U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C.
FORM 10-KSB
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934 [Fee Required]
For the fiscal year ended August 31, 2000
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 [No Fee Required]
For the transition period from to
CAPTEX CAPITAL, INC.
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(Name of small business issuer in its charter)
Texas 98-0116179
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(State or other jurisdiction (IRS Employer
of incorporation) Identification No.)
c/o John Mackay
2160-650 West Georgia Street Vancouver, B.C. Canada V6B 4N7
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(Address of principal executive office including zip code)
(604) 687-1919
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Issuer's telephone number
Securities registered under Section 12(b) of the Exchange Act: None
Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 12 months (or
for such shorter period that the registrant was required to file such
reports), and (2) has been subject to such filing requirements for the
past 90 days. Yes X
Check if there is no disclosure of delinquent filers in response to Item
405 of Regulation S-B is not contained in this form, and no disclosure
will be contained, to the best of registrant's knowledge, in definitive
proxy or information statements incorporated by reference in Part III of
this Form 10-KSB or any amendment to this Form 10-KSB. [X]
State the aggregate market value of the voting stock held by non-
affiliates computed by reference to the price at which the stock was
sold, or the average bid and asked prices of such stock, as of a
specified date within the past 60 days. (See definition of affiliate in
Rule 12b-2 of the Exchange Act.) Not Applicable
(ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING
THE PAST FIVE YEARS)
Check whether the issuer has filed all documents and reports required to
be filed by Section 12, 13, or 15(d) of the Exchange Act after the
distribution of securities under a plan confirmed by a court.
Yes No N/A X
DOCUMENTS INCORPORATED BY REFERENCE
None
ITEMS 1 & 2. DESCRIPTION OF THE BUSINESS AND THE
COMPANY'S PROPERTIES
A. The Company
Captex Capital, Inc. (the "Company") was organized under the
laws of the State of Texas on November 5 1990. The Company was
organized for the purposes of creating a corporate vehicle to locate and
acquire an operating business entity which management believes is a
suitable acquisition candidate (a "Target Company"). The Company
will not restrict its search to any specific business, industry or
geographical location.
The Company does not currently engage in any business activities
that provide any cash flow. The costs of identifying, investigating, and
analyzing business combinations will be paid with money in the
Company's treasury or loaned by management.
Although the Company was under no obligation to do so, it has
voluntarily filed this registration statement because it believes that it
can better facilitate its business goals if it were a "reporting issuer"
under the Securities Exchange Act of 1934 (the "Exchange Act").
PROPOSED BUSINESS
The Company will seek to locate an acquire a Target Company
which is the opinion of the Company's management (sometimes referred
to as the "Management") offers long term growth potential. The
Company will not restrict its search to any specific business, industry
or geographical location. The Company may seek to acquire a Target
Company which has just commenced operations, or which works to avail
itself of the benefits of being a "reporting issuer" in order to facilitate
capital formation to expand into new products or market.
There are certain perceived benefits to being a reporting company
with a class of publicly-traded securities. These are commonly thought
to include the following:
* the ability to use registered securities to make acquisitions
of assets or businesses;
* increased visibility in the financial community;
* the facilitation of borrowing from financial institutions;
* improved trading efficiency;
* shareholder liquidity;
* greater ease in subsequently raising capital;
* compensation of key employees through stock options;
* enhanced corporate image;
* a presence in the United States capital market.
A Target Company, if any, which may be interested in a business
combination with the Company may include the following:
* a company for which a primary purpose of becoming public
is the use of its securities for the acquisition of assets or
businesses;
* a company which is unable to find an underwriter of its
securities or is unable to find an underwriter of securities on
terms acceptable to it;
* a company which wishes to become public with less dilution
of its common stock than would occur upon an underwriting;
* a company which believes that it will be able obtain
investment capital on more favorable terms after it has
become public;
* a foreign company which may wish an initial entry into the
United States securities market;
* a special situation company, such as a company seeking a
public market to satisfy redemption requirements under a
qualified Employee Stock Option Plan;
* a company seeking one or more of the other perceived
benefits of becoming a public company.
There is no assurances that the Company will be able to effect an
acquisition of a Target Company. In addition, at this time, no specifics
as to an acquisition or as to the nature of the Target Company can be
provided.
RISK FACTORS
The Company's business is subject to numerous risk factors,
including the following:
Anticipated Change in Control and Management. Upon the successful
completion of the acquisition of a Target Company, the Company
anticipates that it will have to issue to the Target Company or its
shareholders some authorized but unissued common stock which, when
issued will comprise a majority of the Company's then issued and
outstanding shares of common stock. Therefore, the Company
anticipates that upon the closing of the acquisition of a Target
Company, the Company will no longer be controlled by the current
shareholders. In addition, existing management and directors may
resign. The Company cannot give any assurance that the experience or
qualifications of new management, as it relates to either in the
operation of the Company's activities or in the operation of the
business, assets or property being acquired, will be adequate for such
purposes.
