U.S. SECURITIES AND EXCHANGE COMMISSION
Washington D.C. 20549
FORM 10-SB/A1
GENERAL FORM FOR REGISTRATION OF SECURITIES OF
SMALL BUSINESS ISSUERS
Under Section 12(g) of
The Securities Exchange Act of 1934
ANNEX BUSINESS RESOURCES, INC.
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(Name of Small Business Issuer in its charter)
Nevada 98-0204280
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1460 Pandosy Street
Suite 106
Chalone, British Columbia V1Y 1P3
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(Address of principal executive offices) (Zip code)
Issuer's telephone number: (250) 868-8177
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Securities to be registered pursuant to Section 12(b) of the Act:
none
Securities to be registered pursuant to Section 12(g) of the Act:
Common Stock
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(Title of Class)
Page One of Forty Six Pages
Exhibit Index is Located at Page Forty Three.
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TABLE OF CONTENTS
Page
PART I
Item 1. Description of Business . . . . . . . . . . . . . 3
Item 2. Plan of Operation. . . . . . . . . . . . . . . . . 8
Item 3. Description of Property. . . . . . . . . . . . . . 14
Item 4. Security Ownership of Certain
Beneficial Owners and Management . . . . . . . . . 14
Item 5. Directors, Executive Officers, Promoters
and Control Persons. . . . . . . . . . . . . . . 16
Item 6. Executive Compensation . . . . . . . . . . . . . . 18
Item 7. Certain Relationships and
Related Transactions. . . . . . . . . . . . . . 19
Item 8. Description of Securities. . . . . . . . . . . . . 21
PART II
Item 1. Market for Common Equities and Related Stockholder
Matters . . . . . . . . . . . . . .. . . . . . . 22
Item 2. Legal Proceedings. . . . . . . . . . . . . . . . . 24
Item 3. Changes in and Disagreements with Accountants. . . 24
Item 4. Recent Sales of Unregistered Securities. . . . . . 24
Item 5. Indemnification of Directors and Officers. . . . . 25
PART F/S
Financial Statements . . . . . . . . . . . . . . . 26
PART III
Item 1. Index to Exhibits. . . . . . . . . . . . . . . . . 43
Item 2. Description of Exhibits. . . . . . . . . . . . . . 45
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PART I
Item 1. Description of Business
Annex Business Resources, Inc. (the "Company") was incorporated on May 16,
1997, under the laws of the State of Nevada to engage in any lawful corporate
undertaking, including, but not limited to, selected mergers and acquisitions.
The Company has been in the developmental stage since inception and has no
operations to date. Other than issuing shares to its original shareholders, the
Company never commenced any operational activities. As such, the Company can be
defined as a "shell" company, whose sole purpose at this time is to locate and
consummate a merger or acquisition with a private entity. The Board of Directors
of the Company has elected to commence implementation of the Company's principal
business purpose, described below under "Item 2 - Plan of Operation."
The Company is filing this Registration Statement on a voluntary basis
because the primary attraction of the Company as a merger partner or acquisition
vehicle will be its status as a public company. Any business combination or
transaction will likely result in a significant issuance of shares and
substantial dilution to present stockholders of the Company.
The proposed business activities described herein classify the Company as a
"blank check" company. Many states have enacted statutes, rules and regulations
limiting the sale of securities of "blank check" companies in their respective
jurisdictions. Management does not intend to undertake any efforts to cause a
market to develop in the Company's securities or undertake any offering of the
Company's securities, either debt or equity, until such time as the Company has
successfully implemented its business plan described herein. Relevant thereto,
each shareholder of the Company has executed and delivered a "lock-up" letter
agreement, affirming that they shall not sell their respective shares of the
Company's common stock until such time as the Company has successfully
consummated a merger or acquisition and the Company is no longer classified as a
"blank check" company. In order to provide further assurances that no trading
will occur in the Company's securities until a merger or acquisition has been
consummated, each shareholder has agreed to place their respective stock
certificate with the Company's legal counsel, Andrew I. Telsey, P.C., who will
not release these respective certificates until such time as legal counsel has
confirmed that a merger or acquisition has been successfully consummated.
However, while management believes that the procedures established to preclude
any sale of the Company's securities prior to closing of a merger or acquisition
will be sufficient, there can be no assurances that the procedures established
relevant herein will unequivocally limit any shareholder's ability to sell their
respective securities before such closing.
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The Company's business is subject to numerous risk factors, including the
following:
The Company has no operating history or revenue and minimal assets. The
Company's financial statements accompanying this Registration Statement have
been prepared assuming that the Company will continue as a going concern, which
contemplates the realization of assets and liquidation of liabilities in the
normal course of business. The financial statements do not include any
adjustment that might result from the outcome of this uncertainty. The Company
has had no operating history nor any revenues or earnings from operations. The
Company has no significant assets or financial resources. The Company will
sustain operating expenses without corresponding revenues, at least until the
consummation of a business combination. This may result in the Company incurring
a net operating loss which will increase continuously until the Company can
consummate a business combination with a profitable business opportunity. There
is no assurance that the Company can identify such a business opportunity and
consummate such a business combination.
The Company's proposed operations are speculative. The success of the
Company's proposed plan of operation will depend to a great extent on the
operations, financial condition and management of the identified business
opportunity. The Company may not be successful in locating candidates with
established profitable operations. In the event the Company completes a business
combination, the success of the Company's operations may be dependent upon
management of the successor firm or venture partner firm and numerous other
factors beyond the Company's control.
There is a scarcity of possible merger or acquisition candidates which will
be available to the Company. Many similar companies have greater resources than
the Company. The Company is and will continue to be an insignificant participant
in the business of seeking mergers with, joint ventures with and acquisitions of
small private and public entities. A large number of established and
well-financed entities, including venture capital firms, are active in mergers
and acquisitions of companies which may be desirable target candidates for the
Company. Nearly all such entities have significantly greater financial
resources, technical expertise and managerial capabilities than the Company and,
consequently, the Company will be at a competitive disadvantage in identifying
possible business opportunities and successfully completing a business
combination. Moreover, the Company will also compete in seeking merger or
acquisition candidates with numerous other small public companies.
There is no current agreement between the Company and any other entity to
enter into any transaction and there are no standards for a business
combination. The Company has no
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arrangement, agreement or understanding with respect to engaging in a merger
with, joint venture with or acquisition of, a private or public entity. The
Company may not be successful in identifying and evaluating suitable business
opportunities or in concluding a business combination. Management has not
identified any particular industry or specific business within an industry for
evaluation by the Company. The Company may not be able to negotiate a business
combination on terms favorable to the Company. The Company has not established a
specific length of operating history or a specified level of earnings, assets,
net worth or other criteria which it will require a target business opportunity
to have achieved, and without which the Company would not consider a business
combination in any form with such business opportunity. Accordingly, the Company
may enter into a business combination with a business opportunity having no
significant operating history, losses, limited or no potential for earnings,
limited assets, negative net worth or other negative characteristics.
Management intends to devote only limited time to the business of the
Company. While seeking a business combination, each member of management
anticipates devoting up to twenty hours per month to the business of the
Company. None of the Company's officers has entered into a written employment
agreement with the Company and none is expected to do so in the foreseeable
future. The Company has not obtained key man life insurance on any of its
officers or directors. Loss of the services of any of these individuals would
adversely affect development of the Company's business and its continuing
operations. See "Item 5 - Directors, Executive Officers, Promoters and Control
Persons."
Management may participate in other similar businesses to that of the
Company. Officers and directors of the Company may in the future participate in
business ventures which could be deemed to compete directly with the Company.
Additional conflicts of interest and non-arms length transactions may also arise
in the future in the event the Company's officers or directors are involved in
the management of any firm with which the Company transacts business. Management
has adopted a policy that the Company will not seek a merger with, or
acquisition of, any entity in which management serve as officers, directors or
partners, or in which they or their family members own or hold any ownership
interest.
Time and costs associated with a business combination may delay or
eliminate some potential candidates. Sections 13 and 15(d) of the Securities
Exchange Act of 1934 (the "Exchange Act") require companies subject thereto to
provide certain information about significant acquisitions, including certified
financial statements for the company acquired, covering one, two, or three
years, depending on the relative size of the acquisition. The time and
additional costs that may be incurred by some target entities to prepare such
statements may significantly delay or essentially
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preclude consummation of an otherwise desirable acquisition by the Company.
Acquisition prospects that do not have or are unable to obtain the required
audited statements may not be appropriate for acquisition so long as the
reporting requirements of the 1934 Act are applicable.
