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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 10-SB
(Amendment No. 3)
GENERAL FORM FOR REGISTRATION OF SECURITIES OF
SMALL BUSINESS ISSUERS
Under Section 12(b) or (g) of the Securities Exchange Act of 1934
TECHLABS, INC.
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(Name of Small Business Issuer in Its Charter)
FLORIDA 65-0843965
- -------------------------------- ------------------------------------
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
3435 Galt Ocean Drive
Ft. Lauderdale, FL 33308
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(Address of principal executive offices)
Issuer's telephone number: (954) 630-1898
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Securities to be registered under 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 Registered
None None
Securities to be registered under Section 12(g) of the Act:
COMMON STOCK
(Title of Class)
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PART I
Item 1. Business
Forward-looking Statements
This Registration Statement includes forward-looking statements. These
statements are based on management's beliefs and assumptions and on information
currently available to management. Forward-looking statements include statements
in which words such as "expect," "anticipate," "intend," "plan," "believe,"
"estimate," "consider," or similar expressions are used.
Forward-looking statements are not guarantees of future performance.
They involve risks, uncertainties and assumptions. The Company's future results
and stockholder values may differ materially from those expressed in these
forward-looking statements. Many of the factors that will determine these
results and values are beyond the Company's ability to control or predict. In
addition, the Company does not have any intention or obligation to update
forward-looking statements after the effectiveness of this Registration
Statement, even if new information, future events or other circumstances have
made them incorrect or misleading.
History
TECHLABS, INC. ("Techlabs" or "Company") is a Florida corporation
organized in May, 1998 as Coordinated Physician Services, Inc. to organize and
operate primary care physician networks for managed medical care organizations.
In February 1999 we abandoned this business due to excessive competition and
changed our name to Techlabs, Inc. and embarked on a strategy to develop and
operate Internet related business operations directly and through subsidiaries
and strategic alliances.
The Company's principal office is located at 3435 Galt Ocean Drive, Ft.
Lauderdale, Florida 33308, and its telephone number is (954)630-1898. We are
currently in the developmental stage.
Business Opportunities on the Internet
We believe that Internet related businesses will benefit from the
increasing number of Internet users and that advertisers will more likely choose
to advertise on Web sites that demonstrate a high volume of user traffic and
provide content designed for specific demographic groups. The Company believes
that opportunities for providers of business and finance, sports and Internet-
related content in reaching certain niches of the Internet user community will
parallel opportunities for those offering complementary technologies such as
search/index guides and portals like the Internet Sleuth.
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The Company expects that the Internet market for advertising will
continue to grow in the foreseeable future. According to the Internet
Advertising Bureau, by 1997, advertising reached $900 million and is expected to
grow to approximately $4 billion by the year 2000. Because of the
diversification in user groups, the focus of Internet advertising is no longer
geared toward computer-based or Internet related products. The mushrooming of
Internet advertising reflects this greater diversity of products and target
audience. According to a Coopers & Lybrand spokesman, "[1997] is the year the
Internet has come into its own . . . We are witnessing the evolution of the
Internet into a vitally important consumer advertising medium . . ." Portals,
which now attract 15% of Internet page-views, receive 59% of Internet
advertising, according to Ziff Davis Publishing's ZDNet News. This share of
Internet traffic is projected to reach 20% and 30% of advertising dollars by
2002.
Projections of growth in Internet commerce consider that a primary
impetus will derive from a greater participation from foreign economies.
According to Robert Hult, vice president and general manager of Alta Vista,
"The international market will be 50 percent of the total traffic on the
Internet in a few years." Yahoo! President and CEO, Tim Koogle reports that 40%
of its page-views come from outside North America, up from 20% two years ago. We
believe that license agreements and partnerships within foreign companies may
present important opportunities as the Internet continues to expand globally.
We believe that an important factor in the recognition of the World
Wide Web as a legitimate advertising medium is the ability to direct advertising
to specific user groups, directly distribute targeted information to users on an
individualized basis and receive timely feedback from users. Current technology
allows Web sites to monitor the demographics of their users and deliver specific
information to the advertisers and advertising agencies. The Company believes
that continued improvements in the tools and technologies used to measure user
response to advertisements on the Internet and to track purchasing decisions
should increase the effectiveness and attractiveness of Internet-based
advertising. The emerging model for advertising rates recognizes that
advertisers are willing to pay a premium for the targeted audience that the
internet can deliver. The Internet can also provide the user with direct access
to the advertiser with "click-through" advertisements, where an electronic
transaction is capable of occurring immediately if the advertiser has a Web site
capable of conducting sales and purchases via the Internet. Another perceived
advantage of Internet-based advertising is that such advertising can be
evaluated and monitored daily, and in the future should be capable of being
monitored in real-time. If an Internet-based advertisement is not delivering the
anticipated results, an advertiser can remove the advertisement within a short
period of time and replace it with an advertisement that may be more likely to
deliver the anticipated results.
We believe that the growth of the Internet and its adaptation to
commercial use presents a significant new opportunity for merchants to reach a
wider customer base. We are beginning to see the growth curve as consumers,
merchants and financial institutions have become satisfied that the electronic
manifestations of existing payment methods are as safe, convenient and secure as
their current counterparts.
The Company is a developer and incubator of start-up and emerging
Internet companies and businesses, seeking to make strategic alliances with such
companies and further their growth and development through a variety of
consulting and financing services.
The Company was incorporated on May 26, 1998 and its sole operating
activities to date were the conception and development of its subsidiary's
internet site, http//www.Interplanner.com, and corresponding business plan, the
hiring of employees, including programmers and designers, and administrative
staff and the negotiation of strategic alliances with other internet companies.
The Company has reported no cash revenues since inception.
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Current Internet Initiatives
The following describes the current business activities undertaken by
Techlab:
Interplanner.com
We are developing a World Wide Web site based on a personal information
manager (PIM) application, www.Interplanner.com, which will allow users to
create and maintain a variety of their personal information such as contacts,
appointments, task lists and group calendars. The site will enable users to view
information received from other World Wide Web sources such as news, weather and
stock market data. The site's calendar can be set to send reminders of
appointments, events and tasks on an individual or group basis. Since the
application resides in the site's servers, it can be accessed from any device
that can access the World Wide Web and from any location with World Wide Web
access.
As of the date of this filing, the site is under development. It is
available for a tour of its elements and registration for notification by
e-mail of actual operational launch of the site and other information on the
site. We anticipate that the site will be operational by September, 1999.
Revenue Sources - While it is anticipated that the Interplanner.com
site will be free to users, we expect to obtain revenue from a variety of
sources including sale of advertising on the site, commission on sales obtained
through the site, affiliation of other web sites which desire to utilize our
site, and sale or licensing of the software underlying the site. As of the date
of this filing, we have not made any arrangements for revenue from our
interplanner.com website, and there can be no assurance that revenue will be
generated by the site.
Competition - Besides competing with PIM's run on individual computers,
there are competing web-based PIM's, including when.com, planetall.com and
webcal.com. We expect to compete based on ease of use, quality of links to the
websites and features included in our site. Since all such sites are free to the
user, the features of a PIM site and ease of use will be the most relevant
competitive elements, as well as marketing of the site to bring it to attention
of potential users.
