<PAGE>2
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
Amendment 1 to
FORM 10SB
General Form for Registration of Securities of Small
Business Issuers
Under Section 12(b) or (g) of the Securities Exchange Act of 1934
MICRO LABORATORIES, INC.
(Exact name of Small Business Issuer in its charter)
NEVADA 05-049-4587
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization Identification No.)
29 Lakeside Drive, Johnston, Rhode Island 02919
(Address of principal executive offices) (Zip Code)
Registrant's Telephone number, including area code: (401) 949-3562
Securities to be registered pursuant to Section 12(b) of the Act:
None
Securities to be registered pursuant to Section 12(g) of the Act:
Common Stock, $.001 par value
Forward-Looking Statements and Associated Risk. This Registration
Statement contains forward-looking statements including statements
regarding, among other items, the Corporation's growth strategies, and
anticipated trends in the Corporation's business and demographics.
These forward-looking statements are based largely on the Corporation's
expectations and are subject to a number of risks and uncertainties,
certain of which are beyond the Corporation's control. Actual results
could differ materially from these forward-looking statements.
<PAGE>3
ITEM 1. DESCRIPTION OF BUSINESS
Business of Corporation. The operations and objectives of the
Corporation are to produce, market and distribute a line of oral spray
vitamins, trade name "Micro SprayT". The Corporation intends to
produce, market and distribute an additional product line of, minerals,
herbs and other oral absorption products in the United States and the
international market. Therefore, the Corporation's financial viability
will depend almost exclusively on the Corporation's ability to generate
revenues from its operation, and the production of the above product
lines. The Corporation will not have the benefit of reducing its
financial risks by relying on revenues derived from other operations.
Competition. There is significant competition in the vitamin, minerals
and nutritional supplement industry. The Corporation will compete with
established companies and other entities (many of which possess
substantially greater resources than the Corporation). Almost all of
the companies with which the Corporation will compete are substantially
larger, have more substantial histories, backgrounds, experience and
records of successful operations, greater financial, technical,
marketing and other resources, more employees and more extensive
facilities than the Corporation now has, or will in the foreseeable
future. It is also likely that other competitors will emerge in the
near future. There is no assurance that Corporation will compete
successfully with other established vitamin, minerals and nutritional
supplement manufacturers. The Corporation shall compete on the basis of
quality in addition to a price basis. Inability to compete successfully
might result in increased costs, reduced yields and additional risks to
the investors herein
Employees. The Corporation has one full time and two part time
employees. The Corporation shall employ individuals as required.
Governmental Regulation. The Corporation is not subject to
governmental regulation other those regulations, which apply to
manufacturing. The Corporation will need to meet the requirements of
the Food and Drug Administration for food processing standards.
Seasonal Nature of Business Activities. The Corporation's operations
shall not be seasonal.
Products. The Corporation currently has six different nutritional
health products. All natural ingredients are used in each product. The
price of the products range from retail pricing of approximately $7.00
to $40.00 and wholesale prices of $5.00 to $20.00. The Corporation's
products are: Adult Multiple Vitamin, Children's Multiple Vitamin,
Vitamin B-12, Adult B-Complex with C, Children's B-Complex with C, Zinc
plus Vitamin C.
The nutritional supplement industry is not regulated by the Food and
Drug Administration. The Food and Drug Administration has tried
unsuccessfully in the past to pass legislation labeling vitamins as
drugs. Due to this position, the Corporation does not publish any
information that could be considered as "'prescribing". The
Corporation attempts to cooperate with this agency whenever possible
and seeks professional legal counsel experienced and specializing in
Food and Drug Administration matters.
The Food and Drug Administration prohibits any companies from providing
information to the customer as to what the product is for and why it
works. The Food and Drug Administration views that if the marketer is
making any suggestions or claims as to what the product is for then
that is considered prescribing and as such the product is a drug. If
the product is determined to be a drug, then it needs to be licensed as
one and available only as a prescription item. The Food and Drug
Administration has tried unsuccessfully in the past to pass legislation
labeling vitamins as drugs. Due to this position, the Corporation does
not publish any information that could be considered as "'prescribing".
Micro SprayT Delivery System. The Corporation has developed "Micro
SprayT", a delivery system in the form of a spray that is sprayed
directly onto the mouth in the form of a fine mist. Micro SprayT
enters the delicate tissue of the mouth and is absorbed into the
bloodstream and assimilated throughout the body. Micro SprayT
consists of vitamins and nutrients in an aqueous solution that is
delivered through a non-aerosol pump.
<PAGE>4
In-house studies have determines that Micro SprayT, derived from
vegetable sources, increases the quantity of nutrients that enter into
the bloodstream, provides proper nutrient levels and increases the rate
at which a nutrient is absorbed.
Current Industry Background and Delivery Systems. The metabolism of
nutrients consist of four important steps: digestion, assimilation,
utilization and excretion. Digestion takes place in either the stomach
where the fluids are acidic, or the small intestines where the fluids
are alkaline. The proper balance of acid levels in these vital organs
is crucial to the digestion process, yet as people age, increasingly
less of these fluids are produced and as a result, the level of
nutrient absorption is decreased.
NBC's Today Show reported that when a variety of name brand vitamins
were tested, 36% of the vitamin pills failed to disintegrate quickly
enough to be absorbed into the bloodstream. In order to combat this
problem, tablet manufacturers often attach a catalyst (chelator) to the
minerals that will aid in the digestion process, however, normally up
to 80% of the tablet can become chelator and only 20% of the content is
actually pure mineral. In addition, minerals are typically unstable
and easily destroyed in the digestive tract and the acid in the stomach
can actually deactivate enzymes before they reach the site of optimal
activity. To counter this difficulty, manufacturers enteric-coat
pancreatic and other similar acid sensitive ingredients to prevent
destruction in the stomach. The coating must be resistant to acid in
the stomach, yet dissolve in the alkaline environment of the small
intestine. As individuals vary greatly in the levels of acid in their
stomachs and the alkaline levels of their small intestines, if coatings
are improperly balanced or designed in a generic environment, the
supplement will be wasted.
Assimilation takes place primarily in the small intestines where
adverse effects can result from a multitude of factors. Some nutrients
react to one another and compete for absorption. Some even require
that your body secretes special proteins as carriers before being
absorbed, while others are best absorbed when fat and oils are induced
into the body's diet as a carrier. The result of assimilation
complications is known to cause, among other ailments, unpleasant side
effects such as nausea and gastrointestinal discomfort. In addition,
digestive organs such as the liver, kidneys and stomach are taxed
unnecessarily, as the nutrients do not always break down and might not
offer the body any nutritional value.
Manufacturing. The Corporation will package its product line. Most
packaging will be done in house, some will be done by independent
packaging companies across the nation. The Corporation supplies the
packaging Corporation with the finished product in measured-premixed
form, so that a measured amount can be inserted into the vials by the
packaging Corporation. The vials are filled, labeled and packaged for
distribution. The Corporation will offer variations of their product
for private label.
Service and Support. The Corporation guarantees its products to 100%
satisfaction. If a customer is not satisfied with the product for any
reason, the product will be replaced or the price refunded.
Marketing. The Corporation shall position its marketing efforts to
target large retail store chains and is presently in negotiations with
several large distributors. The Corporation has entered into an
agreement with three large distributors and marketing representatives
for the distribution of its products in the northwest, mid west, and
New England. The distributors receive commissions on each product sold.
The target market extends to drug, grocery, health food stores, fitness
clubs, established physicians, chiropractors and even veterinarians.
New Products. The Corporation shall continue to pursue the
development of new products as funds allow.
Advertising and Name Brand Awareness. In order to increase the number
of new distributors and expand the customer base, the Corporation shall
utilize a portion of the proceeds of the Offering to finance media
campaigns encompassing a broad communication spectrum ranging from
network television to the Internet, and trades.
International Markets. The Corporation shall pursue its expansion into
the foreign markets.