The Company does not have a marketing organization, nor does it intend to
use any Market Research. The Company has neither conducted, nor have others made
available to it, results of market research indicating that market demand exists
for the transactions contemplated by the Company. Moreover, the Company does not
have, and does not plan to establish, a marketing organization. Even in the
event demand is identified for a merger or acquisition contemplated by the
Company, the Company may not be successful in completing any such business
combination.
Upon closing of a business combination, the Company may be subject to
economic fluctuations. The Company's proposed operations, even if successful,
will result in the Company engaging in a business combination with a business
opportunity. Consequently, the Company's activities may be limited to those
engaged in by business opportunities which the Company merges with or acquires.
The Company's inability to diversify its activities into a number of areas may
subject the Company to economic fluctuations within a particular business or
industry and therefore increase the risks associated with the Company's
operations.
The Company may be regulated by Investment Company Act of 1940. Although
the Company will be subject to regulation under the Securities Exchange Act of
1934, management believes the Company will not be subject to regulation under
the Investment Company Act of 1940, insofar as the Company will not be engaged
in the business of investing or trading in securities. In the event the Company
engages in business combinations which result in the Company holding passive
investment interests in a number of entities, the Company could be subject to
regulation under the Investment Company Act of 1940. In such event, the Company
would be required to register as an investment company and could be expected to
incur significant registration and compliance costs. The Company has obtained no
formal determination from the Securities and Exchange Commission as to the
status of the Company under the Investment Company Act of 1940 and,
consequently, any violation of such Act would subject the Company to additional
reporting requirements, which in turn will result in the Company incurring
additional costs of compliance with such additional regulations.
Control and management will probably change upon consummation of a business
combination. A business combination involving the issuance of the Company's
Common Shares will result in shareholders of a private company obtaining a
controlling interest in the Company. Any such business combination may require
management of the Company to sell or transfer all or a portion of the Company's
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Common Shares held by them, or resign as members of the Board of Directors of
the Company. The resulting change in control of the Company could result in
removal of one or more present officers and directors of the Company and a
corresponding reduction in or elimination of their participation in the future
affairs of the Company.
Shareholders percentage of ownership will decrease following a business
combination. The Company's primary plan of operation is based upon a business
combination with a private concern which would result in the Company issuing
securities to shareholders of any such private company. The issuance of
previously authorized and unissued Common Shares of the Company would result in
reduction in percentage of shares owned by present and prospective shareholders
of the Company and may result in a change in control or management of the
Company.
There are disadvantages associated with a blank check offering. The Company
may enter into a business combination with an entity that desires to establish a
public trading market for its shares. A business opportunity may attempt to
avoid what it deems to be adverse consequences of undertaking its own public
offering by seeking a business combination with the Company. Such consequences
may include, but are not limited to, time delays of the registration process,
significant expenses to be incurred in such an offering, loss of voting control
to public shareholders and the inability or unwillingness to comply with various
federal and state laws enacted for the protection of investors.
It is important to structure an acquisition or merger as a "Tax Free"
Transaction. Federal and state tax consequences will be major considerations in
any business combination the Company may undertake. Currently, such transactions
may be structured so as to result in tax-free treatment to both companies,
pursuant to various federal and state tax provisions. The Company intends to
structure any business combination so as to minimize the federal and state tax
consequences to both the Company and the target entity; however, a business
combination may not meet the statutory requirements of a tax-free reorganization
or the parties may not obtain the intended tax-free treatment upon a transfer of
stock or assets. A non-qualifying reorganization could result in the imposition
of both federal and state taxes which may have an adverse effect on both parties
to the transaction.
There is a requirement that a business opportunity provide audited
financial statements, which may disqualify some business opportunities.
Management of the Company believes that any potential business opportunity must
provide audited financial statements for review, for the protection of all
parties to the business combination. One or more attractive business
opportunities may choose to forego the possibility of a business
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combination with the Company, rather than incur the expenses associated with
preparing audited financial statements.
Item 2. Plan of Operation
The Company intends to seek to acquire assets or shares of an entity
actively engaged in business which generates revenues, in exchange for its
securities. The Company has no particular acquisitions in mind and has not
entered into any negotiations regarding such an acquisition. None of the
Company's officers, directors, promoters or affiliates have engaged in any
preliminary contact or discussions with any representative of any other company
regarding the possibility of an acquisition or merger between the Company and
such other company as of the date of this Registration Statement.
The Company has no full time employees. The Company's President and
Secretary and Treasurer have agreed to allocate up to 20 hours per month of
their time to the activities of the Company, without compensation. These
officers anticipate that the business plan of the Company can be implemented by
their devoting such minimal time per month to the business affairs of the
Company and, consequently, conflicts of interest may arise with respect to the
limited time commitment by such officers. See "Item 5 - Directors, Executive
Officers, Promoters and Control Persons - Resumes."
The Company's officers and directors were formerly involved with other
"blank check" companies. The Company's officers and directors may, in the
future, become involved with other companies who have a business purpose similar
to that of the Company. As a result, additional potential conflicts of interest
may arise in the future. If such a conflict does arise and an officer or
director of the Company is presented with business opportunities under
circumstances where there may be a doubt as to whether the opportunity should
belong to the Company or another "blank check" company they are affiliated with,
they will disclose the opportunity to all such companies. If a situation arises
in which more than one company desires to merge with or acquire that target
company and the principals of the proposed target company has no preference as
to which company will merger or acquire such target company, the company which
first filed a registration statement with the Securities and Exchange Commission
will be entitled to proceed with the proposed transaction. See "Item 5 -
Directors, Executive Officers, Promoters and Control Persons - Prior 'Blank
Check' Experience."
The Articles of Incorporation of the Company provides that the Company
shall possess and may indemnify officers and/or directors of the Company for
liabilities, which can include liabilities arising under the securities laws.
Therefore, assets of the Company could be used or attached to satisfy any
liabilities
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subject to such indemnification. See "Part II - Item 5 - Indemnification of
Directors and Officers."
General Business Plan
The Company's purpose is to seek, investigate and, if such investigation
warrants, acquire an interest in business opportunities presented to it by
persons or firms who or which desire to seek the perceived advantages of an
Exchange Act registered corporation. The Company will not restrict its search to
any specific business, industry, or geographical location and the Company may
participate in a business venture of virtually any kind or nature. This
discussion of the proposed business is purposefully general and is not meant to
be restrictive of the Company's virtually unlimited discretion to search for and
enter into potential business opportunities. Management anticipates that it may
be able to participate in only one potential business venture because the
Company has nominal assets and limited financial resources. See "Part F/S -
Financial Statements." This lack of diversification should be considered a
substantial risk to shareholders of the Company because it will not permit the
Company to offset potential losses from one venture against gains from another.
The Company may seek a business opportunity with entities which have
recently commenced operations, or which wish to utilize the public marketplace
in order to raise additional capital in order to expand into new products or
markets, to develop a new product or service, or for other corporate purposes.
The Company may acquire assets and establish wholly owned subsidiaries in
various businesses or acquire existing businesses as subsidiaries.
The Company anticipates that the selection of a business opportunity in
which to participate will be complex and extremely risky. Due to general
economic conditions, rapid technological advances being made in some industries
and shortages of available capital, management believes that there are numerous
firms seeking the perceived benefits of a publicly registered corporation. Such
perceived benefits may include facilitating or improving the terms on which
additional equity financing may be sought, providing liquidity for incentive
stock options or similar benefits to key employees, providing liquidity (subject
to restrictions of applicable statutes), for all shareholders and other factors.
Potentially, available business opportunities may occur in many different
industries and at various stages of development, all of which will make the task
of comparative investigation and analysis of such business opportunities
extremely difficult and complex.
The Company has, and will continue to have, no capital with which to
provide the owners of business opportunities with any significant cash or other
assets. However, management believes the Company will be able to offer owners of
acquisition candidates the
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opportunity to acquire a controlling ownership interest in a publicly registered
company without incurring the cost and time required to conduct an initial
public offering. The owners of the business opportunities will, however, incur
significant legal and accounting costs in connection with acquisition of a
business opportunity, including the costs of preparing Form 8-K's, 10-K's or
10-KSB's, agreements and related reports and documents. The Securities Exchange
Act of 1934 (the "34 Act") specifically requires that any merger or acquisition
candidate comply with all applicable reporting requirements, which include
providing audited financial statements to be included within the numerous
filings relevant to complying with the 34 Act. Nevertheless, the officers and
directors of the Company have not conducted market research and are not aware of
statistical data which would support the perceived benefits of a merger or
acquisition transaction for the owners of a business opportunity.
