SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-KSB
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)OF THE
SECURITIES EXCHANGE ACT OF 1934
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended: December 31, 1999
Commission File Number: 000-25523
ANONYMOUS DATA CORPORATION
(Exact name of registrant as specified in our charter)
Nevada 86-0857752
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
6170 W. Desert Inn
Las Vegas, Nevada 89146
(Address of principal executive offices) (Zip Code)
Registrant's telephone number including area code: (702) 221-0756
Securities registered pursuant to Section 12(b) of the Act:
None
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, $0.001 par value
(Title of Class)
Indicate by check mark whether the registrant (a) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. Yes X No _____
Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be
contained, to the best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form 10-
KSB or any amendment to this Form 10-K. [ ]
The number of shares of Common Stock, $0.001 par value, outstanding on
March 31, 2000, was 11,530,660 shares, held by approximately 113
stockholders.
<PAGE>
This form 10KSB contains forward-looking statements within the meaning
of the federal securities laws. These forward-looking statements are
necessarily based on certain assumptions and are subject to significant risks
and uncertainties. These forward-looking statements are based on management's
expectations as of the date hereof, and the Company does not undertake any
responsibility to update any of these statements in the future. Actual future
performance and results could differ from that contained in or suggested by
these forward-looking statements as a result of factors set forth in this
Form 10KSB (including those sections hereof incorporated by reference from
other filings with the Securities and Exchange Commission), in particular as
set forth in "Business Risks" under Item 1 and set forth in the "Management's
Discussion and Analysis" under Item 6.
In this form 10KSB references to "ADC" "we," "us," and "our" refer to
ANONYMOUS DATA CORPORATION.
PART I
ITEM 1. BUSINESS
Overview
Anonymous Data Corporation, a Nevada corporation (the "Company" or
"ADC") formed in November 1996, is a development stage company engaged in
the business of data management using a biometric identification system. The
biometric identification system; (i) archives individual data, such as
medical educational information, for access by registered users through
rapid sorting using scanning of a portion of their anatomy as a preliminary
search method; and, (ii) permits a second method of identification of
individuals volunteering for payment as plasma donors.
Background
We have obtained rights to a method of linking files of archived data
to the anatomy of an individual. This method allows the search function for
records to be more rapid and accurate and re-checked according to the name
of the individual. We have spent $281,438 during 1999 toward research and
development toward the refinement of our biometric individual data
identification system.
The term BIOMETRIC derives from the words body (BIO) and measurement
(METRIC). The science of biometrics has in recent years developed the
technology to take a reading from a human (such as electronic scan of a
fingerprint, iris scan, facial recognition, palm print, voice sample, etc).
The electronic scan is then matched with the same biometric marker for
purposes of recognition and verification of identity. The United States
Patent and Trademark Office has issued two U.S. patents to Dr. James E.
Beecham, Chairman of the Company. The Patents, Patent Numbers U.S. 5,876,926
[PCT/U.S. 98/16435]) and U.S. 5,897,989 [PCT/U.S. 97/08015], pertain to a
method, system and apparatus that permit an individual to submit biologic
test specimens for medical testing under biometric identification. The
system then allows for the subsequent retrieval of test results from a
computerized database utilizing the same biometric personal identification.
These Patents have been exclusively licensed to us from Dr. Beecham. - See
"Certain Transactions - License Agreement."
The patented applications, in non-U.S. territories, will be utilized
for collecting medical specimens in containers labeled by "biometric index".
For example, a biometric index may be obtained from the scan of a
fingerprint and/or the scan of the iris of the eye of the specimen donor.
After testing in a certified laboratory, the test data is stored
electronically under linkage to that same personal biometric index. Access
to such "biometrically" stored information is controlled by the re-scan of
the specimen donor. Since viewing the data requires "unlocking" the computer
file by scanning the same fingerprint and/or eye as was used for sending the
specimen to the lab in the first place, our system provides the secure
protection of the donors sample and limits mistakes that are sometimes made
in the donation process.
<PAGE>
We have developed a plan and are in the process of developing a method
for providing services and products worldwide based on our exclusive patent
licenses. We plan to offer these products as turnkey systems and also to
offer services directly to subscribers domestically and abroad.
Current Status of ADC's Products and Related Software
ADCNET, a comprehensive software and hardware system, was designed to be
generic to support all four of the current ADC product line. Namely, 1) Court
Mandated Data System, 2) Infectious Disease Education System, 3) Plasma
Industry System, and 4) Medical Records Privacy/Genetics Data Security
System.
Each of the four products named above requires a shared database in a
Local Area Network (LAN) or a Wide Area Network (WAN) environment.
Functionally, each of the systems has an "Enroll," "Recognize," "Print2D bar
code control label," and "Enter Results" options.
Two versions of ADCNET are planned: Version .5 and Version 1.0. Version
.5 is currently beta testing as a "Pilot Court Data System" for the American
Toxicology Institute, and Las Vegas Family Court. This Version is a LAN
between the Court and the Drug Testing Lab. Both sites are anticipated to
share a database located at the Court. Version 1.0 will permit each location
to continue processing in the event of a power failure, until such time as
the power is restored, at which time the database is automatically updated.
Version 1.0 is scheduled to be completed in late September, 1999.
The Prototype ADCNET Version .5 is currently installed as a beta testing
system at the American Toxicology Institute and the Las Vegas Family Court.
This system is operational and is anticipated to be evaluated by both Court
and Lab personnel. Minor enhancements are being noted as the system is
commissioned and these enhancements will be implemented in Version 1.0.
To become market ready, Version 1.0 will require customer modifications
specific to each customer. Modifications such as Title Screen, Customer name,
Customer Address, etc., will have to be programmed for each Customer
Installation.
The completion and operational status of the four systems as described
below, utilizing ADCNET, will be developed through manufacturing contracts,
corporate strategic partnerships and sublicense agreements with U.S. and
foreign governments, corporations and other organizations.
* Court Information System. Developed for the benefit of United States
judicial order compliance. The system pre-identifies an individual
whom the court orders to proceed to the laboratory for drug testing.
The laboratory, prior to the standard identification process such as
by drivers license verification, rechecks the identity by biometric
index. This double check is independent of all laboratory procedures
and does not interface or replace the methods and systems within the
laboratory.
* Infectious Disease Educational System. Developed for individuals and
social organizations in the United States interested in communicable
disease prevention through voluntary testing and sharing of results
privately with selected persons among the public. A study published
in 1998 in the Journal of the American Medical Association
demonstrated the important contribution of education and anonymity in
the U.S. for HIV testing. The study concluded that when people are
aware of the disease and not required to give their name but are
offered anonymous HIV testing, they voluntarily test more than 1 year
earlier and enter medical care earlier. Most U.S. states are now
required to permit anonymous HIV testing.
* In the foreign markets we plan to offer turnkey computerized systems for
nationwide medical testing and data management. One use would be by foreign
government officials to monitor child bearing age women and their HIV test
results. By re-scanning their biometric index when they arrive at the
maternity ward to deliver, HIV positive women can be given AZT, which in 80%
of cases protects their baby from HIV infection.
<PAGE>
* Plasma Industry System. Developed for use in U.S. plasma centers to
prevent the paid donor from violating regulations that forbid
donation more frequently than 48 hours. By registering the biometric
index of the donor in one center and providing the data to other
centers, a paid donor, even giving a false name, can be prevented
from creating the health risk of donating plasma for money several
times in one day at multiple centers in one city.
* Medical Data Privacy/Genetics Data Security System. Developed for
U.S. health care organizations and individuals interested in
verifying and safeguarding their sensitive medical testing data such
as genetic testing results. In particular where such genetic studies
identify predisposition to disease or can predict future disease and
thus if disclosed to unauthorized parties affect insurability of the
individual tested and their family. Developed to allow those who wish
to seek testing directly from a laboratory to identify their
specimens and test results while maintaining privacy.
The primary product lines listed above each utilize a proprietary
apparatus as disclosed in the licensed patents to be used in archiving
medical information for educational purposes. Data retrieval via
computerized stored data or from a 2-D bar code encryption is linked to a
re-scanning of the donor for matching biometric identification.