We have entered into a Strategic Marketing Agreement with The
BigHub.Com, Inc. under which we may acquire advertising space on iSleuth.com on
advantageous terms as described below.
The BigHub.Com, Inc.
On April 27, 1999, the Company negotiated the acquisition and
redemption of an aggregate of 1,000, 000 shares of the preferred stock of The
BigHub.Com, Inc. formerly named iSleuth.Com, Inc., (OTC Bulletin Board Trading
Symbol: BHUB), receiving 1,000,000 restricted shares of the common stock of The
BigHub.com (representing approximately 7% of the total outstanding common shares
of The BigHub.com), in exchange for $627,000, 250,000 shares of the restricted
common stock of Techlabs (representing approximately 3.5% of the total
outstanding common shares of Techlabs).
This transaction represents the commencement of relations between the
Company and The BigHub.com. The BigHub.com has agreed to provide to Techlabs,
its related companies and subsidiaries, strategically located advertising
space, offered at a 25% discount to standard market rates to be then offered by
The BigHub.com, throughout The BigHub.com's network of affiliate sites on the
Internet in order to expose Techlabs, its related companies and subsidiaries to
Internet users at high traffic areas on the Internet.
We believe that the exchange of shares between the Company and The
BigHub.Com, Inc. will enable the two firms to establish a closer working
relationship with each other for similar reasons that a company issues stock
options to its employees, to achieve an attitude of ownership rather than just a
commercial relationship.
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Risk Factors
We are still in the development stage. Our first Internet business,
Interplanner.com is under development and there can be no assurance that this
will result in profitable operations or that any other initiatives of the
Company will result in revenues or profits.
Need for additional working capital.
We may require additional working capital to support any
Internet-related operations we develop.
Government Regulations
Although there are currently few laws and regulations directly
applicable to the Internet, it is possible that new laws and regulations will be
adopted covering issues such as, among other things, privacy, copyrights,
access, obscene or indecent communications and the pricing, characteristics and
quality of Internet products and services. The Communications Decency Act or
other legislation could dampen the growth of the Internet generally and decrease
the acceptance of the Internet as an advertising medium, and could, thereby,
have a material adverse effect on the Company's business, financial condition
and operating results.
Competition
We believe that competition represents the greatest risk to our
proposed Plan of Operation. The Internet has attracted a large number of
business attention from established companies who are seeking to expand into the
Internet as well as newer Internet businesses such as Amazon and Yahoo.
Employees
We currently employ 2 persons.
Item 2. Management's Discussion and Analysis of Financial Conditions and
Results of Operations.
We intend to develop and operate Internet related business ventures
including specialized content providers.
The Company intends to adopt a strategy of seeking opportunities to
realize significant gains through the selective sale of interests in our
Internet ventures or having separate subsidiaries or affiliates sell minority
interest to outside investors. The Company believes that this strategy will
provide the ability to significantly increase shareholder value as well as
provide capital to support the growth in the Company's operations.
We hope to become a significant service provider within each respective
market niche for specialized content which we enter. The critical success
factors are: understanding, developing and applying information technology to
the Internet, interactive media markets, and data access and software tools;
narrowing market focus while consummating strategic alliances to complement
product and service offerings; investing in strategic Internet or interactive
media investments or acquisitions and most importantly, a continued
understanding of customers' needs.
We will seek to participate in the Internet interactive media
industries and develop market share. Key elements of this strategy include:
1. The Company intends to devote significant resources into
operations which seek to capitalize on opportunities surrounding the growth of
the Internet and the interactive marketing industry. The Company intends to
pursue the growth and development of Internet related technologies and services
and introduce such services and products commercially. Additionally, the Company
intends to continue to evaluate new opportunities to further its Internet
strategy and also to seek out opportunities to realize significant shareholder
value through the sale of selected operations or technologies or having separate
subsidiaries sell a minority interest to outsiders.
2. We intend to attend numerous trade shows in the Internet, high
technology, direct marketing, mutual fund, book, and library markets, while
further supplementing its sales efforts with space advertising and product and
services listings in appropriate directories. In addition, the
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Company will sponsor user group meetings for its mutual fund clients and major
lists participants in the InfoBuyers List database, where new products and
services are highlighted.
3. We intend to conduct numerous mailing of list catalogs,
flyers, newsletters and other product information throughout the year to
primarily book, magazine, journal, newsletter and software publishers and
resellers, seminar companies, professional associations, business supply
catalogers, consumer electronic, high technology and financial service
organizations.
4. The Company intends to develop and market a variety of
Internet related products and services, as well as a number of database software
technologies. These industries are characterized by rapid technological
development. The Company believes that its future success will depend in large
part on its ability to continue to enhance its proposed products and services
and to develop other products and services which complement existing ones. In
order to respond to rapidly changing competitive and technological conditions,
the Company expects to continue to incur significant research and development
expenses during the initial development phase of new products and services as
well as on an ongoing basis.
The following discussion regarding the Company and its business and
operations contains "forward-looking statements" within the meaning of Private
Securities Litigation Reform Act 1995. Such statements consist of any statement
other than a recitation of historical fact and can be identified by the use of
forward-looking terminology such as "may," "expect," "anticipate," "estimate" or
"continue" or the negative thereof or other variations thereon or comparable
terminology. The reader is cautioned that all forward-looking statements are
necessarily speculative and there are certain risks and uncertainties that could
cause actual events or results to differ materially from those referred to in
such forward looking statements. The Company does not have a policy of updating
or revising forward-looking statements and thus it should not be assumed that
silence by management of the Company over time means that actual events are
bearing out as estimated in such forward looking statements.
The Company has no operating history upon which an evaluation of the
Company and its prospects can be based. The Company anticipates that
advertising revenues from its Internet site and investment income from its
equity investments will constitute substantially all of the Company's
revenues, if any, during the foreseeable future. Since the Company anticipates
that it will incur negative cash flows from operations for the foreseeable
future, the Company believes that its success will depend upon its ability to
obtain revenues from advertising on its Internet site, which can not be assured.
The Company's ability to generate revenues is subject to substantial
uncertainty. The Company's prospects must be considered in light of the risks,
expenses and difficulties frequently encountered by start-up companies in
general, and specifically with respect to the new and rapidly evolving market
for Internet products, content and services. To address these risks, the Company
must, among other things, effectively establish, develop and maintain
relationships with advertising customers, advertising agencies and other third
parties, provide original, useful technologies to Internet users, develop and
upgrade its technology, respond to competitive developments, attract new
qualified personnel and retain existing qualified personnel. There can be no
assurance that the Company will succeed in addressing such risks and the failure
to do so would have a material adverse effect on the Company's business,
financial condition and operating results. Additionally, the Company's lack of
an operating history makes prediction of future operating results difficult.
Accordingly, there can be no assurance that the Company will be able to generate
revenues or that the Company will achieve, or maintain profitability or generate
revenues from operations in the future.