Conflict of Interest - Management's Fiduciary Duties. A conflict of
interest may arise between management's personal financial benefit and
management's fiduciary duty to you. The Company's sole director and
officers are or may become officers, directors, controlling shareholders
and/or partners of other entities engaged in a variety of businesses. Mr.
Mackay and Saunders are engaged in other business activities.
Accordingly, the amount of time they will devote to the Company's
business will only be about five (5) to ten (10) hours per month. There
exists potential conflicts of interest including allocation of time
between the Company and its representatives' other business interests.
Experience of Management; Consultants. Although management has
general business experience, it has limited experience in effecting
business combinations and may not have any significant experience in
acquiring or operating certain business interests that the company might
choose to acquire. Management does not have, nor does it presently
intend to enter into, any contracts or agreements with any consultants
or advisors with respect to its proposed business activities.
Consequently, Management has not established the criteria that will be
used to hire independent consultants regarding their experience, the
services to be provided, the term of service, etc., and no assurance can
be made that the Company will be able to obtain such assistance on
acceptable terms.
Potential Future Rule 144 Sales. Of the 50,000,000 shares of the
Company's Common Stock authorized, there are presently issued and
outstanding 5,000,000 shares; of which 2,750,000 shares are restricted
securities as that term is defined under the Securities Act of 1933 (the
"Securities Act"), and in the future may, subject to the foregoing
discussion, be sold in compliance with Rule 144 of the Securities Act,
or pursuant to a Registration Statement filed under the Act. Rule 144
provides, in essence, that a person holding restricted securities for a
period of 1 year may sell those securities in unsolicited brokerage
transactions of in transactions with a market maker, in an amount equal
to 1% of our outstanding common stock every 3 months. Additionally,
Rule 144 requires that an issuer of securities make available if the
issuer satisfies the reporting requirements of Sections 13 or 15(d) of
the Exchange Act and of Rule 15c2-11 thereunder. Rule 144 also
permits, under certain circumstances, that sale of shares by a person
who is not an affiliate of ours and who has satisfied a 2 two year
holding period without any quantity limitation and whether or not there
is adequate current public information available. Investors should be
aware that sales under Rule 144, or pursuant to a registration statement
filed under the Securities Act, may have a depressive effect on the
market price of the Company's common stock in any market that may
develop for such shares.
Pursuant to a letter dated January 21, 2000 from the United States
Securities and Exchange Commission (the "Commission") to NASD
Regulation, Inc. the Commission has taken the position that, both
before and after a business combination, the promoters or affiliates of
blank check companies, as well as their transferees, are underwriters of
the securities issued and accordingly such securities can only be resold
pursuant to a Registration Statement filed under the Securities Act.
Accordingly the aforementioned shares may not be sold in compliance
of Rule 144.
Possible Issuance of Additional Shares. The Company's Certificate of
Incorporation, authorizes the issuance of 50,000,000 shares of common
stock. The Company's Board of Directors has the power to issue any or
all of such additional shares without stockholder approval for such
consideration as it deems. Management presently anticipates that it
may choose to issue a substantial amount of the Company's shares in
connection with the acquisition of a target business.
Risks of Leverage. There are currently no limitations relating to the
Company's ability to borrow funds to increase the amount of capital
available to it to effect a business combination or otherwise finance the
operations of any Target Company. The amount and nature of any
borrowings by the Company will depend on numerous factors, including
the Company's capital requirements, the Company's perceived ability to
meet debt services on any such borrowings, and then-prevailing
conditions in the financial, if required or otherwise sought, will be
available on terms deemed to be commercially acceptable and in the
best interest of the Company's inability to borrow funds required to
effect or facilitate a business combination, or to provide funds for an
additional infusion of capital into a Target Company, may have a
material adverse affect on the Company's financial condition and future
prospects.
Additionally, to the extent that debt financing ultimately proves
to be available, any borrowings may subject the Company to various
risks traditionally associated with incurring of indebtedness, including:
* if the Company's operating revenues after the acquisition
were to be insufficient to pay debt service, there would be a
risk of default and foreclosure on our assets.
* if a loan agreement containing covenants is breached without
a waiver or renegotiation of the terms of that covenant, then
the lender could have the right to accelerate the payment of
the indebtedness even if the Company has made all principal
and interest payments when due.
* if the interest rate on a loan fluctuated or the loan was
payable on demand, the Company would bear the risk of
variations in the interest rate or demand for payment.
* if the terms of a loan did not provide for amortization prior
to maturity of the full amount borrowed and the "balloon"
payment could not be refinanced at maturity on acceptable
terms, we might be required to seek additional financing
and, to the extent that additional financing is not available
on acceptable terms, to liquidate the Company's assets.