The analysis of new business opportunities will be undertaken by, or under
the supervision of, the officers and directors of the Company, none of whom is a
professional business analyst. Management intends to concentrate on identifying
preliminary prospective business opportunities which may be brought to its
attention through present associations of the Company's officers and directors,
or by the Company's shareholders. In analyzing prospective business
opportunities, management will consider such matters as the available technical,
financial and managerial resources; working capital and other financial
requirements; history of operations, if any; prospects for the future; nature of
present and expected competition; the quality and experience of management
services which may be available and the depth of that management; the potential
for further research, development, or exploration; specific risk factors not now
foreseeable but which then may be anticipated to impact the proposed activities
of the Company; the potential for growth or expansion; the potential for profit;
the perceived public recognition of acceptance of products, services, or trades;
name identification; and other relevant factors. Officers and directors of the
Company expect to meet personally with management and key personnel of the
business opportunity as part of their investigation. To the extent possible, the
Company intends to utilize written reports and personal investigation to
evaluate the above factors. The Company will not acquire or merge with any
company for which audited financial statements cannot be obtained within a
reasonable period of time after closing of the proposed transaction.
Management of the Company, while not especially experienced in matters
relating to the new business of the Company, shall rely upon their own efforts
and, to a much lesser extent, the efforts of the Company's shareholders, in
accomplishing the business purposes of the Company. It is not anticipated that
any outside consultants or advisors will be utilized by the Company to
effectuate its business purposes described herein. However, if the Company does
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retain such an outside consultant or advisor, any cash fee earned by such party
will need to be paid by the prospective merger/ acquisition candidate, as the
Company has no cash assets with which to pay such obligation. There have been no
contracts or agreements with any outside consultants and none are anticipated in
the future.
The Company will not restrict its search for any specific kind of firms,
but may acquire a venture which is in its preliminary or development stage,
which is already in operation, or in essentially any stage of its corporate
life. It is impossible to predict at this time the status of any business in
which the Company may become engaged, in that such business may need to seek
additional capital, may desire to have its shares publicly traded, or may seek
other perceived advantages which the Company may offer. However, the Company
does not intend to obtain funds in one or more private placements to finance the
operation of any acquired business opportunity until such time as the Company
has successfully consummated such a merger or acquisition.
It is anticipated that the Company will incur nominal expenses in the
implementation of its business plan described herein. Because the Company has no
capital with which to pay these anticipated expenses, present management of the
Company will pay these charges with their personal funds, as interest free loans
to the Company. However, the only opportunity which management has to have these
loans repaid will be from a prospective merger or acquisition candidate.
Management has agreed among themselves that the repayment of any loans made on
behalf of the Company will not impede, or be made conditional in any manner, to
consummation of a proposed transaction.
Acquisition of Opportunities
In implementing a structure for a particular business acquisition, the
Company may become a party to a merger, consolidation, reorganization, joint
venture, or licensing agreement with another corporation or entity. It may also
acquire stock or assets of an existing business. On the consummation of a
transaction, it is probable that the present management and shareholders of the
Company will no longer be in control of the Company. In addition, the Company's
directors may, as part of the terms of the acquisition transaction, resign and
be replaced by new directors without a vote of the Company's shareholders or may
sell their stock in the Company. Any terms of sale of the shares presently held
by officers and/or directors of the Company will be also afforded to all other
shareholders of the Company on similar terms and conditions. Any and all such
sales will only be made in compliance with the securities laws of the United
States and any applicable state.
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It is anticipated that any securities issued in any such reorganization
would be issued in reliance upon exemption from registration under applicable
federal and state securities laws. In some circumstances, however, as a
negotiated element of its transaction, the Company may agree to register all or
a part of such securities immediately after the transaction is consummated or at
specified times thereafter. If such registration occurs, of which there can be
no assurance, it will be undertaken by the surviving entity after the Company
has successfully consummated a merger or acquisition and the Company is no
longer considered a "shell" company. Until such time as this occurs, the Company
will not attempt to register any additional securities. The issuance of
substantial additional securities and their potential sale into any trading
market which may develop in the Company's securities may have a depressive
effect on the value of the Company's securities in the future, if such a market
develops, of which there is no assurance.
While the actual terms of a transaction to which the Company may be a party
cannot be predicted, it may be expected that the parties to the business
transaction will find it desirable to avoid the creation of a taxable event and
thereby structure the acquisition in a so-called "tax-free" reorganization under
Sections 368(a)(1) or 351 of the Internal Revenue Code (the "Code"). In order to
obtain tax-free treatment under the Code, it may be necessary for the owners of
the acquired business to own 80% or more of the voting stock of the surviving
entity. In such event, the shareholders of the Company, would retain less than
20% of the issued and outstanding shares of the surviving entity, which would
result in significant dilution in the equity of such shareholders.
As part of the Company's investigation, officers and directors of the
Company will meet personally with management and key personnel, may visit and
inspect material facilities, obtain independent analysis of verification of
certain information provided, check references of management and key personnel,
and take other reasonable investigative measures, to the extent of the Company's
limited financial resources and management expertise. The manner in which the
Company participates in an opportunity will depend on the nature of the
opportunity, the respective needs and desires of the Company and other parties,
the management of the opportunity and the relative negotiation strength of the
Company and such other management.
With respect to any merger or acquisition, negotiations with target company
management is expected to focus on the percentage of the Company which the
target company shareholders would acquire in exchange for all of their
shareholdings in the target company. Depending upon, among other things, the
target company's assets and liabilities, the Company's shareholders will hold a
substantially lesser percentage ownership interest in the Company following any
merger or acquisition. The percentage ownership may be subject to
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significant reduction in the event the Company acquires a target company with
substantial assets. Any merger or acquisition effected by the Company can be
expected to have a significant dilutive effect on the percentage of shares held
by the Company's then shareholders.
The Company will participate in a business opportunity only after the
negotiation and execution of appropriate written agreements. Although the terms
of such agreements cannot be predicted, generally such agreements will require
some specific representations and warranties by all of the parties thereto, will
specify certain events of default, will detail the terms of closing and the
conditions which must be satisfied by each of the parties prior to and after
such closing, will outline the manner of bearing costs, including costs
associated with the Company's attorneys and accountants, will set forth remedies
on default and will include miscellaneous other terms.
As stated hereinabove, the Company will not acquire or merge with any
entity which cannot provide independent audited financial statements within a
reasonable period of time after closing of the proposed transaction. The Company
is subject to all of the reporting requirements included in the 34 Act. Included
in these requirements is the affirmative duty of the Company to file independent
audited financial statements as part of its Form 8-K to be filed with the
Securities and Exchange Commission upon consummation of a merger or acquisition,
as well as the Company's audited financial statements included in its annual
report on Form 10-K (or 10-KSB, as applicable). If such audited financial
statements are not available at closing, or within time parameters necessary to
insure the Company's compliance with the requirements of the 34 Act, or if the
audited financial statements provided do not conform to the representations made
by the candidate to be acquired in the closing documents, the closing documents
will provide that the proposed transaction will be voidable, at the discretion
of the present management of the Company. If such transaction is voided, the
agreement will also contain a provision providing for the acquisition entity to
reimburse the Company for all costs associated with the proposed transaction.
Year 2000 Disclosure
Many existing computer programs use only two digits to identify a year in
the date field. These programs were designed and developed without considering
the impact of the upcoming change in the century. If not corrected, many
computer applications could fail or create erroneous results by or at the Year
2000. As a result, many companies will be required to undertake major projects
to address the Year 2000 issue. Because the Company has no assets, including any
personal property such as computers, it is not anticipated that the Company will
incur any negative impact as a result of this potential problem. However, it is
possible that
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this issue may have an impact on the Company after the Company successfully
consummates a merger or acquisition. Management intends to address this
potential problem with any prospective merger or acquisition candidate. There
can be no assurances that new management of the Company will be able to avoid a
problem in this regard after a merger or acquisition is so consummated.
Competition
The Company will remain an insignificant participant among the firms which
engage in the acquisition of business opportunities. There are many established
venture capital and financial concerns which have significantly greater
financial and personnel resources and technical expertise than the Company. In
view of the Company's combined extremely limited financial resources and limited
management availability, the Company will continue to be at a significant
competitive disadvantage compared to the Company's competitors. In the event the
Company is competing with another entity similar to that of the Company with the
exception for the fact that the other company has assets to offer any merger or
acquisition candidate, it is doubtful that the Company will be able to
successfully consummate such a transaction.
Item 3. Description of Property
The Company has no properties and at this time has no agreements to acquire
any properties. The Company intends to attempt to acquire assets or a business
in exchange for its securities which assets or business is determined to be
desirable for its objectives.