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The Company's quarterly operating results may fluctuate significantly
as a result of a variety of factors, many of which are outside of the Company's
control. Factors that may adversely affect the Company's quarterly operating
results include the level of use of the Internet, demand for advertising,
seasonal trends in both Internet use and advertising placements, the addition
or loss of advertisers, advertising budgeting cycles of individual advertisers,
the level of use of the Company's Internet sites, the amount and timing of
capital expenditures and other costs relating to the development, operation and
expansion of the Company's Internet operations, the introduction of new sites
and services by the Company or its competitors, price competition or pricing
changes in the industry, technical difficulties or system failures, general
economic conditions and economic conditions specific to the Internet and
Internet media. In seeking to effectively implement its operating strategy, the
Company may elect from time to time to make certain advertising and marketing
or acquisition decisions that could have a material adverse effect on the
Company's business, financial condition and operating results. The Company
believes that period to period comparisons of its operating results are not
meaningful and should not be relied upon for an indication of future
performance. Due to all of the foregoing factors, it is likely that in some
future quarters, the Company's operating results may be below the expectations
of public market analysts and stockholders. In such event, the price of the
Company's Common Stock would likely be materially adversely affected.
RESULTS OF OPERATIONS
REVENUES
From the date of inception through December 31, 1998, the Company did
not generate any cash revenues and had no results from operations. During the
six month period ended June 30, 1999, the Company did not generate any revenues
and, the Company was not a party to any advertising or other agreement or
arrangement from which it could record deferred revenues or reasonably expect
to generate cash revenue. The sole source of funds for the Company from the
date of inception through June 30, 1999 has been through the sale of equity. The
Company believes that its subsidiary, Interplanner.com, will continue to
develop and introduce its products commercially, actively pursue increased
advertising revenues, and look to expand into new market opportunities during
the remainder of fiscal 1999. Additionally, during the six month period ended
June 30, 1999, the Company purchased an equity interest in TheBigHub.com, Inc.
and an interest in a privately held on line direct marketing Company. Therefor,
as a result of both increased revenue from existing companies, and incremental
revenues from new acquisitions and investments, the Company expects to report
future revenue growth. During the six months ended reported $1,734,897 in
unrealized gains on marketable equity securities, net of taxes. Such gains are
included as accumulated other comprehensive income on the balance sheet.
COSTS OF REVENUES
Since inception and through December 31, 1998, and for the six months
ended June 30, 1999, the Company had not incurred any cost of revenues, as the
Company had not generated revenues during such period. There can be no
assurance that the Company will be able to generate sufficient revenues,
advertising or otherwise, to cover its costs of revenues. The failure to
generate sufficient cash revenues in order to cover its costs of revenues will
result in continued cash losses and will continue to have a material adverse
effect on the Company's business, financial condition and operating results.
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OPERATING EXPENSES
Organizational expenses incurred from inception to December 31, 1998
were capitalized and recorded as organization costs. During the six months
ended June 30, 1999, these costs were expensed and included in the caption
"cumulative effect of change in accounting principle" on the Statement of
Operations.
Operating expenses totaling $236,143 for the six months ended June 30,
1999, consist primarily of professional, consulting fees and other organization
costs including non cash compensation totaling $156,000. The Company expects
operating expenses to significantly increase in future periods as a result of,
among other things, the additional costs of being a public company.
INCOME TAXES
At December 31, 1998, the Company had not recorded an income tax
benefit or provision due to the insignificance of its operations. During the
six months ended June 30, 1999, the Company recorded a provision for income
taxes of $1,015,103 resulting primarily from its unrealized gain on investment
securities.
LIQUIDITY AND CAPITAL RESOURCES
At December 31,1998 and June 30, 1999, the Company's principal source
of liquidity was $15,000 and $3,486, respectively, in cash and cash equivalents
derived from private sales of the Company's equity securities. The Company
has primarily financed its operations through the private sale of equity
securities. The Company has no material commitments for capital expenditures.
The Company anticipates a substantial increase in its capital expenditures
through the remainder of fiscal 1999 consistent with its anticipated growth.
The Company currently believes that available funds, cash flows expected to be
generated from operations, if any, and the net proceeds of private placements
will be sufficient to fund its working capital and capital expenditures
requirements for the remainder of fiscal 1999. Thereafter, the Company may need
to raise additional funds. The Company's ability to grow will depend in part on
the Company's ability to expand and improve its Internet operations, expand its
advertising and marketing efforts, expand and improve its Internet user support
capabilities and develop new Internet content and applications. In connection
therewith, the Company may need to raise additional capital in the foreseeable
future from public or private equity or debt sources in order to finance such
possible growth.
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There can be no assurance that we will be successful in establishing meaningful
or profitable operations in any area. Although there is great opportunity in the
Internet, there is little barrier to entry by competitors.
Year 2000 Computer Problem
Since the Year 2000 Computer Problem was well known prior to our
incorporation, we have been able to plan our business strategies to minimize the
problem. We have been assured that the server hosting our Interplanner.com site
is Year 2000 compliant. We expect to utilize only equipment and services which
can assure us of Year 2000 compliance. Nevertheless, we may be affected by Year
2000 problems of service suppliers over which we have little control such as
electricity suppliers and telecommunications suppliers on which the Internet
depends.
Item 3. Description of Property
The Company leases 2,500 square feet of office space in Fort
Lauderdale, Florida under a lease which expires in August 2002. Monthly rental
payment is $2,000.
Item 4. Security Ownership of Certain Beneficial Owners and Management
The following table sets forth information as of June 1, 1999 with
respect to the beneficial ownership of our voting securities by (i) each person
known by the Company to own beneficial 5% or more of our voting securities (ii)
each director and officer of the Company and (iii) all directors and officers as
a group. The number of shares of Common Stock owned are those "beneficially
owned" as determined under the rules of the Securities and Exchange Commission,
Including any shares of Common Stock as to which a person has sole or shared
voting or investment power and any shares of Common Stock which the person has
the right to acquire within 60 days through the exercise of any option, warrant
or right.
<TABLE>
<CAPTION>
Common Stock
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Number of Percent of
Name and Address of Beneficial Owner Shares Owned Class Owned
- ------------------------------------ ------------ -----------
<S> <C> <C>
Thomas J. Taule 750,000 11%
c/o Techlabs, Inc.
3415 Galt Ocean Drive
Ft. Lauderdale, Florida 33308
Blue Sky Investment Group, Inc. 1,000,000 14.6%
3389 Sheridan Street
Hollywood, Florida 33021
</TABLE>
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<TABLE>
<CAPTION>
Number of Percent of
Name and Address of Beneficial Owner Shares Owned Class Owned
- ------------------------------------ ------------ -----------
<S> <C> <C>
Nomad Investment Group, Inc. 833,334 12.2%
3116 N. Federal Hwy.
Lighthouse Point, Florida 33064
Reveal Online Information, Inc. 833,333 12.2%
1003 S.E. 17th Street
Fort Lauderdale, Florida 33315
Strategic Holdings, Inc. 833,333 12.2%
16 Port Side Lane
Fort Lauderdale, Florida 33064
Mayjay Holdings, Inc. 750,000 11%
1570 Madruga Avenue
Suite 211
Coral Gables, FL 33146
Upside Investments, Inc. 750,000 11%
1570 Madruga Avenue
Suite 211
Coral Gables, FL 33146
Hollywood, Florida 33021
Yucatan Holdings Company 750,000 11%
3003 Keller Blvd. Rd
Knoxville, TN 37922
All Directors and Officers as a Group
(Two (2) persons) 750,000 11%
CLASS A SPECIAL PREFERRED STOCK
Thomas J. Taule 4,500,000 50%
c/o Techlabs, Inc.
