U.S. SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549
FORM 10-SB
AMENDMENT NO. 4 TO GENERAL FORM FOR REGISTRATION OF SECURITIES OF SMALL
BUSINESS ISSUERS UNDER
SECTION 12(b) OR 12(g) OF THE SECURITIES EXCHANGE ACT OF 1934
ComputerXpress.com, Inc.
(Name of Small Business Issuer in its charter)
Nevada 86-0853156
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(State or other jurisdiction of I.R.S. Employer
incorporation or organization) Identification No.)
79811A Country Club Dr.
Bermuda Dunes, CA 92201
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(Address of principal executive offices) (Zip Code)
Issuer's telephone number, including area code 760-345-2400
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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 N/A
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Securities to be registered pursuant to Section 12(g) of the Act:
Common Stock, $.001 par value
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(Title of class)
Item 1. Description of Business
Business Development
The Company was incorporated in the State of Nevada on January 15, 1997,
under the original name of Stop-N-Sock, Ltd. Its predecessor entity, Stock-N-
Sock "SEED", was a California Limited Partnership formed in 1996 to develop a
high-tech driving range. Up until March 1, 1999, the Company was engaged in the
business of development of its Coachella Valley real estate into a driving
range. On March 1, 1999, consistent with the Company's agreement to purchase
the assets of another Nevada corporation, COSTPLUSFIVE.COM, INC., which was
incorporated on January 25, 1999, and is now defunct (hereinafter referred to
as "CP1." The Company attempted to change its name to CostPlusFive.com, Inc.
and changed its business to a wholesale buying club, specializing in the sale
of high quality, multimedia computer systems, and peripherals (external
hardware items, such as modems) via the Internet.
The Company entered into an agreement on February 16, 1999, to acquire the
assets of CP1 Inc." for 17 million shares of Company common stock. CP1 was a
corporation, separate and apart from the Company. The assets consisted of
goodwill, and inventory and equipment located in nine separately owned retail
computer stores; as follows: one store in Rockville, Maryland, owned by Bill
Barker; one store in Tuscon, AZ, owned by Frank Scivally; two stores in
Houston, Texas, owned by Lee Jackson and Tom Mitchell, respectively; one store
in Boise, Idaho, owned by Paul Graham; one store in Grapevine, Texas, owned by
Mahlon Meier; one store in Bedford, Texas, owned by John Fecteau; and one store
in Phoenix, AZ, owned by Don Smallman. On March 1, 1999, the Company issued
6,984,000 of the 17 million shares in performance of the agreement. Shortly
thereafter, the Company discovered that the charter of CP1's corporate charter
had been revoked for non payment of fees to the Secretary of the State of
Nevada, and that financial statements presented to the Company during the due
diligence process, did not represent the true financial condition of two stores
owned by Lee Jackson. As a result, the Company rescinded the contract after it
discovered that the state of Texas was preparing to close Mr. Jackson's two
stores in Houston for non payment of taxes. The Company rescinded the asset
purchase contract because the discovery of the financial discrepancies on the
two Houston stores made all of the financial statements suspect.
However, Management of the company felt that, given the suspect nature of the
financial statements surrounding two of the retail locations, it would be best
to run the web site with retail affiliates, instead of purchasing and running
the retail stores. Mr. Scivally and Mr. Smallman have a management background
in computer systems building and sales, and the Company's management had none.
The web site being developed by Smallman and Scivally was generating a lot of
traffic. The decision was made to salvage the agreement by acquiring the web
site, the trade name, and the expert management team needed to run the
company's new business. The retail locations at one time used the trade name,
but, as has been disclosed, there were conflicting claims made on the name and
the company abandoned it. The plan was proposed to the owners of each store, to
affiliate with the store owner, whereby those owners wishing to affiliate with
the Company, but retain the responsibility of managing their own stores could
do so in exchange for 500,000 shares of common stock for which they would each
issue to the company a promissory note in the sum of $125,000. Thereupon, the
Company rescinded the asset purchase agreement and offered to instead enter
into an agreement to acquire the web site from Frank Scivally and Donald
Smallman, and to acquire the domain name, Costplusfive.com, and affiliate with
each of the remaining store owners in exchange for a position with the Company.
Frank Scivally, Don Smallman, Mahlon Meier, and Bill Barker agreed, but Lee
Jackson, Tom Mitchell, Paul Graham and John Fecteau refused. 500,000 shares
each in exchange for $125,000 promissory notes were issued to Scivally, Barker,
Meier and Smallman, for a total of 2,000,000 shares. The Company canceled
1,240,000 shares of the 6,984,000 issued, and has placed stop transfer orders
and is seeking the return of the remaining 5,744,000 shares.
On April 13, 1999, the Company purchased the right to the proprietary website
"http://www.costplusfive.com" from Frank Scivally and Donald Smallman by a
fully performed oral agreement that was memorialized in minutes of the Board of
Directors dated April 13, 1999, which are being filed as an exhibit to this
amended registration statement. The terms of the agreement were simply that the
Company was acquiring the web site and domain name for recited consideration of
$10.00. The Company changed its business to Internet computer sales. The new
directors, Frank Scivally, William Barker, Mahlon Meier and Donald Smallman,
were installed as a new management team to lead the Company in its new business
focus. The web site was roughly developed at the time of the acquisition. The
domain name has been registered to Frank Scivally on December 3, 1998. The
Company acquired the rights to the domain name and the site in March, 1999, but
the domain name was not registered in the Company's name until April 12, 2000.
Prior to the acquisition, the web site was an informational web site, which
contained information about what products were offered by CostPlusFive
affiliates, and what telephone numbers to contact to order products. After the
Company acquired the web site, it developed the web site into a fully
functional e commerce site.
The Company agreed to buy the trade name, COST PLUS FIVE.COM, INC. from CP1 in
February, 1999, but then rescinded the agreement. The domain name,
CostPlusFive.com, had been registered to Franklin Scivally, and owned by
Franklin Scivally and Donald Smallman. The name, CostPlusFive.com was never a
registered trademark or service mark. It was used as the corporate name of the
other Nevada corporation. The Company had already submitted an amendment to its
articles of incorporation to change its name from Stop-N-Sock, Ltd. to
CostPlusFive.com, Inc., which was filed on March 12, 1999. However, the
amendment was rejected by the Secretary of the State of Nevada almost
immediately after filing. The Company was unaware of the rejection until April
19, 2000 because it was sent to the Company's former agent for service of
process, who failed to notify the Company of the rejection. The Company has
since changed its name to ComputerXpress.com, Inc. on , to reflect a change in
its business focus, and also because Lee Jackson and Tom Mitchell discovered
that the Company's amendment to articles of incorporation had been rejected and
filed their own articles of incorporation for Cost Plus Five.com, Inc. The
Company has also been requested by Cost Plus, who has registered the name,
"Cost Plus," to cease using the name "CostPlusFive.com" as a trade name,
because it was allegedly too similar to the Cost Plus name as to cause
confusion in the minds of the public. </R >
In General
The Company is in the business of sales of high quality, multimedia computer
systems and peripherals through its web site on the Internet, supported by
affiliated retail locations in Arizona. The Company's products use components
from nationally recognized suppliers as they become available, such as Intel,
Advanced Micro Devices, ASUS, Sony, Yamaha and Creative Labs. Distribution is
accomplished through a drop-ship arrangement with the Company's suppliers. The
product is shipped directly from the supplier to the customer. Customers are
invoiced for and pay the Company directly for all products ordered before
shipping. The Company's suppliers and the Company have an understanding that
the suppliers will not deal directly with the Company's customers without the
Company's permission, such as is customary in most retail situations where
materials are drop shipped. Therefore, management believes there is little risk
that the customer and the supplier will make their own purchase arrangements.
The current operations of the Company are online and telephone sales of
computer systems and hardware. The Company formerly offered products at 5% over
its wholesale cost. However, this business model did not find acceptance with
investors in particular. The Company has undertaken informal studies of its
customer base, and has found that approximately 70% of all sales during the
past twelve months have come from other businesses, as opposed to the general
consumer. As a result of this study, in late January 2000, the Board of
Directors decided to drop the 5% over cost business model. The Company will
continue to offer online and telephone sales of computer systems and hardware
to the public, but the Company will focus on a new emphasis; designing data
computer solutions and providing computer systems and hardware to businesses.
