FORM 10-SB
GENERAL FORM FOR REGISTRATION OF
SECURITIES OF SMALL BUSINESS ISSUERS
Under Section 12(g) of The Securities Exchange Act of 1934
GOTHINK.COM, INCORPORATED
State of Incorporation: Nevada IRS Employer I.D. Number: 87-6121862
Authorized to do business in Texas
GoThink.Com, Inc.
6429 Richmond Avenue, Suite 610
Houston, Texas 77057
Executive Offices
Post Office Box 953754
Lake Mary, Florida 32795-3754
Securities to be registered:
Common Stock NASDAQ OTC:BB
Symbol: TNKC
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TABLE OF CONTENTS
Item 101 Description of Business
Item 102 Description of Property
Item 103 Legal Proceedings
Item 201 Market for Common Stock and Related Stock Matters
Item 202 Description of Securities
Item 303 Management's Discussion and Analysis or Plan of Operation
Item 304 Changes In and Disagreements With Accountants on Accounting
and Financial Disclosure
Item 310 Financial Statements
Item 401 Directors, Executive Officers, Promoters and Control Persons
Item 402 Executive Compensation
Item 403 Security Ownership of Certain Beneficial Owners and Management
Item 404 Certain Relationships and Related Transactions
Item 405 Compliance with Section 16(a) of the Exchange Act
Item 501 Front of Registration Statement and Outside Front Cover of
Prospectus
Item 502 Inside Front and Outside Back Cover Pages of Prospectus
Item 503 Summary Information and Risk Factors
Item 504 Use of Proceeds
Item 505 Determination of Offering Price
Item 506 Dilution
Item 507 Selling Security Holders
Item 508 Plan of Distribution
Item 509 Interest of Named Experts and Counsel
Item 510 Disclosure of Commission Position on Indemnification for
Securities Act Liabilities
Item 511 Other Expenses of Issuance and Distribution
Item 512 Undertakings
Item 601 Exhibits
Item 701 Recent Sales of Unregistered Securities; Use of Proceeds from
Registered Securities
Item 702 Indemnification of Directors and Officers
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Item 101 Description of Business
The present management of the Company has no personal knowledge of
operations of the Company prior to February, 1999.1 However, Company records and
other materials are relied on to disclose the general history of the Company for
the time period before February, 1999. Present management has knowledge of the
operation of the primary operating subsidiary of the Company prior to February,
1999, but was not present during operations prior to February, 1999.
There is a substantial doubt concerning the Company's ability to
continue as a going concern, as indicated by the losses incurred by the Company
revealed by the accompanying financial information in this disclosure document
and as noted herein. The Company has operated at a loss during 1999, and
anticipates continuing to operate at a loss through at least the second quarter
of 2000. There is currently no prospect for profitability from current
operations. Except for the influx of working capital in exchange for common
stock, as described below (the "Blue Ridge Agreement"), the Company would not
have been able to continue operations.
The Company has experienced accelerating losses from at least mid-1998
and there is no indication in current operations that those losses will not
continue, albeit at a slower rate. Currently, there is no prospect for
profitability from current operations, although the Company does anticipate
being able to continue drastically scaled-down operations through the end of
calendar year 2000. The scope of the Company's business has been drastically
curtailed starting in mid-1998, as more fully explained below.
The loss from operations for the six months ended June 30, 1999, was
approximately $93,000.00 as operating expenses exceeded revenue for that period.
The main components of operating expenses were salaries and payroll taxes and
benefits of $67,000.00, contract instructor fees of $19,000.00, bad debts of
$8,500.00, legal fees of $11,000.00, rent expense of $39,000.00, depreciation of
$8,000.00, and supplies expense of $10,000.00.
The loss from operations for the twelve month period ended December 31,
1998, was approximately $5,000.00. The main components of operating expenses
were salaries and payroll taxes and benefits of $36,000.00, contract instructor
fees of $74,000.00, legal and accounting fees of $4,800.00, supplies expense of
$10,000.00, telephone expense of $3,700.00, dues and subscriptions of
$11,000.00, advertising of $6,700.00, rent of $30,000.00, interest expense of
$6,800.00, and depreciation of $12,000.00.
The Company had income from operations for the year ended December 31,
1997, of approximately $28,000.00. The main components of operating expenses
were contract instructors of $92,000.00, supplies expense of $6,600.00,
telephone expense of $3,300.00,
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1"The Company" refers to GoThink.Com, Incorporated, the present name of
the Company; prior to its' current name, the Company's name was EFO, Inc. The
name changes are explained in the text of this Item.
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advertising expenses of $9,600.00, rent of $23,000.00, depreciation of
$8,300.00, interest expense of $13,300.00, and legal and accounting fees of
$2,600.00.
The total assets of the Company at June 30, 1999, were $443,683.00,
with the primary assets being cash of $202,000.00, accounts receivable of
$96,000.00, and property and equipment of $98,000.00.
The Company's audited financial statements for the year ended December
31, 1999, are not yet completed.
There is a clear trend in the Company's financial condition which
indicates continued losses through the foreseeable future based on current
operations.
The Company has a plan to increase revenues and stem losses, but there
is no indication that the Company can maintain present levels of operations
beyond the end of calendar year 2000.
Currently, the Company only operates one small vocational training
school in Houston, Texas, with less than fifty (50) students. While the Company
has in the past planned to enter other areas of complementary business
operations, and while the Company formerly had other areas of business
operations, as explained herein, at the present time, and for the foreseeble
future, the Company only operates one vocational training site and that is the
sole remaining current business operating to produce revenue for the Company and
appears to the only source of revenue for the Company for the foreseeable
future.
Currently, revenues from operations are insufficient to fully fund
senior management salaries, although basic expenses such as rent, instructor
fees, student materials, telephone service, copy service, and other expenses
necessary to continue current operations are being paid. However, any reduction
in the student census below thirty-five (35) would signal the Company's
inability to continue even scaled-down operations. Currently, the student census
is forty-five (45).
The Company plans to increase the volume of business through
recruitment of additional vocational students to increase revenue, while
continuing to cut costs and overhead. However, even though revenues may
increase, and even though substantial cost reductions may be achieved through
employee lay-offs, those measures may be insufficient to allow the Company to
continue as a going concern.
The current scope of the Company's business operations is limited, and
has substantially contracted in the last four quarters of operations (through
March, 2000).
At present, the Company is engaged in the follow business operations:
vocational training for web masters and designers and vocational training for
medical assistants, home health aides, medication aides, and certified nurse's
aides.
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The Company was formerly engaged in web page design and web page
hosting. However, the Company has discontinued those operations and cannot
accurately forecast when income from present limited operations may enable it to
re-enter those businesses.
The Company also formerly had plans to expand its' vocational
educational campus locations to other cities, expand its' web page hosting
business, and to engage in re-seller activities under an agreement with Landmark
Communications, as explained more fully below. However, none of those former
business activities or plans are currently being pursued by the Company and
there is no prospect that those activities or plans may be pursued in the
foreseeable future. The Company anticipates no revenue from any other operations
other than the limited vocational training classes it is currently offering at
its' sole campus location in Houston, Texas, for the foreseeable future. And, as
is indicated herein, the present limited scope of the Company's business
operations may be insufficient to enable the Company to continue as a going
concern
The length of course in the vocational training range from six to
fourteen weeks. The Company also has a contractual arrangement to resell T-1,
T-3 and DSL phone lines and access as a licensee of Landmark Communications.
The Company does not presently engage in any business operations in
connection with its' agreement with Landmark Communications. The Company cannot
accurately forecast when income from present limited operations might enable it
to commence operations to take advantage of its' agreement with Landmark. To
engage in operations under the Landmark agreement, the Company would be required
to commit substantial resources for telemarketing staff, advertising, additional
office space and equipment, and additional senior management. Those resources
are unavailable to the Company for the foreseeable future. The Company can
foresee no prospects for profitably entering any market or business where the
agreement with Landmark Communications would lead to revenue for the Company.