The Company operates from its offices at 1460 Pandosy Street, Suite 106,
Chalone, British Columbia, Canada V1Y 1P3. This space is provided to the Company
on a rent free basis by Devinder Randhawa, an officer and director and a
principal shareholder of the Company, and it is anticipated that this
arrangement will remain until such time as the Company successfully consummates
a merger or acquisition. Management believes that this space will meet the
Company's needs for the foreseeable future.
Item 4. Security Ownership of Certain Beneficial Owners and
Management
The table below lists the beneficial ownership of the Company's voting
securities by each person known by the Company to be the beneficial owner of
more than 5% of such securities, as well as the securities of the Company
beneficially owned by all directors and officers of the Company. Unless
otherwise indicated, the shareholders listed possess sole voting and investment
power with respect to the shares shown.
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Name and Amount and
Address of Nature of
Beneficial Beneficial Percent of
Title of Class Owner Owner Class
- -------------- ----- ----- -----
Common Devinder Randhawa(1) 304,000 30.4%
1460 Pandosy Street
Suite 106
Chalone, British Columbia
Canada V1Y 1P3
Common Ron Schlitt(1) 304,000 30.4%
1890 Ranchmont Crescent
Chalone, British Columbia
Canada V1V 1T3
Common All Officers and 608,000 60.8%
Directors as a
Group (2 persons)
- ------------------------------
(1) Officer and Director.
The balance of the Company's outstanding Common Shares are held by 8
persons.
(b) Security Ownership of Management.
The following table sets forth the beneficial ownership for each class of
equity securities of the Company beneficially owned by all directors and
officers of the Company.
Name and Amount and
Address of Nature of
Beneficial Beneficial Percent
Title of Class Owner Owner of Class
- -------------- ----- ----- --------
Common Devinder Randhawa(1) 304,000 30.4%
1460 Pandosy Street
Suite 106
Chalone, British Columbia
Canada V1Y 1P3
Common Ron Schlitt(1) 304,000 30.4%
1890 Ranchmont Crescent
Chalone, British Columbia
Canada V1V 1T3
Common All Officers and 608,000 60.8%
Directors as a
Group (2 persons)
15
<PAGE>
(1) Officer and director of the Company
Item 5. Directors, Executive Officers, Promoters and Control Persons.
The directors and officers of the Company are as follows:
Name Age Position
---- --- --------
Devinder Randhawa 39 President and Director
Ron Schlitt 39 Secretary, Treasurer
and Director
The above listed officers and directors will serve until the next annual
meeting of the shareholders or until their death, resignation, retirement,
removal, or disqualification, or until their successors have been duly elected
and qualified. Vacancies in the existing Board of Directors are filled by
majority vote of the remaining Directors. Officers of the Company serve at the
will of the Board of Directors. There is no family relationship between any
executive officer and director of the Company.
Resumes
Devinder Randhawa, is President and a director of the Company, positions he
has held since May 1997. In addition to his positions with the Company, since
October 1994, Mr. Randhawa has been President and principal shareholder of RD
Capital, Inc., Chalone, British Columbia, Canada, a corporation engaged in
corporate finance activities. Prior, from November 1990 through June 1993, Mr.
Randhawa was employed by Canaccord Capital, Inc., a stock brokerage company
located in Vancouver, British Columbia, where his principal responsibilities
included providing investment advice. On March 21, 1996, Mr. Randhawa was fined
$5,000 by the Vancouver Stock Exchange for failing to fulfil his duties in 1993
as a registered representative for Canaccord Capital Corporation due to his
involvement in loaning funds to a company listed on The Vancouver Stock Exchange
without first advising Canaccord Capital Corporation. On September 11, 1997, as
a result of a hearing held on March 21, 1997, the British Columbia Securities
Commission held that The Vancouver Stock Exchange erred, in part, in its
decision and reduced the fine to $2,000. Mr. Randhawa received a Bachelor of
Arts degree with honors from Trinity Western University in 1983 and also
received a Masters degree in Business Administration from the University of
British Columbia in 1985. Mr. Randhawa devotes only such time as necessary to
the business of the Company, which time is not expected to exceed 20 hours per
month.
16
<PAGE>
Ron Schlitt is Secretary, Treasurer and a director of the Company,
positions he has held since May 1997. In addition to his positions with the
Company, since September 1992, Mr. Schlitt has also been the owner and manager
of Epicenter Resources, Inc., Chalone, B.C., Canada, where he administers
employment and re-employment programs. Mr. Schlitt devotes only such time as
necessary to the business of the Company, which time is not expected to exceed
20 hours per month.
Prior "Blank Check" Experience
Mr. Randhawa was an officer and director of LBF Corporation, a Nevada
corporation ("LBF"), whose principal business was to engage in a merger or
acquisition with another company or person. LBF filed a registration statement
with the SEC on Form 10-SB, which became effective in March 1998. Effective June
19, 1998, pursuant to a definitive agreement, LBF acquired certain patent
application rights from FES Innovations, Inc. ("FES"), a privately held British
Columbia, Canada corporation. The terms of the transaction provided that LBF
undertook a forward split of its issued and outstanding common stock, whereby 10
shares of common stock were issued in exchange for each share of common stock
then issued and outstanding in order to establish the number of issued and
outstanding common shares at closing to be 5,000,000 shares, and LBF issued an
aggregate of 12,500,000 "restricted" shares of its Common Stock to FES and its
assigns. LBF also changed its name to "International Fuel Solutions, Inc."
("IFS"). Mr. Randhawa resigned his positions as an officer and director upon
closing of the aforesaid transaction. Subsequently, and on or about March 19,
1999, IFS rescinded the transaction with FES, but did not rescind the forward
split or name change undertaken as a result of that transaction. At that time
Mr. Randhawa resumed his positions as an officer and director of IFS. On April
17, 1999, pursuant to a definitive agreement, IFS acquired certain assets
including an electronic commerce web site and rights to business names from
Michael Levine in exchange for the issuance of 2,500,000 "restricted" shares of
its Common Stock and changed its name to "Retail Highway.com, Inc." Upon the
closing of that transaction, effective April 17, 1999, Mr. Randhawa again
resigned his positions as an officer and director of IFS.
Mr. Randhawa is also an officer, director and principal shareholder of
Eastern Management Corporation, a Nevada corporation ("Eastern"), whose
principal business is a "shell" company, whose sole purpose at this time is to
locate and consummate a merger or acquisition with a private entity. Eastern
filed a registration statement with the SEC on Form 10-SB in June 1999, which
became effective in August 1999.
Mr. Randhawa is also an officer, director and principal shareholder of
Tripacific Development Corporation, a Nevada corporation ("Tripacific"), whose
principal business is a "shell"
17
<PAGE>
company, whose sole purpose at this time is to locate and consummate a merger or
acquisition with a private entity. Tripacific filed a registration statement
with the SEC on Form 10- SB in July 1999, which became effective in September
1999.
Mr. Randhawa is also an officer, director and principal shareholder of
Solid Management Corporation, a Nevada corporation ("Solid"), whose principal
business is a "shell" company, whose sole purpose at this time is to locate and
consummate a merger or acquisition with a private entity. Solid filed a
registration statement with the SEC on Form 10-SB in August 1999.
Mr. Randhawa is also an officer, director and principal shareholder of
Triwest Management Resources Corporation, a Nevada corporation ("Triwest"),
whose principal business is a "shell" company, whose sole purpose at this time
is to locate and consummate a merger or acquisition with a private entity.
Triwest filed a registration statement with the SEC on Form 10-SB in August
1999.
The foregoing is a complete description of all "blank check" companies with
whom management of the Company has been, or is, involved.
Item 6. Executive Compensation.
None of the Company's officers and/or directors receive any compensation
for their respective services rendered unto the Company, nor have they received
such compensation in the past. They all have agreed to act without compensation
until authorized by the Board of Directors, which is not expected to occur until
the Company has generated revenues from operations after consummation of a
merger or acquisition. As of the date of this Registration Statement, the
Company has no funds available to pay directors. Further, none of the directors
are accruing any compensation pursuant to any agreement with the Company.
It is possible that, after the Company successfully consummates a merger or
acquisition with an unaffiliated entity, that entity may desire to employ or
retain one or a number of members of the Company's management for the purposes
of providing services to the surviving entity, or otherwise provide other
compensation to such persons. However, the Company has adopted a policy whereby
the offer of any post-transaction remuneration to members of management will not
be a consideration in the Company's decision to undertake any proposed
transaction. Each member of management has agreed to disclose to the Company's
Board of Directors any discussions concerning possible compensation to be paid
to them by any entity which proposes to undertake a transaction with the Company
and further, to abstain from voting on such transaction. Therefore, as a
practical matter, if each member of the Company's Board of Directors is offered
compensation in any
18
<PAGE>
form from any prospective merger or acquisition candidate, the proposed
transaction will not be approved by the Company's Board of Directors as a result
of the inability of the Board to affirmatively approve such a transaction.