The Company's technology may be utilized in the marketplace for revenue
generation in two areas:
(i) as a seller of hardware components and software for turn-key systems for
large clients and;
(ii) as a provider of services to subscribers directly in certain localities.
The systems which ADC plans to offer for these 2 business models are:
Court Data System
As a direct service provider, we are beta testing a prototype system
code named, "ADCNET," which utilizes biometric identification in the Nevada
court jurisdiction. ADCNET is designed to be utilized by the judicial system
to verify the identification of an individual ordered by the judge to report
to the laboratory for drug testing. The system matches the identification of
the individual biometricly by matching his/her biometric identification with
the biometric image of the individual who has been ordered by the judge for
testing. We are not involved in the testing or laboratory work up itself,
merely the means by which the test results are confirmed as having come from
the person identified. The standard laboratory procedures are still followed
independently of the biometric system. The affiliated laboratories are fully
inspected and in compliance with all governmental regulation such as CLIA,
OSHA, etc.
Infectious Disease Education System
We have designed a direct service data management system, that can
allow thoughtful persons seeking information and a way to address, for
themselves and their loved ones, personal issues regarding health
information. Understanding how the system works requires an understanding of
the value of information that can allow a person to assess the risk of the
spread of disease when engaged in a relationship. The basic question is "How
and when are these diseases usually transmitted?"
<PAGE>
Sexually transmitted diseases are ordinarily transmitted from one
person to another, not from a single sexual contact, but rather only after
repeated contacts over weeks or even months. Thus, even after a relationship
starts, there is an opportunity to prevent the spread of disease, if a
person has the knowledge of the partners' recent testing results. Our
technology provides that information in a convenient and private manner.
To use the system as a tested person, you (i) first subscribe yourself
as an individual, (ii) select from a menu of educational data offered and
then (iii) register as having read the data and understood the process. For
convenience, our system is planned to be utilized as a college campus health
service or private community health service located in storefront type
clinics in public places. Our system is planned to allow a parent to
subscribe for an adolescent child. Over the next months or years, the parent
will be able to monitor the compliance of the child to our education program
by going with the child to a computer monitor, having the adolescent childs
fingerprint scanned or iris scanned and viewing the record of educational
sessions with the adolescent child.
In the international market, in circumstances where a sex worker is the
subscribed person (through government mandate in certain jurisdictions) the
authorities can scan the iris of the sex worker's eye and view that worker's
data from the database, which database includes HIV test results. Where the
worker has not continued to be tested periodically the authorities can
arrest or detain the non-compliant worker. Similarly in circumstances where
the authorities provide the system for use of child-bearing age women the
system can be used to identify those pregnant woman who are HIV positive. By
providing AZT to an HIV positive woman during delivery, the newborn child
can be protected from HIV 80% of the time. In addition, for overseas
markets, in compliance with the foreign government regulations, it is
important that the subscriber and the significant other in a relationship
understand our rules for data retention. Our data base management techniques
enhance the medical validity of data in the Golden Rule database. Each
subscriber, in order to maintain data in the active Golden Rule database,
may be required to present a specimen to be tested at least every four
months. If a recent specimen is not provided at one of the participating,
certified laboratories in our system, no older data is accessible.
Internationally, this testing frequency is designed to be medically
appropriate because in most cases it takes six weeks to several months for
an immuno-competent, recently infected person to make enough antibody to be
detectable. (Some newer tests utilize antigen identification, not antibody,
i.e. a substance such as nucleic acid -DNA or RNA or cell wall fragments
from the organism itself, to detect infection sooner. These viral bacterial
antigen detection tests may be applied in the Golden Rule system as
appropriate). The person with whom the data is shared can have confidence
that the data is valid at least as of the most recent date tested because
they will know that the Golden Rule system imposes a frequent testing
discipline on the subscriber with medical officer review and comment on test
results.
In the international area, the seven diseases for which testing can be
ordered by a physician and data sharing are targeted by our Golden Rule
System are: Human Immunodeficiency Virus or HIV; Gonorrhea; Chlamydia;
Herpes type 2; hepatitis B and C; and Syphilis.
We have demonstrated the system for representatives of the Governments
of Honduras and the Dominican Republic. Similarly the national turn-key
system will be available at the option of the client government to locate,
in public places such as hotel lobbies and selected nightclubs, customers of
sex workers in order to verify the test results of the sex worker in the
field on a 24 hour per day access basis.
ADC plans to offer to the government of those countries identified as
having a major HIV/AIDS problem the ADCNET solution. The initial countries to
be approached are identified in the U.S. Census Bureau, Official Statistics,
2/2/99 and the World Bank Study of Central America to include: Honduras,
Nicaragua, Panama, Costa Rica, El Salvador, Dominican Republic, and other
Caribbean countries. In the year 2,000 and beyond ADC plans to expand its
list of High-Risk countries for marketing.
<PAGE>
Plasma Industry System
In the plasma industry paid donors often falsify their name and try to
donate at several centers in one day to gain multiple payments. Our
DataSecure system offers a means to improve the chances that the high risk
donors or donors attempting to circumvent the system by donating multiple
times prior to the wait period, are accurately linked to the plasma center
computer database and, optionally, remain confidential.
The DataSecure system for plasma centers permits biometric linkage to
be maintained from start to finish in a two-step process: a) through
biometric label of iris of the prospective donor, and b) in the network of
computers to other blood centers.
An alternative use of our turnkey system is for use in the plasma
industry to screen out donors who carry infections. The DataSecure system
for the plasma industry permits biometric linkage to be maintained for paid
donors to records of their previous donations and testing results. When one
donor tests positive for a condition disqualifying that donor from donating
plasma, the information is entered under the biometric of that donor. When
that donor next appears at any blood donation site in the computer network,
the re-scan of the biometric accesses the record and enables the blood
center personnel to disqualify that donor. This step prevents unnecessary
expense in re-testing and more importantly allows a subscribing blood
industry company to prevent inadvertently drawing the blood of that donor,
who may attempt to falsify identity to gain payment for tainted blood
donation.
Medical Records Privacy/Genetics Data Security System.
Medical records privacy has become a prominent concern of U.S. national
leaders, as demonstrated by President Clinton in his January 1999 State of
the Union address in which he promised action on this issue in 1999. Many
sensitive medical data are at issue including testing data, in particular
the area of genetic testing. Scientists today are close to completing the
sequencing of all of the human DNA code through an effort known as the Human
Genome project. One early finding is rather surprising. Each of us has
little imperfections in our own DNA code. In fact, experts say each of us
has a minimum of 5 to 20 errors in our DNA sequence.
Some of these errors result in disease or, more precisely, an increased
risk of developing a certain disease. For example, there are genes now known
that predispose to breast cancer, colon cancer, diseases of the nervous
system and over 450 other different diseases. Tests for many of these genes
are either available now or soon to be available.
Unfortunately information of this type, if released to unauthorized
persons, may lead to discrimination. Some unscrupulous health insurers may
use genetic test information to deny insurance to those persons found to be
at risk for certain diseases. Although Congress and some medically oriented
government agencies are drafting legislation to outlaw such discrimination,
it is one form of discrimination that is difficult to detect or prove.
Our data base of Private Medical test results and Genetic Testing
results is planned to be filed in a unique manner, by fingerprint codes or
iris codes: the fingerprint scan or iris scan of the person who is tested for
genetic markers (the ADC subscriber) and optionally a second fingerprint code
or iris code from the subscriber's doctor. This dual biometric filing and
retrieval method for genetic testing data offers a subscriber confidence that
sensitive test results such as genetic predisposition to diseases such as
breast cancer (BRCA-1 gene) or colon cancer or diabetes are not accessible by
unauthorized individuals or organizations. Furthermore, the fingerprint scan
or iris code module having a clinic setting presents the appropriate
opportunity for genetic counseling and for education by the physician to the
subscriber privately of the meaning of the results. This allows plans to be
made for medical surveillance for the disease for which the patient has a
genetic predisposition.