The present limited focus of the Company is in the area of vocational
educational training for medical assistants, home health aides, medication
aides, and certified nurses' aides. The Company currently operates classes at
its' Houston location with a registered student body of less than fifty (50).
"Medical assistants, home health aides, medication aides, and certified
nurse's aides" are health care workers who normally work in a non-intensive home
or facility environment, under the supervision of a registered nurse or a
doctor. These workers assist patients in a variety of ways, including
administering therapy, medications, and assisting the patient in daily life
functions. These workers are certified by the State of Texas and are required to
obtain a level of certification appropriate to their vocation before being
employed by private home health care companies, hospitals, nursing home
facilities, or other health care providers.
As noted, the Company has an agreement with Landmark Communications to
act as a reseller of telephone access lines and services. The Company does not
presently commit any
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resources or engage in any activities associated with the Landmark agreement.
The Company's agreement with Landmark Communications is not unique in
the industry and is not valued as an asset by the Company. The Company merely
has the right to submit contracts for telecommunications services to Landmark
for its' approval. Landmark has signed a number of similar agreements with other
companies, all of whom would compete with the Company if the Company entered
that business under its' agreement with Landmark. If the Company had the
resources to take advantage of its' agreement with Landmark, which it does not
and will not for the foreseeable future, it would only act as a marketer and
would only receive revenues based on its' actual sales of Landmark products and
services. The Company has done no forecasting or study concerning the amount of
revenues that might be attributable to any efforts it might undertake under the
Landmark agreement. The Company has never booked any revenue as a result of the
Landmark agreement.
"T-1, T-3, and DSL" telephone lines are those designed especially for
the high-density and high-speed transmission of data in a computer environment.
Functioning like modems, except at greatly increased rates of data transmission,
these lines and their attendant equipment allow high- speed access to the
Internet for both residential and commercial users.
The Company's present and former business operations may be generally
divided into the following areas: (1) web page design, (2) web page hosting, (3)
vocational training for web masters and designers, (4) vocational training for
medical workers, and (5) reselling Landmark telecommunications services as a
licensee.
At present, the Company is actively pursuing only the vocational
training aspects of the planned business. (Numbers 3 and 4 in the preceding
paragraph.) Web page design and web page hosting is not presently undertaken and
is anticipated to resume no earlier than the first quarter of 2001, if at all.
At present, if current trends continue with the Company's revenues and
profitability, there is no indication that the Company will be able to expand
into any new or former areas of operations at any time. The Company presently
has inadequate capital to take advantage of its' contract with Landmark and does
not actively pursue that business. Presently, the Company offers only vocational
training for medical workers and web page designers and webmasters.
The Company presently offers classes for medical workers in the areas
set out above for those students to receive accreditation in the areas of study
so as to be qualified for employment. The Company also offers classes in web
design and webmaster hosting. In the area of web page design and webmasters,
there is no national standard accreditation, and the Company's training is
merely a "resume building" and practical training alternative for those students
wishing to enter those fields with private employers.
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There are at least seven (7) competitors in the Houston metro area, not
counting "traditional" worker training alternatives such as community colleges,
universities, employer- sponsored training, and high schools, offering similar
vocational training services at prices competitive with the Company. The Company
faces stiff competition for students.
The Company is one of the country's first accredited educational
institutions for web master and design programs. According to statistics
compiled by the National Association of Webmasters, the Company is one of two
accredited vocational institutions offering web master and design programs in
the country. The State of Texas has accredited the Company for all of its'
vocational training programs.
The market for training web designers is extremely competitive, even in
this growing field. There are a number of local, regional, and national
providers of web design courses and training. Courses in programming and web
design are common at every educational level throughout most of the United
States. However, the market for workers in this area continues to grow.
According to a report in the December 3, 1999, Wall Street Journal, Forrester
Research, a research firm in Cambridge, Massachusetts, forecasts that the market
for electronic-commerce-consulting services is expected to grow to $64.8 billion
by 2003 from approximately $10.6 billion this year.
"Electronic-commerce-consulting" includes web site design, web site production,
promotion, and operations.
If demand for these services continues as forecast, and if the
"build-out" of the Internet continues as predicted in the popular and financial
press, the demand for web designers and webmasters will continue, and possibly
grow, for the foreseeable future. The Company's operations and revenues depend
on students seeking vocational training in web-based design and operations and,
if the number of students grow, then the Company's revenues will grow when and
if the Company is able to sustain these operations.
The only prospect or plan for the Company to continue in business, let
alone expand operations or increase revenues, is to increase the vocational
training student census. Increasing the student census is the primary course
chosen by the Company in its' efforts to continue operations, increase revenue,
and attempt to internally finance future operations and expansion.
However, because of start-up costs and the costs of expansion into new
facilities as discussed herein, the Company anticipates operating at a loss for
at lease the next three calendar quarters and beyond. Depending largely on new
school openings and the operating success of those new facilities, which the
Company is unable to complete at present, along with the availability of capital
for marketing the school's vocational training services in existing and new
markets, such financing not presently being available to the Company, the
Company may not be profitable for the next calendar year or for the foreseeable
future.
The Company does enjoy the advantage of other vocational training
facilities and operations, however, in that as "fixed costs" are met, the number
of students serviced by the facilities adds to the profitability of operations
without a substantial increase in those costs. In
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other words, the Company's capacity for students presently, and for the
foreseeable future (at least the next calendar year) exceeds the number of
students enrolled or realistically expected to enroll.
The Company was originally organized on July 30, 1954, pursuant to the
laws of the State of Utah, with the original charter issued to Bapco Uranium and
Oil, Inc. The Company was known as Southwest Border Corporation from 1988
through 1993 and, in 1993, combined with EFO Technologies, Inc. As a result of
the combination, the Company changed its' name to EFO, Inc. and changed its'
state of incorporation from Utah to Nevada. Present management has no personal
knowledge of the Company's operations prior to February, 1999.
Formerly, through March, 1997, EFO, Inc. developed fiber-optic
technology systems for high-volume direct-to-plate image transfer for commercial
printing and publishing applications. The Company also developed application and
system software which transfers images to film to be used in the graphic arts
industry. The Company is no longer in those businesses and hasn't been since the
February, 1999, transaction explained below. No revenue is anticipated from
these discontinued operations. These operations were discontinued prior to
present management joining the Company. Management has no reason to believe that
the Company records on which it relies for its' rendition of the "history of
operations" is incorrect. No historical financial information is available to
present management regarding the Company's operations prior to February, 1999.
On February 16, 1999, EFO Inc. agreed to issue 2,600,000 shares of its'
common stock to acquire two corporations as subsidiaries: Southern Educational
Alliance, Inc. (SEA) and Internet Presentations, Inc. (IPI). At the time of the
transaction, Mr. and Mrs. Ron Daniels were the sole shareholders and directors
of SEA and Mr. and Mrs. Frank Mulcahy were the sole shareholders and directors
of IPI. At the time of the February, 1999, transaction, EFO, Inc. had ceased
revenue producing operations. As explained below, while IPI was initially
included as a subsidiary of the Company, it has since been severed from the
Company and no revenues have been recorded in the Company's financial filings
with this Form 10SB nor are any revenues anticipated from any prior or future
operations of IPI. Except for a loss resulting from unreimbursed expenditures on
IPI operations as noted, the Company's operations will have no contribution from
IPI in the future.
The stock in the Company was issued on April, 8, 1999, along with
350,000 shares for fees for professionals and promoters related to the
transaction. Mr. and Mrs. Ron Daniels received 1,325,000 shares in the Company
and the Company became the sole shareholder of SEA. Mr. and Mrs. Frank Mulcahy
received 1,325,000 shares in the Company and the Company became the sole
shareholder of IPI.