It is possible that persons associated with management may refer a
prospective merger or acquisition candidate to the Company. In the event the
Company consummates a transaction with any entity referred by associates of
management, it is possible that such an associate will be compensated for their
referral in the form of a finder's fee. It is anticipated that this fee will be
either in the form of restricted common stock issued by the Company as part of
the terms of the proposed transaction, or will be in the form of cash
consideration. However, if such compensation is in the form of cash, such
payment will be tendered by the acquisition or merger candidate, because the
Company has insufficient cash available. The amount of such finder's fee cannot
be determined as of the date of this Registration Statement, but is expected to
be comparable to consideration normally paid in like transactions. No member of
management of the Company will receive any finders fee, either directly or
indirectly, as a result of their respective efforts to implement the Company's
business plan outlined herein.
No retirement, pension, profit sharing, stock option or insurance programs
or other similar programs have been adopted by the Company for the benefit of
its employees.
Item 7. Certain Relationships and Related Transactions.
Conflicts of Interest
Members of the Company's management are associated with other firms
involved in a range of business activities. Consequently, there are potential
inherent conflicts of interest in their acting as officers and directors of the
Company. Insofar as the officers and directors are engaged in other business
activities, management anticipates it will devote only a minor amount of time to
the Company's affairs.
The officers and directors of the Company are now and may in the future
become shareholders, officers or directors of other companies which may be
formed for the purpose of engaging in business activities similar to those
conducted by the Company. Accordingly, additional direct conflicts of interest
may arise in the future with respect to such individuals acting on behalf of the
Company or other entities. As of the date of this Registration Statement, Mr.
Randhawa is also an officer and/or director of Eastern Management Corporation, a
Nevada corporation, Tripacific Development Corporation, a Nevada corporation,
Solid Management Corporation, a Nevada corporation, and Triwest Management
Resources Corporation, a Nevada corporation. While the aforesaid companies have
commenced implementation of their respective business plans,
19
<PAGE>
which plans are identical to that of the Company, no definitive agreements have
been reached with any potential merger or acquisition candidate. As of the date
of this Registration Statement, all of the aforesaid companies have resolved all
outstanding comments relating to their respective registration statements filed
with the Securities and Exchange Commission ("SEC"), with the exception of
Triwest. In order to attempt to resolve this conflict of interest, in the event
a potential merger or acquisition candidate is brought to Mr. Randhawa's
attention, the company whose registration statement first satisfied all of the
SEC's comments will be provided the initial opportunity to engage in the
relevant transaction. In effect, the Company will either be last or next to last
in order of preference for any merger or acquisition opportunity generated by
Mr. Randhawa.
Moreover, additional conflicts of interest may arise with respect to
opportunities which come to the attention of the Company's management in the
performance of their duties or otherwise. The Company does not currently have a
right of first refusal pertaining to opportunities that come to management's
attention insofar as such opportunities may relate to the Company's proposed
business operations.
The officers and directors are, so long as they are officers or directors
of the Company, subject to the restriction that all opportunities contemplated
by the Company's plan of operation which come to their attention, either in the
performance of their duties or in any other manner, will be considered
opportunities of, and be made available to the Company and the companies that
they are affiliated with on an equal basis. A breach of this requirement will be
a breach of the fiduciary duties of the officer or director. If the Company or
the companies in which the officers and directors are affiliated with both
desire to take advantage of an opportunity, then said officers and directors
would abstain from negotiating and voting upon the opportunity. However, all
directors may still individually take advantage of opportunities if the Company
should decline to do so. Except as set forth above, the Company has not adopted
any other conflict of interest policy with respect to such transactions.
Other
The Company's principal place of business is provided to the Company on a
rent free basis by Devinder Randhawa, an officer and director and a principal
shareholder of the Company. There are no other related party transactions, or
any other transactions or relationships required to be disclosed pursuant to
Item 404 of Regulation S-B.
20
<PAGE>
Item 8. Description of Securities.
The Company's authorized capital stock consists of 75,000,000 shares, of
which 25,000,000 shares are Preferred Shares, par value $0.001 per share, and
50,000,000 are Common Shares, par value $0.001 per share. There are 1,000,000
Common Shares issued and outstanding as of the date of this filing. There are no
preferred shares issued or outstanding.
Common Stock. All shares of Common Stock have equal voting rights and, when
validly issued and outstanding, are entitled to one vote per share in all
matters to be voted upon by shareholders. The shares of Common Stock have no
preemptive, subscription, conversion or redemption rights and may be issued only
as fully-paid and nonassessable shares. Cumulative voting in the election of
directors is not permitted, which means that the holders of a majority of the
issued and outstanding shares of Common Stock represented at any meeting at
which a quorum is present will be able to elect the entire Board of Directors if
they so choose and, in such event, the holders of the remaining shares of Common
Stock will not be able to elect any directors. In the event of liquidation of
the Company, each shareholder is entitled to receive a proportionate share of
the Company's assets available for distribution to shareholders after the
payment of liabilities and after distribution in full of preferential amounts,
if any. All shares of the Company's Common Stock issued and outstanding are
fully-paid and nonassessable. Holders of the Common Stock are entitled to share
pro rata in dividends and distributions with respect to the Common Stock, as may
be declared by the Board of Directors out of funds legally available therefor.
Preferred Shares. Shares of Preferred Stock may be issued from time to time
in one or more series as may be determined by the Board of Directors. The voting
powers and preferences, the relative rights of each such series and the
qualifications, limitations and restrictions thereof shall be established by the
Board of Directors, except that no holder of Preferred Stock shall have
preemptive rights. The Company has no shares of Preferred Stock outstanding, and
the Board of Directors does not plan to issue any shares of Preferred Stock for
the foreseeable future, unless the issuance thereof shall be in the best
interests of the Company.
The proposed business activities described herein classify the Company as a
"blank check" company. Many states have enacted statutes, rules and regulations
limiting the sale of securities of "blank check" companies in their respective
jurisdictions. Management does not intend to undertake any efforts to cause a
market to develop in the Company's securities until such time as the Company has
successfully implemented its business plan described herein. Relevant thereto,
each shareholder of the Company has executed and delivered a "lock-up" letter
agreement,
21
<PAGE>
affirming that they shall not sell their respective shares of the Company's
common stock until such time as the Company has successfully consummated a
merger or acquisition and the Company is no longer classified as a "blank check"
company. In order to provide further assurances that no trading will occur in
the Company's securities until a merger or acquisition has been consummated,
each shareholder has agreed to place their respective stock certificate with the
Company's legal counsel, Andrew I. Telsey, P.C., who will not release these
respective certificates until such time as legal counsel has confirmed that a
merger or acquisition has been successfully consummated. However, while
management believes that the procedures established to preclude any sale of the
Company's securities prior to closing of a merger or acquisition will be
sufficient, there can be no assurances that the procedures established relevant
herein will unequivocally limit any shareholder's ability to sell their
respective securities before such closing.
PART II
Item 1. Market Price for Common Equity and Related Stockholder Matters.
There is no trading market for the Company's Common Stock at present and
there has been no trading market to date. Management has not undertaken any
discussions, preliminary or otherwise, with any prospective market maker
concerning the participation of such market maker in the aftermarket for the
Company's securities and management does not intend to initiate any such
discussions until such time as the Company has consummated a merger or
acquisition. There is no assurance that a trading market will ever develop or,
if such a market does develop, that it will continue.
a. Market Price. The Company's Common Stock is not quoted at the present
time.
The Securities and Exchange Commission adopted Rule 15g-9, which
established the definition of a "penny stock," for purposes relevant to the
Company, as any equity security that has a market price of less than $5.00 per
share or with an exercise price of less than $5.00 per share, subject to certain
exceptions. For any transaction involving a penny stock, unless exempt, the
rules require: (i) that a broker or dealer approve a person's account for
transactions in penny stocks; and (ii) the broker or dealer receive from the
investor a written agreement to the transaction, setting forth the identity and
quantity of the penny stock to be purchased. In order to approve a person's
account for transactions in penny stocks, the broker or dealer must (i) obtain
financial information and investment experience and objectives of the person;
and (ii) make a reasonable determination that the transactions in penny stocks
are suitable for that person and that person has sufficient knowledge and
experience in financial matters to be capable of
22
<PAGE>
evaluating the risks of transactions in penny stocks. The broker or dealer must
also deliver, prior to any transaction in a penny stock, a disclosure schedule
prepared by the Commission relating to the penny stock market, which, in
highlight form, (i) sets forth the basis on which the broker or dealer made the
suitability determination; and (ii) that the broker or dealer received a signed,
written agreement from the investor prior to the transaction. Disclosure also
has to be made about the risks of investing in penny stock in both public
offering and in secondary trading, and about commissions payable to both the
broker-dealer and the registered representative, current quotations for the
securities and the rights and remedies available to an investor in cases of
fraud in penny stock transactions. Finally, monthly statements have to be sent
disclosing recent price information for the penny stock held in the account and
information on the limited market in penny stocks.
