note 1) 64,703
Total other assets 100,521
Total assets $1,225,804
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts Payable $ 125,667
Current portion of long-term liabilties 132,446
Accrued wages-officers 180,000
Other accrued liabilities 109,565
Total current liabilities $ 547,678
LONG TERM LIABILITIES:
Notes payable $ 4,427
Capital Lease to related parties 516,226
Loans payable to officers/directors 95,971
Total long term liabilities $ 616,624
Total liabilities $1,164,302
SHAREHOLDERS' EQUITY:
Preferred Stock-no par value,
10,000,000 shares authorized.
10,000,000 issued and outstanding $ 100,000
Common stock - no par value,
40,000,000 shares authorized.
21,322,800 shares issued and outstanding 204,200
Paid in Capital 217,914
Accumulated other comprehensive income 8,882
Deficit accumulated during the development stage (469,494)
Total equity 61,502
Total liabilities and equity $1,225,804
The accompanying notes are an integral part of these financial statements.
<PAGE> F-4
PVAXX CORPORATION (FORMERLY OAK BROOK CAPITAL IV, INC.) & SUBSIDIARIES
(Development Stage Companies)
(with Auditor's Report of September 20, 2000)
PRO FORMA STATEMENT OF OPERATIONS AND DEFICIT
ACCUMULATED DURING DEVELOPMENT STAGE
For the six months ended June 30, 2000 and
from May 1, 1998 (Inception) thru June 30, 2000
Six Months Since Inception
--------------- ----------------
REVENUE $ - $ -
COST OF REVENUE
Direct costs - -
Gross profit $ - $ -
OPERATING EXPENSES
Development costs $ 40,222 $ 40,222
Finance costs 22,647 32,872
Administrative costs 384,192 384,192
Total operating expenses 447,061 457,286
Operating income (loss) $ (447,061) $ (457,286)
OTHER INCOME AND (EXPENSES) (12,208) (12,208)
Net Operating Income (Loss) $ (459,269) $ (469,494)
INCOME TAXES - -
Deficit accumulated during
the development stage $ (459,269) $ (469,494)
PER SHARE INFORMATION
Weighted average number of
common shares outstanding 11,249,356
Profit (loss) per share $ (0.04)
Fully diluted shares 21,249,356
Profit (loss) per
fully diluted share $ (0.02)
The acccompanying notes are an integral part of these financial statements.
<PAGE> F-5
PVAXX CORPORATION (FORMERLY OAK BROOK CAPITAL IV, INC.) & SUBSIDIARIES
(Development Stage Companies)
(With Auditor's Report of September 20, 2000)
PRO FORMA STATEMENT OF CHANGES IN STOCKHOLDERS EQUITY
From inception through June 30, 2000
<TABLE>
<CAPTION>
Shares Issued
<S> <C> <C> <C> <C> <C> <C> <C>
Common Pref. Common Pref. Paid-in- Comprehen. Retained
Stock Stock Stock Stock Capital Income Earnings Equity
Equity at
Inception
$ 0
Issuance of
common stock
for services 1,228,000 $ 4,200 $ 4,200
Net loss for
the period - - - - - - $ (10,225) (10,225)
Shares issued
by Oak Brook
5/19/2000 94,800
Acquisition of
subsidiary
corporations
Issuance of
common stock 20,000,000 $ 200,000 $ 217,914 417,914
Issuance of
preferred
stock 10,000,000 $ 100,000 100,000
Foreign
currency
translation
adjustment 8,882 8,882
Net loss for
the period - - - - - - (459,269) (459,269)
Balance 6/30/2000 21,322,800 10,000,000 $ 204,200 $ 100,000 $ 217,914 $ 8,882 $ (469,494) 61,501
The accompanying notes are an integral part of these financial statements
</TABLE>
<PAGE> F-6
PVAXX CORPORATION (FORMERLY OAK BROOK CAPITAL IV, INC.) & SUBSIDIARIES
(Development Stage Companies)
(With Auditor's Report of September 20, 2000
PRO FORMA STATEMENT OF CASH FLOWS
For the six months ended June 30, 2000 and
from May 1, 1998 (Inception) thru June 30, 2000
<TABLE>
<CAPTION>
Six Months Since Inception
---------- ----------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Loss $(459,269) $ 20,000
Adjustments to reconcile net loss to net cash
provided by (used in) operating activities:
Depreciation & amortization $ 20,000 $ 20,000
(Increase) in VAT taxes receivable (22,990) (22,990)
(Increase) in other assets (35,817) (35,817)
Increase in accounts payable 115,442 125,667
Increase in accrued liabilities 109,565 109,565
Increase in loans to Officers/Directors 95,971 95,971
Net cash provided by (used in) operating activities $ 2,903 $ 2,903
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase/investment of intangible patent (64,703) (64,703)
Purchase of equipment and improvements (703,693) (703,693)