<PAGE>
Business Strategy
Our business strategy is to make proposals to interested governments,
large corporations and interest groups domestically and overseas. As vendor
of hardware and software turnkey systems for large clients, the Company
plans to approach those countries where the problems exist for which the
systems offer solutions. In order to provide services to subscribers
directly, the Company plans to research the medical and legal aspects of its
proposed services in each jurisdiction through appropriate consultation with
local officials.
We hope to expand the system within the U.S. market and abroad through
contracts with medical service providers, insurance companies and
laboratories.
Product Testing
The testing phase for each of the two systems will occur with funding
of pilot projects, when such funding is available.
FDA REGULATIONS SPECIFY THAT PRODUCTS AND SOFTWARE USED FOR EDUCATIONAL
PURPOSES ONLY ARE EXEMPT FROM FDA REGULATION. FURTHERMORE PRODUCTS THAT DO
NOT PROVIDE DIAGNOSIS OR TREATMENT ARE EXEMPT AND NOT CONSIDERED A MEDICAL
DEVICE. The initial four product lines qualify for the exemptions stated
above. Future development of U.S. market products in line with the issued
patents and related software programming domestically will take note of FDA
regulations in anticipation of submitting applications for approval to the
FDA as necessary. We have also engaged the services of C. L. McIntosh and
Associates, a prominent consulting firm in the area of FDA regulatory
matters, to assist us in any future FDA related matters. Field-testing will
occur in the venue best suited to each system, whether in the U.S. or
abroad.
Suppliers
Our business strategy has been to combine proprietary technology and
products with "best of class" technology and products and design an
integrated, seamless product that takes advantage of the superior quality of
our components which are Y2K compliant.
Hardware Suppliers- Our products and services are not dependent on any
one supplier of hardware and will use any off-the-shelf IBM compatible
computer available on the market today, i.e.-Compaq, DELL, Gateway, etc. We
do not foresee the acquisition of such equipment as a problem and supply
should not affect our business in any way.
We use cameras designed by IriScan in the majority of our applications,
however, there are several other companies that make similar cameras, such
as OKI corporation of Japan. Fingerprint scanners produced by UltraScan,
Inc. are also under consideration.
Software Suppliers
We primarily use software based on Oracle database products designed by
Dimensia Inc. of Hawaii.
Sales and Marketing
Initially, the Company, through its officers, directors and key
consultants, plans to start pilot programs in strategic markets with
corporate partners such as Toyota Tsusho and Litton Data Systems and upon
the success of these programs, plans will be to set up Strategic Alliances
with these and other highly visible and well known vendors throughout the
world.
<PAGE>
Strategic Alliances
Our success will be dependent in part upon a number of strategic
relationships that we intend to enter into. At present, we have not
established relationships with any particular entity, however, we are in
discussions with several large companies, both locally and internationally.
The amount and timing of resources which future strategic partners devote to
assisting us will not be within our control. There can be no assurance that
strategic partners will perform their obligations as expected or that any
revenue will be derived from strategic arrangements. If any of our strategic
partners breaches or terminates an agreement with us or otherwise fails to
conduct its collaborative activities in a timely manner, the development,
commercialization or marketing of the product which is the subject of the
agreement may be delayed and we may be required to undertake unforeseen
additional responsibilities or to devote additional resources to development,
commercialization or marketing of our products.
The inability to enter into strategic relationships or the failure of a
strategic partner to perform its obligations could have a material adverse
effect on our business, financial condition and results of operations. There
can be no assurance that we will be able to negotiate acceptable strategic
agreements in the future, that the resulting relationships will be successful
or that we will continue to maintain or develop strategic relationships or to
replace strategic partners in the event any such relationships are
terminated. Our failure to maintain any strategic relationship could
materially and adversely affect our business, financial condition and results
of operations. We are currently in negotiations with IriScan and UltraScan to
determine the terms under which we have access to their respective biometric
technology.
Customer Support
In addition to ongoing client prospecting and product demonstrations
through direct sales, a satisfied customer is one of the most cost-effective
sales tools for our systems is a satisfied customer. Our customers will
generally require significant support and training with respect to our
products, particularly in the initial deployment and implementation stage.
We intend to provide support via telephone, teleconference or on-site
visits, and anticipate hiring additional staff as our customer base grows.
Next to product quality and ease of use, we will always place customer
satisfaction and technical support as its highest marketing priorities.
However, we have limited experience with widespread deployment of products
to a diverse customer base, and there can be no assurance that we will have
adequate personnel to provide the levels of support that our customers may
require during initial product deployment or on an ongoing basis. An
inability to provide sufficient support to our customers could delay or
prevent the successful deployment of our products. Failure to provide
adequate support could have an adverse impact on our reputation and
relationship with its customers, could prevent us from gaining new customers
and could have a material adverse effect on our business, financial
condition or results of operations.
Competition
We compete indirectly with certain companies which utilize biometrics
in related fields, such as Sony Corporation and Lockheed Martin Corporation,
which have biometric systems on the market that are in current use. Other
companies, such as NEC Technologies, have biometric fingerprint
identification systems on the market for physician identification when
accessing computerized patient information rather than a specific patient
file. IriScan Inc. may elect to retain the right to offer IriScan
recognition systems in the medical field either directly or through vendors
other than to us who then may compete with us.
We are aware of medical data collection, storage and display systems
technology entitled' "Medical Image Filing Apparatus," and "Health
Examination Method and System Using Plural Self-Test Stations and a Magnetic
Card." These systems store medical data on magnetic media contained on a
card or film.
Because we are not a testing laboratory we do not compete with
laboratory companies.
<PAGE>
Developing and Changing Market
The market for archiving of medical data management is continually
evolving and is highly dependent upon changes in the regulation arena.
Concern for privacy appears to be a favorable development for us. Changes in
technology and regulatory processes, however, may affect the demand our
products, which in turn may cause existing companies in other product lines
to shift their emphasis to products similar to our services and products,
thus increasing the competition.
Intellectual Property
Two U.S. patents are currently licensed exclusively to us (U.S.
5,876,926 [PCT/ US98/16435] and 5, 897, 989 [PCT/US97/08015]) from our
Chairman, James E. Beecham, MD. The Exclusive Licensee Territorial Agreement
is for the territory of the United States with provisions for expansion of
the licensed territory on a 1st right basis under terms and conditions
relating to payment of patent fees, use of the license and payment of
royalties. These U.S. licenses are exclusive and non-revocable for the term
until May 14, 2008 assuming compliance of the parties with the terms.
Pursuant to the License Agreement, a fee will be paid to Dr. Beecham in the
form of a royalty of three percent (3%) of the first $10 million gross
revenues to us from the manufacture, use, sale or operation of the Products
and Services, two percent (2%) of gross revenues which exceed $10 million
but are less than $25 million and one percent (1%) of gross revenues which
exceed $25 million. Dr. Beecham has also agreed to extend the patent
licenses for us for these two U.S. patents for an additional eight (8) years
depending on performance. We consider these licensed patents to be valuable
and of substantial commercial benefit.
We also seek to protect our intellectual property rights by limiting
access to the distribution of our software, documentation and other
proprietary information. In addition, we enter into confidentiality
agreements with our employees and certain customers, vendors and strategic
partners. There can be no assurance that the steps taken by us in this
regard will be adequate to prevent misappropriation of our technology or
that our competitors will not independently develop technologies that are
substantially equivalent or superior to our technologies.
By virtue of his agreement with us, Dr. Beecham is under no obligation
to assign or license to us any additional patents he may receive beyond the
initial two U.S. patents already licensed by us. A first rights of license
provision for additional patents by Dr. Beecham in the area of medical
biometrics is in place in exchange for our promise to provide funds to
underwrite the costs of additional patent filings and prosecution. There can
be no assurance that any patents, federal trademarks or services marks will
be granted, additional patents will be licensed or that the licensed patents,
although issued by the Patent and Trademark Office, can be defended or will
permit substantial protection for our services or products.