Possible Need for Additional Financing. The Company cannot
ascertain with any degree of certainty the capital requirements for an
particular Target Company inasmuch as the Company has not yet
identified any acquisition candidates. If the Target Company requires
additional financing, such additional financing (which, among other
forms, could be derived from the public or private offering of securities
or from the acquisition of debt through conventional bank financing),
may not be available, due to, among other things, the Target Company
not having sufficient:
* credit or operating history;
* income stream;
* profit level;
* asset base eligible to be collateralized; or
* market for its securities.
Since no specific business has been targeted for acquisition, it is
not possible to predict the specific reasons why conventional private or
public financing or conventional bank financing might not become
available. Although there are no agreements between the Company and
any of its officers and/or directors pursuant to which we may borrow
and such officers and/or directors are obligated to lend the Company
monies, there are no restrictions on our right to borrow money from
officers and directors. No stockholder approval is required in
connection with any such loan.
Penny Stock Rules. Under Rule 15g-9, a broker or dealer may not sell
a "penny stock" (as defined in Rule 3a51-1) to or effect the purchase of
a penny stock by any person unless:
(1) such sale or purchase is exempt from Rule 15g-9; or
(2) prior to the transaction the broker or dealer has (a) approved
the person's account for transaction in penny stocks in
accordance with Rule 15g-9 and (b) received from the person
a written agreement to the transaction setting forth the
identity and quantity of the penny stock to be purchased.
The Commission adopted regulations that generally define a penny
stock to be any equity security other than a security excluded from such
definition by Rule 3a51-1. Such exemptions include, but are not
limited to (a) an equity security issued by an issuer that has (i) net
tangible assets of at least $2,000,000, if such issuer has been in
continuous operations for at least three years; (ii) net tangible assets of
at least $5,000,000, if such issuer has been in continuous operation for
less than three years; or (iii) average revenue of at least $6,000,000 for
the preceding three years; (b) except for purposes of Section 7(b) of the
Exchange Act and Rule 419, any security that has a price of $5.00 or
more; (c) and a security that is authorized or approved for authorization
upon notice of issuance for quotation on the National Association of
Securities ("NASD") Dealers Automated Quotation System
("NASDAQ").
It is likely that the Company's common stock will be subject to
the regulations on penny stocks; consequently, the market liquidity for
our common stock may be adversely affected by such regulations. This,
in turn, will affect shareholders ability to sell his shares following the
completion of an acquisition.
There is no current trading market for shares (the "Shares") of the
Company's common stock and there can be no assurance that a trading
market will develop, or, if such a trading market does develop, that it
will be sustained. The Shares, to the extent that a market develops for
the Shares at all, will likely appear in what is customarily known as the
"pink sheets" or on the NASD over-the-counter Bulletin Board (the
"OTCBB"), which may limit the marketability and liquidity of the
Shares.
To date, neither the Company nor anyone acting on behalf of the
Company has taken any affirmative steps to request or encourage any
broker/dealer to act as a market maker for our common stock. The
Company has had no discussions or understandings, with any "market
makers" regarding the participation of any such market maker in the
future trading market, if any, in the Company's common stock.
Management expects that discussions in this area will ultimately be
initiated by the management in office after completion of the
acquisition of a Target Company.
Risks Associated with Operations in Foreign Countries. The
Company's business plan is to seek to acquire a Target Company.
Management's discretion is unrestricted, and the Company may
participate in any business whatsoever that may in the opinion of
Management meet the Company's business objectives. The Company
may acquire a business outside the United States. The Company has not
limited the scope of its search to a particular region or country.
Accordingly, if the Company acquires a business located, or operating
in a foreign jurisdiction, the Company's operations may be adversely
affected to the extent of the existence of unstable economic, social
and/or political conditions in such foreign regions and countries.
No Recent Operating History or Revenue and Minimal Assets. The
Company has had no operating history nor any revenues or earnings
from operations since 1998. The Company has no significant assets or
financial resources. The Company will, in all likelihood, 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 Target Company. There is no assurance that the Company can
identify such a Target Company and consummate such a business
combination.
Speculative Nature of the Company's Proposed Operations. 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 Target Company. While management will prefer business
combinations with entities having established operating histories, there
can be no assurance that the Company will be successful in locating
candidates meeting such criteria. In the event the Company completes a
business combination, of which there can be no assurance, the success
of the Company's operations will be dependent upon management of the
Target Company and numerous other factors beyond the Company's
control.
Scarcity of and Competition for Business Opportunities and
Combinations. The Company is and will continue to be an
insignificant participant in the business of seeking mergers with and
acquisitions of business 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 merger or
acquisition 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 with numerous
other small public companies in seeking merger or acquisition
candidates.
No Agreement for Acquisition of a Target Company Combination. The
Company has no current arrangement, agreement or understanding with
respect to engaging in a merger with or acquisition of a specific
business entity. There can be no assurance that the Company will 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. There is no assurance that the
Company will 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 Company to have
achieved, or without which the Company would not consider a business
combination with such business entity. Accordingly, the Company may
enter into a business combination with a business entity having no
significant operating history, losses, limited or no potential for
immediate earnings, limited assets, negative net worth or other negative
characteristics.