<PAGE>5
Item 2. Management's Discussion and Analysis or Plan of Operation
Trends and Uncertainties. Demand for the Corporation's products will be
dependent on, among other things, general economic conditions, which
are cyclical in nature. Inasmuch as a major portion of the
Corporation's activities is the receipt of revenues from the sale of
its products, the Corporation's business operations may be adversely
affected by its competitors and prolonged recessionary periods.
The Corporation is entering a phase of conversion from a Development
Stage Corporation to an Operational Corporation. Agreements have been
reached to provide key personnel in the areas of marketing and sales.
An agreement has been reached with three large distributors to include
the west coast, mid west and New England. Preliminary market research
was conducted to arrive at the flavorings for the Micro SprayT product
line. The Corporation sent a representative to the National
Association of Chain Drug Stores (NACDS) trade convention in
Philadelphia, PA also the packaging show in Chicago Ill. The
Corporation plans to use a "target" marketing approach for the
distribution of its Micro SprayT product line.
Capital and Source of Liquidity. The Corporation currently has no
material commitments for capital expenditures.
For the six months ended September 30, 1999, the Corporation acquired
intangible assets for $24,979 and property and equipment for $28,025.
The Corporation had an increase in shareholder loans of $600 and an
increase in notes payable of $4,700. As a result, the Corporation had
net cash used in investing activities of $$58,304 for the six months
ended September 30, 1999.
For the six months ended September 30, 1998, the Corporation did not
pursue any investing activities.
For the year ended March 31, 1999, the Corporation acquired intangible
assets valued at $129,238 and acquired property and equipment of
$25,756. For the year ended March 31, 1999, the Corporation made
shareholder loans of $24,710. The Corporation had a note payable of
$45,000, had $5,500 due to shareholder and $64,030 due to a related
party for the year ended March 31, 1999. As a result, the Corporation
had net cash used in investing activities of $65,174 for the year ended
March 31, 1999.
For the period from August 8, 1997 to March 31, 1998, the Corporation
acquired intangible assets of $75,750 and property and equipment of
$40,965. As a result, the Corporation had net cash used for investing
activities of $116,715 for the period from August 8, 1997 to March 31,
1998.
For the six months ended September 30, 1999, the Corporation did not
pursue any financing activities
For the six months ended September 30, 1998, the Corporation did not
pursue any financing activities.
For the year ended March 31, 1999, the Corporation received proceeds of
$182,198 from the issuance of its common stock. The Corporation also
received services valued at $572,455 in exchange for its common stock
for the year ended March 31, 1999. As a result, the Corporation had
net cash provided by financing activities of $754,653 for the year
ended March 31, 1999.
For the period from August 8, 1997 to March 31, 1998, the Corporation
received proceeds of $411,000 from the issuance of its common stock
resulting in net cash provided by financing activities of $411,000.
On a long term basis, liquidity is dependent on commencement of
operations as discussed above, (See "TRENDS AND UNCERTAINTIES."),
receipt of revenues, additional infusions of capital and debt
financing. The Corporation believes that additional capital and debt
financing in the short term will allow the Corporation to increase its
marketing and sales efforts and become a fully operational Corporation
thereafter resulting in increased revenue and greater liquidity in the
long term. However, there can be no assurance that the Corporation
will be able to obtain additional equity or debt financing in the
future, if at all.
<PAGE>6
Results of Operations.
The Corporation is accurately classified as a "development stage
Corporation" and as such has conducted startup and development
operations that include:
? completed photo shoots, created Corporation logos,
brochures, sales literature, product labels and packaging
design, UPCs
? prepared the product line of six items for distribution
roll out
? completed negotiations with three large distributors to
include west coast, mid west, and New England to
represent and sell the companies product lines to national
chains
The Corporation has not received any material revenues since inception.
For the six months ended September 30, 1999, the Corporation had sales
of $349 and received interest income of $1,681 resulting in total
revenues of $2,031. Cost of Sales were $13,635 resulting in gross
profit of $(11,605) for the six months ended September 30, 1999.
For the six months ended September 30, 1999, the Corporation had
general and administrative expenses of $328,520 resulting in a net loss
of $340,125. The general and administrative expenses included
advertising of $27,754, auto lease expense of $4,730, bookkeeping
services of $12,560, consultant expense of $73,369, fullfilment expense
of $55,000, legal expense of $16,213, professional fees of $7,865,
office expense of $4,057, rent of $12,750, repairs of $2,033, research
and development of $93,095, telephone expense of $13,914. Other
miscellaneous expenses were $5,180.
For the six months ended September 30, 1998, the Corporation had
general and administrative expenses of $154,688 resulting in a net loss
of $153,445. The general and administrative expenses included
advertising of $13,500, administrative fees of $17,220, research and
development costs of $15,022, payroll and payroll taxes of $43,593,
telephone of $4,117, rent of $4,800, automobile expense of $8,069,
travel expense of $7,962, insurance expense of $2,466, office supplies
of $3,543, freight of $1,313, repairs and maintenance of $22,654.
Other miscellaneous expenses were $10,429.
For the year ended March 31, 1999, the Corporation had operating
expenses of $444,156 and had a net loss of $440,507 resulting in a loss
per common share of $.04. These operating expenses consisted primarily
of advertising and public relations of $103,008, legal and professional
fees of $111,444, research and development of $51,022, telephone
expense of 18,959, rent of $24,200, automobile expense of $14,272,
freight expense of $62,107 and other miscellaneous expenses of $59,133
For the year ended March 31, 1998, the Corporation had operating
expenses of $153,550 and had a net loss of $152,226 resulting in a loss
per common share of $.03. These operating expenses consisted primarily
of advertising and public relations ($48,422), administrative fees
($58,127), start-up expenses ($7,627), laboratory supplies ($4,764),
telephone expenses ($6,192) and other miscellaneous expenses ($28,368).
Plan of Operation. The Corporation is in the development stage and has
not conducted any significant operations to date or received any
material operating revenues. The Corporation may experience problems;
delays, expenses and difficulties sometimes encountered by an
enterprise in the Corporation's stage of development, many of which are
beyond the Corporation's control. These include, but are not limited
to, unanticipated problems relating to additional costs and expenses
that may exceed current estimates and competition.
The Corporation is not delinquent in any of its obligations even though
the Corporation has generated limited operating revenues. The
Corporation intends to market its products and services utilizing cash
made available from the private sale of its securities and operations.
The Corporation's management is of the opinion that the proceeds of the
sales of its securities and future revenues will be sufficient to pay
its expenses for the next twelve months.
<PAGE>7
ITEM 3. DESCRIPTION OF PROPERTY
The Corporation's executive offices are located at 29 Lakeside Drive,
P.O. Box 19296, Johnston, Rhode Island 02919. These offices consist of
400 square feet for office, product development, product testing and is
leased at the rate of $600 per month.
ITEM 4. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following tabulates holdings of shares of the Corporation by each
person who, subject to the above, at the date of this prospectus, holds
of record or is known by Management to own beneficially more than 5.0%
of the Common Shares and, in addition, by all directors and officers of
the Corporation individually and as a group. Each named beneficial
owner has sole voting and investment power with respect to the shares
set forth opposite his name.
Shareholdings at Date of
This Prospectus
<TABLE>
<CAPTION>
Percentage of
Number & Class(1) Outstanding
Name and Address of Shares Common
Shares
<S> <C> <C>
Robert Thistle
29 Lakeside Drive
Johnston RI 02919 8,880,000 52.88%
Irene R. Zawadowicz
7 Lakeside Drive
Johnston, RI 02919 10,000 .06%
Mark Shvetz
333 Neipsic Road
Glastonbury, CT 02924 100,000 1.02%
Gerald Schaffert
6 Caldar Road
North Providence 02904 100,000 1.02%
Vanda Poli
117 Nutmeg Drive
Torrington, CT 06790 300,000 3.06%
Cede & Co
C/O Depository Trust Co.