U.S. Government Approvals
The United States Food and Drug Administration (the "FDA"), is the most
stringent regulatory agency for medical devices and claims and may have
jurisdiction over one or more of our services and products. Exemptions
exist for non-diagnostic and non-treatment data archiving system. We expect
that biometric-based information systems that provide archival non-
diagnostic, non-treatment data, will be exempt. However, there can be no
guarantee that the governmental regulations will not change in the future.
Governmental guidelines for universal and special precautions for handling
infectious disease material do not apply to us since we are a medical
education and data storage, retrieval and dissemination service. Neither
can there be a guarantee that our products or services can successfully
compete with those of other competitors, or that the protection provided by
the U.S. patents licensed by us will be successful in preventing competitors
from offering services or products similar ours. We further believe that
certain of our products and services may not qualify for exemption without
FDA pre-market approval. FDA approval should be expedited by our plans to
utilize consultants familiar with FDA procedures. There can be no guarantee,
however, that these approvals will be received in an expeditious manner. The
overseas markets vary in regulatory oversight country by country.
<PAGE>
Foreign Government Approvals
The Company and its products may be subject to foreign regulation
regarding export restrictions and controls on technology such as that
incorporated into the Company's products. Additional approvals from foreign
regulatory authorities may be required, and there can be no assurance that
the Company will be able to obtain foreign approvals on a timely basis or at
all, or that it will not be required to incur significant costs in obtaining
or maintaining its foreign regulatory approvals. In Europe, the Company will
be required to obtain certifications necessary to enable the "CE" mark to be
affixed to the Company's products in member countries of the European Union.
The CE mark is an international symbol of quality and complies with
applicable European medical device directives. The Company has not yet
obtained this CE certification. Failure to comply with foreign regulatory
requirements could have a material adverse effect on the Company's business,
financial condition and results of operations. In addition, the increasing
demand for biometric systems has exerted pressure on regulatory bodies
worldwide to adopt new standards for such products and services, generally
following extensive investigation of and deliberation over competing
technologies. The delays inherent in this governmental approval process may
cause the cancellation, postponement or rescheduling of the installation of
systems by the Company's customers, which in turn may have a material adverse
effect on the sale of products by the Company to such customers.
Many countries in which the Company currently intends to operate either
do not currently regulate devices similar to the Company's or have minimal
registration requirements; however, these countries may develop more
extensive regulations in the future that could adversely affect the Company's
ability to market its products in such countries. In addition, significant
costs and requests by regulators for additional information may be
encountered by the Company in its efforts to obtain regulatory approvals. Any
of such events could substantially delay or preclude the Company from
marketing its products in the U.S. or internationally. Failure to comply with
applicable regulatory requirements can result in loss of previously received
approvals and other sanctions and could have a material adverse effect on the
Company's business, prospects, financial condition and results of operations.
Additionally, the Company and its agents will be subject to compliance
with the Foreign Corrupt Practices Act of 1977, as amended ("FCPA"), which
prohibits the promise or payments of any money, remuneration or other items
of value to foreign government officials, public office holder, political
parties and others with regard to the obtaining or preserving commercial
contracts or orders. The FCPA imposes on SEC reporting companies certain
accounting and internal control requirements, with which the Company intends
to comply, insofar as applicable to the Company. Violation of the FCPA may
result in corporate fines of up to $1,000,000 per offense and fines and/or
imprisonment for convicted corporate officers of up to $10,000 and five years
imprisonment. Although the Company will make every effort to comply with all
such statutes and regulations, inadvertent non-compliance could result in
legal actions against the Company and consequent impairment of its ability to
conduct business and these restrictions may hamper the Company in its
marketing efforts abroad.
Risks Associated with International Sales
A number of risks are inherent in international operations and
transactions. International sales and operations may be limited or disrupted
by the imposition of government controls, export license requirements,
political instability, trade restrictions, changes in tariffs and
difficulties in staffing, coordinating and managing international operations.
Additionally, our business, financial condition and results of operations may
be adversely affected by fluctuations in international currency exchange
rates as well as constraints on our ability to maintain or increase prices.
The international nature of our business subjects us and our representatives,
<PAGE>
agents and distributors to laws and regulations of the foreign jurisdictions
in which they operate or in which our products are sold. The regulation of
medical devices in a number of such jurisdictions, particularly in the
European Economic Area, continues to develop and there can be no assurance
that new laws or regulations, or new interpretations of existing laws and
regulations, will not have a material adverse effect on our business,
prospects, financial condition and results of operations. In addition, the
laws of certain foreign countries do not protect our intellectual property
rights to the same extent as do the laws of the U.S. There can be no
assurance that we will be able to successfully further commercialize our
current products or successfully commercialize any future products in any
international market.
Risks Associated with Acquisitions
The integration of any acquisitions will require special attention from
management, which may temporarily distract its attention from the day-to-day
business of the Company. Any acquisitions will also require integration of
the Company's product offerings and coordination of research and development
and sales and marketing activities. Furthermore, as a result of acquisitions,
the Company may enter markets in which it has no or little direct prior
experience. There can also be no assurance that the Company will be able to
retain key technical personnel of an acquired company or recruit new
management personnel for the acquired businesses, or that the Company will,
or may in the future, realize any benefits as a result of such acquisitions.
Acquisitions by the Company may result in potentially dilutive issuances of
equity securities, the incurrence of debt, one-time acquisition charges and
amortization expenses related to goodwill and intangible assets, each of
which could be significant and could materially adversely affect the
Company's financial condition and results of operations. In addition, the
Company believes that it may be required to expand and enhance its financial
and management controls, reporting systems and procedures as it integrates
acquisitions. There can be no assurance that the Company will be able to do
so effectively, and failure to do so when necessary would have a material
adverse effect upon the Company's business, financial condition and results
of operations.
Employees
As of December 31, 1999, we had 4 full time employees. All employees
are located at our headquarters in Las Vegas. None of our employees are
subject to any collective bargaining agreement.
Our proposed personnel structure can be divided into three broad
categories: management and professional, administrative, and project
personnel. As in most small companies, the divisions between these three
categories are somewhat indistinct, as employees are engaged in various
functions as projects and work load demands.
We are dependent upon the services of James E. Beecham, MD, Chairman of
the Company and President. Our future success also depends on our ability
to attract and retain other qualified personnel, for which competition is
intense. The loss of Dr. Beecham or our inability to attract and retain
other qualified employees, could have a material adverse effect on us.
Additional Information
We are subject to the informational requirements of the Securities
Exchange Act of 1934 (the "Exchange Act") and, in accordance therewith, will
file reports, proxy statements and other information with the Commission.
Such reports, proxy statements and other information may be inspected at
public reference facilities of the Commission at Judiciary Plaza, 450 Fifth
Street N.W., Washington D.C. 20549; Northwest Atrium Center, 500 West Madison
Street, Suite 1400, Chicago, Illinois 60661; 7 World Trade Center, New York,
New York, 10048; and 5670 Wilshire Boulevard, Los Angeles, California 90036.
Copies of such material can be obtained from the Public Reference Section of
the Commission at Judiciary Plaza, 450 Fifth Street N.W., Washington, D.C.
20549 at prescribed rates. For further information, the SEC maintains a
website that contains reports, proxy and information statements, and other
information regarding reporting companies at (http://www.sec.gov). We
maintain a website at www.adcx.com.
<PAGE>
Risks Associated with Year 2000 Problem
We have had no noticeable impact as the result of the year 2000 problem.
As is the case with most other Companies using computers in their operations,
we recognize the need to ensure that our operations will not be adversely
impacted by software and/or system failures related to such "Year 2000"
noncompliance. Within the past twelve months, we have been upgrading
components of our own internal computer and related information and
operational systems and continue to assess the need for further system
redesign and believe it is taking the appropriate steps to ensure Year 2000
compliance. Based on information currently available, we believes that the
costs associated with Year 2000 compliance, and the consequences of
incomplete or untimely resolution of the Year 2000 problem, will not have a
material adverse effect on our business, financial condition and results of
operations in any given year. However, even if our internal systems are not
materially affected by the Year 2000 problem, our business, financial
condition and result of operations could be materially adversely affected
through disruption in the operation of the enterprises with which we
interact. There can be no assurance that third party computer products used
by us are Year 2000 compliant. Further, even though we believe that our
current products are Year 2000 compliant, there can be no assurance that
under actual conditions such products will perform as expected or that future
products will be Year 2000 compliant.