Net cash provided by (used in) investing activities $(768,396) $(768,396)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from notes & loans payable $ 7,097 $ 7,097
Proceeds from notes & loans payable-related parties 646,001 646,001
Repayments of notes & loans payable
Proceeds from sale of common stock 417,914 417,914
Proceeds from sale of preferred stock 100,000 100,000
Sale of common stock for services 4,200 4,200
Cash restricted by investor (299,970) (299,970)
Net cash provided by (used in) financing activities 875,242 875,243
EFFECT OF EXCHANGE RATE CHANGES ON CASH 8,882 8,882
Increase in Cash and Cash Equivalents 118,631 118,631
Cash at beginning of period - -
Cash at end of period $ 118,631 $ 118,631
Supplemental information:
Interest expense $ 12,208 $ 12,208
Income tax expense $ - $ -
The accompanying notes are an integral part of these financial statements
<PAGE> F-7
PVAXX CORPORATION (FORMERLY OAKBROOK CAPITAL IV) & SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS
AS OF JUNE 30, 2000
NOTE 1 - NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
History of the Reporting Entity
Originally named Oakbrook Capital IV, (Oakbrook IV) the company reporting
herein was formed in May 1998 in Colorado, with 40,000,000 shares of common
and 10,000,000 shares of preferred stock authorized. It was registered with
the SEC as one of a series of blank check companies seeking a business
combination with an operating company. On May 19, 2000, Oakbrook IV entered
into a share exchange agreement with PVAXX Corporation, a development stage
company whose primary business is the development of a biodegradable polymer,
which is distinguished by its relative environmental neutrality compared to
competing products in a variety of commercial, industrial and consumer
applications.
PVAXX Corporation, formed in Florida in 2000, has its primary office in Fort
Myers, Florida and an office and laboratories located in Kemble, England, the
residence of the majority shareholder. PVAXX Corporation had purchased certain
United Kingdom business assets of the PVAXX Business Group in exchange for
10,000,000 shares of its Preferred and 20,000,000 shares of its Common stock.
The PVAXX Business Group, in turn, was owned and controlled by the acquiring
Company's President and Chairman of the Board of Directors, Henry Stevens. It
consisted of two development stage United Kingdom corporations; Jumik
Technologies, Ltd., which was incorporated on March 31, 1999 and changed its
name on March 22, 2000 to PVAXX Technologies, Ltd., and PVAXX Research and
Development Centre Ltd., which was incorporated on October 18, 1999 and
changed on May 22, 2000 to PVAXX Research & Development, Ltd. On March 31,
2000, PVAXX Corporation formed another subsidiary corporation, PVAXX Europe,
Ltd. The only activities of any of these companies have been development
stage activities.
The role of each of the subsidiary companies is as follows:
*PVAXX Technologies, Ltd. is the holder of the rights to patents published
under International Publication Numbers WO 98/26911 on June 25, 1998 and WO
00/12615 on March 9, 2000,
*PVAXX Research and Development Ltd. performs research into product
improvements and applications. Doing business as PVAXX Engineering, it
produces machines for pelletizing the product for sale to converters, and as
PVAXX Pharmaceuticals it manufactures and sells capsule making machinery.
*PVAXX Europe Ltd. is intended to market and sell the products in Europe.
<PAGE> F-8
In conjunction with the share exchange agreement, Oakbrook IV, the Colorado
corporation, changed its name to PVAXX Corporation, and the company and all of
the subsidiaries have changed their respective fiscal year-ends to June 30.
Principles of Consolidation
These financial statements include the combined accounts of the Colorado
corporation, Oak Brook Capital IV, and the former Florida corporation, PVAXX
Corporation They are consolidated with the three 100% owned UK subsidiary
corporations (PVAXX Technologies, Ltd., PVAXX Research & Development, Ltd. and
PVAXX Europe, Ltd.). After conversion of UK currency to US dollars, all
significant inter-company accounts and transactions have been eliminated.