P.O. Box 20
Bowling Green Station
New York NY 10004 4,723,155 28.13%
All Directors & Officers
as a group (4 persons) 9,090,000 55.92%
</TABLE>
(1)Pursuant to Rule 13d-3 under the Securities Exchange Act of 1934, as
amended, beneficial ownership of a security consists of sole or shared
voting power (including the power to vote or direct the voting) and/or
sole or shared investment power (including the power to dispose or
direct the disposition) with respect to a security whether through a
contract, arrangement, understanding, relationship or otherwise.
Unless otherwise indicated, each person indicated above has sole power
to vote, or dispose or direct the disposition of all shares
beneficially owned, subject to applicable unity property laws.
ITEM 5. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS.
Board of Directors. The following persons listed below have been
retained to provide services as director until the qualification and
election of his successor. All holders of Common Stock will have the
right to vote for Directors of the Corporation. The Board of Directors
has primary responsibility for adopting and reviewing implementation of
the business plan of the Corporation, supervising the development
business plan, review of the officers' performance of specific business
<PAGE>8
functions. The Board is responsible for monitoring management, and
from time to time, to revise the strategic and operational plans of the
Corporation. Directors receive no cash compensation or fees for
their services rendered in such capacity.
Mr Thistle dedicates 90% of his time to the Corporation. Ms.
Zawadowicz dedicates 50% of her time to the Corporation. Mr. Shvetz
dedicates 10% of his time to the Corporation.
The Executive Officers and Directors are:
<TABLE>
<CAPTION>
Name Position Term(s) of Office
<S> <C> <C>
Robert Thistle, age 59 President, Director Inception to Present
Mark Shvetz, age 50 Treasurer, Director Inception to Present
Gerald Schaffert, age 38 Director January 27, 1999
to present
Irene R. Zawadowicz, age Secretary August 28, 1999
to present
</TABLE>
Resumes:
Robert Thistle. Mr. Thistle has been Chief Executive Officer,
President and a Director of the Corporation from inception. From 1984
to 1991, Mr. Thistle was President of TR Productions, a Philadelphia
production company. From 1991 to present, Mr. Thistle has worked as a
international business and political consultant working with the
countries of Russia, Pakistan, the Philippines and China. He also
advises Chinese political officials in The People's Republic of China
and is involved in the annual MFN renewal between China and the United
States.
Mark Shvetz. Mr. Shvetz has been the Treasurer and a Director of the
Corporation since inception. Mr. Shvetz has been involved in sales and
marketing for 29 years. From 1993 until he joined the Corporation, Mr.
Shvetz was self employed selling hospital products and other medical
related equipment. From 1979 through 1993, he was a manager of Timmed
Labeling Systems, Inc., a distributor of hospital products and capital
equipment for a national medical products manufacturer. His
responsibilities included interacting with hospital management and
purchasing decision making staff. Mr. Shvetz received a BS in
Accounting from the University of Connecticut in 1967.
Gerald Schaffert. Mr. Schaffert has been a Director of the
Corporation since January 27, 1999. Mr. Schaffert has been involved in
sales and marketing for the past 19 years. From 1990 to present, Mr.
Schaffert has been the assistant sales manager for Union Wadding Co., a
manufacturer of Christmas and Halloween decorations. Mr. Schaffert has
been responsible for supervising a sales force of 50 manufacturer's
representatives covering the entire United States. Mr. Schaffert
received a Bachelor of Science degree in 1982 from the University of
Rhode Island with a concentration in Consumer Affairs.
Irene Zawadowicz. Ms. Zawadowicz has been secretary of the
Corporation since August 1999. From 1994 to 1998, Ms. Zawaowicz was
secretary in the human resources department of Butler Hospital. From
1998 to present, Ms. Zawadowicz has been attending Johnson and Wales
University pursing a degree in information science. Ms. Zawadowicz
received an Associate of Arts degree from the Community College of
Rhode Island along with an Office Automation Certificate.
ITEM 6. EXECUTIVE COMPENSATION
Since inception, the following cash compensation has been paid by the
Corporation to its executive officers, during which there were three
(3) officers.
<PAGE>9
<TABLE>
<CAPTION>
Long Term Compensation
Annual Compensation Awards Payouts
(a) (b) (c) (d) (e) (f) (g) (h) (i)
Other All
Name Annual Restricted LTIP Other
and Compen- Stock Options/ Pay- Compen-
Principal Salary Bonus sation Awards SARs Outs sation
Position Year ($) ($) ($) ($) ($) ($) ($)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Robert Thistle 1999
President 1998 $12,000
Mark Shvetz 1999
1998 (1)
Irene Zawadowicz 1999 (2)
Secretary
</TABLE>
(1)Mr. Shvetz received 100,000 Common Shares for services rendered from
inception.
(2)Pursuant to an agreement dated August 28, 1999, Ms. Zawadowicz
received 10,000 common shares as compensation for services.
The Corporation has not entered into Employment Agreements with its
officers.
Board of Directors Compensation. Currently board members receive no
special compensation for meetings or time incurred. Director
liability insurance may be provided to all members of the Board of
Directors. No differentiation shall be made for any further
compensation of "outside directors" and those officers of the
Corporation serving in that capacity.
Stock Option Plan. The Corporation shall implement an employee stock
option program. The specifics of the plan have yet to be determined.
ITEM 7. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
During the year ended March 31, 1999, the Corporation paid rents
totaling $7,200 to Robert Thistle, President, Director and majority
shareholder. The Corporation incurred administrative expenses during
the period totaling $26,353 paid to a company operated by Mr Thistle
The Corporation has a receivable totaling $27,925 due from President,
Director and a shareholder and a payable totaling $5,500 due to Robert
Thistle.
The Corporation incurred various expenses totaling $64,030, which were
paid for by and due to Beneficial Health, Inc., a company operated by
Robert Thistle.
In addition, the Corporation borrowed $45,000 from Beneficial Health,
Inc., a corporation operated by Robert Thistle during the year ended
March 31, 1999.
ITEM 8. DESCRIPTION OF SECURITIES
Qualification. The following statements constitute brief summaries of
the Corporation's Certificate of Incorporation and Bylaws, as amended.
Such summaries do not purport to be complete and are qualified in their
entirety by the full text of the Certificate of Incorporation and
Bylaws.
The Corporation's articles of incorporation authorize it to issue up to
50,000,000 Common Shares, $.001 par value per Common Share.
Common Stock. Holders of Common Shares of the Corporation are
entitled to cast one vote for each share held at all shareholders
meetings for all purposes. Upon liquidation or dissolution, each
outstanding Common Share will be entitled to share equally in the
assets of the Corporation legally available for distribution to
shareholders after the payment of all debts and other liabilities.
Common Shares are not redeemable, have no conversion rights and carry
no preemptive or other rights to subscribe to or purchase additional
<PAGE>10
Common Shares in the event of a subsequent offering. All outstanding
Common Shares are, and the Common Shares offered hereby will be when
legally issued, fully paid and non-assessable.
There are no limitations or restrictions upon the rights of the Board
of Directors to declare dividends out of any funds legally available
therefor. The Corporation has not paid dividends to date and it is not
anticipated that any dividends will be paid in the foreseeable future.
The Board of Directors initially may follow a policy of retaining
earnings, if any, to finance the future growth of the Corporation.
Accordingly, future dividends, if any, will depend upon, among other
considerations, the Corporation's need for working capital and its
financial conditions at the time.
Transfer Agent. Harris Trust and Savings Bank acts as the
Corporation's transfer agent.
<PAGE>11
PART II
ITEM 1. MARKET PRICE OF AND DIVIDENDS ON THE REGISTRANT'S COMMON
EQUITY AND RELATED STOCKHOLDER MATTERS
The Company's common stock is traded in the over-the-counter market and
listed on the NASDAQ Bulletin Board under the symbol "MLAR-BB.