Since we have not commenced substantial operations, third parties non
compliance with the Year 2000 issue will have minimal impact on us. We in
contracting with new vendors, manufactures, and plants are pre-establishing
the third party's compliance with Year 2000 issues.
ITEM 2. PROPERTIES
The Company's main offices are located at 6170 W. Desert Inn, Las Vegas,
Nevada. The facility is a leased 1,500 square foot facility utilized in the
following manner: a) administrative offices, b) professional offices, c)
storage, and d) developmental laboratory. These headquarters are adequate for
marketing throughout the United States. The Company anticipates it may
require additional space in the future, but anticipates no difficulty in
obtaining such space in its immediate vicinity at favorable rates. The
Company pays rent at the rate of $3,000 per month. The Company has other
tangible property, including computer equipment, proprietary software and
biometric prototype.
ITEM 3. LEGAL PROCEEDINGS
The Company recently settled a suit filed on January 14, 2000 by Asia
Pacific, Inc., a Nevada Corporation, dba Laser Barcode Solutions, which was
filed in District Court in Clark County, Nevada, Case Number A413603
Department XII against Anonymous Data Corporation and the President James
Beecham claiming Breach of Contract, Tortious Breach of Contract and
Negligent/Intentional Misrepresentation.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matter was submitted to a vote of security holders, through the
solicitation of proxies or otherwise, during the fourth quarter of our fiscal
year ended December 31, 1999.
<PAGE>
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS
Our Common Stock is traded in the over-the-counter securities market
through the National Association of Securities Dealers Automated Quotation
Bulletin Board System, under the symbol "ANYD". The following table sets
forth the quarterly high and low bid prices for our Common Stock as reported
by the National Quotations Bureau. The quotations reflect inter-dealer
prices, without retail mark-up, markdown or commission, and may not
necessarily represent actual transactions.
<TABLE>
1999
Average Bid Average Ask
<S> <C> <C>
November $2.09 $2.64
December $1.87 $2.14
</TABLE>
Note: We started trading in November, 1999
As of March 31, 2000, we had approximately 113 stockholders of the
11,530,660 shares outstanding.
We have never declared or paid dividends on our Common Stock. We intend
to follow a policy of retaining earnings, if any, to finance the growth of
the business and do not anticipate paying any cash dividends in the
foreseeable future. The declaration and payment of future dividends on the
Common Stock will be the sole discretion of the Board of Directors and will
depend on our profitability and financial condition, capital requirements,
statutory and contractual restrictions, future prospects and other factors
deemed relevant.
ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
The following discussion and analysis should be read in conjunction with
our Financial Statements and the notes thereto appearing elsewhere in this
document.
RISK FACTORS AND CAUTIONARY STATEMENTS
This report contains forward-looking statements within the meaning of
Section 27A of the Securities Act of 1933 and Section 21E of the Securities
Exchange Act of 1934. Actual results and events could differ materially from
those projected, anticipated, or implicit, in the forward-looking statements
as a result of the risk factors set forth below and elsewhere in this report.
With the exception of historical matters, the matters discussed herein
are forward looking statements that involve risks and uncertainties. Forward
looking statements include, but are not limited to, statements concerning
anticipated trends in revenues and net income, the date of introduction or
completion of our products, projections concerning operations and available
cash flow. Our actual results could differ materially from the results
discussed in such forward-looking statements. The following discussion of our
financial condition and results of operations should be read in conjunction
with our financial statements and the related notes thereto appearing
elsewhere herein.
Overview
The Company, which was organized in November 1996, is a Development
Stage Enterprise, engaged in the business of marketing services and products
related to the management of data based on biometric individual
identification. The Company has a limited operating history and has not
generated revenues from the sale of any products. The Company recently
installed its beta testing system at the American Toxicology Institute and
in the Las Vegas Family Courts. Until the installation of the system in Las
<PAGE>
Vegas, the Company's activities have been limited to the development of
prototypes, licensing U.S. patents, evaluating biometric equipment and
analyzing the market conditions for the proprietary services and products.
Consequently, the Company has incurred the expenses of start-up and patent
licensing. Future operating results will depend on many factors, including
the ability of the Company to raise adequate working capital, demand for the
Company's services and products, the level of competition and the Company's
ability to satisfy governmental regulations and deliver company services and
products while maintaining quality and controlling costs. The Company's
financial statements have been prepared assuming the Company will continue
as a going concern.
Results of Operations
Period from January 1, 1999 to December 31, 1999
The first years of existence for the Company achieved three main goals;
The formation of the Company's organization to pursue its business strategy,
development of a production model and achieving the public company status to
assist in funding the Company's objectives.
Revenues. The Company is a development stage enterprise as defined in
Statement of Financial Accounting Standards- No. 7, and has yet to generate
any revenues. The Company is devoting substantially all of its present
efforts to: (1) developing its medical data management products and systems,
(2) developing its market, and (3) obtaining sufficient capital to commence
full operations.
General and Administrative. General and administrative, legal and
consulting expenses for the year ended December 31, 1999 were $614,742 which
was a increase over the $92,444 for the year ended December 31, 1998. This
increase was primarily the result of increased expenses related to: (i) going
public, and (ii) common stock issued in lieu of cash payments to employees
and consultants.
Research and Development. Research and Development expenses were
$281,438 for the year ended December 31, 1999.
Net loss for the Company were $919,389 for the year ended December 31,
1999 as compared to net loss of $601,277 for the year ended December 31,
1998. This increase was the result of increasing activity and related
additional expenses discussed above associated with being a development stage
enterprise.
Liquidity and Capital Resources
The receipt of funds to the Company from Private Placement Offerings
and loans obtained through private sources are anticipated to offset the
near term cash requirements of the Company. Since inception, the Company has
financed its cash flow requirements through debt financing, issuance of
common stock for cash and services, and minimal cash balances. As the
Company expands its medical data management activities, it may continue to
experience net negative cash flows from operations, pending receipt of sales
revenues, and will be required to obtain additional financing to fund
operations through common stock offerings and bank borrowings to the extent
necessary to provide its working capital.
Over the next twelve months, the Company intends to develop its revenues
by releasing its products under development to its target markets. However,
the Company will continue the research and development of its products,
increase the number of its employees, and expand its facilities where
necessary to meet product development and completion deadlines. The Company
believes that existing capital and anticipated funds from operations will not
be sufficient to sustain operations and planned expansion in the next twelve
months. Consequently, the Company will be required to seek additional capital
in the future to fund growth and expansion through additional equity or debt
<PAGE>
financing or credit facilities. No assurance can be made that such financing
would be available, and if available it may take either the form of debt or
equity. In either case, the financing could have a negative impact on the
financial condition of the Company and its Shareholders.
Initial financing is only to provide funds to prove the business
concept, to finish the development of the software, and to install the first
prototype system. Additional funds will be necessary to take the products to
market. The Company hopes to enter into additional funding arrangements
through strategic partnerships, merger, equity offering or debt offering.
Nothing has been secured as of this time.
The Company anticipates that it will incur operating losses in the next
twelve months. The Company's lack of operating history makes predictions of
future operating results difficult to ascertain. The Company's prospects
must be considered in light of the risks, expenses and difficulties
frequently encountered by companies in their early stage of development,
particularly companies in new and rapidly evolving markets such as bio-
medical. Such risks for the Company include, but are not limited to, an
evolving and unpredictable business model and the management of growth. To
address these risks, the Company must, among other things, obtain a customer
base, implement and successfully execute its business and marketing
strategy, continue to develop and upgrade its technology and products,
provide superior customer services and order fulfillment, respond to
competitive developments, and attract, retain and motivate qualified
personnel. There can be no assurance that the Company will be successful in
addressing such risks, and the failure to do so can have a material adverse
effect on the Company's business prospects, financial condition and results
of operations.
