SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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AMENDMENT NO. 2
FORM 10SB
GENERAL FORM FOR REGISTRATION OF SECURITIES
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Pursuant to Section 12(g) of
The Securities Exchange Act of 1934
MIND2MARKET, INC.
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(Exact name of registrant as specified in its charter)
Colorado (84-1361341)
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(State or other jurisdiction (I.R.S. Employer
of incorporation or organization Identification No.)
1625 Abilene Dr., Broomfield, Colorado 80020
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(Address of principal executive offices) (Zip Code)
(303) 438-9185
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Registrant's telephone number, including area code:
Securities to be registered pursuant to Section 12(b) of the Act:
Title of each class Name of each exchange on which
to be so registered each class is to be registere
None None
Securities to be registered pursuant to Section 12(g) of the Act:
Title of class
Common $.001 Par Value
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TABLE OF CONTENTS
Sequential
Page
Part I
Item 1. Description of Business ................. 1
Item 2. Managements Discussion and Analysis 1
or Plan of Operation.....................
Item 3. Description of Properties ............... 16
Item 4. Security Ownership of Certain
Beneficial Owners and Management ...... 16
Item 5. Directors and Executive Officers ....... 17
Item 6. Executive Compensation ................. 20
Item 7. Certain Relationships and Related
Transactions ........................... 22
Item 8. Description of Securities ............... 22
Part II
Item 1. Market Price of and Dividends on
Registrants Common Equity and
Related Stockholder matters ............ 24
Item 2. Legal Proceedings ....................... 24
Item 3. Changes and Disagreements with Accountants on
Accounting and Financial Disclosure .... 24
Item 4. Recent Sales of Unregistered
Securities ............................. 24
Item 5. Indemnification of Directors and
Officers ............................... 25
Part III
Financial Statements.................... F-1 - F- 9
Exhibit Index ...................... 29
Signatures ......................... 30
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ITEM 1. DESCRIPTION OF BUSINESS
(a) General Description and Development of Business.
Mind2Market, Inc. (the "Registrant" or the "Company") was incorporated in
Colorado in February, 1996, as NELX Marketing, Inc. In October 1996 shareholders
approved a name change to Mind2Market, Inc.
THE COMPANY BUSINESS
The company was formed as a Colorado Corporation in 1996 as NELX Marketing,
Inc. It was formed as a wholly owned subsidiary corporation of NELX, Inc. It
received limited capital of $11,500 from NELX, Inc. In October, 1996, NELX, Inc.
agreed to divest the company. NELX, Inc. received 600,000 shares of NELX
Marketing, Inc. stock and NELX, Inc. assigned all rights and privileges to two
products to NELX Marketing, Inc. NELX Marketing, Inc. changed its name to
Mind2Market, Inc. concurrent with the separation from NELX, Inc.
The company was formed to develop, manufacture and market safety products.
The initial product was obtained under a manufacturing and marketing license
from Radarfind, Inc. and a royalty agreement with the original inventor of the
product, Tony Mears. It is a Radar Beacon Emergency Signal Balloon which is a
visual distress signal and an inflatable radar reflector that is lightweight and
small enough to be worn by a person.
1. Property and General Operations
General Operations: The Company's current operations are limited to planning
marketing of products and are minimal at this time due to lack of capital.
PRODUCTS DESCRIPTION
The initial products that will be marketed are the Radar Beacon and the
AeroLink distress signals. The products were conceived and patented by
RadarFind, Inc. of Denver, Colorado. Radarfind, Inc. completed the initial
development and testing of the aerodynamic balloon products for the outdoor land
and marine markets and subsequently conveyed manufacturing and marketing rights
to the company. The balloon in the products has a unique design which enables it
to sustain its upward flight in very high winds. There are no other balloon
products available capable of this flight performance. RadarFind, Inc. obtained
patents and Mind2Market has licensed all development rights on the products
under the manufacturing and marketing agreement. Since the company has no
manufacturing capabilities, it will hire third party manufacturing.
(b) Parents and Subsidiaries: None
(c) Narrative Description of Business.
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The Company is a product marketing company. The first products the company
is proposing to market are described as follows:
(1) EMERGENCY SIGNAL BALLOON (RADAR BEACON)
The Emergency Signal Balloon is a personal, portable locator device,
designed to be deployed in emergency situations to assist in search and rescue
efforts. The device consists of a lightweight tubular plastic case encompassing
a folded 26" balloon, made of microfoil (microwave reflecting) material, with a
fluorescent orange coating, string for tethering the balloon, a cylinder
containing 2 cubic feet of helium, and a release valve which, when activated,
fills the balloon and releases it into the air. The balloon is tethered to the
case with 200 feet of line. The case is a round plastic tube 2" in diameter and
is 11" in length, weighs approximately 15 ounces, and is made of a high impact
plastic designed to be secured to a belt, equipment, or tethering device. The
case may also be purchased with an optional water seal for the diving market.
The balloon and its attached airfoil have been tested both in the atmosphere and
in a major university wind tunnel. The balloon is capable of flying at an angle
of 58 degrees in winds over 75 mph. The balloon has flown for sustained periods
over ten days in atmospheric tests. The balloon is an inflatable radar
reflector. The distance the balloon can be seen on radar depends on the type of
radar and height of the balloon.
(2) RADIO ANTENNA BALLOON (AEROLINK)
The Radio Antenna Balloon has been developed to meet the need for a
portable antenna to enhance signal transmission and receipt in remote areas and
at sea. The unit is approximately 8" x 12" x 3" in size and weighs 2 lbs. 10
ounces. It is packaged in a handle-equipped plastic case for ease of
transportation or can be carried in an optional fabric shoulder bag. Each unit
contains two helium cylinders for multiple usage, a 36" microfoil balloon, a
fill valve, and a removable hand cranked reel containing approximately 250 feet
of antenna line. This reel has been designed with a built-in frequency adjuster
for different radio bands and a lightning arrester that can be connected to an
optional ground anchor for usage in bad weather. Also included in the case is
the connector and coax cabling to permit emergency locator transmitter (ELT) or
radio connections. The AeroLink Balloon is capable of sustained flight in winds
over 75 mph for more than ten days. The balloon has been tested extensively by
engineers in the Colorado State University wind tunnel and in actual adverse
outdoor conditions. This balloon, with attached tail assembly, is also radar
reflective. The distance the balloon can be seen on radar depends on the type of
radar and height of the balloon. This product will be introduced to the market
approximately 6-9 months after the initial introduction of the Radar Beacon.
BUSINESS
The Company will market safety products as its main business. The company
has no manufacturing capabilities and will be reliant upon third party
manufacturers for product supplies. The Radar Beacon and AeroLink products have
been analyzed for their market potential and the market strategy for acquiring
sales.
The Company obtained rights to manufacture and market the two products by
way of assignment from NELX, Inc. In September, 1995, NELX and Radarfind, Inc.,
a Colorado corporation, entered into an agreement whereby Radarfind assigned the
exclusive rights to manufacture and market the products along with an
irrevocable option for NELX to purchase the underlying patents owned by
Radarfind for $50,000 subject to the payment by NELX of $150,000 of royalties to
Radarfind for subsequent sales of the products. In lieu of payment of the
$50,000 and the royalties, NELX issued 750,000 shares of its common stock to
Radarfind in exchange for the exclusive manufacturing and marketing rights to
the products. The 750,000 shares of NELX stock were issed as follows: 250,000
shares each to Messrs. Charles Powell and Arthur Mears, each of whom were
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officers and 33 1/3% shareholders of Radarfind at the time; and the remaining
250,000 shares were to be held in escrow for the remaining shareholders of
Radarfind. In addition to the 250,000 shares of stock issued to Arthur Mears,
the original patent holder of the product, NELX also agreed to pay Mears a
royalty of $0.25 per unit sold of the product. NELX recorded the rights at
$187,500, which was the market value of the NELX stock issued. After
incorporating the Company, NELX was unable to raise sufficient funds to follow
through with developing and marketing the products and in October 1996
transferred the rights to the subsidiary concurrent with the divestiture.
Effective May 15, 1997, the Company and Radarfind entered into an
agreement which will ultimately transfer the patents for the products referred
to above from Radarfind to Mind2Market, Inc.. The Company will assume the
obligation to pay the royalties of $150,000 ($1.00 per unit sold). Effective on
May 15, 1997, the Company issued 250,000 shares of its common stock to be held
in escrow for the benefit of Radarfind's shareholders other then Messrs. Powell
and Mears. The 250,000 shares were recorded as additional cost of the
manufacturing and marketing rights in the amount of $125,000 ($.50 per share,
which was the price of shares issued for cash during the period). Upon final
payment of the $150,000 royalties, the NELX shares held in escrow and the
Company shares held in escrow will be distributed to the remaining shareholders
of Radarfind, and Radarfind will be liquidated.
MARKETING STRATEGY FOR RADAR BEACON
A. Market Research
For every outdoorsman, pilot, fisherman, boater, scuba diver, and for
every family member and acquaintance familiar with these activities, news
articles of "near-miss" encounters with disaster are real. Mind2Market has
developed products geared toward safety and to prevent near-miss incidents from
becoming real. The Radar Beacon is a visual distress signal with radar
reflective capabilities to enhance a person's ability to be seen in a
distressful situation. The Radar Beacon can aid people who enjoy outdoor
activities such as hunting, hiking, cross country skiing and snowmobiling to be
found in mountainous and back country regions where it is easy to become lost or
injured. The Radar Beacon can also be useful to boaters who are disabled to
signal other boaters in the area of their distress. It can also be used by
people who have been in a boat that has sunk, whether they are in a life raft or
physically in the water themselves. It provides a signal to other boats in the
area, whether visually or by radar, they need assistance.
The Company believes there are several large markets for the product due
to the need for the product by every outdoors group. The need is becoming more
apparent to everyone with the individual state legislators considering state
laws to have individuals reimburse the state for a search and rescue operation.
Most western states have imposed a $0.25 to $0.50 "tax" fee on hunting and
fishing licenses issued to establish a Search and Rescue (SAR) fund to help pay
for certain expenses associated with searches. Also the Federal Government is
requesting reimbursement of rescue operations conducted by the Coast Guard. In
the Coast Guard annual report of operations, it provides a list of search and
rescue operations conducted each year. As part of this table, it details the
expenses for each operation and those expenses which were reimbursable searches.