Management intends to strongly consider undertaking a transaction with any
merger or acquisition candidate which will allow the Company's securities to be
traded on a national exchange. However, there can be no assurances that, upon a
successful merger or acquisition, the Company will qualify its securities for
listing on NASDAQ or some other national exchange, or be able to maintain the
maintenance criteria necessary to insure continued listing. The failure of the
Company to qualify its securities or to meet the relevant maintenance criteria
after such qualification in the future may result in the discontinuance of the
inclusion of the Company's securities on a national exchange. In such event,
trading, if any, in the Company's securities may then continue in the OTC
Bulletin Board operated by the NASD or another low volume market, presuming that
such a listing is approved, of which there can be no assurance. As a result, a
shareholder may find it more difficult to dispose of, or to obtain accurate
quotations as to the market value of, the Company's securities.
b. Holders. There are ten (10) holders of the Company's Common Stock. In
May 1997, the Company issued 1,000 of its Common Shares at $0.50 per share for
an aggregate of $500 in services. In August 1999, the Board of Directors
authorized a forward split, issuing 1,000 shares for each share issued and
outstanding, establishing the present issued and outstanding Common Stock of
1,000,000 shares. All of the issued and outstanding shares of the Company's
Common Stock were issued in accordance with the exemption from registration
afforded by Section 4(2) of the Securities Act of 1933.
As of the date of this Registration Statement, 1,000,000 shares of the
Company's Common Stock are eligible for sale under Rule 144 promulgated under
the Securities Act of 1933, as amended, subject to certain limitations included
in said Rule. In general, under Rule 144, a person (or persons whose shares are
aggregated), who has satisfied a one year holding period, under certain
23
<PAGE>
circumstances, may sell within any three-month period a number of shares which
does not exceed the greater of one percent of the then outstanding Common Stock
or the average weekly trading volume during the four calendar weeks prior to
such sale. Rule 144 also permits, under certain circumstances, the sale of
shares without any quantity limitation by a person who has satisfied a two-year
holding period and who is not, and has not been for the preceding three months,
an affiliate of the Company.
c. Dividends. The Company has not paid any dividends to date and has no
plans to do so in the immediate future.
Item 2. Legal Proceedings.
There is no litigation pending or threatened by or against the Company.
Item 3. Changes in and Disagreements With Accountants on Accounting and
Financial Disclosure.
The Company has not changed accountants since its formation and there are
no disagreements with the findings of said accountants.
Item 4. Recent Sales of Unregistered Securities.
In May 1997, the Company issued 1,000 shares of its common stock to 10
persons at a price of $0.50 per share, and in August 1999, declared a 1,000 for
one forward split. These shares were issued pursuant to exemption from the
registration requirements included under the Securities Act of 1933, as amended,
including but not necessarily limited to Section 4(2) of said Act. Each
shareholder was either an "accredited investor" (as that term is defined in the
1933 Act) or a sophisticated investor, and each shareholder was provided all
information necessary in order to allow each investor to exercise their
respective business judgment as to the merits of the investment. All of the
shares of Common Stock of the Company previously issued have been issued for
investment purposes in a "private transaction" and are "restricted" shares as
defined in Rule 144 under the Securities Act of 1933, as amended (the "Act").
These shares may not be offered for public sale except under Rule 144, or
otherwise, pursuant to the Act.
As of the date of this Registration Statement, all of the issued and
outstanding shares of the Company's Common Stock are eligible for sale under
Rule 144 promulgated under the Securities Act of 1933, as amended, subject to
certain limitations included in said Rule. However, all of the shareholders of
the Company have executed and delivered a "lock-up" letter agreement which
provides that each such shareholder shall not sell their respective securities
until such time as the Company has successfully consummated a merger or
acquisition. Further, each shareholder has
24
<PAGE>
placed their respective stock certificate with the Company's legal counsel,
Andrew I. Telsey, P.C., who has agreed not to release any of the certificates
until the Company has closed a merger or acquisition. Any liquidation by the
current shareholders after the release from the "lock-up" selling limitation
period may have a depressive effect upon the trading prices of the Company's
securities in any future market which may develop.
In general, under Rule 144, a person (or persons whose shares are
aggregated) who has satisfied a one year holding period, under certain
circumstances, may sell within any three-month period a number of shares which
does not exceed the greater of one percent of the then outstanding Common Stock
or the average weekly trading volume during the four calendar weeks prior to
such sale. Rule 144 also permits, under certain circumstances, the sale of
shares without any quantity limitation by a person who has satisfied a two year
holding period and who is not, and has not been for the preceding three months,
an affiliate of the Company.
Item 5. Indemnification of Directors and Officers.
The Company's Articles of Incorporation incorporate the provisions of the
Nevada Revised Statutes providing for the indemnification of officers and
directors and other persons against expenses, judgments, fines and amounts paid
in settlement in connection with threatened, pending or completed suits or
proceedings against such persons by reason of serving or having served as
officers, directors or in other capacities, except in relation to matters with
respect to which such persons shall be determined not to have acted in good
faith and in the best interests of the Company. With respect to matters as to
which the Company's officers and directors and others are determined to be
liable for misconduct or negligence, including gross negligence in the
performance of their duties to the Company, Nevada law provides for
indemnification only to the extent that the court in which the action or suit is
brought determines that such person is fairly and reasonably entitled to
indemnification for such expenses which the court deems proper.
Insofar as indemnification for liabilities arising under the 1933 Act may
be permitted to officers, directors or persons controlling the Company pursuant
to the foregoing, the Company has been informed that in the opinion of the U.S.
Securities and Exchange Commission such indemnification is against public policy
as expressed in the 1933 Act, and is therefore unenforceable.
25
<PAGE>
PART F/S
Financial Statements.
The audited financial statements for the fiscal years ended June 30, 1999
and 1998 of the Company are attached to this Registration Statement and filed as
a part hereof. See page 27.
1) Table of Contents - Financial Statements
2) Independent Auditors' Report
3) Balance Sheet
4) Statement of Operations
5) Statement of Cash Flows
6) Statement of Shareholders' Equity
7) Notes to Financial Statements
The unaudited financial statements for the three month periods ended
September 30, 1999 and 1998, are also attached to this Registration Statement
and filed as a part hereof. See page 37.
26
<PAGE>
Annex Business Resources, Inc.
Audited Financial Statements
For the Years Ended June 30, 1999 and 1998
and the Period May 16, 1997 (Inception)
through June 30, 1999
27
<PAGE>
ANNEX BUSINESS RESOURCES, INC.
TABLE OF CONTENTS
Page
Independent Auditors' Report 1
Financial Statements
Balance Sheet 2
Statement of Operations 3
Statement of Cash Flows 4
Statement of Changes in Stockholders' Equity 5
Notes to Financial Statements 6 to 8
28
<PAGE>
KISH, LEAKE & ASSOCIATES P.C.
7901 E BELLEVIEW AVE - SUITE 220
ENGLEWOOD, COLORADO 80111
303.779.5006
Independent Auditors' Report
We have audited the accompanying balance sheet of Annex Business Resources, Inc.
(a development stage company) as of June 30, 1999 and the related statements of
income, shareholders' equity, and cash flows for the fiscal years ended June 30,
1999 and 1998 and period May 16, 1997 (inception) through June 30, 1999. 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 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 Annex Business Resources, Inc.,
at June 30, 1999 and the results of its operations and its cash flows for the
fiscal years ended June 30, 1999 and 1998 and the period May 16, 1997
(Inception) through June 30, 1999 in conformity with generally accepted
accounting principles.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note 5, the Company is
in the development stage and has no operations as of June 30, 1999. The
deficiency in working capital as of June 30, 1999 raises substantial doubt about
its ability to continue as a going concern. Management's plans concerning these
matters are described in Note 5. The financial statements do not include any
adjustments that might result from the outcome of these uncertainties.
s/Kish, Leake & Associates, P.C.
Kish, Leake & Associates, P.C.
Certified Public Accountants
Englewood, Colorado
August 26, 1999
-1-
29
<PAGE>
<TABLE>
Annex Business Resources, Inc.