Costs Associated with Year 2000 Problem
The Company has incurred minimal expenses associated with the Year 2000
Problem. As a result the Company being a Development Stage Enterprise, the
Company's computer equipment is being purchased as Year 2000 compliant, where
possible.
ITEM 7. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
See Index to Financial Statements and Financial Statement Schedules
appearing on page F-1 through F-8 of this Form 10-KSB
ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
No Changes to Report
<PAGE>
PART III
ITEM 9. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT; COMPLIANCE WITH
SECTION 16(a) OF THE EXCHANGE ACT.
The following table sets forth the names, positions with the Company and
ages of the executive officers and directors of the Company. Directors will
be elected at the Company's annual meeting of shareholders and serve for one
year or until their successors are elected and qualify. Officers are elected
by the Board and their terms of office are, except to the extent governed by
employment contract, at the discretion of the Board.
<TABLE>
Name Age Title
<S> <C> <C>
James E. Beecham, MD 51 Chairman of the Board
William M. Somers, OD 53 Director
</TABLE>
Duties, Responsibilities and Experience
James E. Beecham, MD. Founded Anonymous Data Corporation and as served as
Chairman of the Board since inception in November of 1996. From 1990 to
present Dr. Beecham has been a Physician/Pathologist at Laboratory Medicine
Consultants Laboratories, Inc. Dr. Beecham served as Vice President of
Laboratory Medicine Consultants Laboratories, Inc., a full service medical
laboratory located in Las Vegas, Nevada from its inception until it's sale
in 1997. Dr. Beecham is a member of the Board of Directors and full partner
in Laboratory Medicine Consultants, Ltd., a medical practice consisting of
12 pathologists located in Las Vegas, Nevada. Dr. Beecham received his
medical degree from the University of Florida School of Medicine in 1973. He
has been engaged in the full time practice of medicine in the specialty of
Pathology since his completion of a residency at the University of North
Carolina and University of Washington in 1978. Dr. Beecham spends
approximately 25% of his time on ADC related activities.
William M. Somers, OD has served as Director of Anonymous Data Corporation
since November, 1998. From 1994 until present William Somers, a Doctor of
Optometry has maintained a full time optometry practice in Las Vegas, Nevada.
He has held numerous committee positions throughout his career including the
Medicare Carrier Advisory Committee, the Nevada chapter of the American
Optometric Association and advisory board committee member and spokesman for
Vistakon (Johnson & Johnson contact lenses). He received his optometry degree
from the Southern California College of Optometry.
LIMITATION OF LIABILITY OF DIRECTORS
Pursuant to the Nevada General Corporation Law, our Articles of
Incorporation exclude personal liability for our Directors for monetary
damages based upon any violation of their fiduciary duties as Directors,
except as to liability for any breach of the duty of loyalty, acts or
omissions not in good faith or which involve intentional misconduct or a
knowing violation of law, or any transaction from which a Director receives
an improper personal benefit. This exclusion of liability does not limit any
right which a Director may have to be indemnified and does not affect any
Director's liability under federal or applicable state securities laws. We
have agreed to indemnify our directors against expenses, judgments, and
amounts paid in settlement in connection with any claim against a Director if
he acted in good faith and in a manner he believed to be in our best
interests.
BOARD OF DIRECTORS COMMITTEES AND COMPENSATION
Compensation Committee Interlocks and Insider Participation
The Board of Directors does not have a Compensation Committee. James
Beecham, President, oversaw the compensation of our executive officers.
<PAGE>
Board of Director's Report on Executive Compensation
General. As noted above, our Board of Directors does not have a
Compensation Committee and, accordingly, during the fiscal year ended
December 31, 1999, the Board of Directors, through the President, reviewed
and approved the compensation of our executive officers.
Overall Policy; Significant Factors. During fiscal 1999, the
compensation decisions made by the Board of Directors in respect of our
executive orders were influenced by three major factors. First, our start-up
nature brings with it all of the normal capital requirements to sustain
growth, therefore certain stock compensation was granted in lieu of salaries,
commissions and for services rendered. This practice may be extended into
the future on a case by case basis and accordingly filed with the Securities
and Exchange Commission. Finally, as we continue to mature, certain
additions to the executive staff will be required. As we are required to
seek talent in outside market, we will be required to provide a competitive
compensation package.
As overall policy, however, the Board continues to believe that long-
term compensation tied to the creation of stockholder value should constitute
a significant component of the compensation to be earned by our executive
officers. In this respect, it will be the Board's policy to attempt to
restrain base cash compensation (subject to competitive pressures), while
providing the incentive for Management to increase stockholder value by
providing such officers with significant numbers of market-price stock that
will not confer value upon the officers unless and until the Company's share
price rises. The Board of Directors expects that stock options will
constitute a significant component of the compensation package provided to
executive officers.
The Board believes that cash bonuses are, at times, appropriate based
upon the performance of the Company's business compared to our internal
expectations and general business conditions.
ITEM 10. EXECUTIVE COMPENSATION
The following table sets forth the cash compensation of the Company's
executive officers and directors during each of the fiscal years since
inception of the Company. The remuneration described in the table does not
include the cost to the Company of benefits furnished to the named executive
officers, including premiums for health insurance and other benefits provided
to such individual that are extended in connection with the conduct of the
Company's business. The value of such benefits cannot be precisely
determined, but the executive officers named below did not receive other
compensation in excess of the lesser of $50,000 or 10% of such officer's cash
compensation.
<TABLE>
Summary Compensation Table
Long Term
Annual Compensation Compensation
Restricted
Name and Principal Other Annual Stock
Position Year Salary Bonus Compensation (2)(3) Options
<S> <C> <C> <C> <C> <C> <C>
James E. Beecham(1) 1996 -0- -0- -0- -0- -0-
James E. Beecham 1997 -0- -0- -0- -0- -0-
James E. Beecham 1998 -0- -0- -0- -0- -0-
James E. Beecham 1999 -0- -0- -0- -0- -0-
William M. Somers 1998 -0- -0- -0- $1,000 -0-
William M. Somers 1999 -0- -0- -0- $9,000 -0-
</TABLE>
(1) Beecham purchase 6,000,000 shares of restricted stock in the Company at
$.02 per share as the result of his Pre-Incorporation Agreement with the
Company.
<PAGE>
Compensation of Directors
All directors will be reimbursed for expenses incurred in attending Board
or committee meetings.
Stock Option Plan
The following descriptions apply to stock option plan which the Company
has adopted; however, no options have been granted as of this date.
The Company reserved for issuance an aggregate of 1,500,000 shares of
common stock under a Stock Option Plan (the "Stock Option Plan") and Non-
Employee Directors' Plan described below (the "Directors' Plan") which has
been adopted by the Company. These plan are intended to encourage directors,
officers, employees and consultants of the Company to acquire ownership of
common stock. The opportunity so provided is intended to foster in
participants a strong incentive to put forth maximum effort for the continued
success and growth of the Company, to aid in retaining individuals who put
forth such efforts, and to assist in attracting the best available
individuals to the Company in the future.
Officers (including officers who are members of the Board of Directors),
directors (other than members of the Stock Option Committee (the "Committee")
to be established to administer the Stock Option Plan and the Directors'
Plan) and other employees and consultants of the Company and its subsidiaries
(if established) will be eligible to receive options under the planned Stock
Option Plan. The Committee will administer the Stock Option Plan and will
determine those persons to whom options will be granted, the number of
options to be granted, the provisions applicable to each grant and the time
periods during which the options may be exercised. No options may be granted
more than ten years after the date of the adoption of the Stock Option Plan.
Unless the Committee, in its discretion, determines otherwise, non-
qualified stock options will be granted with an option price equal to the
fair market value of the shares of common stock to which the non-qualified
stock option relates on the date of grant. In no event may the option price
with respect to an incentive stock option granted under the Stock Option Plan
be less than the fair market value of such common stock to which the
incentive stock option relates on the date the incentive stock option is
granted.
Each option granted under the Stock Option Plan will be exercisable for
a term of not more than ten years after the date of grant. Certain other
restrictions will apply in connection with this Plan as to when some awards
may be exercised. In the event of a change of control (as defined in the
Stock Option Plan), the date on which all options outstanding under the Stock
Option Plan may first be exercised will be accelerated. Generally, all
options terminate 90 days after a change of control.
