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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-KSB
ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
X ACT OF 1934
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For the fiscal year ended June 30, 2000
OR
ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
-----
COMMISSION FILE NUMBER: 0-30187
INTERCONEXUS.COM, INC.
(Name of Small Business Issuer in its Charter)
DELAWARE 52-2225697
(State or Other Jurisdiction of (I.R.S. Employer Identification No.)
Incorporation or Organization)
2651 WARRENVILLE ROAD, SUITE 560 (630) 874-5500
DOWNERS GROVE, ILLINOIS 60515 (Registrant's Telephone Number,
(Address of Principal Executive Offices, Including Area Code)
including Zip Code)
SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:
None
SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:
Common Stock, $.0001 par value
Check whether the issuer: (1) filed all reports required to be filed by
Section 13 of 15(d) of the Securities 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 No
--- ---
Check if there is no disclosure of delinquent filers in response to Item
405 of Regulation S-B, 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]
Issuer's revenues for fiscal 2000: $ 0
There is currently no market for the voting common equity of the
registrant.
The number of shares of the registrant's Common Stock, $.0001 par value,
outstanding as of September 28, 2000 was 12,908,091.
Transitional Small Business Disclosure Format: Yes X No
--- ---
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the following documents of the registrant are incorporated
herein by reference:
DOCUMENT PART OF FORM 10-K
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Proxy Statement for the 2000 annual I and II
meeting of stockholders
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PART I
The Issuer has elected to follow Form 10-KSB, Disclosure Alternative 2.
ITEM 6. DESCRIPTION OF BUSINESS.
GENERAL. InterConexus.com, Inc., a Delaware corporation (the "Company"),
proposes to engage in electronic commerce ("e-commerce") by developing an
on-line business-to-business trading exchange for the global electronic
interconnect industry. The Company intends to develop an e-commerce
business-to-business trading exchange (the "Trade Exchange") which would make up
an electronic trading community within the global electronic interconnect
industry which comprises the areas of integrated circuits, semi-conductors,
contract assembly, printed circuit boards and electronic manufacturing service
providers. The Trade Exchange would establish a common trading hub between
suppliers, customers and manufacturers in the global electronic interconnect
industry. The Trade Exchange would enable multi-buyer and multi-seller
interaction, would address end-to-end transactions and would enable the global
electronic interconnect industry community to share common information and
knowledge. The primary role of the Trade Exchange will be to connect buyers and
sellers within the global electronic interconnect industry. The Company's
principal executive offices are located at 2651 Warrenville Road, Suite 560,
Downers Grove, Illinois 60515; it's telephone number is (630) 874-5500, and its
web site address is www.interconexus.com.
The Company was incorporated in March, 2000 by Capri Corp., a Minnesota
corporation ("Capri"). Capri, through its wholly-owned operating subsidiary
Cimnet Systems, Inc., ("Cimnet") is engaged in developing computer software that
records, organizes and provides access to real-time integrated manufacturing
information for use by printed circuit board (PCB) manufacturers. Capri develops
and licenses software under the trademarks Paradigm(R) and Paradeim(R) which
provides real time access to information at the PCB manufacturing plant level,
such as engineering information, production scheduling, quality control reports
and levels and types of inventory being produced. Capri also provides related
technical support and user training and distributes certain hardware and third
party software that may be used with Paradigm(R). Capri, a reporting company
under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), was,
prior to the Spin-Off (as defined below), the sole stockholder of the Company.
Capri distributed all of the shares of Company common stock, par value $.0001
per share ("Common Stock"), to the shareholders of Capri in a taxable
distribution effective June 1, 2000 (the "Spin-Off").
RELATIONSHIP BETWEEN THE COMPANY AND CAPRI AFTER THE SPIN-OFF. For the
purpose of governing certain ongoing relationships between the Company and Capri
following the Spin-Off, the Company and Cimnet have entered into various
agreements and adopted certain policies with respect to the following:
- Services Agreement. The Company and Cimnet have entered into a Services
Agreement whereby Cimnet provides certain services to the Company on an
as-needed basis. The fees for such services will be based on a rate
designed to reflect Cimnet's cost of providing such services, including
reimbursement of certain direct out-of-pocket expenses. The Company is
free to procure such services from outside vendors or to develop an
in-house capability in
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order to provide such services internally. The services to be provided
to the Company by Cimnet pursuant to such agreement include employees,
including key executives, accounting services, computer services,
insurance coverage, payroll processing services and management of
employee benefits programs, or any other similar services that the
Company may require.
- Office Space. The Company currently shares office space with Cimnet.