The company has prioritized which markets to pursue first. The management team
has decided the boating market would be the first market. The decision was based
on the scope of this market and the available sales channels through
representatives that
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can be utilized without large staff and salary additions to the company. The
need for the product is more realized by the individual who owns and operates a
boat in areas where they venture to where they cannot see the shore line.
Boaters often want all the tools available to them that would help them in a
distressful situation. The company will stress the benefits of the Radar Beacon
over the items currently available to them.
B. Market Segments
The boating market can be segmented by the geographic regions and size of boats
registered in the U.S. The largest concentration of registered motorized boats
are in the following regions:
GEOGRAPHIC AREA REGISTERED BOATS
Florida 3.5 million
Great Lakes 4 million
California 2 million
Northeast 1 million
Missouri 1/2 million
The company believes boaters who are in ocean areas with boats over 21
feet and under 75 feet would be inclined to buy this product. These people are
very safety conscious and realize a need to be seen as quickly as possible if
their boat breaks down or sinks. The Company has attended several boating shows
and conducted informal surveys of people attending these shows as to the type
and size of boats they own and what is their likelihood of purchasing the
company's product to confirm this. After returning from these shows, the Company
has concluded from these surveys the perceived need of the market. With this
information in mind, the company has surveyed the buying habits of this market
to aid it in where to place the product for sale to the market. There were no
cost for these surveys beyond the cost to attend the shows by company personnel.
This market will mostly be the commercial and recreational boater. The
commercial boater needs to be rescued quickly due to the number of people on
board and the dependence on the boat for income. They will buy a product of this
type because they see the need to be rescued quickly. They don't want to have to
pay for a rescue, nor does they want to lose the income by waiting for a long
period of time in a disabled boat or life rafts. The recreational boater has a
fear of not being found once they lose sight of land. He will buy the product
because he too doesn't want the added expense of a rescue or have his family
exposed to a near miss disaster without the most advanced tools available to
help them be found. Each group has indicated a strong desire for a product like
this to us while we exhibited the product to them at various boat shows.
Approximately 40% of the purchases by this market are bought at their
local marina, with an additional 30% purchased through a boaters catalog. There
are various boating catalogs that these people will purchase through, however
the research indicates U.S. Boating and West Marine are the most used and
respected. Other areas where purchases are made are sporting goods stores (10%),
discount stores (10%) and mail order (3%).
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C. Market Strategy
The potential of the boating market is great, however, factors must be
considered. The product must be a quality product. It must be perceived as a
product that can benefit the buyer when they need it. The development, research
and testing work performed on this product has created a product that can be
sold as a dependable product. One of the first avenues available to us to help
sell this as a dependable product is the U.S. Coast Guard. The Company has
demonstrated the product to various Coast Guard personnel in Florida, Maryland,
and California. Prototype units of the product were left with the Coast Guard
after the demonstrations. It is the policy of the Coast Guard that it cannot
recommend or require a product not in production. Once the product is in full
production, five (5) units will be given at no cost to the Coast Guard for final
testing. It is the plan of the Company at the time testing is complete by the
Coast Guard to ask them for an approval of the product and to place the product
on the CG recommended list of safety products for boats. The Company will offer
for sale the product to all federal government organizations through the GSA
catalog. The Company believes this approval will aid in the marketing of the
product to the marine market. The Company will have the approval stamped on the
product and it's packaging and advertising.
Pricing is another key element in the sale of the Radar Beacon. While the
markets are concerned about a quality product, they are also concerned with
price. The Company must price the product at what the market will bear. To help
determine price, the Company looked at what other safety devices were selling
for. The following table shows some comparable safety products:
Product Typical Retail Price
Compass $35 to $100
Signal Mirror $10
Flare Signal Kit $35 to $225
Flashlight $15 to $40
Emergency Strobe Signal Light $45 to $100
Life Vest $40 to $150
Emergency Position Indicating Beacon $450 to $2200
Radar Beacon Signal $150*
*The pricing for the product has not been totally established. Once the
product has been finalized, all component costs can be established. A contract
with Western Innovations, Inc. (WII) has been signed in which WII will be
responsible for the procurement of all components, and the assembly and shipping
of the product. In addition, WII will also provide certain administrative
functions for the Company,
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including a offices and a customer support phone line. The Company will pay WII
actual expenses for product components plus a fee for assembly, shipping and
storage, and the administrative services. It is the intent of the Company to
mark up the cost to the Company from WII an additional 40% to cover the
Company's additional expenses and profit.
From immediate responses the Company has obtained by attending various
trade shows, it appears it will be a readily acceptable product. However, the
Company intends to use as much free news release service as possible. A small 30
to 90 second demonstration of the product to be aired on the local news casts or
an article in the local newspaper or area magazine would expose the product to
the public.
The Company has contacted many of the targeted areas for sales distributor
support. The distributor contract currently established by the Company is a
standard contract developed by the Company. All distributors will be treated
equally per the contract. The Company has a letter of intent with at least 5
distributors but does not have any distributors under contract at this time. But
the Company anticipates signing with the 5 distributors as soon as the product
is ready for sale, a final price is established to the distributors, and the
product meets their final approval.The Company has an initial advertising budget
and will allocate two dollars ($2.00) per unit sold for all forms of advertising
in conjunction with the local distributors.
The Company plans to contact many of the more respected periodicals to
gain their new product release information and see if they would print feature
articles. The feature article could center around the personal experience of the
inventor, who was lost at sea during a diving expedition for several hours and
how he has developed this new, state of the art SOS. Some of the periodicals to
be considered for press releases and feature articles include: Northwest
Magazine, Boat, Boat Journal, 38th Latitude, Cruising World, Great Lakes Sailor,
Heartland Boating, Hot Boat, Southern Boating Magazine, Yachting, The Fisherman,
Fishing World, Gulf coast Fisherman, The Maine Sportsman, Marlin, Outdoor Life,
Salt Water Sportsman, The Diver, Pacific Diver, Undercurrent, and Northeast
Outdoors. All the periodicals mentioned in this section have been contacted. The
Company has received substantial interest from them of their interest in this
type of article. In addition, new product information packets have been received
from these periodicals to introduce the product to the potential markets.
D. Distribution Strategy
The Company is currently establishing sales distributors for the Radar
Beacon. With the extensive contacts provided by attending various trade shows,
the Company has estimated that approximately ten (10) distributors must be
obtained to gain total coverage of North America.
Once a distributor has been placed under contract for a certain geographic
area, he will receive promotional material provided by the Company. He must also
provide an initial order for his immediate inventory and then meet the
performance clauses agreed to in the contract. The Company will provide all
necessary support to help the distributor get started, including a technical
training session and sales strategy sessions in the sales reps office. Follow up
sessions will be provided as needed. Also support to trade shows as technical
reps will be provided by the Company. All area news releases the distributor may
set up will be done by a company person.
A chronological plan which is under way is as follows:
1)Prepare distributor packages and contact as many as possible from the contacts
already established from the trade shows. Perform background checks on all
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possible distributor candidates and select the most suitable for each geographic
region. Step 1 is currently in progress and the Company anticipates having at
least 10 distributors under contract by the end of 2000. Cost: $10,000.
2) Prepare press releases and contact each publication individually for specific
needs. Thrust will be aimed at national media, using free lance writers where
possible. Special emphasis on inventor and management's perception of need and
practicality. Prepared material will be coordinated so attention is centered on
distributor for each area. Step 2 is currently in progress. The Company
anticipates providing the materials to each periodical for inclusion in the next
published issue to coordinate with the release of the product to market. A
prepared article has been written by a writer dealing with the original
inventors story and the Company's perceived need for the product. Cost: $5,000.
3) Contact National Public Radio for telephone interview with the inventor and
other management personnel on products need and safety features. Step 3 will
begin in conjunction with the release of the product. Cost: minimal.
4) Place the product in catalogs where appropriate. Step 4 is in progress.
Several outdoor and marine product catalogs have been contacted for requirements
to be included in their catalogs. Sample product will be sent for their testing
and approval. A written advertisement, along with specification sheets and a
picture of the product, will be submitted to the catalog companies. These
companies will be contacted over the next year. Cost: $5,000.
5) Contact national associations to establish credibility of the product, and to
get endorsements. Use these national association's newsletters and periodicals
to market the product. Step 5 is in progress. Many search and rescue
associations have been contacted and demonstrations are being scheduled. The
Company anticipates this process will take about 2 years to contact all known
associations, although it may be expedited by attending some of the associations
trade shows and seminars. Cost: $20,000.
6) Work with the military to gain their approval of the product. Obtain an
approval for sale to the military by establishing a GSA number and entering it
in the GSA catalog. Establish military sales by direct contact to the Pentagon.
Step 6 is in progress. Coast Guard and U.S. Navy demonstrations are being
scheduled for the near future. A company has been hired by Mind2Market to handle
all military sales. A GSA number application for the product has been submitted
and it is anticipated the product will be included in the GSA catalog in 2001.
Supplements to the GSA catalog are released at various times during the year and
the Company anticipates being included in a supplement sometime in 2000. Cost:
$2,500.
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(2) Working Capital. The historical working capital needs of the Company
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consist primarily of: research and development, product and market testing,
manufacturing and marketing of products. The current estimated costs for each
phase: R&D - $5,000; product and market testing - $10,000; manufacturing -
$100,000; marketing - $100,000. Several avenues are being pursued at this time
to acquire the necessary funding. The Company currently has $2,000 in cash as of
the date of this registration statement. The Company is negotiating to obtain a
loan in the amount of $250,000 from an investment banking firm to help defray
these costs. In addition, upon receipt of committed orders the manufacturer,
Western Innovation, has agreed to purchase on behalf of the Company, all
components for the product up to $1,00,000 to help establish an inventory of
units for sale.
(3) Dependence on a Single Customer or a Few Customers.
--------------------------------------------------
a) Revenues - Products
The Radar Beacon and AeroLink depend upon a large population base of
boaters and outdoor enthusiast and is not tied to only a few customers. It is
not limited to any geographic area and can be used anywhere in the world.
b) Client Services revenues - none
(4) Backlog of Orders. The company is currently negotiating with a
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distributor for an initial order for 10,000 units of Radar Beacon. There are
currently no orders for sales at this time.
(5) Government Contracts. None at this time.
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(6) Competitive Conditions. Currently, there are no other products similar
----------------------
to those of the company on the market. However, competitive products which
already have a niche in the market include flare kits, signal mirrors, flash
lights and strobes, Emergency Positioning Indicator Beacons (EPIRB), Global
Positioning Systems, radar reflectors, and signal flags.
Registrant Sponsored Research and Development. None.