Reporting Requirements May Delay or Preclude Acquisition. Section
13 of the Exchange Act requires companies subject thereto to provide
certain information about significant acquisitions including certified
financial statements for the company acquired covering one or two
years, depending on the relative size of the acquisition. The time and
additional costs that may be incurred by some target companies to
prepare such financial statements may significantly delay or essentially
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 Exchange Act
are applicable.
Lack of Market Research or Marketing Organization. The Company has
neither conducted, nor have others made available to it, market research
indicating that demand exists for the transactions contemplated by the
Company. Even in the event demand exists for a merger or acquisition
of the type contemplated by the Company, there is no assurance the
Company will be successful in completing any such business
combination.
Lack of Diversification. The Company's proposed operations, even if
successful, will in all likelihood result in the Company engaging in a
business combination with only one business entity. Consequently, the
Company's activities will be limited to those engaged in by the business
entity 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.
Regulation under Investment Company Act. Although the Company
will be subject to regulation under the Exchange Act, 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
could subject the Company to material adverse consequences.
Probable Change In Control and Management. A business combination
involving the issuance of the Company's common stock will, in all
likelihood, result in shareholders of a Target Company obtaining a
controlling interest in the Company. Any such business combination
may require shareholders of the Company to sell or transfer all or a
portion of the Company's common stock held by them. The resulting
change in control of the Company will likely result in removal of the
present officer and director of the Company and a corresponding
reduction in or elimination of his participation in the future affairs of
the Company.
Taxation. Federal and state tax consequences will, in all likelihood, 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 Company; however,
there can be no assurance that such business combination will meet the
statutory requirements of a tax-free reorganization or that the parties
will 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.
ITEM 3. LEGAL PROCEEDINGS
The Company is not party to any pending legal proceedings and is
not aware of any contemplated legal proceedings to which it may be a
party or of which any of its properties may be subject.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY
HOLDERS
During the last quarter of the fiscal year ended August 31, 2000 no
matter was submitted to the vote of the Company's security holders,
through resolutions of proxies or otherwise.
PART II
ITEM 5. MARKET FOR THE COMPANY'S COMMON EQUITY AND
RELATED STOCKHOLDERS MATTERS
There is no trading market for the Company's Common Stock.
ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN
OF OPERATION
This Report includes "forward-looking statements" within the
meaning of Section 27A of the Securities Act and Section 21E of the
Exchange Act. All statements other than statements of historical facts
included in this Report, including, without limitation, the statements
under "Management's Discussion and Analysis or Plan of Operation"
regarding the Company's prospects and the Company's financial position
are forward-looking statements. Although the Company believes that
the expectations are reasonable and it can give no assurance that such
expectations are reasonable and it can give no assurance that such
expectations will prove to have been correct. Important factors that
could cause actual results to differ materially from the Company's
expectations ("Cautionary Statements") are disclosed in this Report,
including, without limitation, in conjunction with the forward-looking
statements included in this Report under "Risks Associated with the
Company's Business." All subsequent written and oral forward looking
statements attributable to the Company or persons acting on its behalf
are expressly qualified in their entirety by the Cautionary Statements.
Business Objectives
The Company's business plan is to seek to acquire or merge with
potential businesses that may, in the opinion of Management, warrant
the Company's involvement. Management's discretion is unrestricted,
and the Company may participate in any business whatsoever that may
in the opinion of Management meet the business objectives discussed
herein.
The Company recognizes that as a result of its limited financial,
managerial or other resources, the number of suitable potential
businesses that may be available to it will be extremely limited. The
Company's principal business objective will be to seek long-term
growth potential in the business in which it participates rather than
immediate, short-term earnings. In seeking to attain its business
objectives, the Company will not restrict its search to any particular
industry. Rather, the Company may investigate businesses of
essentially any kind or nature, including but not limited to finance,
high technology, manufacturing, service, research and development,
communications, insurance, brokerage, transportation, and others.
Management may also seek to become involved with other development
stage companies or companies that could be categorized as "financially
troubled." At the present time, the Company has not chosen the
particular area of business in which it proposes to engage and has not
conducted any market studies with respect to any business, property or
industry.
Businesses that seek the Company's participation in their operations
may desire to do so to avoid what such businesses deem to be adverse
factors related to undertaking a public offering. Such factors include
substantial time requirements, market conditions, legal costs,
conditions or requirements imposed by Federal and state securities laws
and possible loss of voting control. In making an investment in the
Company, investors should recognize that the terms of their purchase of
the Company's securities may ultimately prove to be less favorable than
if such persons had invested in the securities of a specific business that
was undertaking its own public offering.