Foreign Currency Translation and Transactions
The financial position and results of operations of the company's foreign
subsidiaries are determined using the local currency as the functional
currency. Assets and liabilities of these subsidiaries are translated at the
exchange rate in effect as of the balance sheet date. Income statement
accounts are translated at the average rate of exchange prevailing during the
period. Translation adjustments arising from the use of differing exchange
rates from period to period are included in the accumulated other
comprehensive income account in shareholder's equity section.
Use of Estimates
The process of preparing financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reporting of amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period.
Cash and Cash Equivalents
Highly liquid assets with a maturity date of three (3) months or less from the
date of acquisition are treated as cash or cash equivalents.
Property and Equipment
Property and equipment is stated at cost less accumulated depreciation.
Depreciation is computed using straight-line and accelerated methods over
estimated useful lives of the property.
The amortization of leasehold improvements is based on the shorter of the
lease term or the life of the improvement.
Betterments and large renewals which extend the life of an asset are
capitalized whereas maintenance and repairs and small renewals are expensed as
incurred.
Intangibles
Intangible assets such as patents on other intellectual property are recorded
at cost if it is determinable at the date of acquisition. Such intangible
assets are amortized over estimated useful lives based on the nature of the
item.
<PAGE> F-9
In accordance with SFAS 121, " Accounting for Impairment of Long-Lived Assets
and Long-Lives Assets to be Disposed of", intangibles are evaluated for
impairment when events or changes in circumstances indicate that the carrying
amounts of the assets may not be recoverable through the estimated
undiscounted future cash flows resulting from the use of these assets. When
any such impairment exists, the related assets are written down to fair
value.
Income Taxes
The Company uses the asset and liability method as identified in SFAS 109,
Accounting for Income Taxes.
The consolidated Company has a net operating loss carryforward (NOL) of
$469,494 available to future periods due to losses generated since its
inception through June 30, 2000. This NOL would result in a tax debit based
on application of appropriate UK and US tax rates if offsetting profits were
anticipated. Because the Company and its subsidiaries are in the development
stages, there is no assurance that future operations will generate a profit or
income, therefore the company recognizes a valuation adjustment which
completely offsets the deferred tax asset related to the net operating loss
carryforward.
NOTE 2 - ACCOUNTS RECEIVABLE
Management believes all receivables are due and collectible and no reserve for
un-collectable amounts is necessary.
NOTE 3 - RELATED PARTY TRANSACTIONS
Through a series of transactions, the Company effectively acquired the PVAXX
Business Group from a company owned and controlled by Henry Stevens, the
present majority owner of PVAXX Corporation. The ultimate consideration for
the transaction is the 10,000,000 shares of Preferred stock and 20,000,000
shares of Common stock held by Henry Stevens and others whose PVAXX Florida
corporation shares were exchanged. The PVAXX Business Group consists of the
subsidiary companies described in Note 1.
The President, and another officer, advanced $95,971 to the Company on a
short-term basis with no interest.
The patent rights owned by PVAXX Technologies, Ltd., were developed by and
acquired from a company owned by the President, Henry Stevens, and are carried
at their actual cost of $68,018.
The Company entered into an Employment Agreement dated March 20, 2000 with
Henry Stevens, the Company's President and Chairman of the Board of Directors.
The Agreement is for a term of five years and renewable by the Company.
<PAGE> F-10
Under the Agreement, the Company agrees to pay the following amounts:
a) $50,000 per month net of all taxes;
b) Use of a motor vehicle at the choice of the employee;
c) Use of residential facilities in the Fort Myers area at a rental not to
exceed $36,000 per annum; and
d) The Company will establish a performance related share option program,
under which the company's board of directors will determine participation
commensurate with the employee's position. However, as of balance sheet
date, the Company has not officially established a share option plan.
No payments have been made under the Agreement as of the date of the financial
statements.
NOTE 4 - RISKS AND UNCERTAINTIES
The Company's future operating results may be affected by a number of factors.
The ability of the Company to raise the capital necessary to continue to
develop and bring its products to market is not assured. The product being
developed by PVAXX will be sold in a highly competitive global market in which
it will need to demonstrate performance characteristics sought by customers,
at a competitive price which will yield a profit after production and
distribution costs. Estimates of the size of the market, and the company's
eventual market share may not be realized, and the effect of competition
cannot be determined.
NOTE 5 - COMMITMENTS AND CONTINGENT LIABILITIES
Leased Facilities
The Company has entered into a three (3) year lease of facilities in the Fort
Myers area effective June 1, 2000. Under the terms of the lease, the Company
is obligated for monthly based rental amounts plus sales tax and Common Area
Maintenance (CAM) charges. Under the terms of the lease, the Company is
obligated to keep and maintain the leased premises, including fixtures and
improvements, in good condition.