---------------------------------------------
(8) Compliance with Environmental Laws and Regulations.
--------------------------------------------------
The operations of the Company are subject to local, state and federal laws
and regulations governing environmental quality and pollution control pertaining
to the handling and storage of the high pressure cylinders used in the product.
To date, compliance with these regulations by the Company has had no material
effect on the Company's operations, capital, earnings, or competitive position,
and the cost of such compliance has not been material. The Company is unable to
assess or predict at this time what effect additional regulations or legislation
could have on its activities.
(9) Number of Persons Employed. As of June 30, 2000, the Company has no
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employees.
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Risk Factors
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(1) Conflicts of Interest. Certain conflicts of interest may exist between
the Company and its officers and directors. They have other business interests
to which they devote their attention. The Company currently has no full time
employees, therefore all officers and directors of the Company are currently
employed by other entities. It is not anticipated any of these current employers
have any conflicts with the Company or its product. If funding becomes
available, officers will be hired by the Company to conduct the business of the
Company. . Until that time, conflicts of interest may arise that can be resolved
only through exercise of such judgment as is consistent with fiduciary duties to
the company. See "Management," and "Conflicts of Interest".
(2) Need for Additional Financing. The Company has very limited funds, and
such funds may not be adequate to carryout the business plan. The ultimate
success of the Company may depend upon its ability to raise additional capital.
The Company has not investigated the availability, source, or terms that might
govern the acquisition of additional capital and will not do so until it
determines a need for additional financing. If additional capital is needed,
there is no assurance that funds will be available from any source or, if
available, that they can be obtained on terms acceptable to the Company. If not
available, the Company's operations will be limited to those that can be
financed with its modest capital.
(3) Regulation of Penny Stocks. The Company's securities, when available
for trading, will be subject to a Securities and Exchange Commission rule that
imposes special sales practice requirements upon broker-dealers who sell such
securities to persons other than established customers or accredited investors.
For purposes of the rule, the phrase "accredited investors" means, in general
terms, institutions with assets in excess of $5,000,000, or individuals having a
net worth in excess of $1,000,000 or having an annual income that exceeds
$200,000 (or that, when combined with a spouse's income, exceeds $300,000). For
transactions covered by the rule, the broker-dealer must make a special
suitability determination for the purchaser and receive the purchaser's written
agreement to the transaction prior to the sale. Consequently, the rule may
affect the ability of broker-dealers to sell the Company's securities and also
may affect the ability of purchasers in this offering to sell their securities
in any market that might develop therefore.
In addition, the Securities and Exchange Commission has adopted a number
of rules to regulate "penny stocks". Such rules include Rules 3a51-1, 15g-1,
15g-2, 15g-3, 15g-4, 15g-5, 15g-6, 15g-7, and 15g-9 under the Securities and
Exchange Act of 1934, as amended. Because the securities of the Company may
constitute "penny stocks" within the meaning of the rules, the rules would apply
to the Company and to its securities. The rules may further affect the ability
of owners of Shares to sell the securities of the Company in any market that
might develop for them.
Shareholders should be aware that, according to Securities and Exchange
Commission, the market for penny stocks has suffered in recent years from
patterns of fraud and abuse. Such patterns include (i) control of the market for
the security by one or a few broker-dealers that are often related to the
promoter or issuer; (ii) manipulation of prices through prearranged matching of
purchases and sales and false and misleading press releases; (iii) "boiler room"
practices involving high-pressure sales tactics and unrealistic price
projections by inexperienced sales persons; (iv) excessive and undisclosed
bid-ask differentials and markups by selling broker-dealers; and (v) the
wholesale dumping of the same securities by promoters and broker-dealers after
prices have been manipulated to a desired consequent investor losses. The
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Company's management is aware of the abuses that have occurred historically in
the penny stock market. Although the Company does not expect to be in a position
to dictate the behavior of the market or of broker-dealers who participate in
the market, management will strive within the confines of practical limitations
to prevent the described patterns from being established with respect to the
Company's securities.
(4) Lack of Operating History. The Company was formed in October, 1996 for
the purpose of product marketing. The Company has no revenues. The Company is
not profitable and the business effort is in start-up stage. The Company must be
regarded as a new or start-up venture with all of the unforeseen costs,
expenses, problems, and difficulties to which such ventures are subject.
(5) No Assurance of Success or Profitability. There is no assurance that
the Company will ever operate profitably. There is no assurance that it will
generate revenues or profits, or that the market price of the Company's Common
Stock will be increased thereby.
(6) Lack of Diversification. Because of the limited financial resources
that the Company has, it is unlikely that the Company will be able to diversify
its operations. The Company's probable inability to diversify its activities
into more that one area will subject the Company to economic fluctuations within
a particular business or industry and therefore increase the risks associated
with the Company's operations.
(7) Dependence upon Management. Limited Participation of Management. The
Company currently has only two individuals who are serving as its officers and
directors on a part time basis. The Company will be heavily dependent upon their
skills, talents, and abilities to implement its business plan, and may, from
time to time, find that the inability of the officers and directors to devote
their full time attention to the business of the Company results in a delay in
progress toward implementing its business plan. See "Management." Because
investors will not be able to evaluate the merits of possible business
acquisitions by the Company, they should critically assess the information
concerning the Company's officers and directors. The Company may not conduct an
acquisition in a matter that requires a shareholder vote or disclosure statement
and therefore shareholders will not have the opportunity to vote on the
transaction or examine the business and financials prior to an acquisition. If
such an acquisition were to prove unprofitable, it could affect stock price and
shareholder value.
(8) Lack of Continuity in Management. The Company does not have an
employment agreement with its officers and directors, and as a result, there is
no assurance they will continue to manage the Company in the future. In
connection with acquisition of a business opportunity, it is likely the current
officers and directors of the Company may resign subject to compliance with
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section 14f of the Securities Exchange Act of 1934. A decision to resign will be
based upon the identity of the business opportunity and the nature of the
transaction, and is likely to occur without the vote or consent of the
stockholders of the Company.
(9) Indemnification of Officers and Directors. Colorado Revised Statutes
provide for the indemnification of its directors, officers, employees, and
agents, under certain circumstances, against attorney's fees and other expenses
incurred by them in any litigation to which they become a party arising from
their association with or activities on behalf of the Company. The Company will
also bear the expenses of such litigation for any of its directors, officers,
employees, or agents, upon such person's promise to repay the Company therefor
if it is ultimately determined that any such person shall not have been entitled
to indemnification. This indemnification policy could result in substantial
expenditures by the Company which it will be unable to recoup.
(10) Director's Liability Limited. Colorado Revised Statutes exclude
personal liability of its directors to the Company and its stockholders for
monetary damages for breach of fiduciary duty except in certain specified
circumstances. Accordingly, the Company will have a much more limited right of
action against its directors that otherwise would be the case. This provision
does not affect the liability of any director under federal or applicable state
securities laws.
(11) Dependence upon Outside Advisors. To supplement the business
experience of its officers and directors, the Company may be required to employ
accountants, technical experts, appraisers, attorneys, or other consultants or
advisors. The selection of any such advisors will be made by the Company's
President without any input from stockholders. Furthermore, it is anticipated
that such persons may be engaged on an "as needed" basis without a continuing
fiduciary or other obligation to the Company. In the event the President of the
Company considers it necessary to hire outside advisors, he may elect to hire
persons who are affiliates, if they are able to provide the required services.
(12) Competition. Radar Beacon is intensely competitive. The Company
expects to be at a disadvantage when competing with many firms that have
substantially greater financial and management resources and capabilities than
the Company. These competitive conditions will exist in any industry in which
the Company may become interested. There is no known direct competition as far
as other balloon signal devices are concerned by the Company at this time. There
have been other balloon signal devices being developed and/or marketed in the
past, but each of those products were abandoned by the companies or individuals
working on them. There is indirect competition in the form of other signal
devices currently on the market. These products include signal mirrors, flares,
smoke emitting devices, flashlights and electronic devices. These products have
been on the market for some time and have already established a market niche.
(13) No Foreseeable Dividends. The Company has not paid dividends or its
Common Stock and does not anticipate paying such dividends in the foreseeable
future.
(14) Loss of Control by Present Management and Stockholders. The Company
may issue further shares as consideration for the cash or assets or services out
of the Company's authorized but unissued Common Stock that would, upon issuance,
11
<PAGE>
represent a majority of the voting power and equity of the Company. The result
of such an issuance would be that new stockholders and management would control
the Company, and the Company's management could be replaced by persons unknown
at this time. Such an occurrence would result in a greatly reduced percentage of
ownership of the Company by its currents shareholders.
(15) No Public Market Exists. There is no public market for the Company's
common stock, and no assurance can be given that a market will develop or that a
shareholder ever will be able to liquidate his investment without considerable
delay, if at all. If a market should develop, the price may be highly volatile.
Factors such as those discussed in the "Risk Factors" section may have a
significant impact upon the market price of the securities offered hereby. Owing
to the low price of the securities, many brokerage firms may not be willing to
effect transactions in the securities. Even if a purchaser finds a broker
willing to effect a transaction in these securities, the combination of
brokerage commissions, state transfer taxes, if any, and any other selling costs
may exceed the selling price. Further, many lending institutions will not permit
the use of such securities as collateral for any loans.
(16) Rule 144 Sales. All of the outstanding shares of Common Stock held by
present officers, directors, and affiliate stockholders are "restricted
securities" within the meaning of Rule 144 under the Securities Act of 1933, as
amended. As restricted shares, these shares may be resold only pursuant to an
effective registration statement or under the requirements of Rule 144 or other
applicable exemptions from registration under the Act and as required under
applicable state securities laws. Rule 14 provides in essence that a person who
has held restricted securities for one year may, under certain conditions, sell
every three months, in brokerage transactions, a number of shares that does not
exceed the greater of 1.0% of a company's outstanding common stock or the
average weekly trading volume during the four calendar weeks prior to the sale.
There is no limit on the amount of restricted securities that may be sold by a
nonaffiliate after the restricted securities have been held by the owner for a
period of two years. Nonaffiliate shareholders holding 200,500 common shares of
the Company have held their shares for two years and under Rule 144(K) are
eligible to have freely tradable shares. A sale under rule 144 or under any
other exemption from the Act, if available, or pursuant to subsequent
registration of shares of Common Stock of present stockholders, may have a
depressive effect upon the price of the Common Stock in any market that may
develop.