Evaluation Criteria
The analysis of potential business endeavors will be undertaken by or
under the supervision of Management, no member of which is a
professional business analyst. Management is comprised of individuals
of varying business experiences, and Management will rely on its own
business judgment in formulating decisions as to the types of businesses
that the Company may acquire or in which the Company may
participate. It is quite possible that Management will not have any
business experience or expertise in the type of business engaged in by
the company ultimately acquired. Management will seek to examine
those factors described herein when making a business decision;
however, the mention of such factors to be examined by Management
with regard to its determining the potential of a business endeavor
should not be read as implying any experience or expertise on behalf of
Management as to the business chosen. These factors are merely
illustrative of the types of factors that Management may consider in
evaluating a potential acquisition.
Management anticipates that the selection of a Target Company will
be complex and risky because of the competition for such business
opportunities among all segments of the financial community. The
nature of the Company's search for the acquisition of a Target Company
requires maximum flexibility inasmuch as the Company will be required
to consider various factors and divergent circumstances which may
preclude meaningful direct comparison among the various business
enterprises, products or services investigated. Investors should
recognize that the possible lack of diversification in relation to the
Company's acquisition may not permit the Company to offset potential
losses from one venture against profits from another. This should be
considered a negative factor affecting any decision to purchase the
Shares. Management of the Company will have virtually unrestricted
flexibility in identifying and selecting a prospective Target Company.
Management may consider, among other factors in evaluating a
prospective Target Company and determining the "fair market value"
thereof, the following:
* the Target Company' net worth;
* the Target Company' total assets;
* the Target Company' cash flow;
* costs associated with effecting the Business Combination;
* equity interest in and possible management participation in the
Target Company;
* earnings and financial condition of the Target Company;
* growth potential of the Target Company and the industry in which
it operates;
* experience and skill of management and availability of additional
personnel of the Target Company;
* capital requirements of the Target Company;
* competitive position of the Target Company;
* stage of development of the product, process or service of the
Target Company;
* degree of current or potential market acceptance of the product,
process or service of the Target Company;
* possible proprietary features and possible other protection of the
product, process or service of the Target Company; and
* regulatory environment of the industry in which the Target
Company operates.
The foregoing criteria is not intended to be exhaustive or obligatory
any evaluation relating to the merits of a particular Business
Combination will be based, to the extent relevant, on the above factors
as well as other considerations deemed relevant by management in
connection with effecting a Business Combination consistent with the
Company's business objectives.
It is anticipated that locating and investigating specific business
proposals could take a considerable amount of time. The time and
costs required to select and evaluate a Target Company candidate
(including conducting a due diligence review) and to structure and
consummate the Business Combination (including negotiating relevant
agreements and preparing requisite documents for filing pursuant to
applicable securities laws and state corporate laws) cannot presently be
ascertained with any degree of certainty.
The Company anticipates that it will make contact with business
prospects primarily through the efforts of its officers, who will meet
personally with existing management and key personnel, visit and
inspect material facilities, assets, products and services belonging to
such prospects, and undertake such further reasonable investigation as
Management deems appropriate, to the extent of its limited financial
resources. The Company anticipates that certain Target Company
candidates may be brought to its attention from various unaffiliated
sources, including securities broker/dealers, investment bankers,
venture capitalists, bankers, other members of the financial community,
and affiliated sources. While the Company does not presently
anticipate engaging the services of professional firms that specialize in
business acquisitions on any formal basis, the Company may engage
such firms in the future, in which event the Company may pay a finder's
fee or other compensation.
To date, the Company has not selected any particular industry or any
Target Company in which to concentrate its Business Combination
efforts.
Daily Operations
The Company expects to use attorneys and accountants as necessary,
and does not anticipate a need to engage any full-time employees so
long as it is seeking and evaluating business opportunities. The need
for employees and their availability will be addressed in connection
with the decision whether or not to acquire or participate in a specific
Business Acquisition.
Until an active business is commenced or acquired the Company will
have no employees or day- to-day operations. The Company is unable
to make any estimate as to the future number of employees which may
be necessary, if any, to work for the Company. If an existing business
is acquired it is possible that its existing staff would be hired by the
Company. At the present time it is the intention of Management to meet
or be in telephone contact at least once a week and more frequently if
needed to review business opportunities, evaluate potential acquisitions
and otherwise operate the affairs of the Company. Except for
reimbursement of reasonable expenses incurred on behalf of the
Company, Management will not be compensated for these services
rendered on behalf of the Company.
Office Facilities
The Company will maintain its business address at 2160-650 West
Georgia Street Vancouver, B.C. Canada V6B 4N7. Pursuant to an oral
agreement, which agreement may be terminated by either party on 30
days prior written notice, the Company will use these offices on a rent
free basis until such time as it consummates a Business Combination
ITEM 7. FINANCIAL STATEMENTS
Index
Page
Independent Auditor's Report F-1
Balance Sheet as of August 31, 2000
and August 31, 1999 F-2
Statements of Loss for the Years
Ended August 31, 1997, August 31, 1998,
August 31, 1999 and August 31, 2000. F-3
Statements of Cash Flows for the Years Ended
August 31, 1997, August 31, 1998,
August 31, 1999 and August 31, 2000. F-4
Statements of Changes in Stockholders' Equity (Deficit)
for the Years Ended August 31, 1997, August 31,1998, F-5
August 31, 1999 and August 31, 2000.