(A Development Stage Company)
Balance Sheet
- ------------------------------------------------------------------------------
<CAPTION>
June
30, 1999
--------
<S> <C>
ASSETS $ 0
--------
LIABILITIES AND SHAREHOLDERS' EQUITY
LIABILITIES - Due to related entity 235
--------
SHAREHOLDERS' EQUITY
Preferred Stock, $.001 Par Value
Authorized 25,000,000 Shares; Issued
And Outstanding -0- Shares 0
Common Stock, $.001 Par Value
Authorized 75,000,000 Shares; Issued
And Outstanding 1,000,000 Shares 1,000
Additional Paid In Capital On Common Stock (500)
Deficit Accumulated During The Development Stage (735)
--------
TOTAL SHAREHOLDERS' EQUITY (235)
--------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 0
========
The Accompanying Notes Are An Integral Part Of These Financial
Statements.
</TABLE>
-2-
30
<PAGE>
<TABLE>
Annex Business Resources, Inc.
(A Development Stage Company)
Statement Of Operations
- ------------------------------------------------------------------------------
<CAPTION>
May
16, 1997
Fiscal Fiscal (Inception)
Year Ended Year Ended Through
June June June
30, 1999 30, 1998 30, 1999
--------- --------- --------
<S> <C> <C> <C>
Revenue: $ 0 $ 0 $ 0
Expenses:
Licenses & Fees 235 0 235
Office 0 0 500
--------- --------- --------
Total 235 0 735
--------- --------- --------
Net (Loss) $ (235) $ 0 $ (735)
========= ========= ========
Basic (Loss) Per Common Share $ (0.00) $ 0.00
========= =========
Basic Common Shares Outstanding * 1,000,000 1,000,000
========= =========
* Restated to reflect forward 1,000 to 1 forward split in August 1999.
The Accompanying Notes Are An Integral Part Of These Financial
Statements.
</TABLE>
-3-
31
<PAGE>
<TABLE>
Annex Business Resources, Inc.
(A Development Stage Company)
Statement Of Cash Flows
- ------------------------------------------------------------------------------
<CAPTION>
May
16, 1997
Fiscal Fiscal (Inception)
Year Ended Year Ended Through
June June June
30, 1999 30, 1998 30, 1999
-------- -------- --------
<S> <C> <C> <C>
Net Income (Loss) Accumulated During
The Development Stage $ (235) $ 0 $ (735)
-------- -------- --------
Issuance of Common Stock For
Services 0 0 500
-------- -------- --------
Net Cash Flows From Operations (235) 0 (235)
-------- -------- --------
Cash Flows From Investing Activities: 0 0 0
-------- -------- --------
Cash Flows From Financing Activities:
Expenses paid by related entity 235 0 235
-------- -------- --------
Net Cash Flows From Financing 235 0 235
-------- -------- --------
Net Increase In Cash 0 0 0
Cash At Beginning Of Period 0 0 0
-------- -------- --------
Cash At End Of Period $ 0 $ 0 $ 0
======== ======== ========
Non-Cash Activities:
Stock Issued For Services $ 0 $ 500 $ 500
======== ======== ========
The Accompanying Notes Are An Integral Part Of These Financial
Statements.
</TABLE>
-4-
32
<PAGE>
<TABLE>
Annex Business Resources, Inc.
(A Development Stage Company)
Statement Of Shareholders' Equity
- -------------------------------------------------------------------------------------------
<CAPTION>
Deficit
Accumulated
Number Of Capital Paid During The
Common Common In Excess Development
Shares Stock Of Par Value Stage Total
--------- -------- ------------ -------- --------
<S> <C> <C> <C> <C> <C>
Balance At May 16, 1997 0 $ 0 $ 0 $ 0 $ 0
Issuance of Common Stock:
May 16, 1997 for Services Valued
at $.001 Per Share * 1,000,000 1,000 (500) 0 500
Net Loss (500) (500)
--------- -------- ------------ -------- --------
Balance At June 30, 1997 and 1998 * 1,000,000 1,000 (500) (500) 0
Net Loss (235) (235)
--------- -------- ------------ -------- --------
Balance At June 30, 1999 * 1,000,000 $ 1,000 $ (500) $ (735) $ (235)
========= ======== ============ ======== ========
* Restated to reflect forward 1,000 to 1 forward split in August 1999.
The Accompanying Notes Are An Integral Part Of These Financial
Statements.
</TABLE>
-5-
33
<PAGE>
Annex Business Resources, Inc.
(A Development Stage Company)
Notes to Financial Statements
For the Fiscal Years Ended June 30, 1999 and 1998
- -------------------------------------------------
Note 1 - Organization and Summary of Significant Accounting Policies
- --------------------------------------------------------------------
Organization:
On May 16, 1997, Annex Business Resources, Inc. (the Company) was incorporated
under the laws of Nevada to engage in any lawful business or activity for which
corporations may be organized under the laws of the State of Nevada.
Development Stage:
The company entered the Development stage in accordance with SFAS No. 7 on May
16, 1997. Its purpose is to evaluate, structure and complete a merger with, or
acquisition of a privately owned corporation.
Statement of Cash Flows:
For the purpose of the statement of cash flows, the company considers demand
deposits and highly liquid-debt instruments purchased with a maturity of three
months or less to be cash equivalents.
Cash paid for interest in fiscal year ended June 30, 1999 and 1998 was $-0-.
Cash paid for income taxes in fiscal year ended June 30, 1999 and 1998 was $-0-.
Basic (Loss) Per Common Share:
Basic (loss) per common share is computed by dividing the net loss for the
period by the weighted average number of shares outstanding at June 30, 1999 and
June 30, 1998.
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. Actual results could differ from those estimates.
-6-
34
<PAGE>
Annex Business Resources, Inc.
(A Development Stage Company)
Notes to Financial Statements
For the Fiscal Years Ended June 30, 1999 and 1998
- -------------------------------------------------
Note 2 - Capital Stock and Capital In Excess of Par Value
- ---------------------------------------------------------
The Company initially authorized 25,000 shares of no par value common stock. On
August 11, 1999 the Board of Directors approved an increase in authorized shares
to 75,000,000 and changed the par value to $.001 (See Note 6 - Subsequent
Events). On May 16, 1997 the Company issued 1,000 shares of common stock for
services valued at $.50 per share or $500.
Note 3 - Related Party Events
- -----------------------------
The Company maintains a mailing address at an officers place of business. This
address is located at Suite 106, 1460 Pandosy Street, Chalone, B.C., Canada, V1Y
1P3. At this time the Company has no need for an office. As of June 30, 1999
management has incurred a minimal amount of time and expense on behalf of the
Company.
Note 4 - Income Taxes
- ---------------------
At June 30, 1999, the company had a net operating loss carryforward available
for financial statement and Federal income tax purposes of approximately $735
which, if not used, will expire in the year 2019.
The Company follows Financial Accounting Standards Board Statement No. 109,
"Accounting for Income Taxes" (SFAS #109), which requires, among other things,
an asset and liability approach to calculating deferred income taxes. As of June
30, 1999, the Company has a deferred tax asset of $47 which has been fully
reserved through the valuation allowance. The change in the valuation allowance
for 1999 is $47.
Note 5 - Basis of Presentation
- ------------------------------
In the course of its development activities the Company has sustained continuing
losses and expects such losses to continue for the foreseeable future. The
Company's management plans on advancing funds on an as needed basis and n the
longer term, revenues from operations of a merger candidate, if found. The
Company's ability to continue as a going concern is dependent on these
additional management advances, and, ultimately, upon achieving profitable
operations through a merger candidate.
-7-
35
<PAGE>
Annex Business Resources, Inc.
(A Development Stage Company)
Notes to Financial Statements
For the Fiscal Years Ended June 30, 1999 and 1998
- -------------------------------------------------
Note 6 - Subsequent Events
- --------------------------
On August 11, 1999 the Company filed amended articles with the state of Nevada
to change the total authorized shares to 75,000,000 shares of common stock $.001
par value and 25,000,000 shares of preferred stock $.001 par value.
On August 16, 1999, the Board of directors approved a 1,000 to 1 forward split.
This increases outstanding common shares from 1,000 to 1,000,000. The financial
statements take into account this split.
The Company will be filing a form 10 SB with the Securities and Exchange
Commission thereby electing to be a reporting company under the Securities Act
of 1934.
-8-
36
<PAGE>
Annex Business Resources, Inc.
Unaudited Financial Statements
For the Three Month Period Ended September 30,
1999 and 1998 and the Period May 16, 1997
(Inception)
through September 30, 1999
37
<PAGE>
<TABLE>
Annex Business Resources, Inc.