3415 Galt Ocean Drive
Ft. Lauderdale, Florida 33308
Yucatan Holdings Company 4,500,000 50%
3003 Keller Blvd. Rd
Knoxville, TN 37922
</TABLE>
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Item 5. Directors and Executive Officers.
The following table sets forth the name, age and position of each
director and executive officer of the Company as of the date hereof.
<TABLE>
<CAPTION>
NAME AGE POSITION
- ---- --- --------
<S> <C> <C>
Thomas J. Taule 29 Chairman, Secretary, Treasurer and Director
John J. Bennett 38 President and Director
</TABLE>
JOHN J. BENNETT
Mr. Bennett, President and Director of Techlabs since May 17, 1999, possesses an
extensive background in the Internet services industry, with a particular
emphasis on site design and development, operation and e-commerce. While serving
as CEO and President of TheBigHub.com (formerly iSleuth.com. Inc.) from August
1998 through May 1999, he successfully guided the transformation of that
company's "Internet Sleuth" search engine site (http://www.isleuth.com) from its
origins as a non-commercial web search site into that of a premier Internet
gateway portal site offering a variety of features and services. During the
course of his tenure, he directed the introduction of a wide range of new site
services, including shopping and e-commerce, free e-mail, and in-depth news,
weather, financial, business and investment information. Mr. Bennett also
developed and implemented a variety of innovative traffic building programs for
the isleuth.com site which resulted in an increase in the site's user base over
a nine month period from approximately 300,000 unique users to well over
1,200,000. Since May 1994, Mr. Bennett has also served as President of Direct
Digital Communications, an Internet-based marketing and Web site development
company that specializes in working with Web site owners and operators to build
traffic and revenues through the development of site sponsorships, advertising
programs and partnership arrangements.
THOMAS J. TAULE
Thomas J. Taule, Chairman, Secretary, Treasurer and Director of Techlabs, Inc.
since May 1998, was Executive Vice President of operations of TheBigHub.com
(formerly iSleuth.com. Inc.) from August 1998 to May 1999, where he directed the
successful transformation of the Company from it's origins as a physician
practice management business to that of an Internet site owner and operator. Mr.
Taule was chiefly responsible for development and adoption of the new business
plan which guided that transformation, as well as the acquisition of the
Internet Sleuth search engine and web site that formed the backbone of its
Internet operations. From February 1994 to August 1998 Mr. Taule served as
Chairman of the Board, President and CEO of Coordinated HealthCare, Inc., the
predecessor of thebighub.com/isleuth.com and was also a founder of the Company.
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Item 6. Executive Compensation
The Company has not paid any compensation to its current officers and
directors. The Company expects to pay reasonable compensation at such time as
the Company s business develops to such extent that it is able to do so. The
Company does not have any incentive or stock option plans and does not have any
employment agreements.
Item 7. Certain Relationships and Related Transactions
None.
Item 8. Description of Securities
COMMON STOCK
The Company's authorized capital consists of 50,000,000 shares of
Common Stock, par value $.001 per share. Holders of shares of Common Stock are
entitled to one vote per share at all meetings of stockholders. In the event of
liquidation, dissolution or winding up of the Company, holder of the Common
Stock will be entitled to receive on a pro rata basis 99% of assets of the
Company remaining after satisfaction of all liabilities and payment of any
preferred liquidation rights with liquidation preference.
PREFERRED STOCK
The Articles of Incorporation as amended, authorize the issuance of the
following Preferred Stock:
<TABLE>
<CAPTION>
<S> <C>
10,000,000 shares of Preferred Stock $.001 par value per share
25,000,000 shares of Special Preferred Stock $.001 par value per share
</TABLE>
12,500,000 shares of the Special Preferred Stock have been designated
Class A Special Preferred Stock. The shares of Special Preferred Stock which are
not Class A Special Preferred Stock may be issued, with a majority of
shareholder approval, with designations, powers, preferences and relative rights
determined by the Board of Directors.
VOTING RIGHTS
Preferred Stock - Each share of Preferred Stock is entitled to one vote
per share.
Special Preferred Stock - The voting rights of the Special Preferred
Stock is to be determined at the time of issuance.
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Class A Special Preferred Stock - Three votes per share. Votes as a
single class with the Common Stock and Preferred Stock.
LIQUIDATION RIGHTS
Preferred Stock - Has the right to receive 1% of the assets of the
corporation available to the shareholders upon liquidation with the holders of
the common stock receiving the other 99%.
Special Preferred Stock - Liquidation rights to be determined upon
issuance. May have priority over liquidation payments to common stock and other
series of preferred stock.
Class A Special Preferred Stock - does not share in proceeds upon
liquidation.
REDEMPTION
Preferred Stock - At the option of the company, may be redeemed for one
share of common stock.
Special Preferred Stock - Redemption to be determined at time of
issuance.
Class A Special Preferred Stock - Manner of redemption, redemption
price and terms and conditions to be determined by the Board of Directors.
PART II
Item 1. Market Price of and Dividends on the Registrant's Common Equity and
Related Stockholder Matters
Our Common Stock has been trading on the over-the-counter market
since January 4, 1999. The following sets forth the range of high and low bid
quotations for the periods indicated as reported by National Quotation Bureau,
Inc. Such quotations reflect prices between dealers without retail mark-up,
markdown or commission and may not represent actual transactions and is quoted
on the OTC Bulletin Board under the symbol TKLB.
<TABLE>
<CAPTION>
High Bid Low Bid
-------- -------
<S> <C> <C>
January 5, 1999 through March 31, 1999 $ 1.50 $ .50
April 1, 1999 thorough June 30, 1999 $16.00 $1.50
</TABLE>
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HOLDERS OF RECORD
As of May 15, 1999, there were approximately 38 holders of record of
the Company's Common Stock.
The Company has never paid a cash dividend on its Common Stock nor does
the Company anticipate paying cash dividends on its Common Stock in the near
future. It is the present policy of the Company not to pay cash dividends on the
Common Stock but to retain earnings, if any, to fund growth and expansion. Any
payment of cash dividends of the Common Stock in the future will be dependent
upon the Company's financial condition, results of operations, current and
anticipated cash requirements, plan for expansion, as well as other factors the
Board of Directors deems relevant.
Item 2. Legal Proceedings
As of the date hereof, the Company is not a party to any material
pending legal proceeding and is not aware of any threatened legal proceeding.
Item 3. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure
None.
Item 4. Recent Sales of Unregistered Securities
The following provides information concerning all sales of securities
within the last three (3) years which were not registered under the Securities
and Exchange Act of 1933:
1. In May 1998, the Company issued 1,000,000 shares of its Common Stick
to its founders for par value of $.001 per share pursuant to an exemption from
registration under Section 4(2) of the Securities and Exchange Act of 1933.
2. In August 1998, the Company completed a private placement of its
Common Stock to 32 investors pursuant to Rule 504 of Regulation D. as
promulgated by the Securities and Exchange Commission under the Securities Act.