The Company is obligated for the following rent payments over the lease term:
Total Monthly Sales
Rent Base Rent CAM Tax
Year 1
1st quarter $11,013 $2,000 $1,463 $208
2nd quarter 11,013 2,000 1,463 208
3rd quarter 12,285 2,400 1,463 232
4th quarter 13,239 2,700 1,463 250
Year 2 55,080 2,808 1,522 260
Year 3 57,276 2,920 1,583 270
<PAGE> F-11
Employee Compensation
In addition to the employment contract with the President disclosed in Note 3,
an arrangement with the Vice-president provides for a salary of $10,000
monthly for one year, and $15,000 thereafter.
NOTE 6 - RESTRICTED CASH
On March 3, 2000, the former PVAXX executed an agreement with an unrelated
individual who transferred $299,970 to an escrow agent in exchange for 90,000
shares of its common stock. Under the terms of the escrow agreement, updated
and signed on August 4, 2000, the funds will be released to the company when
the exchanged shares of the new PVAXX corporation are tradable on a U.S.
national exchange at not less than $5.00 per share. If this is not achieved,
the funds may be released to the investor six (6) months after the effective
date of the agreement, upon return of the 90,000 shares.
NOTE 7 - FAIR VALUES OF FINANCIAL INSTRUMENTS
The carrying amounts reported in the consolidated balance sheet for cash and
cash equivalents, restricted cash, receivables, accounts payable, accrued
expenses and other liabilities, approximate fair value because of immediate or
short-term maturity of these financial instruments. The underlying carrying
amount reported for long-term debt and capital leases approximates fair value
because, in general, the interest on the underlying instruments fluctuates
with market rates.
NOTE 8 - EARNINGS PER SHARE
Basic earnings per share are computed by dividing earnings available to common
stockholders by the weighted average number of common shares outstanding
during the period. Diluted earnings per share reflect per share amounts that
would have resulted if all preferred stock had been converted to common
stock. The following reflects amounts reported in the financial statements:
For the Period Ended June 30, 2000
Income Shares Per-share
(Numerator) (Denominator) Amount
----------- ------------- ---------
Income available to common stockholders
- basic earnings per share ($459,269) 11,249,356 $(.04)
Effect of dilutive securities
- convertible preferred stock 10,000,000
Income available to common stockholders
- diluted earnings per share ($459,269) 21,249,356 $(.02)
<PAGE> F-12
NOTE 10 - GOING CONCERN CONSIDERATIONS
The company is addressing the substantial doubt about its ability to continue
as a going concern through the deferral of cash payments to the principal
shareholders, through the negotiation of anticipated private placements with
additional investors, and by taking steps to register shares for sale on the
public market in order to generate additional working capital.
The Company's management is addressing its ability to emerge from the
development stage and to continue as a going concern by continuing to develop,
refine, and market its processes and products. Although as of the balance
sheet date of June 30, 2000, the Company had not entered into any
revenue-producing contracts, several successful field tests of various
products have been conducted, and management expects to have successfully
negotiated several contracts before the end of this fiscal year.
NOTE 11 - LONG TERM LIABILITIES
Long term liabilities include a capital lease dated May 1, 2000 with a related
party for equipment, office furniture and vehicles, and an automotive lease.
Capital Lease Auto Lease Total
2001 $ 129,776 $ 2,670 $ 132,446
2002 134,405 3,170 137,575
2003 381,821 1,491 383,312
Current 129,776 2,670 132,446
Long term 516,226 4,427 520,653
Total $ 646,002 $ 7,097 $ 653,099
PVAXX Corporation is the guarantor of these leases.
<PAGE> 16
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
ON ACCOUNTING AND FINANCIAL DISCLOSURE
Not Applicable.
PART III
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS;
Compliance with Section 16(a) of the Securities Exchange Act of 1934
Section 16(a) of the Exchange Act, requires the Company's officers,
directors and persons who beneficially own more than ten percent of the Common
Stock to file reports of securities ownership and changes in such ownership
with the Securities and Exchange Commission. Officers, directors and greater
than ten percent beneficial owners also are required by rules promulgated by
the Securities and Exchange Commission to furnish the Company with copies of
all Section 16(a) forms they file.
Based solely upon review of the copies of such forms furnished to the
Company, or written representations that no Form 5 filings were required, the
Company believes that during 1999 all Section 16(a) filing requirements
applicable to its officers, directors and greater than ten percent beneficial
owners were complied with on a timely basis.