ITEM 2. MANAGEMENT DISCUSSION AND ANALYSIS
The information presented herein, should be read in conjunction with the
Company's audited financial statements and related notes attached hereto.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND CHANGES IN
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The Company has no primary income source at this time. The company will
receive revenues from the sale of the products. The Company has contracted with
Western Innovation, Inc. (WII) of Aurora, Colorado to procure and store all
components required for assembly, assemble the product, and package the units
for shipment upon the Company's receipt of committed orders. WII will also
provide shipping and mailing services for the product. Upon the Company's
receipt of committed orders, Western Innovation, has agreed to purchase on
behalf of the Company, all components for the product up to $1,000,000 to help
establish an inventory of units for sale. For these services, the Company will
pay actual costs of components plus a fixed fee for general and administrative
service, overhead, and profit.The company completed a private offering of common
stock at $0.50 per share which achieved $112,500 and which terminated April 30,
1999.
12
<PAGE>
Results of Operations for year ended December 31, 1999 as compared to
prior year 1998.The Company revenues (consisting of interest income) for the
year ended December 31, 1999, were $46 and were $665 in 1998. The Company
incurred expenses in 1999 of $99,904, the largest items of which were Director's
fees, $41,000, amortization, $22,322, legal and accounting, $16,997, and
research and development, $9,600. In 1998, the Company incurred $66,776 in
expenses, the largest items being: amortization $25,298; and salaries and
contract labor $15,900. The Company had a loss on operations in 1999 of
($99,858) and ($66,111) in 1998. The Company commenced business operations in
February 1996 and expects a significant net loss from operations in 2000
resulting from costs of start up and developmental cost of products. The Company
will continue to show losses resulting from the start up of operations, but may
generate limited revenues from sales of Radar Beacon product.
Results of Operations for the six month period ended June 30, 2000 as
compared to the same period in 1999. During the six month period in 2000 the
Company incurred expenses of $17,027 which $11,161 went to amortization and
$5,866 went to other costs. The details of the other costs in 2000 are: Bank
Service Charges - $27, Depreciation - $4,140, Postage & Freight - $476,
Telephone - $138, Miscellaneous - $196, and Marketing $770. The Company had $284
revenues for the period in 2000 and $25 in the period in 1999. The loss on
operations was ($16,743) for the period, or ($0.01) per share. In the same
period in 1999, the Company incurred expenses of $17,253, which $11,161 went to
amortization, $6,092 went to other costs. The details of the other costs in 1999
are: Bank Service Charges - $91, Depreciation - $4,108, Postage & Freight -
$492, Telephone - $272, Miscellaneous - $289, Marketing $250, and legal and
accounting $600. The loss on operations in 1999 was $(17,228) for the period or
($0.01) per share.
The Company operating expenses should be expected to increase
significantly as it attempts to commence marketing of initial product for sale.
As the Company begins the sale of its product, there will be costs incurred for
product inventory, sales literature, sales calls, advertising of the product,
trade show expenditures, and other types of costs that will be incurred to sell
the product. Further it will need capital for purchase of product from a
contract manufacturer, which will be significant.
13
<PAGE>
At this time, the Company is dependent upon private placements or loans
for future operations and funding. Therefore it will have to either borrow
money, if possible, or raise funds through subsequent public or private
offerings to continue operations until when, or if, it ever develops sufficient
revenue from its assets to maintain operations. If such revenues are not
generated, or investors not found the Company will be forced to develop another
line of business, or to finance its operations through borrowed funds, the sale
of assets it has, or enter into the sale of stock for additional capital none of
which may be feasible when needed. The Company has no management ability, and no
financial resources or plans to enter any other business as of this date
although the Company will be open to suggestion and opportunity.
LIQUIDITY
The Company expects that its need for liquidity will increase for the
coming year due to its anticipation of expending funds to advertise and market
its existing products and the development of additional product lines. The
Company is seeking additional capital to market the product. Several avenues are
being pursued at this time to acquire the necessary funding. The estimated costs
for each phase: R&D - $5,000; product and market testing - $10,000;
manufacturing - $100,000; marketing - $100,000.
Short Term.
----------
On a short term basis, the Company does not generate revenue sufficient to
cover operations. Based on prior experience, the Company believes it will
continue to have insufficient revenue to satisfy current and recurring
liabilities as it seeks to develop and market its products. For short term needs
the Company will be dependent on receipt, if any, of private placement proceeds.
The Company's current assets $19,143 at December 31, 1999, were exceeded
by its current liabilities, $25,821.
Long Term.
---------
As of December 31, 1999, the Company has a note payable to existing
principals of the Company of $80,946 used to finance the start-up operations. It
has additional accounts payable of $11,700 for R&D and initial marketing
expenses on the Radar Beacon product. The Company also has a $50,000 royalty due
to certain shareholders as product is sold. The royalty is based upon the sale
of the product. In the royalty agreement with these shareholders, it states the
shareholders will receive $3.00 for each unit sold until the debt is repaid. If
no units are ever sold, the $50,000 will never be repaid.
14
<PAGE>
CAPITAL RESOURCES
The primary capital resources of the Company are its common stock.
As of the date of the registration statement, the Company has no material
commitments for capital expenditures within the next year, however if sales are
commenced, substantial capital will be needed to pay for manufactured product.
Cash Flows:
----------
The Company has achieved no revenues to date.
Need for Additional Financing. The Company does not have capital
sufficient to meet the Company's cash needs, or to commence business, including
the costs of compliance with the continuing reports requirements of the
Securities Exchange Act of 1934. The Company will have to seek loans or equity
placements to cover such cash needs. There is no assurance, however, that
without funds it will ultimately allow registrant to commence sales and
marketing. Once marketing commences, the Company's needs for additional
financing are likely to increase substantially.
No commitments to provide additional funds have been made by management or
other stockholders. Accordingly, there can be no assurance that any additional
funds will be available to the Company to allow it to cover its expenses as they
may be incurred.
Irrespective of whether the Company's cash assets prove to be inadequate
to meet the Company's operational needs, the Company might seek to compensate
providers of services by issuances of stock in lieu of cash.
Year 2000 Issues. Year 2000 problems result primarily from the inability of
some computer software to properly store, recall, or use data after December 31,
1999. These problems may affect many computers and other devices that contain
embedded computer chips. The Company's operations, however, do not rely on
information technology (IT) systems. Accordingly, the Company does not believe
it will be material affected by Year 2000 problems.
The Company relies on non-IT systems that may suffer from Year 2000
problems, including telephone systems and facsimile and other office machines.
Moreover, the Company relies on third-parties that may suffer from Year 2000
problems that could affect the Company's operations, including banks, oil field
operators, and utilities. In light of the Company's substantially reduced
operations, the Company does not believe that such non-IT systems or third-party
Year 2000 problems will affect the Company in a manner that is different or more
industry generally. Consequently, the Company does not currently intend to
conduct a readiness assessment of Year 2000 problems or to develop a detailed
contingency plan with respect to Year 2000 problems that may affect the Company.
15
<PAGE>
ITEM 3. DESCRIPTION OF PROPERTIES
(a) Real Estate. None
(b) Title to properties. None.
ITEM 4. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AS OF
OCTOBER 1, 1999.
(a) Beneficial owners of five percent (5) or greater, of the Registrant's
Common Stock. (No Preferred Stock is outstanding at August 15, 2000.)
The following sets forth information with respect to ownership by holders
of more than five percent (5%) of the Company's Common Stock known by the
Company:
Title Name and address of Beneficial Amount of Percent Voting
of Owner Beneficial of Class
----- -----
Class Interest Equity
Common Ronald Powell 1,020,000 30.7% 30.7%
Broomfield, CO
Common Ray W. Williams 617,500 18.4% 18.4%
Rancho Santa Fe, CA
Common NELX, Inc. (beneficially 600,000 18.4% 18.4%
controlled by Charles Stout)
Wheat Ridge, CO
Common Catherine Williams 375,000 11.5% 11.5%
Broomfield, CO
Common 250,000 7.7% 7.7%
Radarfind, Inc.
owned by 38
individual shareholders)
Broomfield, CO
16
<PAGE>
(b) The following sets forth information with respect to the Company's Common
and Preferred Stock beneficially owned by each Officer and Director, and by all
Directors and Officers as a group as of June 30, 2000.
Title Name of Amount and Percent
of Beneficial Nature of of
Class Owner Beneficial Equity
----- ----- Ownership -------
---------
Common Stock Ronald Powell, President and Director 1,020,000 30%
Common Stock Ray W. Williams, Secretary and Director 617,500 18%
Common Stock William Boyer, Director 20,000 0.6%
Common Stock Stuart M. Novak, Director 20,000 0.6%
--------------------
Officers and Directors as a Group 1,110,000 33%
ITEM 5. DIRECTORS AND EXECUTIVE OFFICERS
(a) The following table furnishes the information concerning the directors
of the Company as of June 30, 2000. The directors of the Company are elected
every year and serve until their successors are elected and qualify.
Name Age Title
---- --- -----
Ronald Powell 44 President, Director
Bill Boyer 46 Director
Stuart M. Novak 58 Director/Secretary
Jerry Jernigan 57 Director
The term of office for each director is one (1) year, or until his/her
successor is elected at the Company's annual meeting and qualified. The term of
office for each officer of the Company is at the pleasure of the board of
directors.
17
<PAGE>
The board of directors has no nominating, auditing committee or a
compensation committee. Therefore, the selection of person or election to the
board of directors was neither independently made nor negotiated at arm's
length.
(c) Identification of Certain Significant Employees.
There are no employees other than the executive officers disclosed above
who make, or are expected to make, significant contributions to the business of
the Company.
(d) Family Relationships. None.
(e) Business Experience.
The following is a brief account of the business experience during the
past five years of each director and executive officer of the Company, including
principal occupations and employment during that period and the name and
principal business of any corporation or other organization in which such
occupation and employment were carried on.
MANAGEMENT
CHARLES R. (Ron) POWELL
Mr. Powell is a President, Director and a principal shareholder of
Mind2Market, Inc. since 1996. While earning a degree in Business Administration
from Regis University (1997), Mr. Powell worked for Rockwell, International from
1983 till 1990 at the Rocky Flats Nuclear Weapons Site on a national defense
contract. Mr. Powell earned a certified Project Manager degree and worked as a
Project Manager with EG&G, Inc. at the Rocky Flats Environmental Cleanup Site
from 1990 till 1995, with responsibilities for design and construction on
projects ranging from $2 to $50 million dollars. He currently serves as a
project management consultant and trainer for Monks Associates, Inc. He has
served as the product manager for the products and has been responsible for the
management of the company finance and administrative functions.