The following table sets forth the range of high ask and low bid
quotations for the Company's common stock for each quarter since
commencement of trading (July 8, 1998), as reported by the OTC Bulletin
Board. The Company's market makers are Hill, Sharpe Capital, Inc. and
Paragon Securities. The quotations represent inter-dealer prices
without retail markup, markdown or commission, and may not necessarily
represent actual transactions.
Quarter Ended High Ask Low Bid
9/30/98 $4.00 $4.00
12/31/98 $6.062 $.375
3/31/99 $3.250 $.187
6/30/99 $3.00 $.0437
9/30/99 $.750 $.218
12/31/99 $2.125 $.218
The Corporation has never paid any cash dividends nor does it intend,
at this time, to make any cash distributions to its shareholders as
dividends in the near future.
As of December 31, 1999, the number of holders of Corporation's common
stock is approximately 33.
ITEM 2. LEGAL PROCEEDINGS
The Corporation had entered into verbal agreement with InterCapital
Holdings (an unaffiliated entity) to provide services relating to
public relations and marketing of the Corporation and its products.
InterCapital Holdings and its affiliates were to be issued an aggregate
of 500,000 Common Shares as payment for these services. The
Corporation terminated the agreement for non-performance and did not
issue the Common Shares to InterCapital Holdings Corp. On October 4,
1998, InterCapital Holdings Corp filed a lawsuit in the Supreme Court
of the State of New York, InterCapital Holdings Corp. vs. Micro
Laboratories, Inc., Index No. 98.026334. InterCapital Holdings Corp.
alleges that it did perform and is seeking to obtain the 500,000 Common
Shares or $50,000. Management of the Corporation is of the opinion
that it will successfully defend itself in the above-described lawsuit.
Additionally, management is of the belief that any unsuccessful result
would not materially impact the operations of the Corporation.
The Corporation filed suit in an civil action against Deborah L. Gutt,
Vanda Poli Gutt, DL Gutt Corporation, a New Jersey Corporationand
William Gutt (Micro laboratories, inc., et al vs. Gutt, et al, Docket
#: 99-0774 in the Providence County Superior Court. The Corporation
is seeking the return of shares of stock and other property. The
Corporation alleged, among other things, that the defendants did not
render the professional services, which would have entitled them to the
shares of stock as compensation. The Corporation is of the belief
that it shall be successful in any legal proceeding and shall request
the return of the Common Shares so that they may be canceled on the
books and records of the Corporation.
On or about May 10, 1999, the Corporation was served with a Complaint
in United States District Court, District of Connecticut containing a
variety of claims against, among others, the Corporation (Deborah L.
Gutt, Vanda Poi Gutt, DL Gutt Corporation, a New Jersey Corporation and
William Gutt vs. Micro Laboratories, Inc., a Nevada Corporation,
Beneficial Heealth Products, Inc., a Nevada corporation, Top Hat Media
Productions, Inc., a Nevada corporation, Robert Thistle and Ada
Thistle, a/k/a Ada D. Kuszai-Thistle - Case No. 3:99CV0860 SRU). The
plaintiffs claim breach of fiduciary duty, conversion, theft, unjust
enrichment, securities fraud, fraud, breach of affirmative duty of
disclosure and breach of contract. On or about September 17, 1999, the
defendants filed a Motion to Dismiss on several grounds including,
without limitation, the pendency of a prior pending action in another
jurisdiction and the inadequacy of the claims allenged in the
Complaint. On November 5, 1999, the Plantiffs filed an Amended
Complaint which purports to address the objections raised in the Motion
to Dismiss. The Corporation intends to maintain the objectios
<PAGE>12
raised in the Motion to Dismiss and vigorously defend against any
claims raised in the Complaint should they survive the Motion to
Dismiss. The Corporation is of the view that the claims raised in the
Complaint are without merit and will engage in discovery and file
additional substantive motions to address the claims.
ITEM 3. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS.
Since inception, there have been no changes in or disagreements with
the Corporation's principal independent accountant.
ITEM 4. RECENT SALES OF UNREGISTERED SECURITIES.
In the last quarter of 1997 and the first quarter of 1998, the
Corporation issued 3,100,000 common shares to Robert Thistle for
equipment valued at $4,150. The Corporation also issued the following
individuals and entities 850,000 common shares for services valued at
$850z($.001 per share):
Name # of Shares Services provided
Donald Davett 500,000 financial market consulting
Mark Shvetz 100,000 marketing consulting
William McCollum 250,000 South African distribution
consulting
These issuances were made to sophisticated investors (based on their
relationship with the Corporation and representations by the above
listed individuals to the Corporation) pursuant to Section 4(2) of the
Securities Act of 1933.
The Corporation issued 348,000 Common Shares for cash of $411,000 to
the following individuals
Name Number of Common Shares Amount Paid
Intercapital Holdings 175,000 $206,860
Stanley Katz 25,000 29,500
Julian Herskowitz 25,000 29,500
Windless Capital Mgt 12,500 14,750
Meersbrook, Ltd. 12,500 14,750
Michael Fielding 75,000 88,500
Steven Lefkowitz 7,000 8,260
Mitchell Birzon 12,500 14,750
Milton & Olga Cohen 1,000 1,180
Suzanne Spiliotis 1,000 1,180
James Lynch 1,500 `,770
These issuances were made in compliance with Rule 504, Regulation D of
the Securities Act of 1933 by Registrant's management. The offering was
approved and/or exempted by the required states. No commissions were
paid. The determination of whether an investor was accredited or
nonaccredited was based on the responses in the subscription agreement
filled out by each investor. The investor was given the definition of
accredited as set out in the Securities Act of 1933 and asked to
indicate if they were, in fact, accredited or nonaccredited.
In the fourth quarter of the year ended March 31, 1999, the Corporation
issued 1,254,500 to the following individuals for services rendered.
Name Number of Common Shares Value of Services
Nadine Schaffert 200,000 $20,000
Susan Robbins 200,000 20,000
Vandi Poli 300,000 36,000
Jean Sawyer 19,500 2,340
Mitch Birzon 75,000 14,063
Kenneth Richardson 100,000 18,750
Jean Sawyer 250,000 46,875
Don Mazin 50,000 9,375
Harry Hartzstark 25,000 4,687
Ken Alger 25,000 4,687
William Ruffa 10,000 1,875
These issuances were made to sophisticated investors (based on their
relationship with the Corporation and representations by the above
listed individuals to the Corporation) pursuant to Section 4(2) of the
Securities Act of 1933.
ITEM 5. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Indemnification. The Corporation shall indemnify to the fullest extent
permitted by, and in the manner permissible under the laws of the State
of Nevada, any person made, or threatened to be made, a party to an
action or proceeding, whether criminal, civil, administrative or
investigative, by reason of the fact that he is or was a director or
officer of the Corporation, or served any other enterprise as director,
officer or employee at the request of the Corporation. The Board of
Directors, in its discretion, shall have the power on behalf of the
Corporation to indemnify any person, other than a director or officer,
made a party to any action, suit or proceeding by reason of the fact
that he/she is or was an employee of the Corporation.
Insofar as indemnification for liabilities arising under the Act may be
permitted to directors, officers and controlling persons of the
Corporation, the Corporation has been advised that in the opinion of
the Securities and Exchange Commission such indemnification is against
public policy as expressed in the Act and is, therefore, unenforceable.
In the event that a claim for indemnification against such liabilities
(other than the payment by the Corporation of expenses incurred or paid
by a director, officer or controlling person of the Corporation in the
successful defense of any action, suit or proceedings) is asserted by
such director, officer, or controlling person in connection with any
securities being registered, the Corporation will, unless in the
opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question
whether such indemnification by it is against public policy as
expressed in the Act and will be governed by the final adjudication of
such issues.
INDEMNIFICATION OF OFFICERS OR PERSONS CONTROLLING THE CORPORATION FOR
LIABILITIES ARISING UNDER THE SECURITIES ACT OF 1933, IS HELD TO BE
AGAINST PUBLIC POLICY BY THE SECURITIES AND EXCHANGE COMMISSION AND IS
THEREFORE UNENFORCEABLE.