Cimnet intends to allocate to the Company its pro rata share of rent,
common area maintenance charges and other costs and expenses under
Cimnet's lease for its office space based upon the square footage of the
shared office space occupied by the Company.
- Software License. The Company and Cimnet may enter into a license
agreement pursuant to which Cimnet will grant a license to the Company
for certain components of Paradigm(R), Cimnet's software application. It
is expected that the fees payable by the Company pursuant to this
license agreement will be at least the same fees generally required
under Cimnet's typical software license with unrelated third-party
customers for the same software.
- Loans. The Company may borrow funds from Cimnet from time to time in
order to fund its operations.
- Mehul J. Dave. Mehul J. Dave, the Chairman of the Board, President and
Chief Executive Officer of the Company, holds the same positions at
Capri. Mr. Dave divides his time between the Company and Capri. See
"Risk Factors."
INDUSTRY BACKGROUND.
Growth of the Internet and the World Wide Web. The Internet and
the World Wide Web ("Web") are experiencing dramatic growth in terms of the
number of Web users. The growth of the number of Web users and the amount of
time spent on the Web is being driven by the increasing importance of the
Internet as a communications medium and an information resource in the sales and
distribution channel.
Growth of On-Line E-Commerce. The Internet is dramatically
affecting the methods by which consumers and businesses are buying and selling
goods and services. E-commerce offers the opportunity for businesses to
establish new competitive standards by expanding distribution channels,
integrating internal and external processes and offering a cost-effective method
of providing products and services. The Internet provides on-line businesses
with the ability to reach a global audience and to operate with a minimal
infrastructure, reducing overhead and providing greater economies of scale,
while providing customers and businesses with a broad selection, increased
pricing power and unparalleled convenience. As a result, a growing number of
parties are transacting business on the Web.
The Electronic Interconnect Industry On the Internet. The Company
has identified a need in the world wide electronic interconnect community for
Internet-based services such as the Trade Exchange which can provide services
and connect businesses involved in the electronic interconnect industry at an
anticipated economical cost. The traditional methods of information delivery and
communications between businesses involved in the electronic
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interconnect industry, including trade magazines, telephone and trade
conferences, contain inherent inefficiencies such as:
- trade publications and print media are costly and offer a limited
circulation;
- expansion of businesses beyond traditional boundaries is expensive
due to the high cost of marketing, travel and promotional expenses;
and
- language barriers limit the ability of businesses to communicate.
The Internet provides a medium for businesses around the world to communicate
and enter into business transactions.
COMPETITION. Barriers to entry into competition with the Company's
proposed Trade Exchange are low. Presently, the Company believes that
PCB.007.com, Verticalnet.com, Agilesoft.com, TheSupply.com. WebQuote.com and
FreeMarkets.com are either engaged in, contemplating or actively pursuing the
establishment of a business-to-business e-commerce service for the electronic
interconnect industry. These companies are larger, more experienced and better
financed than the Company. In addition, many general business-to-business
e-commerce companies are larger and better financed than the Company. There are
minimal barriers to such companies developing and providing a
business-to-business e-commerce exchange for the electronic interconnect
industry which would compete directly with that of the Company. See "Risk
Factors".
REVENUE AND WORKING CAPITAL.
Revenue. The Company intends to derive revenues from the Trade
Exchange by charging a transaction fee equal to a percentage of the value of the
transaction consummated between buyer and seller via the Trade Exchange. The
specifics of such transaction based fee has not yet been established. In
addition, the Company may also derive revenues from the Trade Exchange in other
ways, such as selling advertising space on the Trade Exchange.
Working Capital. The Company currently has no operations and does
not expect to generate any revenues from operations prior to the time the Trade
Exchange becomes operational. The Company intends to fund its development
through investments from strategic partners, funds from investors, as well as
funds borrowed from Capri, if necessary. Although the Company has had informal
contacts with certain parties regarding investments in the Company, and has also
discussed the possibility of borrowing operating funds from Capri, no agreements
have been reached with respect to such investments or borrowings. See "Risk
Factors".
During the fiscal year ended June 30, 2000, the Company purchased
services from Cimnet totaling approximately $434,000 under the terms of the
Services Agreement and office space sharing arrangement described above.
EMPLOYEES. The Company currently has no employees.
CUSTOMERS. The Company currently has no customers. The Trade Exchange's
customer base is expected to include manufacturers, customers and suppliers
within the global electronic interconnect industry.
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MARKETING. The Company intends to increase the visibility and brand
recognition of its Trade Exchange through a variety of marketing and promotional
techniques such as direct mailings, advertisements in trade publications and
attendance at trade shows. The Company may also pursue co-marketing arrangements
with other websites on the Internet through cross-linking.