The professionals and promoters involved in the offering and the number
of shares they received in the offering are: James Skalko (100,000 shares); Blue
Ridge Finance Company, Inc. (100,000 shares); Douglas Hackett (100,000 shares);
Phil Tannenbaum (30,000 shares); Tom Edwards (20,000 shares); Michelle K. Cain
[attorney involved in the preparation of the offering
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materials] (20,000 shares). Additionally, the Daniels and the Mulcahys, as noted
above, would be considered "promoters" of the offering.
SEA was incorporated on December 10, 1998, in Texas, with Mr. and Mrs.
Ron Daniels as the sole shareholders and directors. Prior to the acquisition by
the Company, Southern Education Alliance, Inc. (SEA) purchased all of the
authority, licenses, equipment, inventory, and personnel of "Southwest Medical
Academy" (SMA) effective February 12, 1999. "Southwest Medical Academy" was a
sole proprietorship owned by Mr. and Mrs. Ron Daniels and they received their
stock in SEA in exchange for the transfer.
SEA also accepted all of the liabilities of SMA and thereafter
conducted the business of the corporation under the trade name "GoThink Tech."
EFO changed its' name to Think!.Com, Inc. and, thereafter, changed its'
name to GoThink.Com Incorporated on June 15, 1999, according to the records of
the Secretary of State of the State of Nevada. SEA remained a wholly-owned
subsidiary of GoThink.Com, Inc. and continues to do business as "GoThink Tech."
Think!.Com Incorporated obtained a Certificate of Authority to do
business as a foreign corporation in the State of Texas (Charter Number
00125622) on March 15, 1999, and, thereafter, the Texas Secretary of State
issued an Amended Certificate of Authority for GoThink.Com, Incorporated, (the
new name of the corporation) on June 23, 1999. SEA d/b/a "GoThink Tech" remains
a wholly-owned subsidiary of GoThink.Com, Inc. after the amended certificate of
authority.
The Company, through its wholly owned subsidiary Southern Educational
Alliance, Inc. doing business as "GoThink Tech," operates the only state
accredited proprietary school for web page design in the State of Texas. Though
the school also offers training for nurses aides and medical assistants, Go
Think Tech is now focusing on web page design and technical training for
networks and trying to gain approval to become a Microsoft network training
affiliate. The proposal to become an approved provider of the MCSE ["Microsoft
Certified Software Engineer"] has not yet been completed for submission to
Microsoft. That proposal is scheduled to be completed by June 1, 2000.
SEA, Inc.'s board of directors intends to change the name of the
corporation to "GoThink Tech, Inc." before the end of 1999.
The Company is preparing to enter the highly competitive industry of
telecommunications. The Company has recently signed a contract with LandMark
Communications (a partner of Level 3) to become a retailer of T-1, T-3 and DSL
phone lines. The Company can now expand the communications division into 26
cities nationwide, along with the expansion of the vocational training schools.
However, the operations involving the retailing of high-speed data and voice
communications transmission lines is currently suspended until operational
revenues from vocational training increase. The retail operation involved in the
agreement with LandMark will
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require a substantial outlay in terms of additional telemarketing personnel and
marketing expenses. Until the vocational training operations are
self-sufficient, and until the retail operation can be funded from internal
revenues, the Company anticipates holding the retail operation involving
telecommunications lines in suspense. The Company does not anticipate entering
that market actively until sometime during the third quarter of 2000.
While the Company is engaged in an extremely competitive business in
its' vocational training areas, it enjoys an advantage as being the only
accredited institution in Texas offering web page design training. Students
enrolling in the training programs are allowed to take advantage of various
education loans and grants offered by the government and private institutions
and the Company is able to take advantage of the steady income stream afforded
by those types of students with that type of financial aid.
In the more traditional vocational training areas (the medical arts
areas), the Company is able to compete vigorously in its' market and is
benefitting from the current shortage of these types of workers, the elevated
need for training to fill current positions in the medical and home health
industries, and is able to rely on its' management's historical experience in
the industry.
Vocational training schools are under the jurisdiction of the Texas
Education Agency. The Company is currently accredited and in good standing with
that agency.
Vocational training schools are subject to governmental regulations
regarding course content, instructor certification, and use of financial aid.
Management has experience with this regulatory framework and no problems are
anticipated with conducting the Company's vocational training school business
within that framework.
The Company has historically operated with twenty or less full-time
employees, though that number will grow if more campuses are opened in
accordance with the Company's expansion plan. Additionally, full or part-time
telemarketers may be utilized to market the Company's telecommunications
business and to reach the potential pool of vocational trainees.
Telemarketers are persons who are employed by the Company to use
telephone communications to supplement or replace traditional marketing efforts.
Telemarketers call prospective students and customers and attempt to educate
them on the Company's services and enroll them in the Company's programs or sell
them the Company's services. At the present time, the Company does not undertake
a full-time telemarketing effort and employs no telemarketers.
Subsequent to acquiring IPI, the Company reached an agreement with Mr.
and Mrs. Frank Mulcahy to divest itself of that subsidiary. Mr. Frank Mulcahy
has retained 200,000 shares of common stock in the Company, with the balance of
1,125,000 being canceled or converted to options for future purchase. (See Note
2 to Consolidated Financial Statements. Mr. Mulcahy retains options to purchase
up to 200,000 shares of common stock in the Company, in 50,000
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increments beginning August 1, 2000, and extending through February 1, 2002,
expiring no later than August 1, 2002.) IPI is not now an operating subsidiary
of the Company.
The Company determined that IPI's operations were not complementary to
the main business plan to be pursued by the Company, as outlined above.
Basically, the IPI transaction as regards the Company was reversed and treated
as not affecting the Company's operations, except for the recording of the
expenses associated with IPI during the period IPI was associated with the
Company. Mr. Mulcahy surrendered 1,125,000 shares of stock to the Company and
retained the options outlined above. No operations of IPI are included in the
statement of operations so "discontinued operations" is not an applicable item
for disclosure.
The Mulcahy stock returned to the Company was not treated as treasury
stock, as the Company did not anticipate holding it long-term. As described
below, the stock formerly held by Mulcahy (1,125,000 shares) is now held by
another officer of the Company, Tom Edwards.
On or about October 29, 1999, the Company, along with its Chief
Executive Officer, Ron Daniels, entered into an Agreement with Blue Ridge
Finance Company, Inc. (hereinafter referred to as the "Agreement.") In that
Agreement, Blue Ridge agreed to make an additional capital investment in the
Company of $200,000.00, in two installments of $100,000.00 each, the second
installment to be made on or before January 30, 2000. The additional capital
contribution was necessary for the Company's continued operations. Blue Ridge
made the initial installment of $100,000.00.
In the Agreement with Blue Ridge, the Company agreed to issue
additional stock to Blue Ridge in such amount so that Blue Ridge would have
fifty one percent (51%) of all outstanding common stock of the Company.
Additionally, the Company agreed that Blue Ridge would have the ability and the
right to appoint a majority of the Board of Directors. Mr. Daniels was
guaranteed a salary of $5,000.00 per month, as was Mr. Edwards, the Chief
Operating Officer. Mr. Daniels was also assigned the right to recover his
business-related expenses and thirty percent (30%) of the net profits of the
subsidiary, payable quarterly in stock or cash, at the discretion of the
Company. The Agreement provided that Mr. Daniels would be the Chief Operating
Officer of the Company and that Mr. Edwards, by future Board action, would be
elected Chief Executive Officer. Mr. Daniels was also awarded a ten year
employment contract with the Company, on the terms set out above, with a
provision that he would not be terminated from employment except for "cause."