<PAGE>
ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Security Ownership of Certain Beneficial Owners.
The following table sets forth certain information as of December 31,
1999 with respect to the beneficial ownership of common stock by (i) each
person who to the knowledge of the Company, beneficially owned or had the
right to acquire more than 10% of the Outstanding common stock, (ii) each
director of the Company and (iii) all executive offices and directors of the
Company as a group.
<TABLE>
Name of Beneficial Owner (1) Number Percent
of Shares Of Class (2)
<S> <C> <C>
James E. Beecham, MD 5,100,000 54%
William M. Somers, OD 10,000 0%
All Directors & Officers as a Group 5,110,000 54%
</TABLE>
(1) As used in this table, "beneficial ownership" means the sole or shared
power to vote, or to direct the voting of, a security, or the sole or shared
investment power with respect to a security (i.e., the power to dispose of,
or to direct the disposition of, a security). In addition, for purposes of
this table, a person is deemed, as of any date, to have "beneficial
ownership" of any security that such person has the right to acquire within
60 days after such date.
(2) Figures are rounded to the nearest percentage. Less than 1% is reflected
as 0%.
ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
PreIncorporation Agreement. On the 1st of November, 1996, the Company
entered into an agreement with James Beecham, MD, wherein Beecham agreed to
provide exclusively to the Company an option to enter into a formal License
Agreement. The Pre-Incorporation Agreement provided that James Beecham would
receive 6,000,000 shares of common stock at a price to Beecham of $0.02 per
share to be paid over two years. The agreement recited that the option was
the only asset of the to be formed corporation.
License Agreement. On May 14 1998, the Company entered into an "Exclusive
Licensee Territorial Agreement" for two U.S. patents relating to medical
biometrics with Dr. James Beecham, Chairman of the Company, in exchange for
future royalties in the amount of three percent (3%) of the first $10
million gross revenues to the Company from the manufacture, use, sale or
operation of the Products and Services, two percent (2%) of gross revenues
which exceed $10 million but are under $25 million and one percent (1%) of
gross revenues which exceed $25 million. A disinterested Company senior
management official approved the agreement which was then ratified by the
Board of Directors. The Company believes the agreement is commercially
reasonable and generally equivalent to what a third party would receive with
no affiliation.
Officer Loans. In November 1999, the Chairman loaned the Company $51,000 at
10% annually. Interest payments are due annually with principal balance due
in 2004.
<PAGE>
ITEM 13. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
(a) Documents filed as part of this Report
1. Financial Statements:
A. INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
1. Independent Auditors Report F-1
2. Financial Statements:
Balance Sheet F-2
Statement of Operation F-3
Statement of Changes in Stockholders' F-4
Statement of Cash Flows F-5
Notes to Consolidated Financial Statements F-6 - F-7
All schedules are omitted because they are not applicable or
the required information is shown in the consolidated financial
statements or notes thereto.
2. During the fiscal year 1999, the Company filed the following 8-Ks.
8-K filed November 4, 1999
8-K filed November 11, 1999
3. Subsequent to the end of the fiscal year, the Company filed the
following reports on Form 8-K
8-K filed February 1, 2000
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed
on our behalf by the undersigned, thereunto duly authorized.
ANONYMOUS DATA CORPORATION DATED: April 16, 2000
By:/s/ James Beecham
James Beecham
President
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.
Signature Title Date
/s/ James Beecham President April 17, 2000
James Beecham
/s/ William Somers Director April 17, 2000
William Somers
<PAGE>
INDEPENDENT AUDITORS' REPORT
Board of Directors
Anonymous Data Corporation
Las Vegas, Nevada
We have audited the balance sheet of Anonymous Data Corporation (a
development stage enterprise) as of December 31, 1999, and the related
statements of operations, stockholders' equity and cash flows for the two
years ended December 31, 1998 and 1999, and for the period from inception
(November 15, 1996) to December 31, 1997. 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 audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits to
obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements.
An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Anonymous Data Corporation
as of December 31, 1999, its results of development stage operations and its
cash flows for the periods presented in conformity with generally accepted
accounting principles.
The accompanying balance sheet has been prepared assuming that the Company
will continue as a going concern. As discussed in Notes 1 and 3, the
Company's ability to commence operations and realize its investments in
assets is dependent upon obtaining additional sources of capital to fund the
successful completion of its equipment and software development and marketing
of its products. This condition raises substantial doubt as to the Company's
ability to continue as a going concern. Management's plans in regard to this
matter are described in Note 3. The financial statements do not include any
adjustments that might result from the outcome of this uncertainty.
March 27, 2000
<PAGE>
<TABLE>
ANONYMOUS DATA CORPORATION
(A Development Stage Enterprise)
BALANCE SHEET
December 31, 1999
ASSETS
<S> <C>
Current assets, cash $ 3,939
Equipment and software, less accumulated
depreciation of $36,224 89,225
Unamortized patent costs 96,038
-----------
$ 189,202
==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 37,569
Accrued taxes 7,089
Accrued interest, officer/director 5,100
Capitalized lease obligation 1,528
---------
51,286
Long-term debt, officer/director 51,000
---------
102,286
---------
Stockholder's equity:
Common stock, $.001 par, 100,000,000
shares authorized, 9,438,160 shares
issued and outstanding
Preferred stock, $.001 par, 25,000,000
shares authorized, none issued and
outstanding 9,438
Additional paid-in capital 1,692,376
Deficit accumulated during development stage (1,614,898)
-----------
86,916
-----------
$ 189,202
</TABLE>
===========
See notes to financial statements
<PAGE>
<TABLE>
ANONYMOUS DATA CORPORATION
(A Development Stage Enterprise)
STATEMENT OF OPERATIONS
From
Year Ended December Inception to
31, December 31,
1999 1998 1997
<S> <C> <C> <C>
Operating costs and expenses:
Research and development $ 281,438 $ 496,468 $ 33,366
Administrative 614,742 92,444 59,116
Depreciation 26,462 8,012 1,750
Interest 5,785 4,353
---------- --------- -----------
928,427 601,277 94,232
---------- -------- -----------
Income:
Interest 2,109
Other 6,929
----------
9,038
----------
Net loss $ 919,389 $ 601,277 $ 94,232
========== ========= ===========
Loss per share $ 0.099 $ 0.076 $ 0.012
========== ========= ===========
Weighed average number of shares
outstanding 9,325,932 7,936,165 7,591,250
========== ========= ===========
</TABLE>
See notes to financial statements
<PAGE>
<TABLE>
ANONYMOUS DATA CORPORATION
(A Development Stage Enterprise)
STATEMENT OF SHAREHOLDER'S EQUITY
FOR THE YEARS ENDED DECEMBER 31,1999 AND 1998 AND FOR THE PERIOD FROM
INCEPTION (NOVEMBER 15,1996) TO DECEMBER 31,1997
Stock Deficit
Common Stock Subscrip- accumulated
Additional tion during
Paid-in Receiv- development
capital able stage Total
Par
Shares Value
<S> <C> <C> <C> <C> <C> <C>
Common shares
issued from
inception
(November
15,1996) to:
Officer with
stock
subscription
receivable 6,000,000 $6,000 $114,000 (120,000) $-
Officer/directo
r for expense
reimbursement 1,000,000 $1,000 $19,000 20,000
Employees for
services 235,000 235 4,465 4,700
Employees for
cash 175,000 175 3,325 3,500
Consultants for
services 325,000 325 6,175 6,500
Payment of
stock
subscription
receivable
from founding
shareholder 83,164 83,164
Net loss (94,232) (94,232)
--------- ------ -------- -------- ------------ --------
Balances,
December 31,
1997 7,735,000 7,735 146,965 (36,836) (94,232) 23,632
Common shares
issued in 1998
to:
Officer/directo
r for expense
reimbursement 73,000 73 74,581 74,654
Officers and
directors for
services 201,000 201 200,799 201,000
Employees for
services 18,500 19 18,481 18,500
Consultants for
services 373,200 373 372,827 373,200
Others for cash
93,300 93 93,207 93,300
Payment of
stock
subscription
receivable 36,836 36,836
Net loss (601,277) (601,277
)
--------- ------ ------- ------- ------------ --------
Balances,
December 31,
1998 8,494,000 8,494 906,860 (695,509) 219,845
Common shares