PATENTS, TRADEMARKS AND LICENSES. The Company's performance and ability
to compete will be dependent to a significant degree on its ability to develop
and protect its proprietary technology. The Company intends to rely on a
combination of trademark, copyright and trade secret laws, as well as
confidentiality agreements and non-compete agreements executed by employees and
consultants in order to establish and protect its proprietary rights as they are
developed or acquired. The Company is the owner of the "www.interconexus.com"
domain name.
RISK FACTORS. Ownership of Company Common Stock involves a high degree
of risk and is intended for long term investment. Stockholders of the Company
should be aware that the ownership of Common Stock involves certain risk
factors, including those described below, which could adversely affect the value
of the Company Common Stock going forward. The Company makes no representation
as to the future market value of Company Common Stock. Any forward-looking
statements contained in this report should not be relied upon as predictions of
future events. Such statements are necessarily dependent on assumptions, data or
methods that may be incorrect or imprecise and that may be incapable of being
realized.
Possible Conflicts of Interest and Related Party Transactions.
The directors and officers of the Company are also the directors and officers of
Capri and/or Cimnet. Accordingly, conflicts of interest could arise for such
persons. In addition, as part of its ongoing business and operations, the
Company will engage in certain transactions with Capri. Due to the relationships
between the Company and Capri, the terms of such transactions may not
necessarily be effectuated through arms-length negotiations. However, all such
transactions will be subject to review by the Board of Directors of the Company.
Mehul J. Dave, the Chairman of the Board, President and Chief
Executive Officer of the Company, holds the same positions at Capri. Mr. Dave
intends to divide his time between the Company and Capri, and therefore will be
unable to devote his attention solely to the operations of the Company.
Restrictions On Transfer. Company Common Stock is not
transferable until the first to occur of the following: (i) the second
anniversary of the Spin-Off; (ii) the consummation of an initial public offering
of Common Stock registered under the Securities Act of 1933, as amended; or
(iii) the Board of Directors of the Company determines, in its sole discretion,
that the business of the Company has developed to support a trading market.
Notwithstanding the foregoing, the stockholders of the Company are not
restricted in any way from transferring any shares of Common Stock (i) in
connection with the Spin-Off or (ii) by will, intestacy laws or the laws of
descent or survivorship or by operation of law. Due to these transfer
restrictions, there is currently no public market for the Company Common Stock.
In addition, even after these transfer restrictions expire, there can be no
assurance that a public market for the Common Stock will develop or, if such
market does develop, that it will be sustained.
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The Company has No Operating History And May Experience Risks
Encountered By Early-Stage Companies. The Company was formed in March 2000 and
therefore has no significant operating history. The Company's business and
prospects must be considered in light of the risks, expenses and difficulties
that companies encounter in the early stages of development, particularly
companies in new and rapidly evolving markets like the Internet and e-commerce.
These risks include the Company's ability to:
- develop the Trade Exchange;
- develop its technology and customer service;
- manage its growth effectively;
- anticipate and adapt to the rapid changes that characterize the
market the Company expects to serve;
- expand its sales and marketing efforts to build brand recognition;
and
- continue to identify, attract, retain and motivate qualified
personnel.
The Revenue And Profit Potential Of the Company's Business Model
Is Unproven. The Company's business model is new and its ability to generate
revenue or profits is unproven.
The Company's Financial Results May Fluctuate And May Be
Difficult To Forecast. The Company's quarterly revenues, expenses and operating
results may be unpredictable. The Company expects that its operating results
will fluctuate in the future due to a number of factors, some of which are
beyond its control. These factors include:
- its ability to develop the Trade Exchange, and the costs of such
development;
- its ability to attract businesses and customers;
- its ability to control its gross margins;
- consumer confidence in encrypted transactions in the Internet
environment;
- the amount and timing of costs relating to expansion of its
operations;
- technical difficulties consumers and businesses might encounter in
using the Trade Exchange;
- delays in processing orders as a result of computer systems
failures, Internet "brown-outs" or problems with completing,
processing and securing financial transactions through the Internet;
and
- general economic conditions and economic conditions specific to the
Internet and e-commerce.
Additional Capital. The Company must raise additional capital in
the near term to continue its business plan. The Company will attempt to raise
additional capital but there are no guarantees that it will be able to raise
sufficient capital on a timely basis and on reasonable terms. Additional
financing could involve dilution to the interests of the Company's then-existing
stockholders.
The Company Will Face Intense Competition In The E-Commerce
Market. The e-commerce market is new, rapidly evolving and intensely
competitive, and the Company expects competition to intensify in the future.