The Company currently has three retail affiliate locations to support its
Internet sales program. These locations offer after market support and repair
services for the Company's customers. The Company originally had four retail
affiliate locations in Phoenix, Tuscon, Rockville, Maryland and Bedford, Texas.
The Bedford store was closed in September, 1999, and the owner of the Bedford
store and former Company president, Mahlon Meier, resigned from his post as
president and resigned from the Board of Directors. He subsequently filed a
voluntary petition in bankruptcy. The current three retail locations are in
Phoenix, Arizona, which is owned by Don Smallman; in Tuscon, Arizona, which is
owned by Franklin Scivally; and in Rockville, Maryland, which is owned by
William Barker. The Tuscon location operates under the name, "PC Exchange," and
has been in operation since September, 1996, and was formerly operated under
the name, "Cyber Exchange." The Rockville location operates under the name,
"Hytec Exchange," and has been in operation since September, 1996, and was
formerly operated under the trade name, "Cyber Exchange." The Phoenix location
operates under the name, "ComputerXpress, from inside a PAC MAIL store, and has
been in operation since September, 1999. A prior Phoenix location at 4206 East
Chandler Boulevard, which was in operation since 1996 under the former trade
name, "Cyber Exchange," was closed in September, 1999. The current retail
locations are as follows:
1. 5420 East Broadway Blvd., Suite 234, Tuscon, Arizona.
2. 12274-C Rockville Pike, Rockville, Maryland.
3. 3941 East Chandler Blvd., Ste. 106, Phoenix, Arizona.
The Company will seek to expand its affiliated retail locations in the
future, by developing additional locations through the use of approximately 100
square foot retail kiosks strategically placed in existing businesses and
shopping centers. The kiosks will offer sales of all computer products offered
by the Company, and service. Operators of retail location where the kiosks are
located will split 50% of gross profits from all sales and services. The
Company is currently seeking affiliates interested in this type of venture with
the Company. There can be no assurance that the Company will be successful in
obtaining these proposed future affiliated retail locations.
The Company emphasizes business to business sales of computer systems designed
to solve particular business data processing and computing requirements. The
Company also sells its products to present members of its wholesale buying club
at five percent over wholesale price (the cost the Company pays for the product
from its suppliers, including shipping and handling). Members pay $39.95 per
family or $139.95 per business per year to receive these discounts on all
products the company sells. However, new memberships are no longer being sold,
since the Company has changed its emphasis to business to business commerce and
has dropped the five percent above wholesale price business model. The Company
will continue to sell to its existing members sales are also made to non
members on a full retail basis. The last current membership will expire on
September 6, 2000. No memberships will be renewed.
The Industry
Retail sales in computer hardware products is a relatively new industry, which
is in a constant state of change, due to the advances in microchip technology,
which results in the development of more diversified and technologically
advanced hardware. Internet sales of computer products is a more recent
development. Both of these industries are highly competitive. During the
calendar year 1999, the Company's web site has received approximately 11,676
"hits." Management feels this is an indication that the Company has an Internet
presence, but does not believe that "hits" have any direct correlation to
sales. Management formerly believed that the Company's niche in this industry
was the fact that the Company offered a membership, which stimulates customer
loyalty, but has since formed the opinion that customer service and product
support stimulated customer loyalty with its business customers, and that the
general consuming public who shop online pay more attention to price when they
shop. This, and the fact that there are a proliferation of Internet computer
stores was a factor leading the Company to put an emphasis on business to
business commerce. Management originally thought that it was the membership
program which stimulated customer loyalty, because, since the Company initiated
the membership program for CostPlusFive.com, the Company has found that, in
approximately 1500 cases, its member customers will usually call or shop with
the Company for peripheral components and associated hardware. This was mainly
evident when customers call or shop the Company for upgrades of equipment they
have purchased from the Company. Upon reflection of these statistics,
management has changed its opinion and now feels that it is the Company's
service and product support which accounts for most of the repeat business.
Management also believes that customers of the Company are afforded further
advantages in that they are able to go to affiliated (not owned) locations in
Phoenix, Tuscon, and Rockville, Maryland, for after market support and repairs.
The benefits of membership are that members can buy products sold by the
Company for a price five percent above the wholesale price paid by the Company.
The Company is not selling any more memberships after March 13, 2000, but still
offers the same price structure to its current members.
Discontinued Business
The Company was formerly known as Stop-N-Sock, Inc. The Company owned a 32 acre
unimproved and undeveloped site in the Coachella Valley on Miles Avenue between
Washington Boulevard near to Highway 111 in Indian Wells. The driving range was
in the development stages, and never commenced operations. Management had plans
to erect a high-tech golf practice range and teaching facility plus full pro
shop, to feature 60 driving range stations having climate compensating
misters/heaters, full lighting for night usage, automatic ball spotters, and
computer aided video swing analysis.
The Company discontinued the implementation of its planned operation of the
driving range when its changed its direction to Internet computer sales. The
Company was unable to sell the undeveloped golf range property to satisfy the
secured debt on the property, and was unable to justify the raising of capital
to service the secured debt. The driving range was in the development stages,
and never commenced operations. The Company spent a small amount of cash and
issued 245,000 shares from its treasury to purchase the driving range property,
subject to a note and two deeds of trust for $867,000, which the Company was to
service by paying 10% interest payments. The Company was unable to raise the
capital needed to service the debt on the driving range property as of
February, 1999, and determined that it was in the best interests of the Company
to sell the driving range property. The Company entered into an escrow to sell
the property on February 22, 1999 for a net sales price of $1,700,000, payable
$100,000 by April 22, 1999, with the balance being paid on or about June 22,
1999. The prospective buyer did not perform by depositing the $100,000 down
payment, and the escrow was cancelled. The Company, facing foreclosure on the
property, with no means to satisfy the ongoing debt, and having changed its
business focus to computer sales, deeded the property in lieu of foreclosure on
June 24, 1999 to the secured lenders George and Rita White and Terisa Edwards,
who were also stockholders in the Company.
Products
The Company offers a full line of fully customer configurable multimedia
computer systems, which means that, as a seller of computer systems, the
Company can offer its customers who wish to have a custom made computer system
a system of any configuration they desire, using the specific components they
wish to use in their custom built system. The Company also offers printers,
notebook computers, monitors and scanners, computer cables and related
hardware, computer software and games.
Marketing
The Company was, until March 13, 2000, vigorously promoting memberships in its
"CostPlusFive.com Buying Club," which enables members to purchase computers,
peripherals and software at five percent over Company cost. As of March 13,
2000, the Company had sold 187 memberships, 155 of which were paid for. The
Company has decided to cease sales of new memberships, and emphasize business
to business sales of computer systems and computing solutions.
The current operations of the Company are online and telephone sales of
computer systems and hardware. The Company currently has three retail affiliate
locations to support its Internet sales program. These locations offer after
market support and repair services for the Company's customers.
The Company's management believes that the Company's emphasis is better placed
in marketing its products to businesses, which have accounted for 70% of the
Company's sales in the last year, and the Company will seek to foster long term
relationships and word of mouth referrals through customer service. The Company
maintains a full time customer service toll free telephone number, and service
maintenance at its affiliated retail locations. The Company has no ownership
interest in the current retail locations, which are owned by the officers and
directors of the Company, one of which bears the Company name by Company
consent.
Existing Affiliate Program
The Company has an established affiliate program, whereby participating
affiliates execute a standard Affiliate Operation Agreement, and are paid
quarterly commissions for every purchase from an affiliate's website through a
coded "link." Commissions are paid on a scale of purchases made by the
affiliates customer through the coded link which are completed and delivered.