Committees of the Board
------------------------------------
The Board of Directors delegates certain of its authority to a Compensation
Committee and an Audit Committee. There are currently vacancies on both of
these committees. The Board expects to fill such vacancies after it has
filled the vacancies on the Board of Directors.
The primary function of the Compensation Committee will be to review and make
recommendations to the Board with respect to the compensation, including
bonuses, of the Company's officers and to administer the Company's
Compensatory Stock Consulting Plan.
The function of the Audit Committee is to review and approve the scope of
audit procedures employed by the Company's independent auditors, to review and
approve the audit reports rendered by both the Company's independent auditors
and to approve the audit fee charged by the independent auditors. The Audit
Committee will report to the Board of Directors with respect to such matters
and recommends the selection of independent auditors.
<PAGE> 17
Management
Members of Management will devote their full time and attention to the
operations of the Company.
The following table sets forth the ages of and positions and offices presently
held by each Director of the Company. For information about ownership of the
Company's Securities by each director, see "BENEFICIAL OWNERSHIP OF PVAXX
SECURITIES."
</TABLE>
<TABLE>
<CAPTION>
Date
First
Became Positions and Offices
Name Age Director With the Company
-------------------- ---- ---------- -------------------
<S> <C> <C> <C>
Henry Stevens 37 June 26, 2000 President
Bryan Wade 53 June 26, 2000 Secretary
------------------------------------------------------
Please see personal biographies below
</TABLE>
Personal Biographies and Summary of Experience
--------------------------------------------------------
HENRY STEVENS, President and Director
From 1979 to 1986, Mr. Stevens was the Agricultural Manager in Bisley, UK.
From there, Mr. Stevens was a design consultant in packaging development at
Deranged Design from 1987 to 1993. It was here that Mr. Stevens first became
involved with PVA polymers. He was Managing Director at Churchill Technology
(IOM) Ltd., which is a PVA technology company. He then served as Managing
Director of FIP Holdings, Ltd., which is a PVA development company until
1997. In 1998, Mr. Stevens began serving as Managing Director of PVAXX
Group. His experience with PVA materials, particularly in young companies,
will certainly be a valuable tool in PVAXX's development.
BRYAN WADE, Vice President and Director
Mr. Wade has extensive sales and marketing experience, beginning in 1985, when
he served as Director of Multi-National Sales and Marketing at CFS. Mr. Wade
held similar positions in Weststar Marketing and S&S marketing Ltd. In early
2000, Mr. Wade joined PVAXX as a Vice President, overseeing all sales and
marketing for the company.
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<PAGE> 18
MANAGEMENT LOANS AND BORROWING
The Company's executive officers and directors do not plan to negotiate loan
agreements, nor do they have understandings between the Company and third
parties, nor does the Company intend to raise any operating through debt
financing. Certain of the Company's officers and shareholders have verbally
agreed that they will advance to the Company some additional funds which the
Company needs for operating capital. The Company will not borrow any funds
from anyone other than its current shareholders for the purpose of repaying
advances made by the shareholders, and the Company will not borrow any funds
to make any payments to the Company=s promoters, management or their
affiliates or associates.
CONSULTANTS
The Company is a development stage company and currently has limited
employees. Management of the Company expects to use attorneys and accountants
as necessary. The need for additional employees and their availability will
be addressed in connection with the decision whether or not to commence
certain business objectives.
Since Company management has no current plans to use any outside consultants
or advisors, no policies have been adopted regarding use of such consultants
or advisors, the criteria to be used in selecting such consultants or
advisors, the services to be provided, the term of service, or regarding the
total amount of fees that may be paid.
BOARD OF DIRECTORS
Colorado provides that a corporation's board of directors may be divided into
various classes with staggered terms of office. Our directors are elected for
a term of three years and until their successors are elected and qualified.
NUMBER OF DIRECTORS
Our board of directors currently consists of two directors. The number of
directors on our board may only be changed by a vote of a majority of our
directors, subject to the rights of the holders of any outstanding series of
our company's preferred stock to elect additional directors.
REMOVAL OF DIRECTORS
Our directors, or the entire board, may be removed for cause by the
affirmative vote of the holders of at least 50% of the outstanding shares of
common stock entitled to vote in the election of directors, voting as a single
class and subject to the rights of the holders of any outstanding series of
our company's preferred stock.