Notes to Financial Statements F-6 - F-7
ITEM 8. CHANGES IN AND DISAGREEMENTS WITH
ACCOUNTANTS AND ACCOUNTING AND FINANCIAL DISCLOSURE
Not Applicable
PART III
ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND
CONTROL PERSONS; COMPLIANCE WITH SECTION 16(a) OF THE
EXCHANGE ACT
Directors and Executive Officers
Set forth below is the name of each of the directors and officers of
the Company, all positions and offices with the Company held, the
period during which such person has never served as such, and the
business experience during at least the last five years:
Name Age Positions and Offices Held
John Mackay 51 President and Director
(since inception)
Rod Saunders 41 Secretary (since May 1st
1996)
There are no agreements or understandings for the officer or
director to resign at the request of another person and the above-named
officers and director are not acting on behalf of nor will act at the
direction of any other person.
Mr. John Mackay is and since 1990 has been the President of
Strand Properties Corporation. Mr. Mackay holds a Bachelor of
Commerce degree and a Bachelor of laws degree, both from the
University of British Columbia.
Mr. Rod Saunders is and since 1990 has been the Vice President,
Finance of Strand Properties Corporation. Mr. Saunders holds a
Bachelor of Commerce degree from the University of British Columbia
and is a Certified Public Accountant and a member of the Delaware
Society of Certified Public Accountants.
ITEM 10. EXECUTIVE COMPENSATION
No officer or director presently receives a salary. Except as
described herein it is not anticipated that any director or officer will
receive any fee or salary pending consummation of a Business
Combination. However, directors and/or officers will receive expense
reimbursement for expenses reasonably incurred on behalf of the
Company.
In addition, Mr. Mackay as a stockholder of the Company or his
affiliates may receive personal financial gain, by: (i) payment of
consulting fees, (ii) sales of affiliates' stock, and (iii) payments of
salaries. See "Risks Associated with the Company's Business."
However, no finders fees will be paid to an officer, director or principal
stockholder or their affiliates by virtue of their initiation of, or the
identification of a Target Company with which a Business Combination
is consummated.
CONFLICTS OF INTEREST
The Company's officers and sole director expect to organize other
companies of a similar nature and with a similar purpose as the
Company. Consequently, there are potential inherent conflicts of
interest in acting as an officer and director of the Company. Insofar as
the officers and the sole director are engaged in other business
activities, he will devote only a minor amount of time to the Company's
affairs. The Company does not 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.
A conflict may arise in the event that another blank check and/or
blind pool company (a "blind pool company") with which management is
affiliated is formed and actively seeks a target company. It is
anticipated that target companies will be located for the Company and
other blind pool companies in chronological order of the date of
formation of such blind pool companies or by lot. However, any blank
check companies that may be formed may differ from the Company in
certain items such as place of incorporation, number of shares and
shareholders, working capital, types of authorized securities, or other
items. It may be that a target company may be more suitable for or may
prefer a certain blind pool company formed after the Company. In such
case, a business combination might be negotiated on behalf of the more
suitable or preferred blind pool company regardless of date of formation
or choice by lot. Mr. John Mackay will be responsible for seeking,
evaluating, negotiating and consummating a business combination with
a target company which may result in terms providing benefits to Mr.
John Mackay.
The Company may agree to pay finder's fees, as appropriate and
allowed, to unaffiliated persons who may bring a Target Company to the
Company where that reference results in a business combination. No
finder's fee of any kind will be paid by the Company to management or
promoters of the Company or to their affiliates. No loans of any type
have, or will be, made by the Company to management or promoters of
the Company or to any of their associates or affiliates.
Management has not adopted policies involving possible conflicts
of interest.
There are no binding guidelines or procedures for resolving
potential conflicts of interest. Failure by Management to resolve
conflicts of interest in favor of the Company could result in liability of
Management to the Company. However, any attempt by shareholders to
enforce a liability of Management to the Company would most likely be
prohibitively expensive and time consuming.
ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT
The following table sets forth certain information regarding the
beneficial ownership of the Company's common stock as of August 31,
2000 and as adjusted to reflect the sale of the Shares by: (i) each person
who is known by the Company to own beneficially more than five
percent (5%) of the Company's outstanding common stock, (ii) each of
the Company's officers and directors, and (iii) all directors and officers
of the Company as a group.