Affiliated Retail Locations
The Company currently has three affiliated locations. These locations offer
after market support and repair services for the Company's customers. The
Company originally had four retail affiliate locations in Phoenix, Tuscon,
Rockville, Maryland and Bedford, Texas. The Bedford store was closed in
September, 1999. The current three retail locations are in Phoenix, Arizona,
which is owned by Don Smallman; in Tuscon, Arizona, which is owned by Franklin
Scivally; and in Rockville, Maryland, which is owned by William Barker. The
Company formerly had one other affiliate, in Bedford, Texas, which was owned by
former Company officer and director, Mahlon Meier, was closed in August, 1999.
The Tuscon location operates under the name, "PC Exchange," and has been in
operation since September, 1996, and was formerly operated under the name,
"Cyber Exchange." The Rockville location operates under the name, "Hytec
Exchange," and has been in operation since September, 1996, and was formerly
operated under the trade name, "Cyber Exchange." The Phoenix location operates
under the name, "ComputerXpress, from inside a PAC MAIL store, and has been in
operation since September, 1999. A prior Phoenix location at 4206 East Chandler
Boulevard, which was in operation since 1996 under the former trade name,
"Cyber Exchange," was closed in September, 1999. The locations are as follows:
1. 5420 East Broadway Blvd., Suite 234, Tuscon, Arizona.
2. 12274-C Rockville Pike, Rockville, Maryland.
3. 3941 East Chandler Blvd., Ste. 106, Phoenix, Arizona.
The affiliates operate pursuant to the same standard operating agreement, with
an addendum that provides that they receive 50% of gross profits from all sales
of Company products. Affiliated locations and kiosks receive 100% of all repair
revenue charged to customers. The Company will seek to expand its affiliated
retail locations in the future, by developing additional locations through the
use of approximately 100 square foot retail kiosks strategically placed in
existing businesses and shopping centers. The kiosks will offer sales of all
computer products offered by the Company, and service. Operators of retail
location where the kiosks are located will split 50% of gross profits from all
sales. There is one test marketing of a retail affiliate kiosk being performed
in a PAK Mail franchise in Phoenix, Arizona. However, there can be no assurance
that this test market will result in an affiliated kiosk location. The Company
is currently seeking affiliates interested in this type of venture with the
Company. There can be no assurance that the Company will be successful in
obtaining these proposed future affiliated retail locations. All affiliates are
authorized to use the name "ComputerXpress" in conjunction with their own trade
name in the normal conduct of their business. Affiliates are paid on the 15th
day of each month for their share of revenues generated during the previous
month. Affiliates collect any revenue for repairs made directly from the
customer and are entitled to 100% of all repair revenue.
The current affiliated locations owned by Company officers and directors have
the same agreement with the Company as offered to other affiliates with regard
to profit sharing, and are treated in the same manner as other affiliates.
Patents
The Company holds no patents for its products. Its trade name "ComputerXpress"
is not a registered trademark. It owns the right to the domain name,
"CostPlusFive.com" for its website.
Raw Materials and Principal Suppliers and Vendors
The Company does not manufacture its products and, therefore, does not utilize
raw materials. Distribution is accomplished through a drop-ship arrangement
with Company suppliers. The product is shipped directly from the supplier to
the customer. Suppliers are not affiliated with any officer, director or
principal shareholder. The Company's products and its suppliers are as follows:
Computer Systems, Printers, and peripherals: Total peripherals, Richardson, TX
Computer Systems, Printers and Peripherals: Parts 2PC, Pasadena, CA
Computer Systems, Printers and Peripherals: Comtech Digital Systems,
Glendale, CA
Computer cables and related hardware: Cables Unlimited, Concord, CA
Computer software and games: HC Distributors, Pflugerville, TX
The suppliers of the Company do not manufacture the individual components which
make up the computer systems the Company sells. They integrate component parts
obtained from various manufacturers into the system ordered by the customer.
This is the only way to offer the Company's customers a wide range of choices
for custom built computer systems.
Competition
The business of providing wholesale and retail computer sales is one of intense
competition. Other companies with more affiliate or retail locations than the
Company have financial resources superior to the Company, so there can be no
assurance that the Company's projected income will not be affected by its
competition. There are also many other companies with greater financial
resources that the Company who offer computer sales on the Internet. However,
the Company feels it is able to compete adequately with these other companies,
due to its unique pricing of product at 5% above cost. However, there can be no
assurance that competing companies with greater buying power will not be able
to undercut the Company's pricing structure.
Employees
The Company's only employees are its four officers and directors.
Item 2. Management's Discussion and Analysis of Plan of Operations
Results of Operations
The Company is engaged in the business of sales of high quality, multimedia
computer systems and peripherals through its web site on the Internet,
supported by two affiliated retail locations in Arizona and Maryland. The
Company sells its products at five percent over wholesale price to its
membership. However, as of March 13, 2000, the Company is no longer issuing new
memberships. Its Members pay $39.95 per family or $139.95 per business per year
to receive these discounts on all products the company sells. The Company will
continue to sell to its members at five percent above wholesale price, and will
continue to sell products to the general public who are not members, but will
emphasize providing business customers with computer hardware solutions to
their data processing, and computing needs. The Company has financed its
operations to date through the sale of its securities. See Item 10 - "Recent
Sales of Unregistered Securities."
The Company was formerly known as Stop-N-Sock, Inc. The Company owned a 32 acre
unimproved and undeveloped site in the Coachella Valley on Miles Avenue between
Washington Boulevard near to Highway 111 in Indian Wells. The driving range was
in the development stages, and never commenced operations. Management had plans
to erect a high-tech golf practice range and teaching facility plus full pro
shop, to feature 60 driving range stations having climate compensating
misters/heaters, full lighting for night usage, automatic ball spotters, and
computer aided video swing analysis. However, the Company determined that it
would be in the best interests of the Company and its shareholders to abandon
the project and to sell the site, due to the fact that management determined
that the Company could not likely raise the capital required to develop the
site to its full potential. The Company then put in a new management team and
shifted its focus to Internet sales of computer products.
The Company entered into an agreement on February 16, 1999, to acquire the
assets of Cost Plus Five.com, Inc., in exchange for 17 million shares. Cost
Plus Five.com, Inc. is a Nevada corporation, which was incorporated on January
25, 1999, corporation number C1574-99. Enclosed herewith is a copy of the
articles of incorporation. The assets consisted of inventory, equipment in
retail computer stores; as follows: one store in Rockville, Maryland, owned by
Bill Barker; one store in Tuscon, AZ, owned by Frank Scivally; two stores in
Houston, Texas, owned by Lee Jackson and Tom Mitchell, respectively; one store
in Boise, Idaho, owned by Paul Graham; one store in Grapevine, Texas, owned by
Mahlon Meier; one store in Bedford, Texas, owned by John Fecteau; and one store
in Phoenix, AZ, owned by Don Smallman. On March 1, 1999, the Company issued
6,984,000 shares in performance of the agreement. Shortly thereafter, the
Company discovered that the charter of this company had been revoked for non
payment of fees to the Secretary of the State of Nevada, and that financial
statements presented to the Company during the due diligence process, falsely
represented the stores owned by Lee Jackson, Tom Mitchell, and John Fecteau had
been falsified. Thereupon, the Company rescinded the asset purchase agreement
and offered to enter into an agreement with the owners of the stores to instead
enter into an agreement to acquire the web site from Frank Scivally and Don
Smallman, and to acquire the trade and domain name, Costplusfive.com, and
affiliate with each of the remaining store owners.
Each store owner was to be issued 500,000 shares in exchange for a $125,000
promissory note payable to the Company on demand. Frank Scivally, Don Smallman,
Mahlon Meier, and Bill Barker agreed, but Lee Jackson, Tom Mitchell, Paul
Graham and John Fecteau refused. 500,000 shares of restricted shares were
issued to Scivally, Barker, Meier and Smallman, for a total of 2,000,000
shares. The Company canceled 1,240,000 shares of the 6,984,000, and has placed
stop transfer orders and is seeking the return of the remaining 5,744,000
shares through informal negotiations.