Barriers to entry are minimal, and competitors presently exist and more may
develop and offer similar services in the future. The Company's
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business could be severely harmed if it is not able to compete successfully
against current or future competitors. Although there is no current dominant
e-commerce provider in the Company's expected markets, additional companies may
offer competing e-commerce solutions in the future. In addition, the Company's
customers may become competitors in the future.
The Company Will Rely On Third Parties To Maintain its Critical
Systems And, If These Third Parties Fail To Adequately Perform Their Services,
The Company Could Experience Disruptions In Its Operations. The Company will
rely on a number of third parties for Internet and telecommunications access,
delivery services and financial transaction processing. The Company will have
limited control over these third parties and no long-term relationships with any
of them. From time to time, the Company expects to experience temporary
interruptions in its Web site connection and telecommunications access. Slow
Internet transmissions or prolonged interruptions in its Web site connection or
telecommunications access would materially harm its business.
The Company May Not Be Able To Sustain Or Grow Its Business
Unless It Keeps Up With Rapid Technological Changes. The Internet and electronic
commerce industries are characterized by:
- rapidly changing technology;
- changes in consumer demands;
- frequent introductions of new services or products that embody new
technologies; and
- evolving industry standards and practices that could render the
Company's Web sites and proprietary technologies obsolete.
The Company's future performance will depend, in part, on its ability to
license or acquire leading technologies, enhance its existing services and
respond to technological advances and emerging industry standards and practices
on a timely and cost-effective basis. Developing Web site and other proprietary
technology involves significant technical and business risks. The Company also
cannot offer assurance that it will be able to successfully use new technologies
or adapt its Web sites and proprietary technology to emerging industry
standards. The Company may not be able to remain competitive or sustain growth
if it does not adapt to changing market conditions or customer requirements.
If The Company Encounters System Failure, Service To Its
Customers Could Be Delayed Or Interrupted. Service Delays Or Interruptions Could
Severely Harm Its Business And Result In A Loss Of Customers. The Company's
ability to successfully maintain e-commerce Web sites and provide acceptable
levels of customer service largely depends on the efficient and uninterrupted
operation of its computer and communications hardware and network systems. Any
interruptions could severely harm the Company's business and result in a loss of
customers.
Dependence On Key Personnel. The Company's future performance
depends substantially on the continued service of Mehul J. Dave, the Chairman,
President and Chief Executive Officer of the Company. Mr. Dave intends to divide
his time between Capri and the Company, and therefore will be unable to focus
exclusively on the operations of the Company.
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Business Will Suffer If The Company Does Not Attract And Retain
Additional Highly Skilled Personnel. The Company's future success will depend
upon its ability to hire, train and retain highly skilled personnel. Competition
for quality personnel is intense. The Company cannot be sure that it will be
successful in hiring, assimilating or retaining the necessary personnel, and its
failure to do so could adversely affect its business and financial condition.
The Company May Not Be Able To Successfully Protect Its
Proprietary Rights. The Company's ability to compete effectively will depend on
its ability to maintain the proprietary nature of its services and technologies,
including its proprietary software. The Company intends to rely on a combination
of patents, trade secrets, copyright laws, non-disclosure, and other contractual
agreements to protect its rights in its technological know-how and proprietary
services. The Company also intends to depend upon confidentiality agreements
with its officers, directors, employees and consultants to maintain the
proprietary nature of its technology. These measures may not afford the Company
sufficient or complete protection, and others may independently develop know-how
and services similar to the Company's, otherwise avoid its confidentiality
agreements, or produce patents or copyrights that would materially adversely
affect the Company's business, prospects, financial condition and results of
operations.
The Company's Success Depends On The Internet's Ability To
Accommodate Growth In E-Commerce. The use of the Internet for retrieving,
sharing and transferring information among businesses, buyers, suppliers and
partners has only recently begun to develop. If the Internet were not able to
accommodate growth in e-commerce, the Company's business would suffer. The
recent growth in the use of the Internet has caused frequent periods of
performance degradation. The Company's ability to sustain and improve its
services is limited, in part, by the speed and reliability of the networks
operated by third parties. Consequently, the emergence and growth of the market
for its services is dependent on improvements being made to the Internet
infrastructure to alleviate overloading and congestion.