NAME AND SHARES OF ATTRIBUTED APPROXIMATE
ADDRESS OF COMMON STOCK BENEFICIAL PERCENT
BENEFICIAL BENEFICIALLY OWNER
OWNER OWNED
OWNERSHIP
Unigro U.S.A. Inc. 2,750,000 Frits Jelgersma 55%
1221 Lexington Court
El Dorado hills, CA 95762
Carrie Nelson 450,000 NA 9%
639 Thurston Crt.
Port Moody B.C.
Canada V3H 4J4
Lynne Tam 50,000 NA 9%
2433 West 47th Ave.
Vancouver, B.C.
Canada V6M 2N3
John Mackay 450,000 NA 9%
2280 S.W. Marine Drive
Vancouver B.C.
Canada V6P 6C2
Officers and 450,000 NA 9%
Directors as a Group
(1 person)
ITEM 12. CERTAIN RELATIONSHIPS AND RELATED
TRANSACTIONS
None
ITEM 13. EXHIBITS AND REPORTS ON 8K
(a) Exhibits
None
(b) Reports on Form 8-K
No reports on Form 8-K were filed during the last quarter of the
period covered by this report.
SIGNATURE
In accordance with Section 13 or 15(d) of the Exchange Act, the
registrant caused this Annual Report on Form 10-KSB to be signed on
its behalf by the undersigned, thereunto duly authorized.
CAPTEX CAPITAL, NC.
(Registrant)
Dated: DECEMBER 1, 2000 /s/JOHN MACKAY
-------------------------
John Mackay President
F1
Russell & Co.
AUDITORS' REPORT TO THE DIRECTORS OF:
CAPTEX CAPTIAL INC.
(Formerly Strand Capital, Inc.)
(A Texas Corporation)
(A development stage company)
We have audited the balance sheet of Captex Capital Inc. as at August
31, 2000, and August 31, 1999 and the statements of loss and
shareholders' equity (deficit) and cash flows for the years ended August
31, 2000, August 31, 1999, August 31, 1998 and August 31, 1997. These
financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these
financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform an audit to
obtain reasonable assurance whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles
used and significant estimates made by management, as well as
evaluating the overall financial statement presentation.
In our opinion, these financial statements present fairly, in all material
respects, the financial position of the Company as at August 31, 2000
and August 31, 1999 and the results of its operations and its cash flows
for the years ended August 31, 2000, August 31, 1999, August 31, 1998
and August 31, 1997 in accordance with accounting principles generally
accepted in the United States.
The accompanying financial statements have been prepared assuming
that the Company will continue as a going concern. As discussed in
Note 1 to the financial statements, the Company's negative working
capital and deficit raises substantial doubt about its ability to continue
as a going concern. The financial statements do not contain any
adjustments that might result from the outcome of this uncertainty.
Chartered Accountant
West Vancouver, B.C.
Canada.
November 30, 2000
415 Gordon Ave., West Vancouver, B.C., V7T 1P4
Telephone: (604) 913-0405 - Fax: (604) 913-0406
F2
CAPTEX CAPTIAL INC.
(Formerly Strand Capital, Inc.)
(A Texas Corporation)
(A development stage company)
Balance Sheet
as at August 31, 2000 and August 31, 1999
(U.S. DOLLARS)
2000 1999
Assets
Incorporation costs $ 1,000 $ 1,000
----------------------------------------------------------------------
Total Assets $ 1,000 $ 1,000
----------------------------------------------------------------------
Liabilities
Current liabilities
Accounts payable $ 3,624 $ 2,000
----------------------------------------------------------------------
Total Liabilities 3,624 2,000
----------------------------------------------------------------------
Shareholders' equity (deficit)
Share Capital
Authorized:
50,000,000 common shares with a par value of $0.001 each
Issued and outstanding
5,000,000 common shares with a par value of $0.001
at August 31, 2000 and 1,000 as at August 31, 1999
1,000 1,000
----------------------------------------------------------------------
1,000 1,000
Accumulated Deficit (3,624) (2,000)
----------------------------------------------------------------------
(2,624) (1,000)
----------------------------------------------------------------------
$ 1,000 $ 1,000
======================================================================
CONTINUING OPERATIONS (NOTE 1)
F3
CAPTEX CAPTIAL INC.
(Formerly Strand Capital, Inc.)
(A Texas Corporation)
(A development stage company)
Statement of Loss
For the year ended August 31, 2000,
and years ended August 31, 1999, August 31, 1998 and August 31, 1997
(U.S. DOLLARS)
2000 1999 1998 1997
Expenses
Legal $1,724 $2,000 $ - $ -
---------------------------------------------------------------------------
Net earnings (loss) for the period $(1,724) $ (2,000) $ - $ -
===========================================================================
Basic and diluted loss per share $(0.0003) $(2.0000) $(0.0000) $(0.0000)
---------------------------------------------------------------------------
Weighted average shares Outstanding 5,000,000 1,000 1,000 1,000
---------------------------------------------------------------------------
F4
CAPTEX CAPTIAL INC.