The Company only recently commenced operations in April, 1999. The Company is
now engaged in sales of computer systems through its Internet website. During
the last fiscal year ended March 31, 1999, the Company was a development stage
corporation whose activities involved raising capital to maintain its debt
service on real property it planned to develop into a golf driving range.
During the first quarter of the fiscal year ended March 31, 2000, the Company
changed its plan of operations from the development of a driving range on
unimproved real property to Internet computer sales. Since March, 1999, the
Company has expanded its website to offer "e-commerce" capability, which
enables the Company to accept credit card sales over the Internet. It has also
improved the format of the website and increased the information available on
products offered by the Company. The Company was vigorously pursuing sales of
memberships in its wholesale buying club until March 13, 2000, when the Board
of Directors determined that a shift in emphasis to business to business
commerce. Since the Company only recently began its operations, it can only
focus on its plans for the future, which are summarized below. There can be no
assurance that these plans will be realized by the Company.
Liquidity and Capital Resources
At March 31, 1999, the Company had a working capital deficit of $1,322,613. The
Company attributes this working capital deficit primarily to the liabilities
attributable to the golf driving range site, which was disposed of in March,
1999, and the Company does not expect the deficit to reoccur. In fact, at
December 31, 1999, the Company reported a working capital surplus of $158,032.
However, since the Company has just recently commenced operations, it may
continue to operate at a deficit, and will depend not only upon revenue
generated from operations, but also upon sales of its common stock to satisfy
its expenses.
Net cash used in operating activities was $2,732,332 for the year ended March
31, 1999. The Company attributes this figure to the golf driving range
property. The Company's expenses from continuing operations in Fiscal year 1999
were $2,299,875. The Company attributes these expenses to the Company's former
business of development of a golf driving range site. The golf driving range
property was deeded to the secured lender in March, 1999, and the Company
changed its business to that of Internet computer sales. Therefore, the company
does not anticipate that these expenses will reoccur.
Plan of Operations
There are no known trends, events or uncertainties that have or are reasonably
likely to have a material impact on the Company's short-term or long-term
liquidity, other than the fact that the Company expects, until it is able to
raise additional equity capital, that it will suffer from cash deficits. The
Company has no sources of liquidity at this time, other than revenues from
operations, which have only recently commenced, either internal or external.
Its operations have just recently commenced, and it will depend on the raising
of additional equity capital to continue its operations. There are no material
commitments for capital expenditures, other than normal operating expenses,
which the Company intends to satisfy by additional equity financing. There are
no known trends, events or uncertainties that the Company is aware of that have
had or that are reasonably expected to have a material impact on the net sales
or revenues or income from continuing operations. There are no significant
elements of income or loss that do not arise from the Company's continuing
operations. The most significant change in the financial condition of the
Company in the past 12 months has been the change in operations from the
development to a golf driving range to selling computer systems over the
Company's Internet web site, which occurred in March, 1999. There are no
seasonal aspects that had a material effect on the financial condition or
results of operation that the Company is aware of.
The Company has cash requirements of approximately $180,000 for the next 12
months. It estimates that it will be able to satisfy its cash requirements for
the next 12 months through private placements of its common stock. However,
there can be no assurance that the Company will be successful in raising all of
the capital it needs to satisfy its cash requirements. The Company intends to
raise more capital to fund its operations by private and public placements of
its common stock. However, there can be no assurance that the Company will be
able to successfully raise the capital required by additional issuance of
Company common stock. The Company does not manufacture its own products;
therefore it does not anticipate product research and development costs in the
next 12 months. It does not expect the additional purchase or sale of
significant equipment, and it does not expect a significant change in the
number of its employees for the next 12 months.
The Company's plan of operations over the next 12 months includes maintaining
relationships with business customers it has cultivated in the past twelve
months, and emphasizing the providing of computer systems solutions to
businesses' computing needs, as well as continuing to sell computer systems,
and peripherals via its Internet web site. The Company will seek to foster long
term relationships and word of mouth referrals through customer service and its
affiliated locations, and will seek to expand the number of affiliated
locations through the use of approximately 100 square foot retail kiosks
strategically placed in existing businesses and shopping centers. The kiosks
will offer sales of all computer products offered by the Company, and service.
Operators of retail locations will split 50% of gross profits from all sales
and services.
The Company plans to seek joint venture or acquisition opportunities which
compliment the Company's expansion plans. In other words, the Company is
seeking to enter into business arrangements with other companies with national
retail locations who may be interested in forming a venture with the Company
whereby the Company can offer a retail kiosk in the national retail locations.
The Company is also seeking acquisition candidates with national retail
locations who are interested in possibly becoming a subsidiary of a publicly
held OTC Bulletin Board Company, in exchange for Company common stock.
Forward Looking Statements
This registration statement contains forward-looking statements. The Company's
expectation of results and other forward-looking statements contained in this
registration statement involve a number of risks and uncertainties. Among the
factors that could cause actual results to differ materially from those
expected are the following: business conditions and general economic
conditions; competitive factors, such as pricing and marketing efforts; and the
pace and success of product research and development. These and other factors
may cause expectations to differ.
Year 2000 Compliance
With respect to Year 2000 compliance, the Company has performed an audit of all
of its computer hardware, internal accounting and software applications and
found all to be Year 2000 compliant or capable. As of this date, the Company
has been given assurances from its banking institution and transfer agent that
they are in compliance. In the beginning of the second quarter of 1999, the
Company conducted an audit of its vendors and suppliers to identify relevant
Year 2000 issues, and found them all to be Year 2000 compliant.
The worst case scenario would be the risk that the company's transfer agent may
not have complied adequately. However, the transfer agent has assured the
Company that it is Year 2000 compliant. The Company had nominal costs in
becoming compliant, consisting of employee labor and no actual costs to any
third parties. The Company does not anticipate any additional remediation
costs, as it is already Year 2000 compliant. The Company's contingency plan to
handle a Year 2000 crisis, if one occurs, with it bank, transfer agent, or
other third party, is to seek an alternative bank, transfer agent or other
third party supplier who is compliant to substitute for the non compliant
party. The Company does not anticipate such a crisis to occur and management
believes the Year 2000 crises has passed.
Item 3. Description of Property
The Company leases executive offices on a month to month basis from its former
president, Robert T. Yarbray, pursuant to an oral lease, at the rate of $800
per month. It owns no other property, other than its website name and trade
name, which is not a registered trademark or service mark. The Company has no
ownership interest in the retail locations, which are owned by the officers and
directors of the Company, and which bear the Company name by Company consent.
The Company owned a 32 acre unimproved and undeveloped site in the Coachella
Valley on Miles Avenue between Washington Boulevard near to Highway 111 in
Indian Wells. The driving range was in the development stages, and never
commenced operations. Management had plans to erect a high-tech golf practice
range and teaching facility plus full pro shop, to feature 60 driving range
stations having climate compensating misters/heaters, full lighting for night
usage, automatic ball spotters, and computer aided video swing analysis.
However, the Company determined that it would be in the best interests of the
Company and its shareholders to abandon the project and to sell the site, due
to the fact that management determined that the Company could not likely raise
the capital required to develop the site to its full potential. The Company
then put in a new management team and shifted its focus to Internet sales of
computer products.
The Company owns a proprietary website at http://www.costplusfive.com, which
is registered to the Company.
Item 4. Securities Ownership of Certain Beneficial Owners and Management
The following table sets forth certain information regarding the beneficial
ownership of the shares of Common Stock of the Company as of the end of the
fiscal year, 1998, by (I) each person who is known by the Company to be the
beneficial owner of more than five percent (5%) of the issued and
outstanding shares of common stock, (ii) each of the Company's directors and
executive officers, and (iii) all directors and executive officers as a group.
Name and Address Number of Shares Percentage Owned
---------------- ---------------- ----------------
Mahlon Meier(2) 500,000 1.935%
4276 Heatherside
Grapevine, TX 76051
Donald Smallman 500,000 1.935%
11337 West Olive Drive
Avondale, AZ 85323
Franklin R. Scivally 500,000 1.935%
200 S. Hampton Hill Court
Tucson, AZ 85711
William J. Barker 500,000 1.935%
5414 Montgomery Road
Elkridge, MD 21075
George White 4,295,670 16.63%
1977 High Schylea Drive
Kamloops, BC V2E 1S2 Canada
Officers and Directors
as a Group 2,000,000 7.74%
----------
(1) This table is based upon 25,830,050 shares issued and outstanding as of
August 14, 1999.