18
<PAGE>
JERRY JERNIGAN
Mr. Jernigan is a Director of the company and a shareholder since 1997. He
is an experienced business person with over 25 years of business ownership. He
is currently the owner of Western Innovations in Aurora, CO. since 1977. He has
also served as shop foreman and engineering manager of several production
facilities. He holds a Mechanical Engineering degree from the University of
Florida. He has been instrumental in the final development and testing of the
company's current products. (Mr. Jernigan resigned in August 2000.
WILLIAM J. BOYER
Mr. Boyer is a Director of the company since 1997. He has over 25 years
experience in sales, marketing and general business. His experience includes
start-up business development, financing and organization. He is founder and
currently the President and Director of Apparatus Sales, Inc., a computer
hardware and software company selling direct to government organizations since
1991. He also has experience in oil and gas businesses from serving as COO of
Peak Pipe & Supply Company from 1988 to 1991 and serving as President of
Associated Pipe and Supply from 1974 to 1986. Mr. Boyer gained international
sales and import/ export experience from his ownership of Boyer Imports from
1986 to 1988. His experience also includes dealings with banking institutions
and securities business. He also has a background in real estate, construction,
and computer businesses.
STUART M. (Mike) NOVAK
Mr. Novak is a Director of the company since 1997. Mr. Novak has more than
25 years of highly successful senior management experience in both ongoing and
start-up entities as well as a distinguished service as a commissioned officer
in the U.S. Navy. He received a Naval Engineer's degree (a professional post
masters degree) as well as an MS degree in management from the Massachusetts
Institute of Technology in 1971. In 1964 he received a BS in Engineering, from
the US Naval Academy. He served as Chairman of Acclaim Mortgage, Inc.
(3/97-8/98) and founded Resource Funding Group, Inc., a successful residential
and commercial mortgage brokerage that enjoys an excellent reputation for highly
professional and creative mortgage loan origination services in 8/98. As
President Rader Railcar, Inc. (11/94 - 1/97) his leadership resulted in the
growth of a seven employee company to one of more than 300 employees in one
year. He was instrumental in the acquisition of a $65 million contract and put
in place systems, procedures, and managed day to day operations that enabled the
successful growth of the company.
19
<PAGE>
After leaving active duty in the US Navy in 1975, he has experienced a high
degree of success in the marine industry in executive, operations, major project
management, operations and engineering. He helped improve container ship
operations and evaluate acquisitions as Director Marine Operations and
Consultant while at Farrell Lines Inc. (8/93-11/94). He was President and Chief
Executive Officer of The American Ship Building Company and Tampa Shipyards Inc.
(6/92-7/93), a $100 million, NYSE company. As founder and President of Royal
Hawaiian Cruise Line, Inc. ( 7/90-7/92) he developed a new, U.S. flag cruise
company and developed a detailed plan for its start up and operations, including
initial capitalization. At Cunard Line Ltd. (2/81-7/90) as a Senior Vice
President, Mr. Novak directed operations for a fleet of five passenger vessels
and 2500 personnel. He conceived and implemented numerous innovations including
the $150 million life extending refurbishment of the ocean liner Queen Elizabeth
2, unique onboard management structure, improved operations, profitability and
business awareness.
His active duty in the US Navy (6/64-6/75) included sea and shore assignments,
Command, Chief Engineer and a tour of duty in Vietnam. He received various
decorations including the Purple Heart and the Navy Commendation Medal. He
served in the US Naval reserve attaining the rank of Captain, completing 28
years of service.
Directors Compensation
Each member of the Board of Directors of the Company receives $300
compensation for each meeting attended plus reasonable outside travel expenses
for each Board meeting he or she attends and for each Committee meeting he
attends during the fiscal year.
ITEM 6. EXECUTIVE COMPENSATION
The Company accrued a total of $15,900 compensation to the executive officers as
a group for services rendered to the Company in all capacities during the 1998
fiscal year. There was no compensation paid or accured during 1999.
There are no existing employment contracts with the officers of the
Company.
20
<PAGE>
SUMMARY COMPENSATION TABLE OF EXECUTIVES
Annual Compensation Awards
================================================================================
Name and Year Salary ($) Bonus Other Annual Restricted Securities
Principal ($) Compensation Stock Underlying
Position ($) Award(s) Options/
($) SARs (#)
-------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Ron 1996 0 0 0 0 0
Powell,
President
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
1997 0
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
1998 0
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Ray 1996 10,000 0 0 0 0
Williams,
Secretary
(Resigned May 2000)
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
1997 28,679
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
1998 15,900*
================================================================================
*Accured
Total compensation for officers and directors:
1998 - $15,900 1997 - $28,679 1996 - $10,000
Option/SAR Grants Table (None)
Aggregated Option/SAR Exercises in Last Fiscal Year an FY-End Option/SAR value
(None)
Long Term Incentive Plans - Awards in Last Fiscal Year (None)
21
<PAGE>
DIRECTOR COMPENSATION FOR LAST FISCAL YEAR
1. There was no director compensation for last fiscal year. Issuance of common
stock for services is being negotiated by the Board members at this time. There
is no awards committee for the Company at this time.
KEY EMPLOYEES STOCK COMPENSATION PLAN:
The Company has not adopted a stock compensation plan at this time.
ITEM 7. CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS
During 1998, the Company received loans from five individuals totaling
$50,000 for the purpose of providing funds for production setup of one of the
Company's products. Jerry Jernigan, a director (until August 2000), loaned
$15,000 of the $50,000 in loans and received 30,000 shares. As additional
consideration for the loans, the Company issued 110,000 shares of its common
stock to the individuals, and agreed to repay the loans at a rate of $3.00 per
unit of product sold for the first 16,667 units sold, then the payment will be
reduced to $1.00 per unit for the next 50,000 units sold. The total payments
will aggregate $110,000, or twice the original amount of the loans. The 110,000
shares of stock were valued at $0.50 per share (representing the price at which
shares were sold by the Company for cash during the year), and the resulting
$50,000 was recorded as prepaid loan costs.
Ronald Powell is the same person as Charles R. Powell of Radarfind. The
full name of this individual is Charles Ronald Powell. Mr. Powell is also a
principal in Mountain Share Transfer, Inc., the stock transfer agent for the
Company. No compensation has been paid to Mountain Share Transfer by the
Company, to date, and none has accrued.
ITEM 8. DESCRIPTION OF SECURITIES TO BE REGISTERED
The Company is presently authorized to issue fifty million (50,000,000)
shares of its $.0001 par value common shares and five million (5,000,000) shares
of preferred stock $.10 par value in such classes as the Board may determine. A
total of 3,381,600 common shares are issued and outstanding. No shares of any
class of preferred stock is outstanding.
22
<PAGE>
Common Shares
-------------
All shares, when issued, will be fully paid and non-assessable. All shares
are equal to each other with respect to voting, liquidation, and dividend
rights. Special shareholders' meetings may be called by the officers or
director, or upon the request of holders of at least one-tenth (1/10th) of the
outstanding shares. Holders of shares are entitled to one vote at any
shareholders' meeting for each share they own as of the record date fixed by the
board of directors. There is no quorum requirement for shareholders' meetings.
Therefore, a vote of the majority of the shares represented at a meeting will
govern even if this is substantially less than a majority of the shares
outstanding. Holders of shares are entitled to receive such dividends as may be
declared by the board of directors out of funds legally available therefor, and
upon liquidation are entitled to participate pro rata in a distribution of
assets available for such a distribution to shareholders. There are no
conversion, pre-emptive or other subscription rights or privileges with respect
to any shares. Reference is made to the Company's Articles of Incorporation and
its By-Laws as well as to the applicable statutes of the State of Delaware for a
more complete description of the rights and liabilities of holders of shares. It
should be noted that the By-Laws may be amended by the board of directors
without notice to the shareholders. The shares of the Company do not have
cumulative voting rights, which means that the holders of more than fifty
percent (50%) of the shares voting for election of directors may elect all the
directors if they choose to do so. In such event, the holders of the remaining
shares aggregating less than fifty percent (50%) of the shares voting for
election of directors may not elect all the directors if they choose to do so.
In each event, the holders of the remaining shares aggregating less than fifty
percent (50%) will not be able to elect directors.
Preferred Stock. The Company's Articles of Incorporation authorize the
issuance of 5,000,000 shares of preferred stock. The Board of Directors of the
Company is authorized to issued the preferred stock from time to time in classes
and series and is further authorized to establish such classes and series, to
fix and determine the variations in the relative rights and preferences as
between the conversion of preferred stock into Common Stock. No Preferred Stock
has been issued by the Company. Preferred stock may be utilized in making
acquisitions.
Shareholders. Each shareholder has sole investment power and sole voting
power over the shares owned by such shareholder.
No shareholder has entered into or delivered any lock up agreement or
letter agreement regarding their shares or options thereon. Under Colorado laws,
no lock up agreement is required regarding the Company's shares as it might
relate to an acquisition.
Transfer Agent. The Company has engaged Mountain Share Transfer, Inc., 1625
Abilene Drive, Broomfield, CO 80020 as its transfer agent. Mr. Ronald Powell is
a principal in the Transfer Agency. The Company recently contracted with
Mountain Share Transfer, Inc. to perform transfer services and has not paid MST
for any services to date.
23
<PAGE>
Reports to Stockholders. The Company plans to furnish its stockholders
with an annual report for each fiscal year containing financial statements
uadited by its independent certified public accountants. In the event the
Company enters into a business combination with another company, it is the
present intention of management to continue furnishing annual reports to
stockholders. The Company intends to comply with the periodic reporting
requirements of the Securities Exchange Act of 1934 for so long as it is subject
to those requirements, and to file unaudited quarterly reports and annual
reports with audited financial statements as required by the Securities Exchange
Act of 1934.
PART II
ITEM 1. (a) MARKET PRICE OF AND DIVIDENDS ON REGISTRANTS COMMON
EQUITY AND RELATED STOCKHOLDER MATTERS
The Company at June 30, 2000 had 23 shareholders. The Company's common
stock is not presently traded on any "Over-the-Counter" market and no dividends
have been paid to shareholders to date. If it is ever approved for trading by
NASD Market Regulation, Inc., it may trade on the OTC Bulletin Board or on the
"Pink Sheets". No assurance can be made that any trading market will ever
develop or that trading will be approved. No assurance can be made that any
dividends will ever be paid to shareholders.