PART F/S
The following financial statements required by Item 310 of Regulation
S-B are furnished below
Unaudited Balance Sheet as of September 1999 and 1998
Unaudited Statement of Operations for the six months ended September
30, 1999 and 1998
Unaudited Statement of Cash Flows for the six months ended September
30, 1999 and 1998
Unaudited Statement of Stockholders' Equity for the six months ended
September 30, 1999 and 1998
Unaudited Notes to Financial Statements
Independent Auditor's Report dated June 9, 1999
Balance Sheet as of March 31, 1999
Statement of Operations for the year ended March 31, 1999
Statement of Cash Flows for the year ended March 31, 1999
Statement of Stockholders' Equity for the year ended March 31, 1999
Notes to Financial Statements
Independent Auditor's Report dated January 18, 1999
Balance Sheet as of March 31, 1998
Statement of Operations for the year ended March 31, 1998
Statement of Cash Flows for the year ended March 31, 1998
Statement of Stockholders' Equity for the year ended March 31, 1998
Notes to Financial Statements
<PAGE>14
MICRO LABORATORIES, INC.
BALANCE SHEET
September 30, 1999
ASSETS
Current assets:
Cash $7,668
Accounts Receivable 45,000
Allowance for Doubtful Accounts (45,000)
Inventory 12,154
Prepaid expense 4,542
Advance against commissions 3,000
Shareholder loans 28,525
--------
Total current assets 55,779
--------
Property and equipment:
Machinery and equipment 238,925
Furniture and fixtures 3,664
Leaseholder improvements 2,357
--------
Total property and equipment 244,946
Less: accumulated depreciation (13,737)
--------
Net property and equipment 231,209
--------
Other assets:
Deposits 4,600
Formulas and trademarks
(net of accumulated amortization) 63,125
Research and Development 8,167
--------
Total other assets 75,892
--------
TOTAL ASSETS $362,880
========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 15,259
Due to Related Entities 64,030
Due to Shareholder 5,500
-------
Total current liabilities 84,789
-------
Stockholders' equity:
Capital stock-$.001 par common;
authorized 50,000,000 shares, issued and
outstanding 10,352 shares 10,352
Additional paid-in-capital 1,160,300
Deficit accumulated during the
development stage (932,86)
--------
Total stockholders' equity 237,791
--------
TOTAL LIABILITIES AND
STOCKHOLDERS'EQUITY $362,880
========
<PAGE>15
MICRO LABORATORIES, INC
STATEMENT OF OPERATIONS
For the Six Months Ending September 30, 1999 and 1998
<TABLE>
<CAPTION>
1999 1998
<S> <C> <C>
Net sales $ 671 $ 0
-------- -------
Cost of goods sold 13,635 0
-------- -------
Operating expenses 328,521 308,238
-------- -------
Loss from operations (338,444) (154,688)
-------- --------
Other income:
Interest income 1,681 1,243
-------- ------
Net other income 1,681 1,243
-------- ------
Net loss $(340,125) $(153,445)
========= =========
Loss per common share $.03 $.04
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>16
MICRO LABORATORIES INC
STATEMENT OF CASH FLOWS
For the Six Months Ended September 30, 1999 and 1998
<TABLE>
<CAPTION>
1999 1998
<S> <C> <C>
Cash flows from operating activities:
Net income $ (340,125) (153,567)
Adjustments to reconcile net income
to net cash used for operating
activities:
Depreciation and amortization 5,642 6,553
(Increase) decrease in assets:
Prepaid expenses 17,934 20,882
Shareholder loans 600 (4,375)
Increase (decrease) in liabilities:
Accounts payable 30,488 1,200
Notes payable 4,700 45,000
-------- ------
Net cash used by operating activities (59,364) (84,307)
-------- ------
Investing activities:
Acquisition of intangible assets (24,979) -
Acquisitions of property and equipment (28,025) -
-------- -------
Net cash used for investing activities
(53,004) -
-------- -------
Net increase (decrease) in cash
during the period (405,341) (84,307)
Cash balance, beginning of period 412,899 102,969
Cash balance, end of period $ 7,558 18,662
========= ========
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
<PAGE>17
MICRO LABORATORIES, INC.
NOTES TO FINANCIAL STATEMENTS
September 30, 1999 and 1998
1. SIGNIFICANT ACCOUNTING POLICIES
Background
Micro Laboratories, Inc. ("the Company") was
incorporated as a Nevada Corporation on August 8, 1997. Micro
Laboratories, Inc. is a development stage enterprise which has
undertaken the development and marketing of a line of oral spray
vitamins, nutrients, herbs and other oral absorption products as
well as gel capsules, etc. in the United States and
international market. The financial statements and notes are
representations of the Company's management, who is responsible
for their integrity and objectivity. The accounting policies of
the Company are in accordance with generally accepted accounting
principles and conform to the standards applicable to
development stage companies. The preparation of financial
statements in conformity with generally accepted accounting
principles requires management to make estimates and assumptions
that affect certain reported amounts and disclosures.
Accordingly, actual results could differ from those estimates.
Cash and Cash Equivalents
The Company considers all highly liquid investments purchased
with a maturity of three months or less to be cash and cash
equivalents.
Formulas and Trademarks
Formulas and trademarks are recorded at cost and are amortized
over a period of 15 years using the straight-line method.
Property and Equipment
Property and equipment are recorded at cost. Depreciation is
computed using the straight line method for financial reporting
purposes. Estimated service lives of property and equipment
range from 7 to 31.5 years.
Revenue Recognition
Revenue will be recognized upon the invoicing and shipping of
product. No revenue has been recognized as of September 30,
1999 and 1998.
Advertising Costs
Advertising costs are charged to operations and are expensed as
incurred. The total amount charged to expense at September 30,
1999 is $27,754 and $13,500 at September 30, 1998.
Income Taxes
The Company has adopted Financial Accounting No. 109,
"Accounting for Income Taxes" (FAS 109). Under the provisions
of FAS 109, an entity recognizes deferred tax assets and
liabilities for the future tax consequences of events that have
been previously recognized in the Company's financial statements
or tax returns. The measurement of deferred tax assets and
liabilities is based on provisions of the enacted tax law; the
effects of future changes in tax laws or rates are not
anticipated. The adoption of FAS 109 did not have an effect on
the Company's financial statements.
Net Income (Loss) Per Share
Primary net income (loss) per share is determined by dividing
net income (loss) by the weighted average number of common
shares and dilutive common shares outstanding during the year.
2. COMMON STOCK
Common stock issued by the Company as payment for services has
been valued by management at fair market value.
<PAGE>18
CAYER PRESCOTT CLUNE CHATELLIER
CERTIFIED PUBLIC ACCOUNTANTS
BUSINESS CONSULTANTS
Providence, Rhode Island
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
To the Stockholders and Board of Directors
Micro Laboratories, Inc.
We have audited the balance sheet of MICRO LABORATORIES, INC. (a
development stage Company) as of March 31, 1999 and the related
statements of operations, stockholders' equity and cash flows for the
year then ended and the period from August 8, 1997 (inception) to March
31, 1999. The financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on
these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits
to obtain reasonable assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the
financial statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well
as evaluating the overall financial statement presentation. We believe
that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of MICRO
LABORATORIES, INC. for the year ended March 31, 1999 and for the period
from August 8, 1997 to March 31, 1999, and the results of its
operations and its cash flows for the period then ended in conformity
with generally accepted accounting principles.
The accompanying financial statements have been prepared assuming that
the Company will continue as a going concern. As discussed in Note 1
to the financial statements, the Company is a development stage
enterprise. The Company has not yet commenced its principal operations
and has focused it efforts on the raising of capital and the
development and marketing of its products. Accordingly, the Company
has no operating history, which raises substantial doubt about its
ability to continue as a going concern. The financial statements do
not include any adjustments that might result from the outcome of this
uncertainty.