<PAGE> 19
FILLING VACANCIES ON THE BOARD OF DIRECTORS
Any newly created directorships in our board of directors, resulting from any
increase in the number of authorized directors or any vacancies, may be filled
by a majority of the remaining members of such board of directors, even though
less than a quorum, or in the case of our company, by a sole remaining
director, subject to the rights of holders of any outstanding series of
preferred stock. Newly created directorships or decreases in directorships in
our board of directors are to be apportioned among the classes of directors so
as to make all classes as nearly equal in number as practicable, provided that
no decreases in the number of directors in our board of directors may shorten
the term of any director then in office.
To the extent reasonably possible, any newly created directorship will be
added to the class of directors whose term of office is to expire at the
latest date following the creation of that directorship, unless otherwise
provided for by resolution of the majority of the directors then in office.
Any newly eliminated directorship will be subtracted from the class whose
office is to expire at the earliest date following the elimination of the
directorship, unless otherwise provided for by resolution of the majority of
the directors then in office.
ABILITY TO CALL SPECIAL MEETINGS
Special meetings of our company's stockholders may be called by our board of
directors, by affirmative vote of a majority of the total number of authorized
directors at that time, regardless of any vacancies, or by the chief executive
officer.
ADVANCE NOTICE PROVISIONS FOR STOCKHOLDER NOMINATIONS AND PROPOSALS
Our bylaws allow stockholders to nominate candidates for election to the board
of directors at any annual or any special stockholder meeting at which the
board of directors has determined that directors will be elected. In
addition, the bylaws allow stockholders to propose business to be brought
before any annual stockholder meeting. However, nominations and proposals may
only be made by a stockholder who has given timely written notice to the
Secretary of our company before the annual or special stockholder meeting.
Under our company's bylaws, to be timely, notice of stockholder nominations or
proposals to be made at an annual stockholder meeting must be received by the
Secretary of our company no less than 60 days nor more than 90 days before the
first anniversary of the preceding year's annual stockholder meeting. If the
date of the annual meeting is more than 30 days before or more than 60 days
after the anniversary of the preceding year's annual stockholder meeting,
notice will also be timely if delivered within 10 days of the date on which
public announcement of the meeting was first made by
our company.
<PAGE> 20
In addition, if the number of directors to be elected is increased and no
public announcement is made by us naming all of the nominees or specifying the
size of the increased board of directors at least 70 days before the first
anniversary of the preceding year's annual meeting, or, if the date of the
annual meeting is more than 30 days before or 60 days after the anniversary of
the preceding year's annual meeting, at least 70 days before the annual
meeting, a stockholder's notice will be considered timely, with respect to the
nominees for any new positions created by the increase, if it is delivered to
the Secretary of our company within 10 days of the date on which public
announcement of the meeting was first made by us.
Under our bylaws, to be timely, notice of a stockholder nomination to be made
at a special stockholder meeting must be received no less than 60 days nor
more than 90 days before a special meeting at which directors are to be
elected or within 10 days of the date on which public announcement of the
special meeting was first made by our company.
A stockholder's notice to us must set forth all of the following:
- all information required to be disclosed in solicitations of proxies for
election of directors, or information otherwise required by applicable law,
relating to any person that the stockholder proposes to nominate for election
or reelection as a director, including that person's written consent to being
named in the proxy statement as a nominee and to serving as a director if
elected
- a brief description of the business the stockholder proposes to bring before
the meeting, the reasons for conducting that business at that meeting and any
material interest of the stockholder in the business proposed
- the stockholder's name and address as they appear on our books and the class
and number of shares which are beneficially owned by the stockholder
- The chairman of our stockholder meeting will have the power to determine
whether the nomination or proposal was made by the stockholder in accordance
with the advance notice procedures set forth in our bylaws.
- If the chairman determines that the nomination or proposal is not in
compliance with advance notice procedures, the chairman may declare that the
defective proposal or nomination will be disregarded.
DIRECTOR COMPENSATION
The directors of our company, who are all executive officers as well, are not
compensated for serving.
<PAGE> 21
LIMITATION OF LIABILITY AND INDEMNIFICATION
Our Articles of Incorporation provide that a director of our company shall not
be personally liable to the company or any of its shareholders for monetary
damages for breach of fiduciary duty as a director, except for liability:
(i) for any breach of the director's duty of loyalty to the Company or its
shareholders,
(ii) for acts or omissions not in good faith or which involve gross
negligence, intentional misconduct or a knowing violation of law,
(iii) for any unlawful distribution as set forth in the Colorado Model
Business Corporation Act of Colorado (the "CMBCA"); or
(iv) for any transaction from which the director derived an improper personal
benefit. These provisions may have the effect in certain circumstances of
reducing the likelihood of derivative litigation against directors. While
these provisions may eliminate the right to recover monetary damages from
directors in various circumstances, rights to seek injunctive or other
non-monetary relief is not eliminated.