ITEM 2. LEGAL PROCEEDINGS
The Company is not a party to any pending legal proceedings, and no such
proceedings are known to be contemplated.
No director, officer or affiliate of the Company, and no owner of record
or beneficial owner of more than 5.0% of the securities of the Company, or any
associate of any such director, officer or security holder is a party adverse to
the Company or has a material interest adverse to the Company in reference to
any litigation.
ITEM 3. CHANGES AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
DISCLOSURE
None.
ITEM 4. FINANCIAL STATEMENTS AND EXHIBITS
The following documents are filed as a part of this report:
1) Financial Statements: Pages F-1 through F-9.
2) Financial Statement Schedules: None
24
<PAGE>
3) SB Exhibits: Articles, Amendment to Articles, By-Laws.
4) Supplemental Oil and Gas Information - None.
ITEM 5. RECENT SALES OF UNREGISTERED SECURITIES
Since October, 1996, the Company has sold its Common Stock to the persons
listed in the table below in transactions summarized as follows:
<TABLE>
<CAPTION>
ISSUE # OF PRICE/ TOTAL
NAME DATE SHARES SHARE CONSIDERATION
<S> <C> <C> <C> <C>
Ray Williams 10/15/96 1,000,000 $0.001 $1,000
12270 Cherrywood St.
Broomfield, CO 80020
Ronald Powell 10/15/96 1,000,000 $0.001 $1,000
1625 Abilene Dr.
Broomfield, CO 80020
*John Brinkman 05/28/97 70,000 $0.47 $30,000
1391 Carr St., Ste. 209
Lakewood, CO 80215
*James R. and
Jane K.Walsh, Trust 05/28/97 2,000 $0.50 $1,000
638 N. Hickory St.
Arlington Heights, IL 60004
*David S. Losapio 05/28/97 6,000 $0.50 $3,000
509 Richards Lake Rd.
Ft. Collins, CO 80524
*Robert Monks 05/28/97 10,000 $0.50 $5,000
1160 Detroit St.
Denver, CO 80203
*Galt Investment Club 05/28/97 5,000 $0.50 $2,500
1888 Sherman St., Suite 780
Denver, CO 80203
*Rodney Jackson 08/25/97 45,000 $0.25 $12,500
3702 W. 99th Ave.
Westminster, CO 80030
NELX, Inc. 10/15/96 600,000 $.016 $10,000
Route #1, Box 4IJ
BRidgeport, WV 26330
25
<PAGE>
Brian V. Walker 10/15/96 15,000 $0.001 Startup Services
505 S. Hunt Club Rd Rendered
Gurnee, IL 60031
Stella C. Dempsey 10/15/96 50,000 $0.05 Startup Services
325 Hale Rendered
Palo Alto, CA 94301
Mike Littman 08/25/97 50,000 $0.05 Legal Services
7609 Ralston Rd Rendered
Arvada, CO 80002
*Jery Jernigan 04/13/98 30,000 $0.05 As Additional
15508 E. 19th St. Consideration for
Aurora, CO 80011 Loan
*Bill Kellog 04/13/98 20,000 $0.05 As Additional
15508 E. 19th St. Consideraton for
Aurora, CO 80011 Loan
*Bill Johnson 04/13/98 20,000 $0.05 As Additional
15508 E. 19th St. Consideration for
Aurora, CO 80011 Loan
*David Lancaster 04/13/98 15,000 $0.05 As Additional
5335 S. Cody St Consideration
Littleton, CO 80123 Loan
*Donald Lancaster 04/13/00 15,000 $0.05 As Additional
5335 S.Cody St. Consideration for
Littleton, CO 80123 Loan
*Eugene Pendery 04/13/98 10,000 $0.05 As Additional
2331 W. Hampden Consideration for
Unit 148 Loan
Englewood, CO
*Kymberly Ford 05/19/98 2,000 $0.05 $1,000
21314 CR 1`5-21
Elbert, CO 80106
26
<PAGE>
Orval Neuschwanger 10/04/98 16,600 $0.05 Shares Issued
3135 W. 134th Ct. for Engineering
Broomfield, CO 80020 Services
Radarfind, Inc. 05/15/97 250,000 $0.001
1625 Abilene Dr.
Broomfield, CO 80020
*John P. and
Connie L. Chavez 04/14/99 20,000 $0.05 $10,000
7409 s. Alkire St. #206
Littleton, CO 80127
</TABLE>
* Each of these sales listed above was made for cash or services as listed. All
of the listed sales were made in reliance upon the exemption from registration
offered by Section 4(2) of the Securities Act of 1933, as amended. Based upon
Subscription Agreements completed by each of the Subscribers, the Company had
reasonable grounds to believe immediately prior to making an offer to the
private investors, and did in fact believe, when such subscriptions were
accepted, that such purchasers (1) were purchasing for investment and not with a
view to distribution, and (2) had such knowledge and experience in financial and
business matters that they were capable of evaluating the merits and risks of
their investment and were able to bear those risks. The purchasers had access to
pertinent information enabling them to ask informed questions. The shares were
issued without the benefit of registration. An appropriate restrictive legend is
imprinted upon each of the certificates representing such shares, and
stop-transfer instructions have been entered in the Company's transfer records.
All such sales were effected without the aid of underwriters, and no sales
commissions were paid. All shareholders in the Company are personal friends,
family, contacts and business acquaintances of officers, directors and
principals.
ITEM 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS
The Colorado Statutes and Company By-Laws offer protection by way of
indemnification to any officer, director or employee of the Company. The
indemnification extends to expenses, including attorney's fees, judgments, fines
and amounts paid in settlement actually and reasonably incurred in connection
with an action, suit or proceeding if the party acted in good faith and in a
manner reasonably believed to be in or not opposed to the best interests of the
Company and with respect to any criminal proceeding if the party had no
reasonable cause to believe the conduct was unlawful.
27
<PAGE>
The general effect of the above indemnification provisions allow the
employees, directors, and officers of the Company to function and engage in the
day to day business activities of the Company knowing the Company will offer
protection against the threat or event of litigation subject to the limitations
that said individual must exercise good faith and reasonableness.
Insofar as indemnification for liabilities arising under the Securities
Act of 1933 or Securities Exchange Act of 1934 may be permitted to directors,
officers and controlling persons of 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 the Act and is, therefore, unenforceable.
28
<PAGE>
FINANCIAL STATEMENTS AND SUPPLEMENTAL DATA
INDEX TO FINANCIAL STATEMENTS
AND SUPPORTING SCHEDULES
Page
Report of Independent Public Accountants F-1- F-11
I. Financial Statements:
Balance Sheets, Dec. 31, 1999 and June 30, 2000 F-2
Statement of Operations Years Ended December 31, 1999
And 1998, Six Month Periods Ended June 30, 2000
And 1999, and the Period From February 15, 1996 (Inception)
To June 30, 1999 F-3
Statement of Stockholders' Equity Years Ended December 31, 1999
And 1998, Six Month Periods Ended June 30, 2000
And the Period From February 15, 1996 (Inception)
To June 30, 2000 F-4
Statement of Cash Flows Years Ended December 31, 1999
And 1998, Six Month Periods Ended June 30, 2000
And 1999, and the Period From February 15, 1996 (Inception)
To June 30, 2000 F-5
Notes to Financial Statements F-6- F-11
29
<PAGE>
INDEX
SB EXHIBITS
3.0 *Articles
3.1 *Amendment to Articles
3.2 *By-Laws
10.0 *Material Contracts - License Agreement
*Previously filed
30
<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.
DATED: August 15, 2000.
Mind2Market, INC.
by:/s/Charles R. Powell
Charles R. Powell, President
Directors:
/s/Charles R. Powell
Charles R. Powell
/s/William Boyer
William Boyer
/s/Stuart M Novak
Stuart M. Novak
31
<PAGE>
INDEPENDENT AUDITOR'S REPORT
Board of Directors
Mind2Market, Inc.
We have audited the accompanying balance sheet of Mind2Market, Inc. (a
development stage company) as of December 31, 1999, and the related statements
of operations, stockholders' equity and cash flows for the two years then ended.
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 made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Mind2Market, Inc. as of
December 31, 1999, and the results of its operations and cash flows for the two
years then ended, in conformity with generally accepted accounting principles.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As shown in the financial statements,
the Company has incurred a net loss for the period from February 15, 1996
(inception) to June 30, 2000 aggregating $370,159 and incurred a loss of $99,858
for the year ended December 31, 1999. The Company has a working capital
deficiency at December 31, 1999 of $6,678. These conditions raise substantial
doubt about its ability to continue as a going concern. Management's plans
regarding those matters are described in Note D to the financial statements. The
financial statements do not reflect any adjustments that might result from the
outcome of this uncertainty.
Van Dorn & Bossi /s/Van Dorn & Bossi
Certified Public Accountants Van Dorn & Bossi
Boulder, Colorado
August 7, 2000
F-1
<PAGE>
<TABLE>
<CAPTION>
Mind2Market, Inc.
BALANCE SHEETS
(A Development Stage Company
DECEMBER 31, JUNE 30,
1999 2000
------------------------------------------------------------------------------------------------------------------------
ASSETS (UNAUDITED)
<S> <C> <C>
CURRENT ASSETS:
Cash in banks $1,336 $262
Inventory 17,807 19,912
------------------- ----------------
Total current assets 19,143 20,174
Equipment 41,270 42,801
Less accumulated depreciation (14,877) (19,016)
------------------- ----------------
Net equipment 26,393 23,785
Prepaid loan costs (Note B) 50,000 50,000
Manufacturing and marketing rights 312,500 315,760
Less accumulated amortization (80,730) (91,891)
------------------- ----------------
Net manufacturing and marketing rights 231,770 223,869
------------------- ----------------
Total assets $327,306 $317,827
=================== ================
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $11,700 $8,217
Accrued salaries 10,569 10,569
Payroll taxes payable 3,551 3,551
------------------- ----------------
Total current liabilities 25,821 22,337
Loans from stockholders (Note B) 130,946 141,693
STOCKHOLDERS' EQUITY:
Preferred stock: authorized 5,000,000 shares, $.10 par value;
none issued -- --
Common stock: authorized 50,000,000 shares, $.0001 par
value; issued and outstanding; 3,381,600 and
3,381,600 shares 338 338
Additional paid in capital 523,617 523,617
Deficit accumulated during development stage (353,416) (370,159)
------------------- ----------------
Total stockholders' equity 170,539 153,796
------------------- ----------------
Total liabilities and stockholders' equity $327,306 $317,827
=================== ================
</TABLE>
See Notes to Financial Statements.