(A Texas Corporation)
(A development stage company)
Statement of Cash Flow
For the year ended August 31, 2000,
and years ended August 31, 1999, August 31, 1998 and August 31, 1997
(U.S. DOLLARS)
1999 1998 1997
Cash provided by (used in)
Operations
Net Loss for period $ (1,724) $ (2,000) $ -
-----------------------------------------------------------------------------
(1,724) (2,000) -
Net change in non-cash working
capital balances
Accounts payable 1,724 2,000 -
-----------------------------------------------------------------------------
Net cash used in operating activities - - -
Change in cash for period - - -
Cash, beginning of period - - -
-----------------------------------------------------------------------------
Cash, end of period $ - $ - $ -
=============================================================================
F5
CAPTEX CAPTIAL INC.
(A Texas Corporation)
(A development stage company)
Statement of Shareholders' Equity (Deficit)
Year ended August 31, 2000,
and years ended August 31, 1999, August 31, 1998 and August 31, 1997
(U.S. DOLLARS)
Common shares Total
Shares Amount (Deficit) Equity (Deficit)
-----------------------------------------------------------------------------
Balance August 31, 1996 1,000 $1,000 - $1,000
Net loss - - - -
-----------------------------------------------------------------------------
Balance at August 31, 1997 1,000 1,000 - 1,000
Net loss - - - -
-----------------------------------------------------------------------------
Balance at August 31, 1998 1,000 1,000 - 1,000
Net loss - - (2,000) (2,000)
-----------------------------------------------------------------------------
Balance at August 31, 1999 1,000 1,000 (2,000) (1,000)
Stock split 5,000,000 - -
Net loss - - (1,724) (1,724)
-----------------------------------------------------------------------------
Balance at August 31, 2000 5,000,000 $1,000 $(3,724) $(2,724)
=============================================================================
F6
CAPTEX CAPTIAL INC.
(A Texas Corporation)
(A development stage company)
Notes to Financial Statements
Year ended August 31, 2000
(U.S. DOLLARS)
1. Continuing operations
Strand Capital, Inc. was incorporated on November 5, 1990 in the
state of Texas, U.S.A.
The Company has negative working capital and a deficit. The
ability for the Company to continue as a going concern is dependent
upon its ability to obtain adequate financing to reach profitable levels
of operations. It is not possible to predict whether financing efforts
will be successful or if the Company will attain profitable levels of
operations.
2. Summary of significant accounting policies
These financial statements have been prepared in accordance with
generally accepted accounting principles in the United States and
reflect the following significant accounting principles:
a. Estimates and assumptions
The preparation of financial statements in conformity with
generally accepted accounting principles requires
management to make assumptions that affect the reported
amounts of assets and liabilities and disclosure of contingent
assets and liabilities at the date of the financial statements
and the reported amount of revenues and expenses during the
reporting period. Actual results could differ from those
estimates.
b. Earnings (loss) per common share
In February, 1997, the Financial Accounting Standards Board
issued Statement No. 128, Earnings Per Share (SFAS 128),
which established new standards for computing and
presenting earnings per share effective for fiscal years
ending after December 15, 1997. With SFAS 128, primary
earnings per share is replaced by basic earnings per share,
which is computed by dividing income available to common
shareholders by the weighted average number of shares
outstanding for the period. In addition, SFAS 128 requires
the presentation of diluted earnings per share, which
includes the potential dilution that could occur if dilutive
securities were exercised or converted into common stock.
The computation of diluted EPS does not assume the
conversion or exercise of securities if their effect is anti-
dilutive. Common equivalent shares consist of the common
shares issuable upon the conversion of the convertible loan
notes and special warrants (using the if-converted method)
and incremental shares issuable upon the exercise of stock
options and share purchase warrants ( using the treasury
stock method).
c. Cash and cash equivalents
Cash and cash equivalents consist of cash on hand, deposits
in banks and highly liquid investments with an original
maturity of three months or less.
3. Share Capital
On October 26, 1999, the Company amended its certificate of
incorporation by increasing its authorized capital stock to 50,000,000
shares of common stock and changing the par value of its common
shares to $0.001 per share. Also, the Company converted and split the
common stock into five thousand shares with the result being that the
Company has 5,000,000 shares of issued and outstanding shares.
4. Income taxes
The Company has net operating losses which may give rise to
future tax benefits of approximately $1,174 as of August 31,
2000and $2,000 as of August 31, 1999. To the extent not used,
net operating loss carryforwards expire in varying amounts
beginning in the year 2014. Income taxes are accounted for in
accordance with Statement of Financial Accounting Standards
No.109 (SFAS 109). Under this method, deferred income taxes are
determined based on differences between the tax basis of assets
and liabilities and their financial reporting amounts at each year
end, and are measured based on enacted tax rates and laws that
will be in effect when the differences are expected to reverse.
Valuation allowances are established, when necessary, to reduce
deferred tax assets to the amount expected to be realized. No
provision for income taxes is included in the statement due to its
immaterial amount.