The Company issued 100,000 shares of its Common Stock at $.25 per share.
3. In March 1999, the Company completed a private placement of its
Common Stock to 4 investors pursuant to Rule 504 of Regulation D as promulgated
by the Securities and Exchange Commission under the Securities Act. The Company
issued 1,500,000 shares of its Common Stock at $.10 per share and an option to
acquire 3,500,000 shares of Common Stock for $.10 per share. These options were
exercised in April 1999 and the Company issued 3,500,000 shares of Common Stock
for $.10 per share to 6 investors.
-13-
<PAGE> 15
4. In March 1999, 1,000,000 shares of Common Stock issued to founders
in May 1998 were converted into 9,000,000 shares of Class A Special Preferred
Stock pursuant to an exemption from registration under Section 3(a)(9) of the
Securities and Exchange Act of 1933.
5. In April 1999, the Company completed a Private Placement of 230,000
shares of Common Stock to 3 investors for $230,000 pursuant to Rule 504 of
Regulation D for $1.00 per share.
Item 5. Indemnification of Directors and Officers
The Company's Certificate of Incorporation, as amended, provides that
the Company must, to the fullest extent permitted by the General Corporation Law
of the States of Florida, indemnify all persons whom it has the power to
indemnify from and against all expenses, liabilities or other matters. The
Company's By-laws further provide that the Company must indemnify its directors,
officers, employees and agents to the fullest extent permitted by the Florida
Law and provides for the advancement of expenses incurred by such person in
advance of final disposition of any civil or criminal action, suit or
proceeding, subject to repayment if it is ultimately determined that he or she
was not entitled to indemnification. The indemnification and advancement of
expenses provided in the By-laws are expressly deemed to not be exclusive of any
other rights to which a person seeking indemnification or advancement of
expenses may otherwise be entitled.
PART F/S
The following financial statements of Techlabs, Inc. are included in this Part
F/S.
For the period May 26, 1998 (inception) through December 31, 1998:
Report of Independent Auditors.
Balance Sheet as of December 31, 1998.
Statements of Operations for the period from May 26, 1998 (inception)
to December 31, 1998.
Statements of Shareholders' Equity for the period from May 26, 1998
(inception) to December 31, 1998.
Statements of Cash Flows for the period from May 26, 1998 (inception)
to December 31, 1998.
Notes to Financial Statements.
For the six months ended June 30, 1999 (unaudited):
-14-
<PAGE> 16
- --------------------------------------------------------------------------------
TECHLABS, INC.
(A DEVELOPMENT STAGE COMPANY)
FINANCIAL STATEMENTS
June 30, 1999
- --------------------------------------------------------------------------------
(unaudited)
<TABLE>
<CAPTION>
CONTENTS PAGE
<S> <C> <C>
FINANCIAL STATEMENTS:
2
Balance Sheet 3
Statements of Operations 4
Statements of Changes in Stockholders' Equity 5
Statement of Cash Flows
</TABLE>
-15-
<PAGE> 17
TECHLABS, INC.
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
June 30, December 31,
1999 1998
(unaudited) (audited)
----------- ------------
<S> <C> <C>
ASSETS
Current Assets
Cash $ 3,486 $15,000
Investment securities 5,680,000 --
Other receivables 4,559 --
---------- -------
Total Current Assets 5,688,045 15,000
Property, Plant & Equipment, net 35,000 --
Intangible Assets
Organization Costs -- 11,849
---------- -------
Total Assets $5,723,045 $26,849
========== =======
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Accrued expenses $ 24,867 $ 849
Note payable 37,500 --
Deferred taxes 1,015,103 --
---------- -------
Total liabilities 1,077,470 849
STOCKHOLDERS' EQUITY
Preferred stock - special class A ($.001 par value, 12,500,000 shares
authorized, 9,000,000 and 0 shares issued and outstanding) 9,000 --
Common stock ($.001 par value, 50,000,000 shares
authorized, 7,085,000 and 1,100,000 shares issued and outstanding) 7,085 1,100
Additional paid-in capital 3,139,585 24,900
Accumulated other comprehensive income 1,734,897 --
Accumulated deficit (244,992) --
---------- -------
Total Stockholders' Equity 4,645,575 26,000
---------- -------
$5,723,045 $26,849
========== =======
</TABLE>
See accompanying unaudited notes.
1
<PAGE> 18
TECHLABS, INC.
CONSOLIDATED STATEMENT OF OPERATIONS
For the Six Months Ended June 30, 1999
(UNAUDITED)
<TABLE>
<S> <C>
REVENUE
Sales $ 0
OPERATING EXPENSES
Stock compensation, officer (118,500)
Stock compensation, other (37,500)
Other general and administrative (80,143)
-----------
Total operating expenses (236,143)
-----------
Loss from opertions (236,143)
Provision for income taxes 0
-----------
Income before cumulative effect of
change in accounting principle (236,143)
Cumulative effect of change in accounting
principle, net of income tax effects of $3,000 (8,849)
-----------
Net loss $ (244,992)
===========
Earnings per share:
Basic and fully diluted
Before cumulative effect of change in accounting principle $ (0.05)
===========
Net income $ (0.05)
===========
Weighted shares outstanding 4,748,654
</TABLE>
See accompanying unaudited notes.
2
<PAGE> 19
TECHLABS, INC.
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
For the Six Months Ended June 30, 1999
(UNAUDITED)
<TABLE>
<CAPTION>
ACCUMULATED
PREFERRED STOCK COMMON STOCK ADDITIONAL OTHER
------------------- -------------------- PAID-IN ACCUMULATED COMPREHENSIVE
SHARES AMOUNT SHARES AMOUNT CAPITAL DEFICIT INCOME TOTAL
--------- ------ ---------- ------- ---------- ---------- ------------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Balance, December 31, 1998 -0- $ -0- 1,100,000 $ 1,100 $ 24,900 $ -0- $ -0- $ 26,000
Sale of shares at par to
officers, February 1999 1,500,000 1,500 118,500 120,000
Conversion of common
stock into preferred,
February 1999 9,000,000 9,000 (1,000,000) (1,000) (8,000) -0-
Issuance of common stock
under private placement
offering, March 1999 5,000,000 5,000 487,170 492,170
Issuance of common stock
under private placement
offering, April 1999 230,000 230 229,770 230,000
Issuance of restricted
shares for services,
April 1999 5,000 5 37,495 37,500
Issuance of common stock
pursuant to strategic
alliance agreement,
April 1999 250,000 250 2,249,750 2,250,000
Increase in net unrealized
gain on marketable
equity securities,
net of tax 1,734,897 1,734,897
Net income (244,992) (244,992)
--------- ------ ---------- ------- ---------- ---------- ---------- ----------
Balance, June 30, 1999 9,000,000 $9,000 7,085,000 $ 7,085 $3,139,585 $ (244,992) $1,734,897 $4,645,575
========= ====== ========== ======= ========== ========== ========== ==========
</TABLE>
See accompanying unaudited notes.