/s/ CAYER PRESCOTT CLUNE CHATELLIER
June 9, 1999
<PAGE>19
CAYER PRESCOTT CLUNE AND CHATELLIER
MICRO LABORATORIES, INC.
(A DEVELOPMENT STAGE COMPANY
BALANCE SHEET
MARCH 31, 1999
ASSETS
Current assets:
Cash $412,899
Prepaid expense 25,478
Shareholder loans 27,925
Inventory 12,154
--------
Total current assets 478,456
--------
Property and equipment:
Machinery and equipment 64,850
Furniture and fixtures 3,664
Leaseholder improvements 2,357
--------
Total property and equipment 70,871
Less: accumulated depreciation (10,619)
--------
Net property and equipment 60,252
--------
Other assets:
Deposits 4,600
Formulas and trademarks
(net of accumulated amortization) 65,650
Website development costs 129,238
--------
Total other assets 199,488
--------
TOTAL ASSETS $738,196
========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 45,746
Due to shareholder 5,500
Note payable - related party 45,000
Due to related parties 64,030
---------
Total current liabilities 160,276
---------
Stockholders' equity:
Capital stock-$.001 par common;
authorized 50,000,000 shares, issued and
outstanding 10,352,500 shares 10,353
Additional paid-in-capital 1,160,300
Deficit accumulated during the
development stage (592,733)
---------
Total stockholders' equity 577,920
---------
TOTAL LIABILITIES AND
STOCKHOLDERS'EQUITY $738,196
=========
SEE NOTES TO FINANCIAL STATEMENTS.
<PAGE>20
MICRO LABORATORIES, INC
(A DEVELOPMENT STAGE COMPANY
STATEMENT OF OPERATIONS
YEAR ENDED MARCH 31,1999
AND THE PERIOD FROM AUGUST 8, 1997 (DATE OF INCEPTION)
TO MARCH 31,1999
<TABLE>
<CAPTION>
Year Ended August 8, 1997
(inception)
March 31, 1999 to March 31. 1999
<S> <C> <C>
Net sales $ 0 $ 0
-------- --------
Cost of goods sold 0 0
-------- --------
Operating expenses:
Advertising and public relations 103,008 151,430
Legal and professional fees 111,44 169,571
Research and development 51,022 51,022
Laboratory supplies 9,632 14,396
Payroll and payroll taxes 18,959 18,959
Telephone 13,409 19,601
Incorporation fees 0 6,501
Depreciation 7,874 10,619
Amortization 5,050 10,100
Rent 24,200 26,600
Automobile expense 13,272 15,470
Travel expense 3,220 6,043
Insurance expense 3,684 4,368
Start-up expense 0 7,627
Samples 0 827
Office supplies 4,988 7,100
Consulting 62,107 62,607
Freight 1,313 2,277
Repairs and maintenance 1,722 2,740
Meals and entertainment 1,312 1,312
Outside services 0 168
Postage 1,061 1,263
Bank service charges 329 442
Printing 1,433 1,516
Dues and subscriptions 1,302 1,302
Licenses and fees 2,080 2,080
Contributions 0 30
Utilities expense 598 598
Miscellaneous expense 1,137 1,137
-------- --------
Total operating expenses 444,156 597,706
-------- --------
Loss from operations 444,156 597,706
-------- --------
Other income:
Interest income 3,649 4,973
-------- --------
Net other income 3,649 4,973
--------- ---------
Net loss $(440,507) $(592,733)
========= =========
Loss per common share $0.04 $0.06
</TABLE>
SEE INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS'AUDIT REPORT.
<PAGE>21
MICRO LABORATORIES INC
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OFCASH FLOWS
YEAR ENDED MARCH 31,1999
AND THE PERIOD FROM AUGUST 8,1997 (DATE OF INCEPTION)
TO MARCH 31,1999
Year Ended August 8, 1997
(inception)
March 31, 1999 to March 31, 1999
-------------- -----------------
Cash flows from operating activities:
Net income
$(440,507) $(592,733)
Adjustments to reconcile net income
to net cash used for operating
activities:
Depreciation and amortization 12,924 20,719
(increase) decrease in assets:
Prepaid expenses 22,811 (25,478)
Inventory (12,154) (12,154)
Deposits (4,000) (4,600)
Increase (decrease) in liabilities:
Accounts payable 41,377 45,746
-------- --------
Net cash used by operating
Activities (379,549) (568,500)
-------- --------
Investing activities:
Acquisition of intangible assets (129,238) (204,988)
Acquisitions of property and equipment
(25,756) (66,721)
Shareholder loans (24,710) (27,925)
Due to shareholder 5,500 5,500
Due to related party 64,030 64,030
Notes payable 45,000 45,000
-------- --------
Net cash used for investing activities
(65,174) (185,104)
-------- --------
Financing activities:
Proceeds from issuance of common stock
182,198 593,198
Services exchanged for common stock
572,455 573,305
-------- ---------
Net cash provided by financing activities
754,653 1,166,503
-------- ---------
Net increase (decrease) in cash during the period
309,930 412,899
Cash balance, beginning of period 102,969 -
------- ----------
Cash balance, end of period $412,899 $ 412,899
======== ==========
SEE INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS'AUDIT REPORT.
<PAGE>22
MICRO LABORATORIES, INC.
(A Development Stage Company)
STATEMENT OF CHANGES IN STOCKHOLDERS' DEFICIT
YEAR ENDED MARCH 31,1999
AND THE PERIOD FROM AUGUST 8,1997(Date of Inception)
TO MARCH 31,1999
<TABLE>
<CAPTION>
ADDITIONAL
COMMON STOCK PAID IN ACCUMULATED
SHARES AMOUNT CAPITAL DEFICIT
------ ------ ------- --------
<S> <C> <C> <C> <C>
Common stock issued for
equipment through March 31, 1998
. 3,100,000 $3,100 $1,050
Common stock issued for services
rendered through March 31, 1998
850,000 $850
Common stock issued for cash
through March 31, 1998
348,000 $348 $410,652
Net loss through March 31, 1998. ($152,226)
Balance at March 31, 1998
--------- ----- --------- ---------
4,298,000 $4,298 $411,702 ($152,226)
Common stock issued for services
rendered for the year ended
March 31, 1999
1,254,500 $1,255 $571,200
Common stock issued for cash
for the year ended March 31, 1999.
4,800,000 $4,800 $177,398
Net loss year ended March 31, 1999 (440,507)
BALANCE AT MARCH 31,1999
-------- ----- ------- --------
10,352,500 $10,353 $1,160,300 ($592,733)
========== ======= ========== ========
</TABLE>
SEE INDEPENDANT CERTIFIED PUBLIC ACCOUNTANTS' AUDIT REPORT
<PAGE>23
MICRO LABORATORIES, INC.
NOTES TO FINANCIAL STATEMENTS
MARCH 31,1999
1. SIGNIFICANT ACCOUNTING POLICIES
Background
Micro Laboratories, Inc. ("the Company") was incorporated as a
Nevada Corporation on August 8, 1997. Micro Laboratories, Inc. is a
development stage enterprise which has undertaken the development and
marketing of a line of oral spray vitamins, nutrients, herbs and other
oral absorption products as well as gel capsules, etc. in the United
States and international market. The financial statements and notes
are representations of the Company's management, who is responsible for
their integrity and objectivity. The accounting policies of the
Company are in accordance with generally accepted accounting principles
and conform to the standards applicable to development stage companies.
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates
and assumptions that affect certain reported amounts and disclosures.
Accordingly, actual results could differ from those estimates.
Development Stage Enterprise
The Company is a Development Stage Company as defined in financial
accounting standards Board Statement No. 7. As of the balance sheet
date, the Company had not yet begun principal operations. The primary
activities during the fiscal period covered by these financial
statements were raising capital and developing vitamin products (the
major source of projected revenue).
Inventories
Inventories consist of chemicals and product packaging. Inventories
are stated at the lower of cost, determined on the first-in, first-out
(FIFO) method, or market.