(2) Mr. Meier was President of the Company from March 1, 1999 through June 1,
1999.
Item 5. Directors, Executive Officers, Promoters and Control Persons
The Executive Officers of the Company, and their ages, are as follows:
Name Age Position
---- --- --------
Donald R. Smallman 37 Secretary, Director
Franklin R. Scivally 47 President, Treasurer, Director
William Barker 37 Director
Donald Smallman. Mr. Smallman is employed as the Secretary and Director of
the Company, and has been since March 1, 1999. From June, 1997 through
March 1, 1999, he was the owner of a Cyber Exchange franchise in Phoenix,
Arizona. From April 1996 through June, 1997, he was employed by CDI in
Phoenix, Arizona as a software engineer,/developer. From December, 1994
through February, 1996, he was employed by First Approach - Energy - River
Bend Nuclear Generating Station, in St. Francisville, Louisiana as a
software engineer/developer, and from March, 1994 through November, 1994, he
was employed by Atlantic Group, Inc. Arizona Public Service Palo Verde
Nuclear Generating Station in Phoenix, Arizona, in various positions,
including I&C Procurement Engineer, Electrical Engineer, and I&C Engineer.
He was previously employed by Bechtel Power Corporation from May, 1991
through November, 1993 at the Palo Verde Nuclear Generating Station in
Phoenix, Arizona, and from August, 1990 through April, 1991, he served as
Electrical Engineer for Advanced Technology, Inc. At the Tennessee Valley
Authority Watts Bar Nuclear Plant in Chattanooga, Tennessee. From October,
1989 through August, 1990, he was employed by Black & Veatch as an
Electrical/I&C Design Engineer at the Palo Verde Nuclear Generating Station,
and from September, 1982 through October, 1989, he was employed as an
Electrical/I&C Engineer at the Tennessee Valley Authority Sequotah Nuclear
Plant in Chattanooga, Tennessee.
Franklin R. Scivally. Mr. Scivally is the Treasurer and Director of the
Company and has been since March 1, 1999. He has been the President of The
Company since June 1, 1999. He is also the owner of the CostPlusFive.com
affiliated location in Tucson, Arizona, and has been so employed since March
1, 1999. He is also the President of Scivally Enterprises, LLC. From
January, 1992 through December, 1997 he was employed by Questech, Inc. as
Project Manager. From December, 1997 through March 1, 1999, the was
employed as the owner of a Cyber Exchange franchise in Tuscon, Arizona. From
November, 1971 through December, 1971 he was a Commissioned Officer in the
United States Air Force, in various positions, including Chief, Quality
Assurance Division of the Tomahawk Cruise Missile Wing, Maintenance Control
Officer, Minuteman & Ground, launch Cruise Missile Launch Officer, Minuteman
Weapon System Launch Analyst, Chief, Maintenance Control, assignment through
the Air Force Institute of Technology to Hughes Aircraft Company, and
Manufacturing Manager for the MILSTAR program. He holds a Master of
Arts/management & Supervision from Central Michigan University, 1983, a
Bachelor of Science/Business Management, 1980 from the University of
LaVerne, and an Associate of Arts/Electronics, 1978 from Alan Hancock College.
William J. Barker. Mr. Barker was a director of the Company from March 1, 1999
through February, 2000. He was also the owner of the company affiliated
location in Maryland. He is also President of Amerthyst, Inc. From January 1996
to the present, which is a computer software and hardware store. Mr. Barker
manages all aspects of the operation, including purchasing, marketing, customer
relations, accounting, proposals and new business development. From February
1994 through December, 1996, Mr. Barker was employed as a Systems Analyst at
SAIC in Anapolis, Maryland. From 1992 through 1995, Mr. Barker was employed as
a Senior Systems Analyst for Science Applications International Corp., where he
Item 6. Executive Compensation
The following table sets forth the cash and non-cash compensation paid by
the Company to its Chief Executive Officer and all other executive officers
for services rendered during the fiscal year ended March 30. 1999. No
salaries are being paid at the present time. There were no grants of options
or SAR grants given to any executive officers during the last fiscal year.
Annual Compensation
-------------------
Name and Position Salary Bonus Annual Deferred Salary
None
Item 7. Certain Relationships and Related Transactions
On February 26, 1999, the Company signed an agreement for the purchase of
assets of a Nevada corporation by the name of Cost Plus Five.com, Inc.,
which purported to own nine retail computer stores, in exchange for 17
million shares, and issued 6,984,000 of those 17 million shares of its
common stock to effectuate the agreement. However, Shortly thereafter, the
Company rescinded the contract after it discovered that the state of Texas
was preparing to close two stores in Houston owned by Lee Jackson, for non
payment of taxes. The Company rescinded the asset purchase contract because
the discovery of the financial discrepancies on the two Houston stores made
all of the financial statements suspect. It subsequently, on April 13,
2000, acquired the proprietary website, "www.costplusfive.com" from its
owners, Frank Scivally, Mahlon Meier, William Barker and Don Smallman, the
directors of the Company, and changed the Company's business direction to
that of Internet computer sales. Out of the 6,984,000 shares, the Company
has distributed 500,000 to Franklin Scivally, 500,000 to Don Smallman,
500,000 to William Barker and 500,000 to Mahlon Meier, in exchange for their
respective interests in the Internet website and domain name, and in
exchange for a $125,000 note payable to the Company from each officer. The
Company intends to seek the cancellation of the remaining 4,984,000 shares.
The related parties who own the current affiliate locations are the officers
and directors of the Company.
Robert T. Yarbray is the only person who may be considered to be a promoter
of the Company. On or about December 1, 1998, Robert T. Yarbray, who was
president of the Company at the time, was issued 600,000 shares of Company
common stock in exchange for and as a retainer for his services as
president. On or about April 13, 1999, outgoing president Robert T. Yarbray
was hired as a consultant to the Company, and compensated for monthly full
time consulting services the amount of 1,000,000 shares of company common
stock, in exchange for 12 months' worth of full time consulting services.
The company leases office space from Mr. Yarbray at $800 per month.
On April 15, 1999, 500,000 shares were sold to officer/director William
Barker in exchange for a note in the amount of $125,000, a sophisticated
investor who had access to all corporate information, including the
Company's most recent offering circular and financial statements, pursuant
to Section 4(2) of the Securities Act of 1933, No underwriter was used in
the transaction.
On April 15, 1999, 500,000 shares were sold to officer/director Mahlon
Meier, in exchange for a note in the amount of $125,000, a sophisticated
investor who had access to all corporate information, including the
Company's most recent offering circular and financial statements, pursuant
to Section 4(2) of the Securities Act of 1933, No underwriter was used in
the transaction.
On April 15, 1999, 500,000 shares were sold to officer/director Franklin
Scivally in exchange for a note in the amount of $125,000; a sophisticated
investor who had access to all corporate information, including the
Company's most recent offering circular and financial statements, pursuant
to Section 4(2) of the Securities Act of 1933, No underwriter was used in
the transaction.
On April 15, 1999, 500,000 shares were sold to officer/director Donald
Smallman, in exchange for a note in the amount of $125,000; a sophisticated
investor who had access to all corporate information, including the
Company's most recent offering circular and financial statements, pursuant
to Section 4(2) of the Securities Act of 1933, No underwriter was used in
the transaction.
On May 23, 1999, 50,000 shares were issued to Kenneth Eade, in exchange for
legal services rendered the company; a sophisticated investor who had
access to all corporate information, including the Company's most recent
offering circular and financial statements, pursuant to Section 4(2) of the
Securities Act of 1933, No underwriter was used in the transaction.