("Cause" was defined to mean "criminal acts, fraud, gross negligence, or breach
of fiduciary duty.) Additionally, the Agreement with Blue Ridge provided that
Mr. Daniels would receive "restricted stock" in such amount so that Mr. Daniels
would own, after the Agreement, a total of 2,500,000 shares in the Company.
Further, Mr. Daniels obtained an option in the Agreement to purchase all of the
outstanding stock in the subsidiary and obtain sole ownership of the subsidiary
by returning to the Company ninety percent (90%) of the shares of the Company
owned by him. The Agreement with Blue Ridge provided that the additional capital
funds provided by it would be used by the Company for payment of corporate
expenses and future operations. The Company agreed to pay Blue Ridge a monthly
consulting fee of $5,000.00 for a period of three years from the date of the
Agreement. The Agreement also provided that the
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executive offices of the Company would be moved to Florida, at the pleasure of
the Board of Directors. The Agreement with Blue Ridge was made under Florida
law.
Mr. Edwards has not yet been elected by the Board to the office of
Chief Executive Officer but it is anticipated that he will be so elected in
January, 2000.
On October 29, 1999, the Company's Board of Directors approved a
resolution approving the Agreement with Blue Ridge, and issuing stock as
follows:
Ron Daniels 1,175,000
Tom Edwards 875,000
Jennifer Brenner 500,000
Blue Ridge Finance Co., Inc. 10,000,000
Also on October 29, 1999, the Board approved a resolution electing Ms.
Jennifer Brenner to the Board of Directors of the Company, where she joined Mr.
Edwards and Mr. Daniels as directors.
The Board of the Company also approved a resolution on October 29,
1999, approving the transfer of the shares of stock previously owned by Frank
Mulcahy represented by treasury certificate number 10157 (1,125,000 shares) to
Tom Edwards. Mr. Edwards, as a result of that Board action, now owns 2,000,000
shares of the Company.
Finally, on October 29, 1999, the Board also approved the issuance of
150,000 shares of common stock to Mr. Ernest Zepeda.
Mr. Zepeda, Mr. Daniels, Mr. Edwards, Ms. Brenner, and Mr. Zepeda were
all issued stock to compensate them in lieu of cash for services rendered and to
be rendered to the Company and to ensure their continued association with and
employment by the Company. Mr. Daniels' additional stock was also issued to
ensure his tenure as an officer of the Company and as part of his employment
agreement with the Company, described above.
The Company is not required by its' by-laws to prepare or deliver
regular annual reports or annual audited financial statements to security
holders or shareholders of any type and the Company has no plans to send those
reports in the future unless required by law or regulation. Financial
information is available to shareholders from the Company at its' offices.
The Company will continue to file required reports with the Securities
and Exchange Commission, as required, and those reports will be available to the
public and to shareholders at the SEC offices and from the Company.
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Item 102 Description of Property
Property Location
The Company maintains an office at 6429 Richmond Avenue, Suite
610, Houston, Texas, with its' Executive Offices at Post Office Box 953754, Lake
Mary, Florida 32795-3754. The Company's property consists of general office
equipment, telephone and computer systems, and office furniture. The property is
periodically updated, replaced, or repaired.
Investment Policies
The Company has no "investment policy" and does not invest
available funds, instead using all available funds for operations. Further, the
Company does not invest in real estate or securities of any type. The Company's
business plan does not provide for any investments in any securities or real
property for investment purposes. For the foreseeable future, all Company funds
will be used for operations and expansion.
Item 103 Legal Proceedings
The company currently has no ongoing legal proceedings
Item 201 Market for Common Stock and Related Stock Matters
The principal market for the Company's securities is the general public
market maintained by the NASDAQ "Over the Counter Bulletin Board" system
("OTC:BB"). The symbol for the Company's stock is "TNKC."
The high bid and low bid range since March 22, 1999, through September
27, 1999, is as follows:
High bid: 5.00000
Low bid: 0.01200
Historical high bid and low bid range (last two years):
High Low
1st quarter 1997 $.1875 $ .00
2nd quarter 1997 .03120 .03120
3rd quarter 1997 .03120 .02
4th quarter 1997 .02 .01
1st quarter 1998 .02 .01
2nd quarter 1998 .02 .00781
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3rd quarter 1998 .01 .01
4th quarter 1998 .01 .006
The source of high bid and low bid information are from
over-the-counter market quotations and those quotations likely reflect
inter-dealer prices, without retail mark-up, mark- down, or commission and may
not reflect actual transactions. The actual figures represented herein are taken
from INVESTools as of September 27, 1999.
There are approximately 1120 holders of common stock in the Company.
There are no holders of preferred stock.
There are 19,346,016 shares of common stock outstanding. There are
926,887 free- trading shares of common stock. There are three (3) shareholders
hold five percent (5%) or more of the outstanding common stock of the Company:
Blue Ridge Finance Company, Inc. 10,000,000 51.69%
Tom Edwards 2,000,000 10.34%
Ronnie Daniels and Sheila Daniels 2,500,000 12.92%
No cash dividends have been declared by the Company and none are
anticipated. The Company's policy for the foreseeable future is to use any
available funds for expansion and operations.
Item 202 Description of Securities
GoThink.Com, Inc. is authorized to issue up to 50,000,000 shares of
common stock. The holders of common stock are entitled to one vote per share for
the election of directors and with respect to all other matters submitted to a
vote of stockholders. Shares of common stock do not have cumulative voting
rights, which means that the holders of more than 50% of such shares voting for
the election of directors can elect 100% of the directors if they choose to do
so and, in such event, the holders of the remaining shares so voting will not be
able to elect any directors. At present, by agreement with the Company and in
exchange for the payment of additional capital as described herein, Blue Ridge
Finance Company, Inc. controls a majority of the outstanding stock of the
Company and is entitled to control the election of a majority of the Board of
Directors.
Holders of GoThink.Com, Inc. common stock are entitled to receive such
dividends as the Board of Directors may from time to time declare to be paid in
accordance with Nevada law and if the company has sufficient surplus or net
earnings. GoThink.Com, Inc. has never paid cash dividends and seeks growth and
expansion of its business through the reinvestment of profits, if any, and does
not anticipate that it will pay dividends in the foreseeable future.
- 14 -
<PAGE>
Go Think. Com is authorized to issue up to 5,000,000 shares of
preferred stock to be issued with such rights, preferences and designations and
in such series as determined by the Board of Directors.
As described in Item 101, on or about October 29, 1999, the Company,
along with its Chief Executive Officer, Ron Daniels, entered into an Agreement
with Blue Ridge Finance Company, Inc. (hereinafter referred to as the
"Agreement.") In that Agreement, Blue Ridge agreed to make an additional capital
investment in the Company of $200,000.00, in two installments of $100,000.00
each, the second installment to be made on or before January 30, 2000. The
additional capital contribution was necessary for the Company's continued
operations. Blue Ridge made the initial installment of $100,000.00. This
infusion of operating capital was necessary to continue operations. In the
Agreement with Blue Ridge, the Company agreed to issue additional stock to Blue
Ridge in such amount so that Blue Ridge would have fifty one percent (51%) of
all outstanding common stock of the Company. Additionally, the Company agreed
that Blue Ridge would have the ability and the right to appoint a majority of
the Board of Directors. By action of the Board of Directors on October 29, 1999,
Blue Ridge was issued 10,000,000 shares of common stock in the Company. Other
persons, as described in Item 101, were also issued substantial shares of common
stock in the Company at the same meeting of the Board of Directors.
The Company believes that the "Blue Ridge transaction" was exempt from
registration, as further explained in Item 701.
Item 303 Management's Discussion and Analysis or Plan of Operation
The Company is a "small business issuer" that has had revenues from
operations in the last fiscal (calendar) year and has furnished financial
statements in conjunction with this filing. The Company has elected to provide
all information regarding its plan of operation for the next twelve (12) months
in narrative form and includes this section - Management's Discussion and
Analysis or Plan of Operation - pursuant to Regulation ss.228.303.