F-2
<PAGE>
<TABLE>
<CAPTION>
Mind2Market, Inc.
(A Development Stage Company)
STATEMENT OF OPERATIONS
YEARS ENDED DECEMBER 31, 1999 AND 1998,
THE SIX-MONTH PERIODS ENDED JUNE 30, 2000 AND 1999,
AND THE PERIOD FROM FEBRUARY 15, 1996 (INCEPTION) TO JUNE 30, 2000
(Unaudited with respect to the six-month periods ended June 30, 2000 and 1999 and the
period from February 15, 1996 to June 30, 2000)
PERIOD
FROM
FEBRUARY
15, 1996
YEAR ENDED SIX MONTHS ENDED (inception) to
DECEMBER 31, DECEMBER 31, JUNE 30, JUNE 30,
------------------ -------------------- ----------------------------
1999 1998 2000 1999 2000
------------------ -------------------- ------------- ------------- -----------------
<S> <C> <C> <C> <C> <C>
REVENUES:
Other $46 $665 $284 $25 $3,451
EXPENSES:
Amortization 22,322 25,298 11,161 11,161 91,891
Automobile -- 20 -- -- 199
Bank service charges 167 270 27 81 1,020
Depreciation 8,216 4,542 4,140 4,108 19,016
Directors' fees 41,000 -- -- -- 41,000
Licenses -- 75 -- -- 5,000
Marketing 250 -- 770 250 9,222
Miscellaneous 289 2,505 196 289 10,967
Salaries and contract labor -- 15,900 -- -- 54,579
Payroll taxes -- -- -- -- 1,101
Postage & freight 491 186 476 492 1,630
Printing -- 145 -- -- 1,288
Legal and accounting 16,997 6,695 0 600 51,012
Research and development 9,600 4,696 120 -- 52,077
Telephone 572 2,750 138 272 5,409
Travel and entertainment -- 3,696 -- -- 28,201
------------------ -------------------- ------------- ------------- -----------------
Total expense 99,904 66,776 17,027 17,253 373,611
------------------ -------------------- ------------- ------------- -----------------
Net loss ($99,858) ($66,111) ($16,743) ($17,228) ($370,159)
================== ==================== ============= ============= =================
Earnings per share:
Basic ($0.03) ($0.02) ($0.01) ($0.01) ($0.15)
================== ==================== ============= ============= =================
</TABLE>
See Notes to Financial Statements.
F-3
<PAGE>
<TABLE>
<CAPTION>
Mind2Market, Inc.
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF STOCKHOLDERS' EQUITY
YEARS ENDED DECEMBER 31, 1999 AND 1998,
THE SIX-MONTH PERIOD ENDED JUNE 30, 2000,
AND THE PERIOD FROM FEBRUARY 15, 1996 (INCEPTION)
TO JUNE 30, 2000 (Unaudited with respect to the six-month
period ended June 30, 2000 and the period
from February 15, 1996 to June 30, 2000)
DEFICIT
ACCUMULATED
ADDITIONAL DURING
COMMON STOCK PAID IN DEVELOPMENT
----------------------------
SHARES AMOUNT CAPITAL STAGE
---------------- ---------- -------------- ---------------------
<S> <C> <C> <C> <C>
Balance at inception,
February 15, 1996 -- $ -- $ -- $ --
Cash invested by former parent
corporation, Nelx, Inc. -- -- 11,500 --
Manufacturing and marketing rights
assigned by Nelx, Inc at cost,
in connection with spinoff -- -- 187,500 --
Issuance of common stock to Nelx, Inc.
shareholders in spinoff 600,000 60 (60) --
Issuance of common stock for cash,
$.001 per share 2,065,000 207 1,859 --
Net loss -- -- -- (63,357)
---------------- ---------- -------------- ---------------------
Balance, December 31, 1996 2,665,000 267 200,799 (63,357)
Issuance of common stock for
patent rights, $.50 per share 250,000 25 124,975 --
Shares issued for cash, $.50 per share 98,000 10 48,990 --
Net loss -- -- -- (124,090)
---------------- ---------- -------------- ---------------------
Balance, December 31, 1997 3,013,000 301 374,764 (187,447)
Issuance of common stock as
consideration for loan, $.50 per share 100,000 10 49,990 --
Issuance of common stock for cash:
$.25 per share 80,000 8 19,992 --
$.50 per share 17,000 2 8,498 --
Issuance of common stock as
consideration for services - $.25 per share 16,600 2 4,148 --
Net loss -- -- -- (66,111)
---------------- ---------- -------------- ---------------------
Balance, December 31, 1998 3,226,600 323 457,392 (253,558)
Issuance of common stock as
consideration for services - $.41 per share 125,000 13 51,228 --
Issuance of common stock for cash - $.50 per share 30,000 3 14,997 --
Net loss -- -- -- (99,858)
---------------- ---------- -------------- ---------------------
Balance, December 31, 1999 3,381,600 338 523,617 (353,416)
Net loss -- -- -- (16,743)
---------------- ---------- -------------- ---------------------
Balance, June 30, 2000 3,381,600 $338 $523,617 ($370,159)
================ ========== ============== =====================
See Notes to Financial Statements.
F-4
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Mind2Market, Inc.
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF CASH FLOWS
YEARS ENDED DECEMBER 31, 1999 AND 1998,
THE SIX-MONTH PERIODS ENDED JUNE 30, 2000 AND 1999,
AND THE PERIOD FROM FEBRUARY 15, 1996 (INCEPTION) TO JUNE 30, 2000
(Unaudited with respect to the six-month periods ended June 30, 2000 and 1999 and the period
from February 15, 1996 to June 30, 2000)
PERIOD
FROM
FEBRUARY
15, 1996
YEAR ENDED SIX MONTHS ENDED (inception) to
DECEMBER 31, DECEMBER 31, JUNE 30, JUNE 30,
------------------- -------------------- ----------------------------
1999 1998 2,000 1,999 2,000
------------------- -------------------- ------------- ------------- ---------------
<S> <C> <C> <C> <C> <C>
CASH FLOWS FROM OPERATING
ACTIVITIES:
Net loss ($99,858) ($66,111) ($16,743) ($17,228) ($370,159)
Adjustments to reconcile net loss to net
cash used by operating activities:
Amortization 22,322 25,298 11,161 11,161 91,891
Depreciation 8,216 4,542 4,140 4,108 19,016
Common stock issued for services 51,240 4,150 -- -- 55,390
Changes in:
Inventory (3,000) (14,807) (2,105) (3,000) (19,912)
Manufacturing and marketing
rights (3,260) (3,260)
Accounts payable (17,854) 12,275 (3,483) (29,554) 8,217
Accrued Salaries -- -- -- -- 10,569
Payroll taxes payable -- -- -- -- 3,551
------------------- -------------------- ------------- ------------- ---------------
Cash used by operating activities (38,934) (34,653) (10,291) (34,513) (204,697)
CASH FLOWS FROM INVESTING
ACTIVITIES:
Purchase of equipment (380) (34,209) (1,531) (380) (42,801)
------------------- -------------------- ------------- ------------- ---------------
Cash used by investing activities (380) (34,209) (1,531) (380) (42,801)
CASH FLOWS FROM FINANCING
ACTIVITIES:
Common stock issued for cash 15,000 28,500 15,000 106,066
Loans from stockholders 17,301 48,711 10,747 13,502 141,693
------------------- -------------------- ------------- ------------- ---------------
Cash provided by financing activities 32,301 77,211 10,747 28,502 247,759
------------------- -------------------- ------------- ------------- ---------------
INCREASE IN CASH (7,013) 8,349 (1,074) (6,391) 262
CASH, BEGINNING OF PERIOD 8,349 -- 1,336 8,349 --
------------------- -------------------- ------------- ------------- ---------------
CASH, END OF PERIOD $1,336 $8,349 $262 $1,958 $262
=================== ==================== ============= ============= ===============
Supplemental cash flow information:
Common stock issued:
Spin-off from Nelx, Inc. $187,500
===============
Patents $125,000
===============
Services $51,240 $4,150 $55,390
=================== ==================== ===============
Consideration for loans $50,000 $50,000
==================== ===============
</TABLE>
See Notes to Financial Statements.
F-5
<PAGE>
Mind2Market, Inc.
(A Development Stage Company)
Notes to Financial Statements
Years ended December 31, 1999 and1998, the six-month periods ended June 30,
2000 and 1999, and the period from February 15, 1996 (inception) to June 30,
2000 (Unaudited with respect to the six-month periods ended
June 30, 2000 and 1999 and the period from February 15, 1996 to
June 30, 2000)
NOTE A - DESCRIPTION OF THE BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES:
Description of the business
Mind2Market, Inc. ("the Company") was incorporated in Colorado on February
15,1996 as NELX Marketing, Inc., a wholly owned subsidiary of NELX, Inc., a
publicly owned company. On October 14, 1996, in a corporate divestiture, the
Company was divested from NELX by issuing 600,000 shares of the Company's common
stock to NELX, Inc.'s shareholders.
Subsequent to the divestiture, the Company issued 1,000,000 shares each to
Charles Powell and Ray Williams for cash of $1,000 each, and changed its name to
Mind2Market, Inc. The Company intends to manufacture, market and distribute two
products known as Aerosearch and Aerolink, which are visual distress signal
products and will be marketed principally to the offshore and marine markets
while the Company is in the development stage.
The Company obtained rights to manufacture and market the two products by way of
assignment from NELX. In September, 1995, NELX and Radarfind, Inc., a Colorado
corporation, entered into an agreement whereby Radarfind assigned the exclusive
rights to manufacture and market the products along with an irrevocable option
for NELX to purchase the underlying patents owned by Radarfind for $50,000
subject to the payment by NELX of $150,000 of royalties to Radarfind for
subsequent sales of the products. In lieu of payment of the $50,000 and the
royalties, NELX issued 750,000 shares of its common stock to the shareholders of
Radarfind in exchange for the exclusive manufacturing and marketing rights to
the products. The 750,000 shares of NELX stock were issued as follows: 250,000
shares each to Messrs. Charles Powell and Arthur Mears, each of whom were
officers and 33-1/3% shareholders of Radarfind at the time; and the remaining
250,000 shares were issued to be held in escrow for the other shareholders of
Radarfind. NELX recorded the rights at $187,500, which was the market value of
the NELX stock issued. After incorporating the Company, NELX was unable to raise
sufficient funds to follow through with developing and marketing the products
and in October 1996 transferred the rights to the subsidiary concurrent with the
divestiture.