On September 28, 1999, the company issued 1,100,000 shares to Farmland
Corporation, a former secured creditor of the company, as a result of the
exercise of an option to convert debt to common stock; a sophisticated
investor who had access to all corporate information, including the
Company's most recent offering circular and financial statements, pursuant
to Section 4(2) of the Securities Act of 1933, No underwriter was used in
the transaction.
On February 26, 1999, the Company entered into an asset purchase and sale
agreement with a Nevada corporation by the name of Cost Plus Five.com, Inc.,
(the "Nevada corporation"), whereby the Company was to acquire certain
assets of the Nevada corporation, in exchange for 17,000,000 shares of
common stock. The Company issued 6,984,000 shares of the 17,000,000 shares
in furtherance of the agreement. However, it became apparent to the Company
during a due diligence investigation that the Nevada corporation had issued
false and misleading financial statements severely misstating its assets and
liabilities, that its corporate charter had been revoked by the state of
Nevada, and that its nine retail stores virtually had no assets. Therefore,
the Company terminated negotiations. It subsequently, on April 13, 2000,
acquired the proprietary website, "www.costplusfive.com" from its owners,
Frank Scivally, Mahlon Meier, William Barker and Don Smallman, the directors
of the Company, and changed the Company's business direction to that of
Internet computer sales. Out of the 6,984,000 shares issued to consummate
the terminated acquisition agreement, the Company has distributed 500,000 to
Franklin Scivally, 500,000 to Don Smallman, 500,000 to William Barker and
500,000 to Mahlon Meier, in exchange for their respective interests in the
Internet website and domain name, and 3,400,000 restricted shares to Bruce
Dorfman and his related corporate entities, which the Company is currently
seeking to cancel in the above-referenced lawsuit. The Company intends to
seek the cancellation of the remaining 4,984,000 shares.
There have been no other transactions since the beginning of fiscal year
1998 through the effective date of this document, or any currently proposed
transactions, or series of similar transactions, to which the Company was or is
to be a party, in which the amount involved exceeds $60,000, inclusive of cash
and noncash transactions, and in which any of the officers, or directors, or
holders of over 5% of the Company's stock have or will have any direct or
indirect material interest. The Company does not currently have any policy
toward entering into any future transactions with related parties.
Item 8.Description of Securities
Common Stock
The Company is authorized to issue 50,000,000 shares of common Stock at a
par value of $.001. The presently outstanding shares of Common Stock are
fully paid and non-assessable. There are currently outstanding 49,835,060
shares of Common Stock. As of the close of the fiscal year 1998, there were
19,482,000 shares of common stock outstanding.
Holders of shares of Common Stock are entitled to one vote per share on all
matters to be voted upon by the stockholders generally. The approval of
proposals submitted to stockholders at a meeting other than for the election
of directors requires the favorable vote of a majority of the shares voting,
except in the case of certain fundamental matters (such as certain
amendments to the Articles of Incorporation, and certain mergers and
reorganizations), in which cases Nevada law and the Company's Bylaws require
the favorable vote of at least a majority of all outstanding shares.
Stockholders are entitled to receive such dividends as may be declared from
time to time by the Board of Directors out of funds legally available
therefor, and in the event of liquidation, dissolution or winding up of the
Company to share ratably in all assets remaining after payment of
liabilities. The holders of shares of Common Stock have no preemptive,
conversion, subscription or cumulative voting rights.
There are no shares subject to outstanding options or warrants to purchase,
aor securities convertible into common equity of the Company. As of April
15, 2000, there were 7,825,530 shares that could be sold pursuant to Rule
144 under the Securities Act. There are no shares which are being or are
proposed to be publicly offered by the Company at the present time.
Under current Nevada law, a shareholder is afforded dissenters' rights
which, if properly exercised, may require the Company to purchase his
shares. Dissenters' rights commonly arise in extraordinary transactions
such as mergers, consolidations, reorganizations, substantial asset sales,
liquidating distributions, and certain amendments to the Company's
certificate of incorporation.
Part II.
Item 1 Market Price of and Dividends on the Registrant's Common Equity and
Other Shareholder Matters
The Company's Common Stock has been quoted on the NASD OTC Bulletin Board
("Bulletin Board"),under the symbol "STSN" in October, 1998. In March,
1999, it changed its symbol to "USAV." For a short time, the symbol was
"CPFV." On April 5, 2000, its trading symbol was changed to "CPXP", and the
NASD added an "E" to the symbol, making it "CPXPE," indicating its inclusion
on the NASD's "eligibility list," from March through April, 2000, when the
company's quote on the Bulletin Board was deleted approximately 30 days later,
and it now trades on the National Quotation Bureau's pink sheets under the
symbol "CPXP." The high and low sale prices of company common stock were 1/8
and 2 1/4, respectively. During the third and fourth quarters of fiscal year
1998, the high and low sale prices of the Company's common stock were $.50 and
$.16, respectively. The Company considers its Common stock to be thinly traded
and that any reported bid or sale prices may not be a true market-based
valuation of the Common Stock. As of March 31, 1999, there were 93 record
holders of the Company's Common Stock. As of August 14, 1999, there were 101
record holders of the Company's common stock. The Company has not paid any cash
dividends since its inception and does not contemplate paying dividends in the
foreseeable future. It is anticipated that earnings, if any, will be retained
for the operation of the Company's business.
The following table sets forth the range of high and low bid information for
each full quarterly period of the last fiscal year:
Period Reported Average High Bid Average Low Bid
--------------- ---------------- ---------------
Quarter ended December 30, 1998 No data available
Quarter ended March 31, 1999 $0.50 $0.16
Quarter ended June 30, 1999 $0.57 $0.30
Source of Data: http://www.freerealtime.com
Item 2. Legal Proceedings
On April 1, 1999, Mary Smith sued the Company and its former President,
Robert T. Yarbray, in the Superior Court of California for the County of
Riverside, Case No. INC 011613, alleging non payment of a $25,000 promissory
note. The Company believed that the lawsuit has no merit, because the
Company executed a first deed of trust on its real property for $250,000 in
exchange for $225,000 of loan proceeds from Ms. Smith. Therefore, the
$25,000 promissory note was extinguished by the subsequent promissory note
for $250,000, secured by a first deed of trust. The lawsuit was dismissed
on May 3, 1999.
On June 18, 1999, the Company filed a lawsuit in federal court for the
Central District of California, Case No. 99-06010RAP(MANx), against
Investor's Equity Corp., Wall Street Trading Group, and others, seeking to
cancel 3,400,000 common shares the Company issued on a promissory note to
the defendants, who defaulted on the promissory note. Defendants filed a
counterclaim, alleging breach of contract, defamation, fraud and securities
violations.
Item 3.CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
The former accountant, Julius Otto resigned in January, 2000, citing delays in
receiving financial information from the Company as his reasons for
resignation. The Company appointed a new independent accountant, Roger G.
Castro, which decision was approved by the Board of Directors, and was ratified
by the shareholders on May 12, 2000. There were no disagreements with the
former accountant on any matter of accounting principle, or practice, financial
statements disclosure or auditing scope or procedure. The former accountant has
indicated his agreement with the statements made by the Company concerning the
change in the Company's independent accountant. The Company has fully
authorized the former accountant to respond fully to the inquiries of the
successor accountant concerning all of the Company's financial reports and
audits. The new accountant, Roger G. Castro, was engaged on April 11, 2000.
Item 4. Recent Sales of Unregistered Securities
The Board of Directors, on July 17, 1997, authorized the sale and issue of a
total of $150,000 in convertible debentures which were unsecured, bear
interest at 10%, which is to be accrued and paid on the first day of the
thirteenth month after the day of issuance. The debentures were sold to ****
The debentures, together with the accrued interest, were convertible into 1,000
shares of the Company's common stock for each $1,000 principal amount no sooner
than the sixth day of the thirteenth month of the date of issuance. The
debentures were issued in reliance upon the exemption from registration
provided in Section 4(2) of the Securities Act of 1933, to accredited investors
whose accredited status was determined from referring to representations made
on investors questionnaires. Prior to March 31, 1999, $100,000 of these
debentures have been converted to common stock at the aggregate purchase price
of $.50 per share. The remainder have been paid in full. The accredited
investors' status were determined as a result of information provided to the
Company on questionnaires completed by the investors.