Pursuant to alternative 3, Part I, "General Instructions" regarding the
use of Form 10SB, the Company has chosen the "disclosure model" which includes
the information required by Items 101, 102, 202, 303, 401, 402, 403, and 404 in
the Form 10SB. That information is contained in this document.
The Company has operated at a loss during 1999, and anticipates
continuing to operate at a loss through the second quarter of 2000. Except for
the influx of working capital in exchange for common stock, as described above
(the "Blue Ridge Agreement" detailed in Item 101), the Company would not have
been able to continue operations.
- 15 -
<PAGE>
Management currently has expansion plans for the operating subsidiary.
Although the plan is to expand steadily, if the current laws governing
proprietary schools change this could impede the Company's progress. No change
in the current regulatory or statutory environment in Texas is anticipated for
the foreseeable future. The Texas legislature meets once every two years, the
next such session not being scheduled until the year 2001.
The Company is currently operating a school only in Houston Texas.
However, the Company has acquired lease space and some office equipment for a
second campus in the Dallas, Texas, area. The Dallas campus is not currently
being organized. The Company is not currently scouting locations for possible
campuses in any other area and there is substantial doubt as to whether the
Dallas school can be opened. The Company has retrieved its' furniture and
equipment from the Dallas location and all expansion plans for that market are
currently on hold. The Company is currently attempting to maintain an expansion
schedule of one school a quarter, though that goal has not been reached and it
appears doubtful that the goal can be reached under current conditions. Unless
revenue substantially increases there will be no expansion. The
telecommunications division of the operating subsidiary is currently not
operating in the retail resale of high-speed voice and data lines under its'
agreement with LandMark.
In the short-term, the expansion of the vocational training campuses
will allow the Company to enjoy an increased cash flow. Failure to bring
campuses online in a timely fashion will adversely affect cash flow and could
impede operations and the expansion plan. Expansion is planned to be funded from
operations, with no infusion of capital, either equity or loaned funds,
anticipated, after the completion of the infusion of capital by Blue Ridge
Finance Company, Inc., described herein. Blue Ridge's financial obligation to
the Company is capped at $200,000.00, of which approximately $100,000.00 is
still outstanding and due the Company before January 30, 2000. The Company has
no available line of credit from any financial institution and operates only
from earned revenues.
The Company has not operated at a profit since current operations
commenced in February, 1999. Until the Company can increase revenues and
operating profits, there will be no expansion of locations or expansion of
operations outside the vocational training classes as explained above.
As described in Item 101, on or about October 29, 1999, the Company,
along with its Chief Executive Officer, Ron Daniels, entered into an Agreement
with Blue Ridge Finance Company, Inc. (hereinafter referred to as the
"Agreement.") In that Agreement, Blue Ridge agreed to make an additional capital
investment in the Company of $200,000.00, in two installments of $100,000.00
each, the second installment to be made on or before January 30, 2000. The
additional capital contribution was necessary for the Company's continued
operations. Blue Ridge made the initial installment of $100,000.00. This
infusion of operating capital was necessary to continue operations.
- 16 -
<PAGE>
If the employment trend in the medical arts community and home health
care industry declines drastically in Texas, the Company would experience a
downturn in demand for those vocational courses. Likewise, if the employment
trend in web design and related industries declines, the Company's vocational
offerings in those areas would likewise decline.
Currently, there is strong demand in Texas and nationwide for
vocational training in the areas in which the Company is accredited. Its' main
operation is located in Houston, Texas, the nation's fourth largest city, with a
concentration of medical and Internet activity.
The main challenges facing the Company with respect to revenues,
earnings, and liquidity would be in the areas of general employment trends,
problems with vocational accreditation, and problems with the administration of
financial aid for student tuition. The Company anticipates no problems in these
areas in the short term.
The Company has working capital of $202,448 at June 30, 1999. For the
six months ended June 30, 1999 the Company recorded a consolidated net loss of
$246,182. The Company recorded net income of $379,221 and the subsidiary had a
net loss of $625,403 for a total net loss of $246,182. Included in the
subsidiary's loss is a one-time acquisition cost of $619,121 related to the
reverse acquisition between the Company and SEA. Assets of the Company at June
30, 1999 (excluding intercompany items) are $293,146 and the subsidiary's assets
are $150,537 for total consolidated assets of $443,683. Liabilities of the
Company at June 30, 1999 are $82,208 and the subsidiary's liabilities (excluding
intercompany items) are $60,703 for total consolidated liabilities of $142,911.
The Company recorded a loss (bad-debt related party expense) of
$201,109 for funds advanced to and expenses paid on behalf of its' former
subsidiary, IPI. Those funds will not be repaid or recovered by or from IPI.
Frank Mulcahy, who received all of the stock in the IPI subsidiary from the
Company when the Company divested itself of that entity, will not be required to
refund or repay any of the funds previously advanced or paid on behalf of IPI by
the Company. Mr. Mulcahy was, as part of the transaction, and as explained in
Item 101, required to relinquish most of his shares in the Company in exchange
for the subsidiary stock.
As noted in Item 101, Mr. Mulcahy was awarded options to purchase
common stock in the Company in the future. The Company considered SFAS 123 and
is aware of the disclosure requirements relating to options and warrants in
future filings. The options to Mr. Mulcahy were granted in August, 1999. Using
the Black-Sholes model, the options have an estimated value of approximately
$102,000.00.
Net revenue for 1998 was $200,357 compared with $205,888 for 1997.
Operating expenses for 1998 were $205,415 compared with $177,424 for 1997. The
increase for 1998 related mainly to higher labor costs and higher supply costs.
(All revenue and expense comparisons are with the prior operations of the
subsidiary of the Company and do not include any operations of either EFO, Inc.
or IPI.)
- 17 -
<PAGE>
The increase in accounts receivable in 1999 is due to expanded sales
activity with many of the sales taking place near June, 1999; these accounts
were not paid prior to June 30, 1999, thus explaining the relatively large
receivables balances. The increase in allowance is a function of total accounts
receivable. Increase in prepaid items is a result of advertising items that the
Company is utilizing to attract students and expand operations. Accounts payable
have increased due to expanded operations and assuming some liabilities related
to the "reverse acquisition" involving EFO. PP & E has increased as the Company
has purchased more equipment to expand the training operations into Dallas and
other future locations. Deferred revenue has increased due to many sales taking
place near June, 1999, and thus revenue is not yet earned.
The expansion plan to be undertaken by the Company will be executed on
a "funds available" basis, meaning that if the Company cannot generate revenues
to sustain expansion, the expansion will likely not take place. If revenues do
not provide sufficient cash flow to sustain expanded operations, the expansion
plans will not materialize to generate additional revenue for the Company. The
change in the Company's financial fortunes are directly tied to expansion and
the ability to internally finance that expansion. Blue Ridge Finance Company,
Inc. has indicated it will not finance further operations beyond its' current
contractual obligation to do so. (See explanation of transaction with Blue Ridge
in Item 101.)
The Company believes that an increase in student enrollment and
continued cost-savings in fixed expenses will allow it to finance expansion from
internal revenues. However, if enrollment does not increase to a level
sufficient to generate the required revenue for expansion, then expansion will
not take place.
There are no formal acquisition agreements or contracts with third
parties regarding the Company's plan to attempt to expand at the rate of one
school per quarter.
The Company does not anticipate any problem arising from its' software
or hardware, or any of its' internal operating systems maintained by it, as a
result of the Y2K problem and, in fact, experienced no problems as a result of
the Y2K situation. All of the Company's computer systems have been checked for
Y2K compliance, as has the retail software which is run on them. The Company
keeps current with all updates and revisions with all software that the Company
currently uses. The Company has a policy of continuing to monitor this situation
and will coordinate its' operations and remedial measures, if any, with its'
software vendors to assure Y2K compliance, should any issues arise in the
future.