(A Development Stage Company)
Balance Sheet
- ------------------------------------------------------------------------------
<CAPTION>
Unaudited Audited
September June
30, 1999 30, 1999
--------- --------
<S> <C> <C>
ASSETS $ 0 $ 0
--------- --------
LIABILITIES AND SHAREHOLDERS' EQUITY
LIABILITIES
Due to related entity 235 235
Accounts Payable 1,623 0
--------- --------
Total 1,858 235
--------- --------
SHAREHOLDERS' EQUITY
Preferred Stock, $.001 Par Value
Authorized 25,000,000 Shares; Issued
And Outstanding -0- Shares 0 0
Common Stock, $.001 Par Value
Authorized 75,000,000 Shares; Issued
And Outstanding 1,000,000 Shares 1,000 1,000
Additional Paid In Capital On Common Stock (500) (500)
Deficit Accumulated During The Development Stage (2,358) (735)
--------- --------
TOTAL SHAREHOLDERS' EQUITY (1,858) (235)
--------- --------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 0 $ 0
========= ========
The Accompanying Notes Are An Integral Part Of These Unaudited
Financial Statements.
</TABLE>
38
<PAGE>
<TABLE>
Annex Business Resources, Inc.
(A Development Stage Company)
Unaudited Statement Of Operations
- ------------------------------------------------------------------------------
<CAPTION>
Unaudited
Unaudited Unaudited May
Three Month Three Month 16, 1997
Interim Period Interim Period (Inception)
Ended Ended Through
September September September
30, 1999 30, 1998 30, 1999
--------- --------- --------
<S> <C> <C> <C>
Revenue: $ 0 $ 0 $ 0
--------- --------- --------
Expenses:
Office 0 0 735
Legal and Accounting 1,623 0 1,623
--------- --------- --------
Total Expenses 1,623 0 2,358
--------- --------- --------
Net Income (Loss) $ (1,623) $ 0 $ 2,358
========= ========= ========
Basic (Loss) Per Common Share $ (0.00) $ 0.00
========= =========
Basic Common Shares Outstanding 1,000,000 1,000,000
========= =========
The Accompanying Notes Are An Integral Part Of These Unaudited
Financial Statements.
</TABLE>
39
<PAGE>
<TABLE>
Annex Business Resources, Inc.
(A Development Stage Company)
Statement Of Cash Flows
- ------------------------------------------------------------------------------
<CAPTION>
Unaudited
Unaudited Unaudited May
Three Month Three Month 16, 1997
Interim Period Interim Period (Inception)
Ended Ended Through
September September September
30, 1999 30, 1998 30, 1999
--------- -------- --------
<S> <C> <C> <C>
Net Income (Loss) $ (1,623) $ 0 $ (2,358)
-------- -------- --------
Adjustments to Reconcile Net Loss to
Net Cash Used in Operating Activities:
Stock Issued For Services 0 0 500
Expenses Paid by Related Entity
on Behalf of Company 0 0 235
Increase in Accounts Payable 1,623 0 1,623
-------- -------- --------
Net Cash Flows Provided By
Operations 0 0 0
-------- -------- --------
Cash Flows From Investing Activities:
Net Cash Flows Provided by Investing
Activities 0 0 0
-------- -------- --------
Cash Flows From Financing Activities:
Issuance of Common Stock 0 0 0
-------- -------- --------
Net Cash Flows Provided By Financing
Activities 0 0 0
-------- -------- --------
Net Increase In Cash 0 0 0
Cash At Beginning Of Period 0 0 0
-------- -------- --------
Cash At End Of Period $ 0 $ 0 $ 0
======== ======== ========
Summary of non-cash investing and financing activities:
Stock Issued For Services $ 0 $ 0 $ 500
======== ======== ========
Expenses Paid by Related Entity
on Behalf of Company $ 0 $ 0 $ 235
======== ======== ========
The Accompanying Notes Are An Integral Part Of These Unaudited Financial
Statements.
</TABLE>
40
<PAGE>
<TABLE>
Annex Business Resources, Inc.
(A Development Stage Company)
Statement Of Shareholders' Equity
- --------------------------------------------------------------------------------------------
<CAPTION>
Deficit
Accumulated
Number Of Capital Paid During The
Common Common In Excess Development
Shares Stock Of Par Value Stage Total
--------- -------- ------------ -------- --------
<S> <C> <C> <C> <C> <C>
Balance At May 16, 1997 0 $ 0 $ 0 $ 0 $ 0
Issuance of Common Stock:
May 16, 1997 for Services Valued
at $.001 Per Share * 1,000,000 1,000 (500) 0 500
Net (Loss) (500) (500)
--------- -------- ------------ -------- --------
Balance At June 30, 1997 and 1998 * 1,000,000 1,000 (500) (500) 0
Net (Loss) (235) (235)
--------- -------- ------------ -------- --------
Balance At June 30, 1999 * 1,000,000 $ 1,000 $ (500) $ (735) $ (235)
Net (Loss) (1,623) (1,623)
--------- -------- ------------ -------- --------
Unaudited Balance At
September 30, 1999 * 1,000,000 $ 1,000 $ (500) $ (2,358) $ (1,858)
========= ======== ============ ======== ========
* Restated to reflect forward 1,000 to 1 forward split in August 1999.
The Accompanying Notes Are An Integral Part Of These Unaudited
Financial Statements.
</TABLE>
41
<PAGE>
Annex Business Resources, Inc.
Notes To Unaudited Financial Statements
For The Three Month Period Ended September 30, 1999
- ---------------------------------------------------
Note 1 - Unaudited Financial Information
- ----------------------------------------
The unaudited financial information included for the three month interim period
ended September 30, 1999 were taken from the books and records without audit.
However, such information reflects all adjustments (consisting only of normal
recurring adjustments, which are of the opinion of management, necessary to
reflect properly the results of interim period presented). The results of
operations for the three month period ended September 30, 1999 are not
necessarily indicative of the results expected for the year ended June 30, 2000.
Note 2 - Financial Statements
- -----------------------------
Management has elected to omit substantially all footnotes relating to the
condensed financial statements of the Company included in the report. For a
complete set of footnotes, reference is made to the Company's Report on Form 10
for the year ended June 30, 1999, as filed with the Securities and Exchange
Commission and the audited financial statements included therein.
42
<PAGE>
PART III
Item 1. Exhibit Index
No. Sequential
- --- Page No.
-------
(3) Articles of Incorporation and Bylaws
3.1 Articles of Incorporation and Amendments *
3.2 Bylaws *
(4) Instruments Defining the Rights of Holders
4.1 Form of Lock-up Agreements Executed *
by the Company's Shareholders
(27) Financial Data Schedule
27.2 Financial Data Schedule 45
- ------------------
* Previously filed as Exhibits to the Registrant's Form 10-SB filed with the SEC
on or about September 21, 1999.
43
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 12 of the Securities Exchange Act
of 1934, the Registrant has duly caused this amendment to its Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized.
ANNEX BUSINESS RESOURCES, INC.
(Registrant)
Date: November 15, 1999
By: s/Devinder Randhawa
-------------------------
Devinder Randhawa,
President
44
<PAGE>
ANNEX BUSINESS RESOURCES, INC.
------------------------------
EXHIBIT 27.2
------------------------------
FINANCIAL DATA SCHEDULE
------------------------------
45
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE AUDITED
FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED JUNE 30, 1999, AND THE UNAUDITED
FINANCIAL STATEMENTS FOR THE THREE MONTH PERIOD ENDED SEPTEMBER 30, 1999, AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C> <C>
<PERIOD-TYPE> YEAR 3-MOS
<FISCAL-YEAR-END> JUN-30-1999 JUN-30-2000
<PERIOD-END> JUN-30-1999 SEP-30-1999
<CASH> 0 0
<SECURITIES> 0 0
<RECEIVABLES> 0 0
<ALLOWANCES> 0 0
<INVENTORY> 0 0
<CURRENT-ASSETS> 0 0
<PP&E> 0 0
<DEPRECIATION> 0 0
<TOTAL-ASSETS> 0 0
<CURRENT-LIABILITIES> 235 1,858
<BONDS> 0 0
0 0
0 0
<COMMON> 1,000 1,000
<OTHER-SE> (1,235) (2,858)
<TOTAL-LIABILITY-AND-EQUITY> 0 0
<SALES> 0 0
<TOTAL-REVENUES> 0 0
<CGS> 0 0
<TOTAL-COSTS> 0 0
<OTHER-EXPENSES> 235 1,623
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 0 0
<INCOME-PRETAX> (235) (1,623)
<INCOME-TAX> 0 0
<INCOME-CONTINUING> (235) (1,623)
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> (235) (1,623)
<EPS-BASIC> 0 0
<EPS-DILUTED> 0 0
</TABLE>