On April 5, 1999, 1,000,000 common shares were sold to Arrow Management in
exchange for the sum of $100,000, a sophisticated investor who had access to
all corporate information, including the Company's most recent offering
circular and financial statements, pursuant to Section 4(2) of the
Securities Act of 1933, No underwriter was used in the transaction.
On April 15, 1999, 500,000 shares were sold to officer/director William
Barker in exchange for a note in the amount of $125,000, a sophisticated
investor who had access to all corporate information, including the
Company's most recent offering circular and financial statements, pursuant
to Section 4(2) of the Securities Act of 1933, No underwriter was used in
the transaction.
On April 15, 1999, 500,000 shares were sold to officer/director Mahlon
Meier, in exchange for a note in the amount of $125,000, a sophisticated
investor who had access to all corporate information, including the
Company's most recent offering circular and financial statements, pursuant
to Section 4(2) of the Securities Act of 1933, No underwriter was used in
the transaction.
On April 15, 1999, 500,000 shares were sold to officer/director Franklin
Scivally in exchange for a note in the amount of $125,000; a sophisticated
investor who had access to all corporate information, including the
Company's most recent offering circular and financial statements, pursuant
to Section 4(2) of the Securities Act of 1933, No underwriter was used in
the transaction.
On April 15, 1999, 500,000 shares were sold to officer/director Donald
Smallman, in exchange for a note in the amount of $125,000; a sophisticated
investor who had access to all corporate information, including the
Company's most recent offering circular and financial statements, pursuant
to Section 4(2) of the Securities Act of 1933, No underwriter was used in
the transaction.
On April 15, 1999, 10,000 shares were issued to William F. Roach in exchange
for administrative services rendered to the company; a sophisticated
investor who had access to all corporate information, including the
Company's most recent offering circular and financial statements, pursuant
to Section 4(2) of the Securities Act of 1933, No underwriter was used in
the transaction.
On May 23, 1999, 900,000 shares were issued to Richard Swift in exchange for
administrative services rendered the company; a sophisticated investor who
had access to all corporate information, including the Company's most recent
offering circular and financial statements, pursuant to Section 4(2) of the
Securities Act of 1933, No underwriter was used in the transaction.
On May 23, 1999, 50,000 shares were issued to Kenneth Eade, in exchange for
legal services rendered the company; a sophisticated investor who had
access to all corporate information, including the Company's most recent
offering circular and financial statements, pursuant to Section 4(2) of the
Securities Act of 1933, No underwriter was used in the transaction.
On May 25, 1999, 400,000 shares were issued to R. Nordstrom, in exchange for
public relations, press relations, and investor relations full time services
rendered the company; a sophisticated investor who had access to all
corporate information, including the Company's most recent offering circular
and financial statements, pursuant to Section 4(2) of the Securities Act of
1933, No underwriter was used in the transaction.
On June 1, 1999, 98,000 shares were issued to M. Williams in exchange for
the sum of $15,000; a sophisticated investor who had access to all
corporate information, including the Company's most recent offering circular
and financial statements, pursuant to Section 4(2) of the Securities Act of
1933, No underwriter was used in the transaction.
On June 11, 1999, 100,000 shares were issued to John Witkop, in exchange for
$17,000 in cash; a sophisticated investor who had access to all corporate
information, including the Company's most recent offering circular and
financial statements, pursuant to Section 4(2) of the Securities Act of
1933, No underwriter was used in the transaction.
On July 9, 1999, 200,000 shares were issued to R. Swift, in exchange for
administrative services; a sophisticated investor who had access to all
corporate information, including the Company's most recent offering circular
and financial statements, pursuant to Section 4(2) of the Securities Act of
1933, No underwriter was used in the transaction.
On July 21, 1999, 25,000 shares were issued to Brenda Mason, in exchange for
clerical services rendered the company; an investor who had access to all
corporate information, including the Company's most recent offering circular
and financial statements, pursuant to Section 4(2) of the Securities Act of
1933, No underwriter was used in the transaction.
On July 22, 1999, the Company issued 1,875,000 shares of its common stock to
an three independent contractor consultants; 625,000 to Richard Surber,
625,000 to Allan Wolfson, and 625,000 to Jon Roylance, in exchange for
consulting services, pursuant to Rule 701 of the Securities Act of 1933.
There was no underwriter involved in the transaction. The services rendered
were providing general financial advice to corporate management, and
assisting the company in locating, evaluating and effecting a merger and/or
acquisition.
On July 22, 1999, the Company issued 750,000 shares to Delman Corp., 750,000
shares to Moore & Elrod, Inc. And 1,500,000 shares to AZ Professional
Services, corporations controlled by the above-referenced independent
contractor consultants, in exchange for consulting services rendered the
company; a sophisticated investor who had access to all corporate
information, including the Company's most recent offering circular and
financial statements, pursuant to Section 4(2) of the Securities Act of
1933, No underwriter was used in the transaction. The exact services
provided were financial advice to management, and assisting in locating,
evaluating and effecting a merger and/or acquisition.
On February 22, 1999, the Company sold 2,400,000 shares of its common stock,
to Bruce Dorfman, an unrelated accredited investor and his two corporate
entities, Wall Street Trading Group and Investors Equity Corp., pursuant to the
exemption set forth in Regulation D, Rule 504, to an unrelated party in
exchange for two promissory notes at a price of $0.25 per share, for total
proceeds of $600,000. On April 6, 1999, the Company sold another 1,000,000
shares to the same unrelated party on a promissory note, and sporadic payments
were made on the notes until May, 1999. The notes were consolidated into one
note on May 12,1999. No underwriter was used in either transaction. The
investor/promisor defaulted on the second payment of the consolidated note due
May 31, 1999. On June 6, 1999, the Company rescinded the transaction and issued
stop transfers on the shares of common stock sold. The investor failed to
return the shares for
cancellation or pay for the shares, so the Company filed a lawsuit in
federal court in the Central District of Los Angeles, California to obtain
cancellation of the shares issued. The Company requested the Court in the
lawsuit to issue a temporary restraining order prohibiting the investor from
selling any more of his free trading shares, which temporary restraining
order was denied by the Court. During the lawsuit, the Company discovered
that the investor had sold all of the free trading stock. The lawsuit was
settled in January, 2000, in a confidential settlement, the terms of which
the Company has been prohibited to disclose.
On February 26, 1999, the Company entered into an asset purchase and sale
agreement with a Nevada corporation by the name of Cost Plus Five.com, Inc.,
(the "Nevada corporation"), whereby the Company was to acquire certain
assets of the Nevada corporation, in exchange for 17,000,000 shares of
common stock. The Company issued 6,984,000 shares of the 17,000,000 shares
in furtherance of the agreement. However, it became apparent to the Company
during a due diligence investigation that the Nevada corporation had issued
false and misleading financial statements severely misstating its assets and
liabilities, that its corporate charter had been revoked by the state of
Nevada, and that its nine retail stores virtually had no assets. Therefore,
the Company terminated negotiations. It subsequently, on April 13, 2000,
acquired the proprietary website, "www.costplusfive.com" from its owners,
Frank Scivally, Mahlon Meier, William Barker and Don Smallman, the directors
of the Company, and changed the Company's business direction to that of
Internet computer sales. Out of the 6,984,000 shares issued to consummate
the terminated acquisition agreement, the Company has distributed 500,000 to
Franklin Scivally, 500,000 to Don Smallman, 500,000 to William Barker and
500,000 to Mahlon Meier, in exchange for their respective interests in the
Internet website and domain name, and 3,400,000 restricted shares to Bruce
Dorfman and his related corporate entities, which have been returned to the
Company treasury for cancellation. The Company is seeking the cancellation
of the remaining 4,984,000 shares informally, and has issued a notice of
rescission for them and placed stop transfer orders with its transfer agent.