The Company experienced no problems associated with the "Y2K" issue and
suffered no downtime or hardware or software failures or difficulties associated
with that situation.
The Company has expended no funds on Y2K compliance, as all of its'
software and hardware is compliant or was fixed without charge by its' vendors.
Company employees, as part of their regular duties, monitored and continue to
monitor Y2K compliance of all Company software and hardware. The Company expects
to expend no funds on Y2K compliance outside normal employee salaries.
- 18 -
<PAGE>
Item 304 Changes In and Disagreements With Accountants on Accounting
and Financial Disclosure
The Company's accountants have been Smith & Company. No change in
accountants has occurred since February, 1999. Current management is unaware of
the identity of former accountants of the Company prior to that time.
The Company has no proposed changes to the audited financial statements
prepared by its' accountants and has no disagreements with its' accountants or
with any former accountants employed or engaged by the Company. No accountant
has been dismissed or has resigned from employment or engagement by the Company
since current management assumed control of operations in February, 1999.
Item 310 Financial Statements
See attached.
The Company had working capital of $202,448 at June 30, 1999. For the
six months ended June 30, 1999 the Company recorded a consolidated net loss of
$246,182. The Company recorded net income of $379,221 and the subsidiary had a
net loss of $625,403 for a total net loss of $246,182. Included in the
subsidiary's loss is a one-time acquisition cost of $619,121 related to the
reverse acquisition between the Company and SEA. Assets of the Company at June
30, 1999 (excluding intercompany items) are $293,146 and the subsidiary's assets
are $150,537 for total consolidated assets of $443,683. Liabilities of the
Company at June 30, 1999 are $82,208 and the subsidiary's liabilities (excluding
intercompany items) are $60,703 for total consolidated liabilities of $142,911.
Net revenue for 1998 was $200,357 compared with $205,888 for 1997.
Operating expenses for 1998 were $205,415 compared with $177,424 for 1997. The
increase for 1998 related mainly to higher labor costs and higher supply costs.
(All revenue and expense comparisons are with the prior operations of the
subsidiary of the Company and do not include any operations of either EFO, Inc.
or IPI.)
Item 401 Directors, Executive Officers, Promoters and Control Persons
GoThink.Com, Inc.
Directors: Ron Daniels, age 38
Thomas Edwards, age 31
Jennifer Brenner, age 24
Executive Officers: C.E.O. and President Ron Daniels
Chief Operations Officer Thomas Edwards
- 19 -
<PAGE>
Southern Educational Alliance, Inc. (subsidiary) d/b/a "GoThink Tech"
Directors: Ron Daniels
Thomas Edwards
Executive Officers: C.E.O. and President Ron Daniels
Chief Operations Officer Thomas Edwards
The terms of office for the officers and directors of the Company and
its' subsidiary are annually for directors and at the pleasure of the Board of
Directors for officers. Blue Ridge Finance Company, Inc. controls a majority of
voting common shares in the Company and will control the composition of the
Board and the election of its' members by virtue of the agreement between the
Company and Blue Ridge, as detailed in Item 101.
Mr. Daniels and Mr. Edwards will, at some point after January 1, 2000,
exchange titles in the Company, with Mr. Edwards becoming CEO and Mr. Daniels
becoming COO. The officers of the subsidiary will remain the same.
Frank Mulcahy was formerly an officer of GoThink.Com, Inc. and was a
director of that entity. When IPI was divested by the Company, Mr. Mulcahy
ceased serving as an officer or director of GoThink.Com, Inc. Mr. Mulcahy was
never an officer or director of the other subsidiary, SEA.
There are no other "significant employees" whom the Company expects to
make a significant contribution to the business and there are no family
relationships between Mr. Edwards and Mr. Daniels.
Mr. Daniels has been involved as senior executive officer of Southern
Educational Alliance, Inc. and its predecessor, Southwest Medical Academy, since
their inception. He has experience in the vocational training environment as an
executive, owner, and manager. Mr. Edwards is an independent businessman with a
variety of experience in small public and private companies.
Neither Mr. Edwards nor Mr. Daniels have filed for bankruptcy relief
within the last five years. Neither Mr. Edwards nor Mr. Daniels have been sued
in the last five years, and have not been the subject of any enforcement or
regulatory enforcement action by any state or federal agency within the last
five years, and are not now involved in any such proceedings. Neither Mr.
Daniels or Mr. Edwards have ever been convicted of a felony or a crime involving
moral turpitude and are not now involved in any such proceeding. Neither Mr.
Edwards nor Mr. Daniels have ever been subject to any order, judgment, or decree
of any court of competent jurisdiction permanently or temporarily enjoining,
barring, suspending or otherwise limiting their involvement in any type of
business, securities or banking activities. Neither Mr. Daniels nor Mr. Edwards
have ever been accused or found by a court of competent jurisdiction, the SEC,
or the
- 20 -
<PAGE>
Commodity Futures Trading Commission to have violated a federal or state
securities or commodities law.
Item 402 Executive Compensation
The Company has two executive officers: Ron Daniels and Tom Edwards.
Mr. Daniels is the CEO. These two comprise the Company's most highly compensated
executives. There are no other individuals who are executive officers.
There is no stock appreciation plan (SAR) in place in the Company.
There is no long term compensation plan in place in the Company. The executive
officers do not hold and are not compensated by warrants or options in the stock
of the Company.
The executive officers receive compensation only in the form of annual
monetary compensation and reimbursement of expenses, however, both Mr. Daniels
and Mr. Edwards have been awarded additional shares of stock in the Company to
ensure their continued employment and affiliation with the Company. Those
transactions are detailed above. The executive officers receive no bonuses and
no bonus plan is in place in the Company.
Since February, 1999, the executive officers of the Company received
the following compensation:
Salary Reimbursement for Expenses
Ron Daniels $10,000 --
Tom Edwards $13,500 -
Further, Mr. Daniels and Mr. Edwards have been awarded additional
shares of stock in the Company to ensure their continued employment and
affiliation with the Company. Those transactions are detailed above in Item 101
and below in this Item.
The directors of the Company are not compensated except for
reimbursement of expenses for attending meetings.
Mr. Edwards does not have an employment contract or agreement with the
Company, except for certain terms contained in the Agreement with Blue Ridge
Finance Company, Inc., as explained in Item 101 and below.
Mr. Daniels has an employment agreement with the Company. That
employment agreement was reached as part of the October 29, 1999, Agreement with
Blue Ridge Finance Company, Inc. Mr. Daniels was guaranteed a salary of
$5,000.00 per month, as was Mr. Edwards, the Chief Operating Officer. Mr.
Daniels was also assigned the right to recover his business-related expenses and
thirty percent (30%) of the net profits of the subsidiary, payable
- 21 -
<PAGE>
quarterly in stock or cash, at the discretion of the Company. The Agreement
provided that Mr. Daniels would be the Chief Operating Officer of the Company
and that Mr. Edwards, by future Board action, would be elected Chief Executive
Officer. Mr. Daniels was also awarded a ten year employment contract with the
Company, on the terms set out above, with a provision that he would not be
terminated from employment except for "cause." ("Cause" was defined to mean
"criminal acts, fraud, gross negligence, or breach of fiduciary duty.)
Additionally, the Agreement with Blue Ridge provided that Mr. Daniels would
receive "restricted stock" in such amount so that Mr. Daniels would own, after
the Agreement, a total of 2,500,000 shares in the Company. Further, Mr. Daniels
obtained an option in the Agreement to purchase all of the outstanding stock in
the subsidiary and obtain sole ownership of the subsidiary by returning to the
Company ninety percent (90%) of the shares of the Company owned by him. The
Company agreed to pay Blue Ridge a monthly consulting fee of $5,000.00 for a
period of three years from the date of the Agreement
There is no "buy-sell" agreement in place with respect to any officers
or any other shareholders and the Company, except to the extent that Mr. Daniels
has the option outlined above regarding the ownership of the subsidiary.