Cash and cash Equivalents
The Company considers all highly liquid investments purchased with a
maturity of three months or less to be cash and cash equivalents.
Concentration of Credit Risk
The Company occasionally maintains deposits in excess of federally
insured limits. Statement of Financial Accounting Standards No. 105
identifies these items as a concentration of credit risk requiring
disclosure regardless of the degree of risk. The risk is managed by
maintaining all deposits in high quality financial institutions.
Formulas and Trademarks
Formulas and trademarks are recorded at cost and are amortized over a
period of 15 years using the straight-line method.
Property and Equipment
Property and equipment are recorded at cost. Depreciation is computed
using the straight line method for financial reporting purposes.
Estimated service lives of property and equipment range from 7 to 31.5
years.
Revenue Recognition
Revenue will be recognized upon the invoicing and shipping of product.
No revenue has been recognized as of March 31, 1999.
Advertising Costs
Advertising costs are charged to operations and are expensed as
incurred. The total amount charged to expense at March 31, 1999 is
$103,008.
<PAGE>24
Income Taxes
The Company has adopted Financial Accounting No. 109, "Accounting for
Income Taxes" (FAS 109). Under the provisions of FAS 109, an entity
recognizes deferred tax assets and liabilities for the future tax
consequences of events that have been previously recognized in the
Company's financial statements or tax returns. The measurement of
deferred tax assets and liabilities is based on provisions of the
enacted tax law; the effects of future changes in tax laws or rates are
not anticipated. The adoption of FAS 109 did not have an effect on the
Company's financial statements.
Net Income (Loss) Per Share
Primary net income (loss) per share is determined by dividing net
income (loss) by the weighted average number of common shares and
dilutive common shares outstanding during the year.
2. COMMON STOCK
Common stock issued by the Company as payment for services has been
valued by management at fair market value.
3. LEASE COMMITMENTS
The Company leases an automobile under a two-year operating lease dated
February 23, 1998. Rent expense for the year ended March 31,1999
amounted to $11,798. Lease commitment fees of $10,477 were paid at
inception. This amount is considered a prepaid expense to be amortized
over the life of the lease.
4. RELATED PARTY TRANSACTIONS
During the year ended March 31, 1999, the Company paid rents totaling
$7,200 to a shareholder. The Company incurred administrative expenses
during the period totaling $26,353 paid to a Company operated by a
shareholder. The Company has a receivable totaling $27,925 due from a
shareholder and a payable totaling $5,500 due to a shareholder. The
Company incurred various expenses totaling $64,030 which were paid for
by and are due to a company operated by a shareholder. In addition,
the Company borrowed $45,000 from a Company operated by a shareholder
during the year ended March 31, 1999.
6. CONTINGENCIES
The Company is named as a defendant in legal action. The plaintiff
claims that in consideration for raising capital for the Company, it is
entitled to receive 500,000 shares in unrestricted common stock and/or
$50,000. The Company intends to vigorously defend this action and is
not inclined to seek an out of court settlement. The case is in the
discovery stage and the ultimate resolution of the matter is not
ascertainable at this time. No provision has been made in the
financial statements related to this claim.
7. GOING CONCERN STATUS - FUTURE OPERATIONS
The Company began operation in August 8, 1997 and there is no
assurance that it will reach profitability. Since its inception, the
Company has been principally engaged in product and service
development. As shown in the accompanying financial statements, the
company has incurred net operating losses of $592,733 since its
inception. The Company is a development stage business. Numerous
problems, many of which are beyond the Company's control, are
frequently experienced by companies in this period of development -
marketing and customer support problems, difficulty in dealing with
competition, lack of familiarity on the part of customers and
suppliers, and technical obsolescence.
The Company believes from its initial contacts with potential clients
that there is a substantial market for its services; however, there
can be no assurance that commercial viability can be demonstrated for
said products and services. There can be no assurance that the
Company will ever achieve profitability on a sustained basis, if at
all.
<PAGE>25
The Company's status as a going concern is dependent on its ability to
successfully implement a marketing plan and generate sufficient
revenues to operate on a profitable basis. The financial statements
do not include any adjustments that might be necessary should the
Company be unable to continue as a going concern.
8. INCOME TAXES
Deferred income taxes reflect the net tax effects of temporary
differences between the carrying amounts of assets and liabilities for
financial reporting purposes and the amounts used for income tax
purposes. The Company's net deferred tax asset balances are primarily
attributable to timing differences in inventory, property and
equipment, and accrued expenses for book and tax purposes and net
operating loss carryforwards and tax credits. At March 31, 1999, the
Company's deferred tax asset was $0 using a blended federal and state
rate of 40%. A 100% valuation allowance was provided for at March 31,
1999. Therefore, net deferred tax asset recognized on the accompanying
balance sheet is $0.
At April 3, 1999, the Company had a net operating loss carryforward of
approximately $590,000 available to offset future income that would
otherwise be subject to federal income taxes. The net operating loss
carryforward will expire in the year 201 1 if not utilized.
If certain substantial changes in the Company's ownership should occur,
there would be an annual limitation on the amount of net operating loss
and investment tax credit carryforwards, which could be utilized.
<PAGE>26
CAYER PRESCOTT CLUNE CHATELLIER
CERTIFIED PUBLIC ACCOUNTANTS
BUSINESS CONSULTANTS
Providence, Rhode Island
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
To the Stockholders and Board of Directors
Micro Laboratories, Inc.
We have audited the balance sheet of MICRO LABORATORIES, INC. (a
development stage Company) for the period from August 8, 1997
(inception) to March 31, 1998 and the related statements of
operations, stockholders' equity and cash flows for the period
then ended. The financial statements are the responsibility of
the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and
perform the audits to obtain reasonable assurance about whether
the financial statements are free of material misstatement. An
audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An
audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating
the overall financial statement presentation. We believe that
our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above
present fairly, in all material respects, the financial position
of MICRO LABORATORIES, INC. for the period from August 8, 1997
to March 31, 1998, and the results of its operations and its
cash flows for the period then ended in conformity with
generally accepted accounting principles.
The accompanying financial statements have been prepared
assuming that the Company will continue as a going concern. As
discussed in Note 1 to the financial statements, the Company is
a development stage enterprise. The Company has not yet
commenced its principal operations and has focused it efforts on
the raising of capital and the development and marketing of its
products. Accordingly, the Company has no operating history,
which raises substantial doubt about its ability to continue as
a going concern. The financial statements do not include any
adjustments that might result from the outcome of this
uncertainty.
/s/CAYER PRESCOTT CLUNE CHATELLIER
January 18, 1999
<PAGE>27
MICRO LABORATORIES, INC.
BALANCE SHEET
MARCH 31, 1998
ASSETS
Current assets:
Cash $102,969
Prepaid expense 48,289
Shareholder loans 3,215
--------
Total current assets 154,473
--------
Property and equipment:
Machinery and equipment 39,094
Furniture and fixtures 3,664
Leaseholder improvements 2,357
--------
Total property and equipment 45,115
Less: accumulated depreciation (2,745)
--------
Net property and equipment 42,370
--------
Other assets:
Deposits 600
Formulas and trademarks
(net of accumulated amortization) 70,700
--------
Total other assets 71,300
--------
TOTAL ASSETS $268,143
========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 4,369
-------
Total current liabilities 4,369
-------
Stockholders' equity:
Capital stock-$.001 par common;
authorized 50,000,000 shares, issued and
outstanding 4,298,000 shares 4,298
Additional paid-in-capital 411,702
Deficit accumulated during the
development stage (152,226)
--------
Total stockholders' equity 263,774
--------
TOTAL LIABILITIES AND
STOCKHOLDERS'EQUITY $268,143
========
SEE NOTES TO FINANCIAL STATEMENTS.