Item 5. Indemnification of Directors and Officers
Nevada Statutes
NRS 78.751 provides that the Company may provide in its articles of
incorporation, by laws or by agreement, to indemnify the Company's officers
and directors and affects their liability in that capacity, for any and all
costs incurred in defending a civil or criminal action, suit or proceeding
must be paid by the corporation as they are incurred and in advance of the
final disposition of the action, suit or proceeding, upon receipt of an
undertaking by or on behalf of the director or officer to repay the amount
if it is ultimately determined by a court of competent jurisdiction that he
is not entitled to be indemnified by the corporation.
Articles of Incorporation
The Articles of Incorporation do not provide for the indemnification of
officers or directors.
By Laws
Article X of the By Laws provide for indemnification of officers and
directors, as follows.
[CAPTION]
PART F/S
Financial Statements
REPORT OF INDEPENDENT AUDITOR REPORT
To Board of Directors and Shareholders ComputerXpress, Inc.
We have audited the accompanying balance sheets of ComputerXpress.com, Inc., as
of March 31, 1999, and the related Statements of Operations, Shareholders'
Equity cash flows for the year then ended. These financial statements are the
responsibil- ity of the Company's management. Our responsibility is to express
an opinion on these financial statements based on our audit.
We conducted my audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. I believe that my audit provides a reasonable basis for
my opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of the Company, as of
March 31, 2000, and the results of their operations and their cash flows for
the year then ended in conformity with generally accepted accounting
principles.
The accompanying financial statements have been prepared assuming the Company
will continue as a going concern. As discussed in Note I to the financial
statements, the Company has an accumulated deficit at March 31,1999. These
factors raise substantial doubt about the Company's ability to continue as a
going concern.
ROGELIO G. CASTRO
-----------------------
ROGELIO G. CASTRO, CPA
August 14, 2000
[CAPTION]
ComputerXpress, Inc.
Balance Sheets
As of March 31, 2000 and 1999
1999
----------
ASSETS
Current Assets:
Cash in banks $ 210
Accounts receivable
Inventory -----------
Total Current Assets 210
-----------
Property and Equipment (net) 22,500
Other Assets:
Receivable from litigation
Land held for future use 860,555
-----------
Total Other Assets 860,555
TOTAL ASSETS $ 883,265
-----------
-----------
LIABILITIES & STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable $357,497
Accrued expenses
Notes payable 562,500
Advances from officers and stockholders 352,826
Debentures 50,000
-----------
Total Current Liabilities 1,322,823
-----------
Stockholders' Equity:
Common stocks , $.001 par value
Authorized shares-50,000,000 and 25,000,000
Issued and outstanding shares-45,915,060 shares
and 19,842,000 shares, respectively 19,842
Paid in capital
Stock subscription receivable (525,000)
Retained deficit
Total Stockholders' Equity (439,558)
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 883,265
[CAPTION]
ComputerXpress, Inc.
Statements of Operations
For the years ended March 31,, 1999, 1998
1999 1998
---------- ----------
Sales $ - $ -
Cost of sales - -
---------- ----------
Gross profit - -
Operating expenses:
General and administrative expenses 2,207,322 119,840
Interest expense 191,474 129,267
Depreciation 4,286 3,214
---------- ----------
Total Expenses 2,403,082 252,321
---------- ----------
Income (Loss) from operations $(2,403,082) $(252,321)
Other income
Recovery judgement from litigation - -
Gain on disposition of land
Total Other Income - -
Net income (loss) $(2,403,082) $(252,321)
Earnings (loss) per common shares -
basic and diluted $ $ (2.34) $ (7.93)
Weighted average shares outstanding 1,028,844 31,804
[CAPTION]
ComputerXpress, Inc.
Statements of Cash Flows
For the years ended March 31, 1999, and 1998
1999 1998
---------- ----------
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss $ (2,403,082) (252,321)
Adjustments to reconcile net loss to
net cash used by operating activities:
Depreciation & amortization 4,286 3,214
Accounts receivable
Inventory
Prepaid expense
Stocks issued for services 1,747,498
Receivable from litigation
Accounts payable and accruals 300,080 57,417
Advances from officers & shareholders 323,841 28,985
NET CASH USED BY OPERATING ACTIVITIES (27,377) (162,705)
CASH FLOWS FROM INVESTING ACTIVITIES
Acquisition of property and equipment - (30,000)
Land - site for future development - (860,555)
NET CASH USED BY INVESTING ACTIVITIES (890,555)
CASH FLOWS FROM FINANCING ACTIVITIES
Notes payable (148,769) 861,269
Stocks cancelled
Subscriptions receivable (525,000)
Stocks issued for cash 691,400 201,947
NET CASH PROVIDED BY FINANCING ACTIVITIES 17,631
1,063,216
INCREASE (DECREASE) IN CASH (9,746) 9,956
BEGINNING CASH 9,956 -
ENDING CASH $ 210 9,956
DISCLOSURE FROM OPERATING ACTIVITIES
Interest expense $ 191,474 $ 98,563
NON CASH DISCLOSURE
14,994,000 shares of common stocks
issued for services 1,747,498
100,000 shares issued to convert
debentures payable 100,000
<TABLE>
<CAPTION>
ComputerXpress, Inc.
Statement of Stockholders' Equity
As of March 31, 1999
<S> <C> <C> <C> <C> <C>
Number
of Common Additional Stocks Retained
Shares Stock Paid-In- Subscription Earinings
Outstanding at Par Value Capital Receivable (Deficit)
----------- ------------ ---------- ------------ --------
Balance at March 31, 1997 - $ - $ - $ - $ -
Net loss - March 31, 1998
Stocks issued for cash 1,850,000 1,850 200,097
----------- ------------ ---------- ------------ --------
Balance at March 31, 1998 1,850,000 1,850 200,097 (252,321)
Net loss - March 31, 1999 (2,403,082)
Shares issued for convertible
debentures payable 100,000 100 99,900
Shares issued for services 14,994,000 14,994 1,732,504
Shares issued in exchanged
for notes receivable 2,100,000 2,100 522,900
Shares issued for cash 300,000 300 74,700
Shares issued for cash 498,000 498 90,902
Common stocks subscribed (525,000)
----------- ------------ ---------- ------------ --------
Balance at March 31, 1999 19,842,000 $ 19,842 2,721,003 (525,000) (2,655,403)
</TABLE>
Item 14. EXHIBITS, FINANCIAL STATEMENTS
(a) Report of Independent Certified Public Accountant dated
August 14, 2000
Financial Statements
Balance Sheets
Statement of Loss And Accumulated Deficit
Statements of Stockholder's Equity
Statements of Cash Flows
Notes to Consolidated Financial Statements
(b)Reports on Form 8-K: Not Applicable
(c)Exhibits
Exhibit No. Description
3(a) Articles of Incorporation(*)
3(a)2 Amendment to Articles of Incorporation(*)
3(a)3 Amendment to Articles of Incorporation(*)
3(a)4 Amendment to Articles of Incorporation(*)
3(a)5 Amendment to Articles of Incorporation(*)
3(b) By-laws
4(a) Specimen certificate of common stock(*)
10(a) Asset acquisition agreement(*)
10(b) Affiliation agreement(*)
10(c) Membership agreement(*)
10(d) Minutes of April 13, 1999(*)
14 Report of Former Independent Accountant(*)
16 Letter of Former Independent Accountant(*)
SIGNATURES
Pursuant to the requirements of Section 12 of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on its behalf
by the undersigned, thereunto duly authorized.
ComputerXpress.com, Inc.
FRANKLIN R. SCIVALLY
By_____________________________________________
Franklin R. Scivally, President and Director
Date: November 10, 2000
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.
FRANKLIN R. SCIVALLY
__________________________________________
Franklin R. Scivally, President and Director
Date: November 10, 2000
JAMES RATHER
___________________________________________
James Rather, Director
Date: November 10, 2000
DONALD R. SMALLMAN
___________________________________________
Donald R. Smallman, Treasurer and Director
Date: November 10, 2000
ROBERT DADDIO
___________________________________________
Robert Daddio, Secretary and Director
Date: November 10, 2000