The Company has no policy regarding severance pay or benefits or
compensation for retirement or longevity of service.
Item 403 Security Ownership of Certain Beneficial Owners and Management
Blue Ridge Finance Company, Inc. 10,000,000
Tom Edwards 2,000,000
Ronnie Daniels and Sheila Daniels 2,500,000
There are no agreements or arrangements that may lead to a change in
control of the Company. The Company is controlled by its' majority stockholder,
Blue Ridge Finance Company, Inc. No holder listed above has been granted or owns
any warrants, options, or conversion privileges to purchase additional shares or
convert its' shares to any other class or for additional stock in the Company.
Frank Mulcahy does own options to purchase shares of common stock in the
Company, but those total less than one percent of the outstanding stock of the
Company and are described above.
The Company is effectively controlled by Blue Ridge Finance Company,
Inc., the holder of a majority of outstanding common stock. That control was
granted in exchange for the infusion of capital for operations in an Agreement
dated on or about October 29, 1999, as detailed in Item 101.
- 22 -
<PAGE>
Item 404 Certain Relationships and Related Transactions
The only covered transactions involving the Company and its' officers,
directors, nominees, or beneficial interest holders or stockholders are as noted
above (and described again below) involving the transfer of SEA stock to the
Company and the issuance of shares to StockPlayer.Com, Inc. for its' services.
As noted above, on February 16, 1999, EFO Inc. agreed to issue
2,600,000 shares of its' common stock to acquire two corporations as
subsidiaries: Southern Educational Alliance, Inc. (SEA) and Internet
Presentations, Inc. (IPI). At the time of the transaction, Mr. and Mrs. Ron
Daniels were the sole shareholders and directors of SEA and Mr. and Mrs. Frank
Mulcahy were the sole shareholders and directors of IPI.
The stock in the Company was issued on April, 8, 1999, along with
350,000 shares for fees for professionals and promoters related to the
transaction. Mr. and Mrs. Ron Daniels received 1,325,000 shares in the Company
and the Company became the sole shareholder of SEA. Mr. and Mrs. Frank Mulcahy
received 1,325,000 shares in the Company and the Company became the sole
shareholder of IPI.
The professionals and promoters involved in the offering and the number
of shares they received in the offering are: James Skalko (100,000 shares); Blue
Ridge Finance Company, Inc. (100,000 shares); Douglas Hackett (100,000 shares);
Phil Tannenbaum (30,000 shares); Tom Edwards (20,000 shares); Michelle K. Cain
[attorney involved in the preparation of the offering materials] (20,000
shares). Additionally, the Daniels and the Mulcahys, as noted above, would be
considered "promoters" of the offering.
The professionals involved were Ms. Cain, who provided legal services.
Shares were issued to her based on the fair market value of those services.
Blue Ridge Finance Company, Inc., Mr. Hackett, and Mr. Edwards were
issued shares for commercial services relating to the organization of the
offering and the shares issued to them initially were based on the fair market
value of those services.
The holdings of StockPlayer.Com, Inc. were issued by the Company in
exchange for anticipated services pursuant to a written contract and the shares
issued to initially were based on the fair market value of those services.
However, that contract has been terminated by the Company and the shares to be
transferred to StockPlayer.Com, Inc. have been put on hold pending a decision by
the board of directors regarding the disposition of that stock and further legal
action by the Company.
In the case of shares issued to officers, promoters, and professionals,
the liability for compensation expense was recorded based on fair market value
of the services rendered. The stock issued at the time of the reorganization
transaction (February, 1999) was issued to retire the
- 23 -
<PAGE>
liability in the amount of approximately $215,000.00. The Company
considered SFAS 123, Accounting for Stock Based Compensation, when it
compensated certain owners of EFO, Inc. to finalize the reorganization of the
Company as well as the officers, promoters, and professionals. The shares issued
to Mr. Daniels and Mr. Mulcahy, as described above, was for the exchange of
stock in their companies.
There are no other transactions, or proposed transactions, to which the
Company was or is to be a party in which any officer, director, or nominee for
officer or director, or any security holder, or any immediate family member of
any of those classes of persons, was to be involved, except as noted.
Certain owners of EFO, Inc. stock at the time of the acquisition of SEA
were given stock in the Company to reflect the reorganization of the Company
under its current business plan. Those persons were given stock by virtue of
their position as directors, officer, creditors, or shareholders of EFO, Inc.
The Company issued 215,731 shares of common stock to those persons for this
purpose.
Item 405 Compliance with Section 16(a) of the Exchange Act
Not applicable to the Company.
Item 501 Front of Registration Statement and Outside Front Cover of
Prospectus
See attached.
Item 502 Inside Front and Outside Back Cover Pages of Prospectus
See attached.
Item 503 Summary Information and Risk Factors
"Risk factors" are the following:
(i) The Company is a "development stage company" with limited operating
history and unpredictability of future revenues. As demonstrated in the
financial statements, notes, and the text of this disclosure the
Company has an extremely limited operating history and there is
insufficient information to predict future revenues. Past operating
history indicates that the data generated by the Company is
insufficient to make projections which are reliable and that the
probability of future operations being profitable is extremely
doubtful.
(ii) The Company has a dependence upon current management with no
assurances of management successfully executing the Company's business
objectives or sustaining any growth. The current management has not
been able to generate net profits from
- 24 -
<PAGE>
operations and there is no likelihood of present management being able
to generate net profits from operations.
(iii) The Company is subject to the voting control of management and
one majority shareholder (Blue Ridge Financial) with no ability of
investors to effect a change of the Company's Board of Directors or
management. See the discussion of the Blue Ridge agreement, supra.
(iv) There are no assurances of the Company's profitability or of the
payment of any dividends. The Company has not generated any net profits
for the past calendar year and there is no assurance that any net
profits will be generated under the Company's plan of business.
(v) The Company is unable to place any reliance upon and assumes the
unreliability of the projected financial information contained or
referenced herein, and specifically, would note that there can be no
assurance that the projected results can or will be realized or that
actual results will not be materially different therefrom.
(vi) There are no audited financial statements at the time of the
offering.
(vii) There is a strong possible inability to repay any outstanding
obligations when due.
(viii) There is no escrow of offering proceeds.
(ix) The Company has a present need for additional capital to achieve
long-term goals with no assurances that any such capital will be
available or, if available, upon terms acceptable to the Company.
(x) There is substantial uncertainty of governmental regulation of the
Internet and the Company's business and that will severely and
negatively impact the Company's ability to do business under its
present business plan.
(xi) The Company and management have extremely limited marketing and
related experience.
(xii) There are potential conflicts of interest between members of
management and the Company with no policy established for conflict
resolution; reliance upon judgment of management to resolve conflicts,
and such conflicts include the personal interest in ownership of the
subsidiary as set out in and involving the Agreement between the
Company, Ron Daniels, and Blue Ridge Finance Company, Inc. and,
further, the financial interest of the executive officers, directors,
and current shareholders in Company operations as reflected by the
share ownership and related degree of control of the operations of the
Company.
- 25 -
<PAGE>
(xiii) The majority of financial risk of the Company's operations are
on the investors.
(xiv) There is possible and probable illiquidity of an investment in
the Common Shares of the Company with no assurance of any market for
those shares.
(xv) There are no assurances of the Company ever successfully effecting
another private placement or any public offering of its securities or
that an active public market for its securities will ever be sustained.