issued in 1999
to:
Officers and
directors for
services 134,500 135 134,365 134,500
Consultants for
services 266,710 266 286,444 286,710
Others for cash
542,950 543 542,407 542,950
Less offering
costs (177,700) (177,700
)
Net loss (919,389) (919,389
)
--------- ------ --------- ------- ------------ --------
Balances,
December 31,
1999 9,438,160 $9,438 1,692,376 $- $(1,614,898) $86,916
========= ====== ========= ======= ============ ========
</TABLE>
See notes to financial statements
<PAGE>
<TABLE>
ANONYMOUS DATA CORPORATION
(A Development Stage Enterprise)
STATEMENT OF CASH FLOWS
From
Inception
to
December
Year Ended 31,
1999 1998 1997
<S> <C> <C> <C>
Operating activities:
Net loss $ (919,389) $ (601,277) $ (94,232)
Depreciation 26,462 8,012 1,750
Expenses reimbursed with stock 401,210 483,354 31,200
Change in operating assets:
Decrease in prepaid expenses 1,000 (1,000)
Change in operating liabilities:
Increase in accounts payable 31,699 7,319
Increase in accrued expenses 5,640
Increase in accrued interest 5,100
----------- ---------- ----------
Net cash used by operating
activities (448,278) (103,592) (61,282)
----------- ---------- ----------
-
Investing activities:
Purchase of equipment (102,708) (8,746) (8,749)
Patent costs (35,400) (52,090) (8,548)
----------- ---------- ----------
Net cash used in investing
activities (138,108) (60,836) (17,297)
----------- ---------- ----------
Financing activities:
Payment by founding shareholder
of stock subscription receivable 36,836 83,164
Payments on lease purchase obligation
(3,718)
Sale of common stock 542,950 93,300 3,500
Offering costs paid with cash (13,700) (10,000)
Advances from founding shareholder
for stock 50,000
Loan from founding shareholder 51,000
---------- ---------- ----------
Net cash provided by financing
activities 576,532 170,136 86,664
---------- ---------- ----------
Net increase (decrease) in cash (9,854) 5,708 8,085
Cash, beginning 13,793 8,085 -
---------- ---------- ----------
Cash, ending $ 3,939 $ 13,793 $ 8,085
========== ========== ==========
Non-cash financing and investing
activities:
Exchange of stock for offering costs $ 20,000 $ 134,000
========== =========
Equipment purchased through lease
purchase obligation $ 5,246
===========
Settlement of shareholder advances
with stock $ 50,000
==========
</TABLE>
See notes to financial statements
<PAGE>
ANONYMOUS DATA CORPORATION
(A Development Stage Enterprise)
NOTES TO FINANCIAL STATEMENTS
1. Summary of significant accounting policies:
Nature of business. The Company is a development stage enterprise and,
therefore, as of December 31, 1999, has not commenced business operations.
The Company was incorporated in 1996, for the purpose of developing biometric
equipment and related software to store and retrieve data of medical
laboratory testing. The Company is in the research and development phase of
testing its technical equipment and software. The Company's future
operations could be affected by adverse changes in local and national
economic conditions. (See Note 3.)
Offering costs. The Company has offered its unregistered common stock to the
public in offerings intended to be exempt from registration with the United
States Securities and Exchange Commission (SEC) pursuant to Rule 504
promulgated under the Securities Act of 1933. The costs of the offerings have
been offset against the proceeds to date.
Use of estimates. Timely preparation of financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect reported amounts and disclosures, some
of which may require revision in future periods.
Equipment, depreciation and amortization. Equipment is stated at cost.
Depreciation and amortization is provided by an accelerated method over the
estimated useful live of the assets.
Stock compensation awards. The Company has adopted Financial Accounting
Standard Board Statement No. 123 Accounting for Stock-Based Compensation, for
valuing compensatory stock and option awards. (See Note 6.)
Patent costs. Cost associated with patents and patents pending are deferred
and amortized based on the lives of patents granted. In the event patent
applications are denied or abandoned, such costs are written off. For
patents granted late in the year, amortization begins in the following year.
Advertising costs. Advertising costs are expensed when incurred and totaled
$57,546 and $22,693 for 1999 and 1998.
Loss per share. Loss per share is computed based on the weighted average
number of shares outstanding for the periods presented.
2.Related party transactions:
In May 1998, Dr. James E. Beecham (Chairman of the Board of Directors and
majority shareholder and president of the Company) licensed to the Company
the rights associated with two U.S. patents pending. The licenses are
irrevocable until May 14, 2008. Dr. Beecham has also agreed to extend the
licenses for an additional eight years depending upon performance. In
consideration for the assignment of rights, Dr. Beecham will receive a
royalty of 3% of the first $10 million, 2% of $10 to $25 million, and 1% in
excess of $25 million in gross revenues to the Company from the manufacture,
use, sale or operation of the products and services.
In December 1998, the Company signed a consultant agreement with Protocol
Services, A.V.V. providing for payment to the consultant of 10% of the gross
proceeds from any sales or business generated by the consultant. The Company
issued 50,000 shares of restricted stock valued at $1 per share. An
additional 25,000 shares are to be issued under terms of the agreement at a
value to be determined. The length of the contract is interminable but may
be terminated at any time by the Company for just cause.
In November 1999, the Chairman loaned the Company $51,000 dollars at 10%
annually. Interest payments are due annually with principal balance due in
its entirety in 2004.
During early 1999, the Company issued 129,500 shares of its common stock to
its officers/directors valued at $1 per share as compensation.
<PAGE>
3. Going concern contingency:
The Company's ability to complete certain research projects and development
of its equipment and software development is dependent upon obtaining
additional equity or debt financing. This condition could prevent the Company
from commencing business operations and continuing as a going concern. The
balance sheet, however, has been prepared assuming the Company will continue
as a going concern, and it reflects no adjustments that might result from the
outcome of this uncertainty. However, because of this uncertainty, no effect
has been given in the balance sheet to any future income tax benefit of the
loss recorded to date. The Company has a net operating loss carry forward
expiring in year 2019 available to reduce future income tax expense in the
amount of approximately $1,600,000.
Management expects to raise additional equity capital by offering its common
stock for sale to investors through private placement or by registration with
the SEC under the Securities Act of 1933 or obtain debt financing to complete
its research projects and equipment and obtain the related additional
patents. Management expects that the Company's medical data management
equipment, when completed, will have a wide range of applications in medical
testing data storage. Management's ability to effectively implement its
plans could have a material and adverse effect upon the Company's business,
financial condition and future operations.
5. Lease commitment:
The Company leases office space under a term expiring December 31, 2000, with
an option to renew for an additional three years. Future annual minimum
lease payments are $16,150.
6. Stock option plan:
The Company adopted a stock option plan which reserves for issuance an
aggregate of 1,500,000 shares of common stock. No options have been granted
to date.
7. Subsequent event:
Subsequent to December 31, 1999, the Company issued 700,000 and 1,020,000
shares of common stock to consultants for services registered with the SEC
through the filing of Forms S-8 on January 26, and March 24, 2000, at market
values ranging between $1.27 and $1.64 per share. The Company has also
issued 372,500 shares under Rule 144 restricted common shares for services at
market values ranging between $1.47 and $2.26 per share.
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-2000
<PERIOD-END> DEC-31-1999
<CASH> 3,939
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 3,939
<PP&E> 89,225
<DEPRECIATION> 0
<TOTAL-ASSETS> 189,202
<CURRENT-LIABILITIES> 102,286
<BONDS> 0
0
0
<COMMON> 9,438
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 189,202
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (919,389)
<INCOME-TAX> (919,389)
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (919,389)
<EPS-BASIC> (.09)
<EPS-DILUTED> (.09)
</TABLE>