<PAGE>28
MICRO LABORATORIES, INC
STATEMENT OF OPERATIONS
THE PERIOD FROM AUGUST 8, 1997 (DATE OF INCEPTION)
TO MARCH 31,1998
Net sales $ 0
--------
Cost of goods sold 0
--------
Operating expenses:
Advertising and public relations 48,422
Administrative fees 58,127
Laboratory supplies 4,764
Telephone 6,192
Incorporation fees 6,501
Depreciation 2,745
Amortization 5,050
Rent 2,400
Automobile expense 2,882
Travel expense 2,823
Start-up expense 7,627
Samples 827
Office supplies 2,112
Consulting 500
Freight 964
Repairs and maintenance 1,018
Outside services 168
Postage 202
Bank service charges 113
Printing 83
Contributions 30
--------
Total operating expenses 153,550
--------
Loss from operations (153,550)
--------
Other income:
Interest income 1,324
--------
Net other income 1,324
--------
Net loss $(152,226)
=========
Loss per common share $.03
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>29
MICRO LABORATORIES INC
STATEMENT OF CASH FLOWS
PERIOD FROM AUGUST 8,1997 (DATE OF INCEPTION)
TO MARCH 31,1998
Cash flows from operating activities:
Net income $ (152,226)
Adjustments to reconcile net income
to net cash used for operating
activities:
Depreciation and amortization 7,795
Allowance for doubtful acounts 45,000
Services exchanged for common stock 850
(Increase) decrease in assets:
Accounts receivable (45,000)
Prepaid expenses (48,289)
Shareholder loans (3,215)
Deposits (600)
Increase (decrease) in liabilities:
Accounts payable 4,369
--------
Net cash used by operating activities (191,316)
--------
Investing activities:
Acquisition of intangible assets (75,750)
Acquisitions of property and equipment (40,965)
--------
Net cash used for investing activities
(116,715)
--------
Financing activities:
Proceeds from issuance of common stock 411,000
--------
Net cash provided by financing activities 411,000
--------
Net increase (decrease) in cash
during the period 102,969
Cash balance, beginning of period -
Cash balance, end of period $102,969
=========
Supplemental disclosures of non-cash investing and financing
activities:
Equipment amounting to $4,150 was received in exchange for
issuance of 3,100,000 shares of common stock. Services
rendered valued at $850 were received in exchange for issuance
of 850,000 shares of common stock.
SEE NOTES TO FINANCIAL STATEMENTS.
<PAGE>30
MICRO LABORATORIES, INC.
STATEMENT OF CHANGES IN STOCKHOLDERS' DEFICIT
PERIOD FROM AUGUST 8,1997(Date of Inception)
TO MARCH 31,1998
<TABLE>
<CAPTION>
DEFICIT
ADDITIONAL ACCUMULATED
COMMON STOCK PAID IN DURING
SHARES AMOUNT CAPITAL DEVELOPMENT STAGE
----------------------------------------------
<S> <C> <C> <C> <C>
Common stock issued for
equipment through March 31, 1998
3,100,000 $3,100 $1,050
Common stock issued for services
rendered through March 31, 1998
850,000 $850
Common stock issued for cash
through March 31, 1998
348,000 $348 $410,652
Net loss through March 31, 1998. ($152,226)
----------------------------------------------
Balance at March 31, 1998
4,298,000 $4,298 $411,702 ($152,226)
==============================================
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>31
MICRO LABORATORIES, INC.
NOTES TO FINANCIAL STATEMENTS
MARCH 31,1998
1. SIGNIFICANT ACCOUNTING POLICIES
Background
Micro Laboratories, Inc. ("the Company") was
incorporated as a Nevada Corporation on August 8, 1997. Micro
Laboratories, Inc. is a development stage enterprise which has
undertaken the development and marketing of a line of oral spray
vitamins, nutrients, herbs and other oral absorption products as
well as gel capsules, etc. in the United States and
international market. The financial statements and notes are
representations of the Company's management, who is responsible
for their integrity and objectivity. The accounting policies of
the Company are in accordance with generally accepted accounting
principles and conform to the standards applicable to
development stage companies. The preparation of financial
statements in conformity with generally accepted accounting
principles requires management to make estimates and assumptions
that affect certain reported amounts and disclosures.
Accordingly, actual results could differ from those estimates.
Cash and cash Equivalents
The Company considers all highly liquid investments purchased
with a maturity of three months or less to be cash and cash
equivalents.
Formulas and Trademarks
Formulas and trademarks are recorded at cost and are amortized
over a period of 15 years using the straight-line method.
Property and Equipment
Property and equipment are recorded at cost. Depreciation is
computed using the straight line method for financial reporting
purposes. Estimated service lives of property and equipment
range from 7 to 31.5 years.
Revenue Recognition
Revenue will be recognized upon the invoicing and shipping of
product. No revenue has been recognized as of March 31, 1998.
Advertising Costs
Advertising costs are charged to operations and are expensed as
incurred. The total amount charged to expense at March 31, 1998
is $48,422.
Income Taxes
The Company has adopted Financial Accounting No. 109,
"Accounting for Income Taxes" (FAS 109). Under the provisions
of FAS 109, an entity recognizes deferred tax assets and
liabilities for the future tax consequences of events that have
been previously recognized in the Company's financial statements
or tax returns. The measurement of deferred tax assets and
liabilities is based on provisions of the enacted tax law; the
effects of future changes in tax laws or rates are not
anticipated. The adoption of FAS 109 did not have an effect on
the Company's financial statements.
Net Income (Loss) Per Share
Primary net income (loss) per share is determined by dividing
net income (loss) by the weighted average number of common
shares and dilutive common shares outstanding during the year.
2. COMMON STOCK
Common stock issued by the Company as payment for services has
been valued by management at fair market value.
<PAGE>32
3. LEASE COMMITMENTS
The Company leases an automobile under a two-year operating
lease dated February 23, 1998. Rent expense for the year ended
March 31,1998 amounted to $964. Lease commitment fees of
$10,477 were paid at inception. This amount is considered a
prepaid expense to be amortized over the life of the lease.
4. RELATED PARTY TRANSACTIONS
During the period ended March 31, 1998, the Company paid $75,000
to a shareholder in exchange for services related to flavoring
of vitamin formulas. The Company incurred administrative
expenses during the period totaling $13,127 paid to a Company
operated by a shareholder. In addition, the Company has a
receivable totaling $3,215 due from a shareholder.
<PAGE>33
PART III
ITEM 1. INDEX TO EXHIBITS
(2) Charter and by-laws
(3) Instruments defining the rights of security holders
(5) Voting Trust Agreement - Not Applicable
(6) Material Contracts - Not Applicable
(7) Material Foreign Patents - Not Applicable
(12) Additional Exhibits
ITEM 2. DESCRIPTION OF EXHIBITS
(2.1) Articles of Incorporation incorporated by reference
to Form 10SB
(2.2) Bylaws incorporated by reference to Form 10SB
(3.1) Common Stock Certificate incorporate by reference
to Form 10SB
<PAGE>34
SIGNATURES
In accordance with Section 12 of the Securities Exchange Act of 1934,
the registrant caused this registration statement to be signed on its
behalf by the undersigned, thereunto duly authorized.
MICRO LABORATORIES, INC.
/s/ Robert Thistle
Date: January 24, 2000 --------------------------------
By: Robert Thistle, President
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> MAR-31-2000
<PERIOD-END> SEP-30-1999
<CASH> 7,558
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 55,779
<PP&E> 244,946
<DEPRECIATION> 13,737
<TOTAL-ASSETS> 362,880
<CURRENT-LIABILITIES> 84,784
<BONDS> 0
<COMMON> 10,353
0
0
<OTHER-SE> 227,439
<TOTAL-LIABILITY-AND-EQUITY> 362,880
<SALES> 349
<TOTAL-REVENUES> 2,031
<CGS> 13,635
<TOTAL-COSTS> 13,635
<OTHER-EXPENSES> 328,521
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (340,125)
<INCOME-TAX> 0
<INCOME-CONTINUING> (340,125)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (340,125)
<EPS-BASIC> (.02)
<EPS-DILUTED> (.02)
</TABLE>