Additionally, the Year 2000 issue may interfere with the Company's
ability to perform major business functions in its' web design and web hosting
businesses, as well as interfere with administrative functions in the vocational
school and telecommunications divisions. While no software or hardware problems
have been identified to date, the Company has not been active in these business
areas since January 1, 2000, and such problems could arise and interfere with
Company operations when and if those areas are resumed. The Company does not
anticipate any problem with its' computers or software arising from the Y2K
issue, but cannot anticipate whether its' vendors, students, customers, or the
government will be Y2K problem-free. Specifically, government financial aid for
students, web server operations, line communications and availability, and
banking functions may be deficient and adversely impact the Company's ability to
do business and be timely compensated because third parties responsible for
those operations are not Y2K compliant.
As a result of third party failure to be Y2K compliant, the Company
could lose revenues, (up to seventy percent (70%)) for a term longer than six
months, or permanently, lose its' ability to timely pay outstanding invoices
from suppliers, lose students and customers, and suffer an interruption in its'
operations that would threaten the viability of the Company as a going concern.
(See the Company's position on Y2K issues, supra, Item 303.)
Summary Financial Information and Key Ratios
<TABLE>
<CAPTION>
6/99 12/98 12/97 12/96
<S> <C> <C> <C> <C>
Total Revenue 153 200 206 79
Operating Income (Loss) (93) (5) 28 3
Income (Loss) before income
taxes and Extraordinary Item (913) (12) 15 3
Net Income (Loss) (246) (12) 15 3
Income (Loss) per share ($.06) ($.00) $.00 $.00
Total Assets 444 73 70 23
Current Portion of Notes
Payable and Long-Term Debt 15 40 40 4
Notes Payable and Long-Term
Debt, Less Current Portion 0 0 0 0
</TABLE>
- 26 -
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Total Stockholders' Equity
(Deficit) 301 (7) 4 8
Dividends Declared and Paid 0 0 19 0
</TABLE>
***All amounts in thousands, except per share amounts.***
Item 504 Use of Proceeds
See attached. The private offering circular is incorporated
herein.
Item 505 Determination of Offering Price
See attached. The private offering circular is incorporated
herein.
Item 506 Dilution
See attached. The private offering circular is incorporated
herein.
Item 507 Selling Security Holders
See attached. The private offering circular is incorporated
herein.
Item 508 Plan of Distribution
See attached. The private offering circular is incorporated
herein.
Item 509 Interest of Named Experts and Counsel
See attached. The private offering circular is incorporated
herein. No expert or counsel as defined in the applicable regulations received
shares or other compensation in excess of fifty thousand dollars ($50,000.00)
for services involved in the offering of the stock of the Company.
Item 510 Disclosure of Commission Position on Indemnification for
Securities Act Liabilities
The Company has made no agreement with any officer, director, or
"control person" providing for indemnification against liability under the
Securities Act.
Item 511 Other Expenses of Issuance and Distribution
See attached. The private offering circular is incorporated
herein.
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<PAGE>
Item 512 Undertakings
Not applicable to the Company.
Item 601 Exhibits
See attached list.
Item 701 Recent Sales of Unregistered Securities; Use of Proceeds from
Registered Securities
The Company has "sold" unregistered securities outside the offering
described herein in the form of a transfer of shares to Blue Ridge Finance
Company, Inc., and certain officers and directors as described herein. (The
transaction with Blue Ridge Finance Company, Inc. is described in Items 101,
202, and 303.) The Company believes that the October, 1999, transactions with
Mr. Daniels, Mr. Edwards, or Ms. Brenner constitute "sales" for the purposes of
this Item, and the sale price of the shares were intended to, at least,
partially, reflect compensation for past, current, and future services as well
as the extension of needed financing by Blue Ridge. The Company believes that
such transaction was exempt from registration under federal securities laws
pursuant to the Securities Act of 1933, Regulation D, Rule 505. See 15 U.S.C.
ss.77d(2); 17 C.F.R. ss.ss.230.502, et seq.
The Company is not an "investment company" as defined by 17 C.F.R.
ss.230.505(a) and the transaction with Blue Ridge constituted a very limited
"offering" in that it was made only to a present shareholder (i.e. Blue Ridge)
and not offered to the public. The transfer of shares to Blue Ridge as described
herein was the product of negotiations between that party and the Company and
did not involve an "offering" to any other member of the public or any third
party, except for officers and directors as described herein.
The Company did no advertising or general offering involving the public
regarding the shares transferred to Blue Ridge. The "aggregate offering price"
of the transaction involving Blue Ridge was less than $1,000,000.00, totaling
only $200,000.00. Blue Ridge, as the sole "purchaser" of the shares, constitutes
"less than thirty-five purchasers" and Blue Ridge Financial is an "accredited
investor" as defined in both state and federal securities statutes and
regulations.
Blue Ridge did not acquire the shares for resale and was aware of the
pending registration but present unregistered status of the shares involved in
the transaction.
The transaction with Blue Ridge was not "integrated" with the main
offering. See Note, 17 C.F.R. ss.230.502(a). Further, the transaction with Blue
Ridge was not part of a part of a single plan of financing, though the
transaction did involve the same class of securities and the same type of
consideration was received. (However, the officers and directors who received
shares in the
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<PAGE>
Blue Ridge transaction did not pay cash for their shares, as more fully
explained hereinabove.) The transaction with Blue Ridge was not made at the same
time as the general offering which is the subject of this disclosure and the
Blue Ridge transaction, as more fully described herein, was more of an
"operating capital" transaction that was not anticipated at the time of the
offering.
Under the Rule 505 exemption, an offer or sale of securities qualifies
as an exempt limited offering if (1) it is made by an issuer that is not an
investment company [17 C.F.R. ss. 230.505(a)]; (2) it does not exceed an
aggregate offering price of $5,000,000, less the aggregate offering price for
all unregistered securities sold under any exemption of Section 3(b) or in
violation of Section 5(a) of the Securities Act of 1933 within the 12 months
before the start of and during the offering of securities [17 C.F.R. ss.
230.505(b)(2)(i)]; and (3) the issuer reasonably believes that there are no more
than 35 purchasers of the securities in the integrated offering [17 C.F.R.
ss.230.505(b)(2)(ii)].
In calculating the number of purchasers, a corporation, partnership, or
other entity not organized for the specific purpose of acquiring the offered
securities is counted as one purchaser [17 C.F.R. ss. 230.501(e)(2)]. Persons
classified as accredited investors are excluded from the purchaser calculation
[17 C.F.R. ss. 230.501(a) -- definition of "accredited investor"]. Directors,
executive officers, and general partners of the issuer are accredited investors,
as are individuals having a net worth in excess of specified amounts, and
individuals who have had and expect to continue to have income in excess of
specified amounts [see 17 C.F.R. ss. 230.501(a) ].
Ron Daniels, Tom Edwards, and Jennifer Brenner were and are all
officers and directors of the Company, did not acquire the shares for resale,
and are fully aware of the Company's operations and plan and condition of
business. Blue Ridge qualifies as an "accredited investor" and the Company
received assurances and representations that Blue Ridge was not organized solely
to take part in this transaction. In fact, Blue Ridge has been a shareholder of
the Company prior to the transaction described in this Item.
Under the applicable federal statutes and regulations, the Blue Ridge
transaction was an "exempt offering" of the securities of the Company.
Item 702 Indemnification of Directors and Officers
The Company has no charter provision, by-law, contract, or other
arrangement that insures or indemnifies a controlling person, director, or
officer of the Company against liability for actions taken in their capacity
with the Company, except that the by-laws of the Company may be construed so as
to protect the directors and officers of the Company against liability taken on
behalf of the Company pursuant to the "business judgment rule."
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<PAGE>
Exhibit List
Plan of Reorganization
Articles of Incorporation
By-Laws
Agreement with LandMark
Agreement with Blue Ridge Finance Company, Inc.
Computation of Earnings Per Share
Subsidiary of the Registrant
Financial Data Schedule
Accountants' Consent Regarding Opinion on Financial Statements
Additional Exhibits
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