3
<PAGE> 20
TECHLABS, INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
For the Six Months Ended June 30, 1999
(UNAUDITED)
<TABLE>
<S> <C>
OPERATING ACTIVITIES:
Net loss $ (244,992)
Adjustments to reconcile net loss to
net cash provided by operating activities
Cumulative effect of change in accounting principle 8,849
Non cash stock transactions 156,000
(Increase) decrease in:
Receivables (4,559)
Increase (decrease) in:
Accrued expenses 24,018
-----------
Net Cash Used by Operating Activities (60,684)
INVESTING ACTIVITIES:
Purchase of marketable securities (677,000)
Purchase of property, plant & equipment (35,000)
-----------
Net Cash Used by Investing Activities (712,000)
FINANCING ACTIVITIES:
Borrowings from stockholder 37,500
Proceeds from the sale of stock 723,670
-----------
Net Cash Provided by Financing Activities 761,170
Decrease in Cash and Cash Equivalents (11,514)
Cash and Cash Equivalents, Beginning of Period 15,000
-----------
Cash and Cash Equivalents, End of Period $ 3,486
===========
</TABLE>
See accompanying unaudited notes.
4
<PAGE> 21
TECHLABS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Six Months Ended June 30, 1999
(unaudited)
NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES
Business Techlabs Inc. (formerly Coordinated Physician Services, Inc. and a
Development Stage Company) was organized under the laws of the State of Florida
on May 26, 1998. Techlabs, Inc. ("Techlabs" or the "Company"), which operates in
one industry segment, is in the business of developing, acquiring and operating
companies whose products and services are focused on the Internet. The Company's
approach to accomplishing its goals is predominantly through investments in or
strategic alliances with other Internet companies. To a lesser extent, the
Company will also effect strategies via the internal development and operation
of majority owned subsidiaries. The Company is currently developing through a
wholly-owned subsidiary, an on-line calendar site (www.interplanner.com). The
site's full-scale launch is expected to occur during September 1999.
BASIS OF PRESENTATION The consolidated financial statements include the
accounts of the Company and its wholly owned subsidiary, Interplanner.com, Inc.
All material intercompany transactions have been eliminated.
INVESTMENT SECURITIES Investment securities consist of marketable equity
securities. Marketable equity securities are classified into one of three
categories: trading, available-for-sale, or held-to-maturity. Trading
securities are acquired and held principally for the purpose of selling them in
the near term. Held-to-maturity securities are those securities that the
Company has the ability and intent to hold to maturity. All other securities
not included in the trading or held-to-matarity categories are
available-for-sale securities.
Management determines the appropriate classification of marketable investment
securities at the time they are acquired and evaluates the continuing
appropriateness of the classification at each balance sheet date. At June 30,
1999, the Company held only available-for-sale securities and they are reported
at aggregate fair value with unrealized gains and losses excluded from earnings
and reported as a separate component of stockholders' equity, net of deferred
taxes.
RESEARCH AND DEVELOPMENT COSTS Research and development expenditures are
expensed as incurred. Costs associated with the development of computer and
internet software (CIS) systems for sale and licensing is required to be
capitalized when its technological feasibility has been established either by
completion of a detail program design or a working model of the CIS.
Capitalization of development costs ends when the CIS is made available for
general release to consumers. Costs to be capitalized include labor, benefits,
mid direct overhead. At the time the software is available for release, the
associated capitalized costs are amortized over the expected term of its
economic life in proportion to revenues. At the date of these financial
statements, the Company has yet to attain technological feasibility or release
of any of its CIS systems under development and accordingly, no capitalization
or amortization of such costs has been recorded.
STOCK BASED COMPENSATION The Company measures its equity transactions with
non-employees using the fair value based method of accounting prescribed by
Statement of Financial Accounting Standards
5
<PAGE> 22
TECHLABS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Six Months Ended June 30, 1999
(unaudited)
NOTE I - SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
No. 123 (SFAS 123), "Accounting for Stock-Based Compensation." Under the
provisions of SFAS 123, the Company recognizes as a cost or expense, the fair
value of stock awards and options to non-employees at the date of grant.
The Company continues to use the intrinsic value approach as prescribed by APB
Opinion No. 25 (APB 25) in measuring equity transactions with employees. Under
APB 25, compensation cost for equity transactions with employees is recognized
only to the extent the fair value of the equity instrument at the award date
exceeds the exercise price the employee is required to pay.
NON-CASH EQUITY TRANSACTIONS Goods and services acquired through the issuance
of common stock are valued on the date of the transaction based on the closing
bid price for the Company's common stock.
COMPREHENSIVE INCOME On January 1, 1998, the Company adopted Statement of
Financial Accounting Standards No. 130 (SFAS 130), "Reporting Comprehensive
Income." SFAS 130 establishes standards for reporting and presentation of
comprehensive income and its components in a full set of financial statements.
SFAS 130 only requires additional disclosures in financial statements and it
does not affect the Company's financial position or results of operations. At
June 30, 1999, the Company had $1,734,897 in accumulated other comprehensive
income related to unrealized gains on marketable equity securities.
NOTE 2 - CUMULATIVE EFFECT OF CHANGE IN ACCOUNTING PRINCIPLE
Statement of Position 98-5, Reporting on the Costs of Start-Up Activities ("SOP
98-5"), issued by the Accounting Standards Executive Committee of the American
Institute of Certified Public Accountants, is effective for the Company in
1999. SOP 98-5 requires the Company, in 1999, to expense costs capitalized in
1998 associated with start-up activities. Adoption of SOP 98-5 also requires
the Company to report the effects of applying SOP 93-5 as a cumulative effect
of a change in accounting principles in its 1999 financial statements.
NOTE 3 -STATEMENT OF CASH FLOWS SUPPLEMENTAL DISCLOSURE
During the six months ended June 30, 1999, the Company paid no interest or
income taxes, and the transactions not affecting cash occurred:
(a) The Company issued 1,500,000 shares of its restricted common
stock as founders, stock, valued at $118,500, in payment of
compensation to an officer of the Company.
(b) The Company issued 5,000 shares of its restricted common
stock, valued at $37,500, for services.
6
<PAGE> 23
TECHLABS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Six Months Ended June 30, 1999
(unaudited)
NOTE 3 - STATEMENT OF CASH FLOWS SUPPLEMENTAL DISCLOSURE (CONTINUED)
(c) The Company issued 250,000 shares of its common stock valued
at $2,250,000 in connection with the acquisition of
marketable equity securities.
(d) The Company recorded $1,724,897 in unrealized gains on
available-for-sale securities, net of income taxes.
NOTE 4 - INVESTMENT SECURITIES
Investment securities at June 30, 1999 consists of common stocks in a public
internet company and a privately owned software company as follows:
Available-for-sale securities:
Marketable equity securities, at cost $2,927,000
Gross unrealized gains 2,753,000
----------
Marketable equity securities, at fair value $5,680,000
==========
NOTE 6- CONTINGENCY
In 1998, the Company began to identify assess, and remediate "Year 2000" issues
within each of its significant computer programs and certain equipment which
contain microprocessors. Systems which have been determined not to be Year 2000
compliant are being either replaced or reprogrammed, and thereafter tested for
Year 2000 compliance The Company anticipates that by August, 1999, conversion,
implementation, and testing activities will be completed.
The Company is in the process of identifying and contacting critical suppliers,
whose computerized systems interface with the Company's systems, regarding
their plans and progress in addressing their Year 2000 issues. The Company has
received varying information from such third parties on the state of compliance
or expected compliance. Contingency plans are being developed in the event that
any critical supplier or customer is not compliant.