Indemnification of Officers and Directors
As permitted by Colorado law, the Company's Articles of Incorporation provide
that the Company will indemnify its directors and officers against expenses
and liabilities they incur to defend, settle, or satisfy any civil or criminal
action brought against them on account of their being or having been Company
directors or officers unless, in any such action, they are adjudged to have
acted with gross negligence or willful misconduct. Insofar as indemnification
for liabilities arising under the Securities Act of 1933 may be permitted to
directors, officers or persons controlling the Company pursuant to the
foregoing provisions, the Company has been informed that, in the opinion of
the Securities and Exchange Commission, such indemnification is against
public policy as expressed in that Act and is, therefore, unenforceable.
Exclusion of Liability
Pursuant to the Colorado Business Corporation Act, the Company's Articles of
Incorporation exclude personal liability for its
directors for monetary damages based upon any violation of their
fiduciary duties as directors, except as to liability for any breach of the
duty of loyalty, acts or omissions not in good faith or which involve
intentional misconduct or a knowing violation of law, acts in violation of
Section 7-106-401 of the Colorado Business Corporation Act, or any transaction
from which a director receives an improper personal benefit. This exclusion
of liability does not limit any right which a director may have to be
indemnified and does not affect any director's liability under federal or
applicable state securities laws.
<PAGE> 22
ITEM 11. EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE FOR PVAXX
Long Term Compensation
_______________________________________________________________________
Annual Compensat. Awards Payouts
_______________________________________________________________________
(a) (b) (c) (d) (e) (f) (g) (h) (i)
Other Rest. All
Name and Annual Stock LTIP Other
Principal Calend. Comp. Award(s)Opt. P/outs Comp.
Position Year Salary Bonus($) ($) ($) SARs(#) ($) ($)
_______________________________________________________________________
Director
Stevens, 1999 0 0 - - - - -
Henry (annualized)
1998 0 0 - - - - -
Director
Wade, 1999 0 0 - - - - -
Bryan (annualized)
1998 0 0 - - - - -
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information regarding beneficial
ownership of PVAXX Common Stock as of July 10, 2000 by (i) each person
known by PVAXX to own beneficially more than 5% of the outstanding Common
Stock, (ii) each director, and (iii) all executive officers and directors as
a group. Each person has sole voting and sole investment or dispositive power
with respect to the shares shown except as noted.
<TABLE>
<CAPTION>
---------------------------------------------
<S> <C> <C>
COMMON STOCK
-----------------------------------
Name and address # of %of
of beneficial owner shares Class Options
-----------------------------------------------------------------------
Jumik Investments, Inc. 16,613,815 77.900% -
Henry Stevens,
Majority and
Controlling Shareholder
Henry Stevens 20,000 00.009% -
<PAGE> 23
PREFERRED STOCK
-----------------------------------
Jumik Investments, Inc.
Henry Stevens,
Majority and
Controlling Shareholder 10,000,000 100.00% -
</TABLE>
DIVIDENDS
The Company has never paid dividends with respect to the Common Stock and
currently does not have any plans to pay cash dividends in the future. There
are no contractual restrictions on the Company's present or future ability to
pay dividends. Future dividend policy is subject to the discretion of the
Board of Directors and is dependent upon a number of factors, including future
earnings, capital requirements and the financial condition of the Company.
The Colorado Corporation Code provides that a corporation may not pay
dividends if the payment would reduce the remaining net assets of the
corporation below the corporation's stated capital plus amounts constituting
a liquidation preference to other security holders.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Other than their employment agreements with the Company (refer to
"Management-Employment Contracts" above), no material transactions involving
the directors, senior officers or principal holders of the Company's
securities have occurred since the Company was incorporated except for several
loans previously made to the Company by the Company's principals.
The Company intends to indemnify its officers and directors to the full extent
permitted by Colorado law. Under Colorado law, a corporation may indemnify its
agents for expenses and amounts paid in third party actions and, upon court
approval in derivative actions, if the agents acted in good faith and with
reasonable care. A majority vote of the Board of Directors, approval of the
stockholder or court approval is required to effectuate indemnification.