Effective May 15, 1997, the Company and Radarfind entered into an agreement
which will ultimately transfer the patents for the products referred to above
from Radarfind to Mind2Market, Inc. The Company will assume the obligation to
pay the royalties of $150,000 ($1.00 per unit sold). Effective on May 15, 1997,
the Company issued 250,000 shares of its common stock to be held in escrow for
the benefit of Radarfind's shareholders other than Mr. Powell and Mr. Mears. The
250,000 shares were recorded as additional cost of the manufacturing and
marketing rights in the amount of $125,000 ($.50 per share, which was the price
of shares issued for cash during the period). Upon final payment of the $150,000
in royalties, the NELX shares held in escrow and the Company shares held in
escrow will be distributed to the remaining shareholders of Radarfind, and
Radarfind will be liquidated.
F-6
<PAGE>
Mind2Market, Inc.
(A Development Stage Company)
Notes to Financial Statements
Years ended December 31, 1999 and1998, the six-month periods ended June 30,
2000 and 1999, and the period from February 15, 1996 (inception) to June 30,
2000 (Unaudited with respect to the six-month periods ended
June 30, 2000 and 1999 and the period from February 15, 1996 to
June 30, 2000)
In addition to the royalties to be paid to Radarfind, the Company will pay to
Mr. Mears a royalty of $.25 per unit for the duration of the patents.
ACCOUNTING POLICIES:
Equipment:
Equipment is recorded at cost and depreciated on the straight-line method over
the estimated useful lives.
Manufacturing and marketing rights:
The rights were recorded at cost and are being amortized over the remaining
patent period of 14 years on the straight-line method.
Advertising:
All advertising costs are expensed when incurred.
Prepaid loan costs:
Prepaid loan costs will be amortized at a rate of $1.00 per unit sold.
Use of estimates:
The preparation of financial statements in conformity with generally accepted
accounting principals requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
Interim financial information:
The unaudited interim financial statements have been prepared on the same basis
as the audited financial statements and, in the opinion of management, include
all adjustments (consisting only of normal recurring adjustments) necessary to
present fairly the financial information set forth therein in accordance with
generally accepted accounting principles. The interim results are not
necessarily indicative of the results to be expected for any future period.
Revenue Recognition:
Product Sales are sales of products and services, if and where sold. Revenue is
recognized at the time of sale. Accounts Receivable are written off when deemed
uncollectable.
F-7
<PAGE>
Mind2Market, Inc.
(A Development Stage Company)
Notes to Financial Statements
Years ended December 31, 1999 and1998, the six-month periods ended June 30,
2000 and 1999, and the period from February 15, 1996 (inception) to June 30,
2000 (Unaudited with respect to the six-month periods ended
June 30, 2000 and 1999 and the period from February 15, 1996 to
June 30, 2000)
Income taxes:
The Company recognizes deferred tax assets and liabilities based on differences
between the financial reporting and tax bases of assets and liabilities using
the enacted tax rates and laws that are expected to be in effect when the
differences are expected to be recovered. The Company provides a valuation
allowance for deferred tax assets for which it does not consider realization of
such assets to be more likely than not.
Earnings per share:
Basic earnings per share is the amount of earnings for the period available to
each share of common stock outstanding during the period. 250,000 shares held in
escrow for the benefit of Radarfind's shareholders are excluded from the
calculation. The number of shares outstanding is computed based on a daily
weighted average.
The calculation of basic earnings per share is as follows:
<TABLE>
<CAPTION>
Period from
February 15,
Year ended Year ended Six months ended 1996 (Inception)
December 31, December 31, to June 30,
June 30,
----------------------------
<S> <C> <C> <C> <C> <C>
1999 1998 2000 1999 2000
-------------- --------------- ------------- ------------- -----------------
Net loss $ (99,858) $ (66,111) $(16,743) $ (17,228) $ (370,159)
============== =============== ============ ============= =================
Average shares
Outstanding 3,131,600 2,990,081
3,001,148 2,861,117 2,446,320
============== ================ =========== ============= =================
Earnings per share:
Basic $ (.03) $ (.02) $ (.01) $ (.01) $ (.15)
============== =============== ============= ============= =================
</TABLE>
Recent accounting pronouncements: In December 1999, the Securities and Exchange
Commission staff released Staff Accounting Bulletin No. 101, Revenue Recognition
in Financial Statements (SAB No. 101), which provides guidance on the
recognition, presentation and disclosure of revenue in financial statements. SAB
No. 101 did not impact the Company's revenue recognition policies.
F-8
<PAGE>
Mind2Market, Inc.
(A Development Stage Company)
Notes to Financial Statements
Years ended December 31, 1999 and1998, the six-month periods ended June 30,
2000 and 1999, and the period from February 15, 1996 (inception) to June 30,
2000 (Unaudited with respect to the six-month periods ended
June 30, 2000 and 1999 and the period from February 15, 1996 to
June 30, 2000)
In June 1998, the Financial Accounting Standards Board (FASB) issued SFAS No.
133, Accounting for Derivative Instruments and Hedging Activities. As amended by
SFAS No. 137, SFAS No. 133 is effective for all fiscal quarters of all fiscal
years beginning after June 15, 2000. SFAS No. 133 requires that all derivative
instruments be recorded on the balance sheet at their fair value. Changes in the
fair value of derivatives are recorded in each period in current earnings or
other comprehensive income, depending on whether a derivative is designed as
part of a hedge transaction and, if it is, the type of hedge transaction. The
Company has not yet determined the impact of the adoption of SFAS No. 133 on its
financial statements or business practices.
Cash and cash equivalents:
For purposes of reporting cash flows, cash and cash equivalents include cash on
hand and in banks.
NOTE B - LOANS FROM STOCKHOLDERS:
---------------------------------
Loans from stockholders consist of the following:
<TABLE>
<CAPTION>
DECEMBER 31, June 30,
1999 2000
--------------- --------------
<S> <C> <C>
Loans from principal stockholders, unsecured,
non-interest bearing,
payable at maturity, January $80,946 $ 91,693
1, 2002
Loans from other stockholders, unsecured, non-interest
bearing,
payable at a rate based on the units of product
sold (see below) 50,000 50,000
--------------- --------------
$130,946 $141,693
=============== ==============
</TABLE>
During April 1998, the Company received loans from five individuals totaling
$50,000 for the purpose of providing funds for production setup of one of the
Company's products. As consideration for the loans, the Company issued 100,000
shares of its common stock to the individuals, and agreed to repay the loans at
a rate of $3.00 per unit of product sold for the first 16,667 units sold, then
the payment will be reduced to $1.00 per unit for the next 50,000 units sold.
The total payments will aggregate $100,000, or twice the original amount of the
loans. The 100,000 shares of stock were valued at $.50 per share (representing
the price at which shares were sold by the Company for cash during the year),
and the resulting $50,000 was recorded as prepaid loan costs.
F-9
<PAGE>
Mind2Market, Inc.
(A Development Stage Company)
Notes to Financial Statements
Years ended December 31, 1999 and1998, the six-month periods ended June 30,
2000 and 1999, and the period from February 15, 1996 (inception) to June 30,
2000 (Unaudited with respect to the six-month periods ended
June 30, 2000 and 1999 and the period from February 15, 1996 to
June 30, 2000)
NOTE C - INCOME TAXES:
The Company did not record any provision for federal and state income taxes
through June 30, 2000. The actual tax expense for each period differs from
"expected" tax expense (computed by applying the statutory U.S. federal
corporate tax rate of 34% to net loss before income taxes) as follows:
[OBJECT OMITTED][OBJECT OMITTED]
In assessing the realizability of deferred tax assets, the Company considers
whether it is more likely than not that some or all of the deferred tax asset
will not be realized. The Company believes that sufficient uncertainty exists
regarding the realizability of the deferred tax assets such that valuation
allowances equal to the entire balance of the deferred tax assets are necessary.
F-10
<PAGE>
Mind2Market, Inc.
(A Development Stage Company)
Notes to Financial Statements
Years ended December 31, 1999 and1998, the six-month periods ended June 30,
2000 and 1999, and the period from February 15, 1996 (inception) to June 30,
2000 (Unaudited with respect to the six-month periods ended
June 30, 2000 and 1999 and the period from February 15, 1996 to
June 30, 2000)
NOTE D - MANAGEMENT'S PLANS:
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As shown in the financial statements,
the Company has incurred a net loss for the period from February 15, 1996
(inception) to June 30, 2000 aggregating $370,159 and incurred a loss of $99,858
for the year ended December 31, 1999. The Company has a working capital
deficiency at December 31, 1999 of $6,678. These conditions raise substantial
doubt about its ability to continue as a going concern. The financial statements
do not reflect any adjustments that might result from the outcome of this
uncertainty.
Management is in process of completing a loan in the amount of $250,000 from an
independent party. The proceeds from this loan will be utilized to fund
operating expenses, including general and administrative, marketing, developing
product advertising materials and other expenses necessary to begin selling
products. Management believes this loan will provide sufficient funding to
enable the Company to begin generating revenues within four months. These
anticipated sales will generate cash flows sufficient to enable the Company to
operate for at least the next twelve months.
NOTE E - RELATED PARTY TRANSACTIONS:
The Company has engaged Mountain Share Transfer (a company owned by the wife of
Mr. Powell) to act as stock transfer agent. No compensation has been paid to
Mountain Share Transfer in connection with these services.
The Company has an agreement with Western Innovations (WI), a company owned by a
Director of the Company, under which agreement, WI will procure and store all
components required for assembly, will assemble the product, and package the
units for shipment. WI will also provide shipping and mailing services for the
product. WI will purchase on behalf of the Company all components for the
product up to $1,000,00, to establish an inventory of product for sale. For
these services, the Company will pay actual costs of components plus a fixed fee
of $3.50 per unit for general and administrative services, and 15% of product
cost for overhead and profit.
F-11
<PAGE>
SB EXHIBIT 3.0
ARTICLES OF INCORPORATION
<PAGE>
SB EXHIBIT 3.1
AMENDMENT TO ARTICLES OF INCORPORATION
<PAGE>
SB EXHIBIT 3.2
BY-LAWS
<PAGE>
SB EXHIBIT 10.0
MATERIAL CONTRACTS - LICENSE AGREEMENT
<PAGE>
SB EXHIBIT 24.1
CONSENT OF ACCOUNTANT