The failure to correct a material Year 2000 problem could result in an
interruption in, or failure of, certain normal business activities or
operations. Such failures could materially and adversely affect the Company's
operations, liquidity, and financial condition. Due to the general uncertainty
inherent in the Year 2000 readiness of third-party suppliers, the Company is
unable to determine at this time whether the consequences of Year 2000 failures
will have a material impact on the Company's operations, liquidity, or
financial condition.
7
<PAGE> 24
TECHLABS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Six Months Ended June 30, 1999
(unaudited)
NOTE 7 - RELATED PARTY TRANSACTIONS
Included in the balance sheet under the caption "Note Payable" is $37,500
demand note payable to a stockholder.
NOTE 8 - STOCKHOLDERS' EQUITY
On February 24, 1999, the Company amended its Articles of Incorporation to
reduce authorization of the Company's $.001 par value preferred voting stock
from 20,000,000 to 10,000,000 shares and provided authorization for 25,000,000
shares of $.001 par value special preferred stock. Of the 25,000,000 authorized
shares of special preferred stock, 12,500,000 shares were designated as Class A
special preferred stock.
The participation rights of the Company's preferred stock in any
dividends or liquidation proceeds are limited to one percent. Each
share of preferred stock receives one vote in stockholder voting
matters. At the option of the Company, the preferred stock may be
redeemed in the Company's common shares at an exchange rate of one
share of common stock for each share of preferred stock. At June 30,
1999, there were no shares of this class outstanding.
The Class A special preferred stock is to receive no preference in
dividend distributions or in the event of liquidation, Each share of
Class A special preferred, stock receives three votes in stockholder
voting matters. Dividend and redemption features are determinable at
the discretion of the board of directors. At June 30, 1999, there were
9,000,000 shares of this class outstanding, and no dividends have
been declared.
As part of the Company's strategy to protect it from unsolicited takeover
attempts and to preserve its management team, it implemented the following
equity transactions involving founders, officers, and directors:
Issuance of 1,500,000 shares of common stock valued at $.08 per share
and subject to continuing legal restrictions to certain officers. Cash
proceeds from the issuance of these shares were $1,500 and the Company
recognized compensation expense of $118,500 for the balance.
Conversion of 1,000,000 shares of the founders common stock into
9,000,000 shares of Class A special preferred stock.
8
<PAGE> 25
TECHLABS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Six Months Ended June 30, 1999
(unaudited)
NOTE 8 - STOCKHOLDERS' EQUITY (CONTINUED)
During the six months ended June 30, 1999, the Company sold in a private
placement exempt from registration, 1,500,000 shares of common stock at $.10 per
share. Available with these shares were options to purchase an additional
3,500,000 shares also at a purchase price of $.10 per share. These options were
later exercised, resulting in aggregate proceeds to the Company from the two
blocks of $492,170, In addition, the Company sold 230,000 shares of common stock
at $1 per share in a private placement exempt from registration resulting in
proceeds of $230,000 to the Company. In late March 1999, the Company's common
shares began trading in the over-the-counter market. On April 27, 1999 when the
Company's common shares were trading at a price of $9.00 per share, it issued
250,000 shares valued at $2,250,000 in connection with the acquisition of an
investment in marketable securities of an Internet company as disclosed in note
3. The shares issued were unregistered, and because of the size of the block,
are subject to certain legal restrictions on the number of shares that may be
resold at one time by the holder.
9
<PAGE> 26
===============================================================================
TECHLABS, INC.
(A DEVELOPMENT STAGE COMPANY)
FINANCIAL STATEMENTS
December 31, 1998
===============================================================================
<TABLE>
<CAPTION>
CONTENTS PAGE
<S> <C>
FINANCIAL STATEMENTS:
Report of Independent Auditors 2
Balance Sheet 3
Statement of Operations 4
Statement of Changes in Stockholders' Equity 5
Statement of Cash Flows 6
Notes to Financial Statements 7
</TABLE>
-19-
<PAGE> 27
REEL & SWAFFORD, PLLC
Certified Public Accountants
<TABLE>
<CAPTION>
<S> <C> <C>
Office Address Mailing Address
2611 Emoriland Blvd. American Institute of Certified Public Accountants P. O. Box 27599
Knoxville, Tennessee 37917 SEC Practice Section-AICPA Knoxville, TN 37917-7599
(423) 637-7196 Telephone Tennessee Society of Certified Public Accountants (423) 637-6437 Facsimile
</TABLE>
REPORT OF INDEPENDENT AUDITORS
To the Board of Directors and Stockholders
Techlabs, Inc.
We have audited the accompanying balance sheet of Techlabs, Inc. (a
Development Stage Company, formerly Coordinated Physician Services, Inc.)
as of December 31, 1998, and the related statements of operations, changes
in stockholders' equity and cash flows for the period from May, 26, 1998
(inception) through December 31, 1998. 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 Techlabs, Inc. as of
December 31, 1998 and the results of its operations and its cash flows for
the period from May, 26, 1998 (inception) through December 31, 1998 in
conformity with generally accepted accounting principles.
REEL & SWAFFORD, PLLC
Certified Public Accountants
Knoxville, Tennessee
March 17, 1999
-20-
<PAGE> 28
===============================================================================
TECHLABS, INC.
(A DEVELOPMENT STAGE COMPANY)
BALANCE SHEET
December 31, 1998
===============================================================================
<TABLE>
<CAPTION>
ASSETS
<S> <C>
CURRENT ASSETS
Cash $15,000
INTANGIBLE ASSETS
Organization Costs 11,849
-------
TOTAL ASSETS $26,849
=======
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable $ 849
-------
TOTAL LIABILITIES 849
STOCKHOLDERS' EQUITY
Common stock ($.001 par value, 50,000,000 shares
authorized, 1,100,000 shares issued and outstanding) 1,100
Additional paid-in capital 24,900
-------
TOTAL STOCKHOLDERS' EQUITY 26,000
-------
$26,849
=======
</TABLE>
The accompanying notes are an integral part of these financial statements.
-21-
<PAGE> 29
===============================================================================
TECHLABS, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF OPERATIONS
For the Period from May 26, 1998 (Inception)
Through December 31, 1998
===============================================================================
<TABLE>
<CAPTION>
<S> <C>
REVENUE $ -0-
EXPENSES -0-
----------
Net Income $ -0-
==========
</TABLE>
The accompanying notes are an integral part of these financial statements.
-22-
<PAGE> 30
===============================================================================
TECHLABS, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF CHANGES IN STOCKHOLDER'S EQUITY
For the Period from May 26, 1998 (Inception)
Through December 31, 1998
===============================================================================
<TABLE>
<CAPTION>
Additional
Common Paid-in Retained
Stock Capital Earnings Total
------ -------- --------- -------
<S> <C> <C> <C> <C>
Balance, May 26, 1998 $ -0- $ -0- $ -0- $ -0-
Initial capitalization of the Company 1,000 1,000
Sale of 100,000 shares of common
stock under Rule 504 offering 100 24,900 25,000
------ -------- --------- -------
Balance, December 31, 1998 $1,100 $ 24,900 $ -0- $26,000
====== ======== ========= =======
</TABLE>
The accompanying notes are an integral part of these financial statements.