Insofar as indemnification for liabilities arising under the Securities Act,
as amended, may be permitted to officers, directors or persons controlling the
Company, the Company has been advised that, in the opinion of the Securities
and Exchange Commission, such indemnification is against public policy as
expressed in such Act and is, therefore, unenforceable. In the event that a
claim for indemnification against such liabilities (other than the payment by
the Company of expenses incurred or paid by an officer, director or
controlling person of the Company in the successful defense of any action,
suit or proceeding) is asserted by such officer, director or controlling
person in connection with the securities being registered, the Company 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
<PAGE> 24
expressed in such Act and will be governed by the final adjudication of such
issue.
Transactions between the Company and its officers, directors, employees and
affiliates will be on terms no less favorable to the Company than can be
obtained from unaffiliated parties. Any such transactions will be subject to
the approval of a majority of the disinterested members of the Board of
Directors.
PART IV
ITEM 14. EXHIBITS AND REPORTS ON FORM 8-K
(a) EXHIBITS
The following documents are filed herewith or have been included as exhibits
to previous filings with the Commission and are incorporated herein by this
reference:
Exhibit No. Exhibit
x 2.10 Agreement and Plan of Share Exchange
x 2.11 Articles of Share Exchange
# 3(a) Articles of Incorporation
# 3(b) Bylaws
# 4(a) Agreements Defining Certain Rights of
Shareholders
# 4(b) Specimen Stock Certificate
x 5.10 Legal Opinion (Nadeau & Simmons, P.C.) -
Investment Representation Letter
7 Not applicable
9 Not applicable
11 Not applicable
14 Not applicable
16 Not applicable
21 Not applicable
x 23.1 Consent of Counsel
(contained in Exhibit 5.1)
<PAGE> 25
## 24.1 Consent of CPA.
27 Financial Data Schedule
28 Not applicable
## 99.1 Safe Harbor Compliance Statement
____________________________
x filed herewith
# previously filed
## incorporated herein by reference from Registrant's Definitive
Information Statement, filed on Schedule 14C on June 12, 2000.
(b) REPORTS ON FORM 8-K
The Company filed the following reports on Form 8-K during the last quarter
of the 1999 fiscal year.
July 11, 2000-Form 8-K Filed for Item 1, Change in Control
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this annual report on Form 10KSB to be signed on
its behalf by the undersigned hereunto duly authorized.
PVAXX CORPORATION
By: /s/ Henry Stevens
________________________________
HENRY STEVENS
Chairman
Date: September 29, 2000
<PAGE> 26
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each individual whose signature appears
below constitutes and appoints Henry Stevens, his true and lawful
attorneys-in-fact and agents with full power of substitution and
re-substitution, for then and in their name, place and stead, in any and all
capacities, to sign any and all amendments (including post-effective
amendments) to this registration statement and to file the same with all
exhibits thereto, and all documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorneys-in-fact and
agents, and each of them, full power and authority to do and perform each and
every act and thing requisite and necessary to be done, as fully to all
intents and purposes as they might or could do in person, hereby ratifying and
confirming all that said attorneys-in-fact and agents or any of them, or their
or his substitute or substitutes, may lawfully do or cause to be done by
virtue hereof.
This power of attorney may be executed in counterparts.
Pursuant to the requirements of the Securities Act of 1933, this registration
statement has been signed by the following persons in the capacities and on
the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- -------- -------------------------
<S> <C> <C>
/s/ Bryan Wade Secretary September 29,2000
</TABLE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
--------------------------
EXHIBITS
TO
FORM 10-KSB
---------------------------
PVAXX CORPORATIOIN
EXHIBIT INDEX
(a) EXHIBITS
The following documents are filed herewith or have been included as exhibits
to previous filings with the Commission and are incorporated herein by this
reference:
Exhibit No. Exhibit
x 2.10 Agreement and Plan of Share Exchange
x 2.11 Articles of Share Exchange
# 3(a) Articles of Incorporation
# 3(b) Bylaws
# 4(a) Agreements Defining Certain Rights of
Shareholders
# 4(b) Specimen Stock Certificate
x 5.10 Legal Opinion (Nadeau & Simmons, P.C.) -
Investment Representation Letter
7 Not applicable
9 Not applicable
11 Not applicable
14 Not applicable
16 Not applicable
21 Not applicable
x 23.1 Consent of Counsel
(contained in Exhibit 5.1)
<PAGE>
## 24.1 Consent of CPA.
27 Financial Data Schedule
28 Not applicable
## 99.1 Safe Harbor Compliance Statement
____________________________
x filed herewith
# previously filed
## incorporated herein by reference from Registrant's Definitive
Information Statement, filed on Schedule 14C on June 12, 2000.