-23-
<PAGE> 31
===============================================================================
TECHLABS, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF CASH FLOWS
For the Period from May 26, 1998 (Inception)
Through December 31, 1998
===============================================================================
<TABLE>
<CAPTION>
OPERATING ACTIVITIES
<S> <C>
Net income (loss) $ -0-
Adjustments to reconcile net income to net
cash provided by operating activities:
Increase in accounts payable 849
--------
Net Cash Provided by Operating Activities 849
INVESTING ACTIVITIES
Organization costs incurred (11,849)
--------
Net Cash Used in Investing Activities (11,849)
FINANCING ACTIVITIES
Sale of common stock 26,000
--------
Net Cash Provided by Financing Activities 26,000
--------
Change in Cash and Cash Equivalents 15,000
Cash and cash equivalents, May 26, 1998 -0-
--------
Cash and cash equivalents, December 31, 1998 $ 15,000
========
</TABLE>
The accompanying notes are an integral part of these financial statements.
-24-
<PAGE> 32
===============================================================================
TECHLABS, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO BALANCE SHEET
For the Period from May 26, 1998 (Inception)
Through December 31, 1998
===============================================================================
NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES
BUSINESS Techlabs Inc. (a Development Stage Company, formerly Coordinated
Physician Services, Inc.) was organized under the laws of the State of Florida
on May 26, 1998. In February, 1999, the Company changed its name to Techlabs,
Inc. (See Note 5). With the name change, the Company's plans have been
redirected towards exploring opportunities for the development and operation of
companies focused on the Internet. The Company intends to accomplish its goals
predominantly though strategic venture investments. The Company's plans include
investment in Internet companies either directly or through venture capital
funding arrangements. To a lesser extent, the Company will also effect
strategies aimed at the internal development and operation of majority owned
subsidiaries. Because of its lack of operating history, the Company is
considered in the development stage and the accompanying financial statements
represent that of a development stage enterprise.
ORGANIZATION COSTS The Company capitalizes costs associated with its start-up
and with its organization. These costs are to be amortized over a ten year
period beginning with the inception of operations. See Note 3.
USE OF ESTIMATES The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and
disclosures of contingent assets and liabilities at the date of the financial
statements. Actual results could differ from those estimates.
INCOME TAXES Deferred income taxes are provided for temporary differences in
reporting income for financial statement and tax purposes. Because no revenue or
expense has been recorded in the Company's accounts, no provision for income
taxes has been made.
CASH AND CASH EQUIVALENTS For purposes of the statements of cash flows, the
Company considers all highly liquid investments with initial maturities of three
months or less which are readily convertible to cash without significant loss or
penalty to be cash equivalents.
NOTE 2 - STATEMENT OF CASH FLOWS SUPPLEMENTAL DISCLOSURE
During the period ended December 31, 1998, the Company paid no interest or
income taxes.
NOTE 3 - IMPACT OF NEW ACCOUNTING PRONOUNCEMENTS
Statement of Position 98-5, Reporting on the Costs of Start-Up Activities ("SOP
98-5"), issued by the Accounting Standards Executive Committee of the American
Institute of Certified Public Accountants, is effective for the Company in 1999.
SOP 98-5 will require the Company to expense costs associated with
-25-
<PAGE> 33
===============================================================================
TECHLABS, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
For the Period from May 26, 1998 (Inception)
Through December 31, 1998
===============================================================================
NOTE 3 - IMPACT OF NEW ACCOUNTING PRONOUNCEMENTS (CONTINUED)
start-up activities as incurred beginning with 1999. Adoption of SOP 98-5 will
also require the Company to report the effects of applying SOP -98-5 as a
cumulative effect of a change in accounting principles in its 1999 financial
statements.
NOTE 4 - STOCKHOLDERS' EQUITY
On August 10, 1998, the Company amended its Articles of Incorporation to provide
for an additional class of stock and to increase the authorized shares of its
common stock. The amendment increased the Company's common stock from 100,000 to
50,000,000 shares authorized and provided authorization for 20,000,000 shares of
$.001 par value preferred voting stock.
Concurrent with the amendment, the Company effected a ten for one stock split,
restating par value of the outstanding common shares from $.01 to $.001. All
amounts presented give effect for the split.
The preferred stock's participation rights as a class in any dividends or
liquidation proceeds are limited to one percent. Each share of preferred stock
receives one vote in stockholder voting matters. At the option of the Company,
the preferred stock may be redeemed in the Company's common shares at an
exchange rate of one share of common stock for each share of preferred stock.
All of the shares of the Company's common stock issued are "Restricted
Securities" as defined under the Securities Act of 1933 (the 1933 Act). These
shares may not be sold or transferred unless they are covered under an effective
registration, or there is an available exemption for such registration
requirement. Current law provides that unregistered shares may be sold pursuant
to Rule 144, which imposes certain limitations on quantity, requires a minimum
of one year of ownership, and imposes conditions upon the manner of sale.
NOTE 5 - SUBSEQUENT EVENTS
On February 24, 1999, the Company amended its Articles of Incorporation to
reduce authorization of the Company's $.001 par value preferred voting stock
from 20,000,000 to 10,000,000 shares and provided authorization for 25,000,000
shares of $.001 par value special preferred stock. Of these 25,000,000
authorized shares, 12,500,000 were designated as Class A special preferred
stock.
The special preferred stock is to receive no preference in dividend
distributions or in the event of liquidation. Each share of special preferred
stock shall receive one vote in stockholder voting matters. Dividend and
redemption features are determinable at the discretion of the board of
directors.
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<PAGE> 34
===============================================================================
TECHLABS, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
For the Period from May 26, 1998 (Inception)
Through December 31, 1998
===============================================================================
NOTE 5 - SUBSEQUENT EVENTS (CONTINUED)
Also on February 24, 1999, the Company amended its charter to effect a change in
the Company's name from Coordinated Physician Services, Inc. to Techlabs, Inc.
Subsequent to the balance sheet date, the Company has offered, pursuant to
exceptions permitted under Regulation D of the 1933 Act, 1,500,000 shares of
common stock at $.10 per share, on a "best efforts" basis, by its officers and
directors.
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<PAGE> 35
Balance Sheet as of June 30, 1999.
Statements of Operations for the six months ended June 30, 1999.
Statements of Changes in Stockholder's Equity for the six months ended
June 30, 1999.
PART III
Item 1. Exhibits
<TABLE>
<CAPTION>
Exhibit No. Description
- ----------- -----------
<S> <C>
2(a) Articles of Incorporation of the Registrant
2(b) Articles of Amendment to Articles of
Incorporation (Composite)
2(c) By-Laws of the Registrant
6(a) Agreement for shares of iSleuth.Com, Inc.
22 Subsidiaries
27 Financial Data Schedule (for SEC use only)
</TABLE>
SIGNATURES
In accordance with Section 12 of the Exchange Act of 1934, the
registrant caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized this 15th day of September, 1999.
TECHLABS, INC.
By: /s/Thomas J. Taule
--------------------------------------
Thomas J. Taule,
Chairman
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