A Lack Of Development Of The E-Commerce Market Would Negatively
Affect The Company. If the e-commerce market does not grow or grows more slowly
than expected, the Company's business will suffer. The possible slow adoption of
the Internet as a means of commerce by businesses may harm the Company's
prospects. A number of factors could prevent the acceptance and growth of
e-commerce, including the following:
- e-commerce is at an early stage and buyers may be unwilling to shift
their traditional purchasing to online purchasing;
- businesses may not be able to implement e-commerce applications on
these networks;
- increased government regulation or taxation may adversely affect the
viability of e-commerce;
- insufficient availability of telecommunication services or changes
in telecommunication services may result in slower response times;
and
- adverse publicity and consumer concern about the reliability, cost,
ease of access, quality of services, capacity, performance and
security of e-commerce transactions could discourage its acceptance
and growth.
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Even if the Internet is widely adopted as a means of commerce, the
adoption of the Company's networks, particularly by companies that have
historically relied on more traditional means, will require broad acceptance of
the new approach. In addition, companies that have already invested substantial
resources in traditional methods of procurement, or in-house e-commerce
solutions, may be reluctant to adopt our e-commerce solutions.
Security Risks Of Electronic Commerce May Deter Use Of The
Company's Products And Services. A fundamental requirement to conduct
business-to-business e-commerce is the secure transmission of information over
public networks. If customers are not confident in the security of e-commerce,
they may not effect transactions on the Trade Exchange, which would severely
harm its business. The Company cannot be certain that advances in computer
capabilities, new discoveries in the field of cryptography, or other
developments will not result in the compromise or breach of the algorithms the
Company will use to protect content and transactions via e-commerce. Anyone who
is able to circumvent the Company's security measures could misappropriate
proprietary, confidential user information, place false orders or cause
interruptions in the Company's operations. The Company may be required to incur
significant costs to protect against security breaches or to alleviate problems
caused by breaches. Further, a well-publicized compromise of security could
deter people from using the Internet to conduct transactions that involve
transmitting confidential information.
Increasing Governmental Regulation Of The Internet Could
Adversely Affect The Company's Business. The Company is currently not regulated
by any government agency, other than regulations applicable to businesses
generally and laws or regulations directly applicable to Internet commerce.
However, due to the increasing popularity and use of the Internet, it is
possible that a number of laws and regulations may be adopted with respect to
the Internet, covering issues such as user privacy, pricing, sales tax, and
characteristics and quality of products and services. Furthermore, the growth
and development of Internet commerce may prompt calls for more stringent
consumer protection laws that may impose additional burdens on companies
conducting business over the Internet. New laws or regulations may decrease the
growth of the Internet, which, in turn, could decrease the demand for the
Company's services and increase its cost of doing business. The applicability to
the Internet of existing laws in various jurisdictions governing issues such as
property ownership, auction regulation, sales tax, libel and personal privacy is
uncertain and may take years to resolve.
The tax treatment of the Internet and electronic commerce is currently
unsettled. A number of proposals have been made at the federal, state and local
level and by some foreign governments that could impose taxes on the sale of
goods and services and other Internet activities. In October 1998, the Internet
Tax Freedom Act was signed into law, placing a three-year moratorium on new
state and local taxes on Internet commerce. However, it is possible that future
laws imposing taxes or other regulations on commerce over the Internet could
substantially impair the growth of electronic commerce and as a result have a
negative effect on the Company's business.
In addition, because the Company's service will be available over the
Internet in multiple states and countries, the Company could be required to
qualify to do business as a foreign corporation in each state or country in
which its services are available. The Company is qualified to do business in
only two states, and its failure to qualify as a foreign corporation in a
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jurisdiction where it is required to do so could subject it to taxes and
penalties for the failure to qualify. Any new legislation or regulation, or the
application of laws or regulations from jurisdictions whose laws do not
currently apply to the Company's business, could have a material adverse effect
on its business.
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
Forward-looking statements under the caption "Description of Business"
in this Annual Report on Form 10-KSB, as well as oral statements that may be
made by the officers, directors or employees of the Company acting on the
Company's behalf, are intended to be made pursuant to the safe harbor provisions
of the Private Securities Litigation Reform Act of 1995. The words "believes",
"expects" and "anticipates" and other similar expressions which are predictions
of or indicate future events and trends and which do not relate solely to
historical matters identify forward-looking statements. Such forward-looking
statements are subject to risks and uncertainties which could cause actual
results, performance, or achievements of the Company to differ materially from
anticipated future results, performance or achievements expressed or implied by
such forward-looking statements. Factors that might cause such differences
include, but are not limited to, the factors discussed herein under the caption
"Risk Factors."
Readers are cautioned not to place undue reliance on these
forward-looking statements, which speak only as of the date hereof. The Company
undertakes no obligation to publicly release any revisions to these
forward-looking statements, which may be made to reflect events or circumstances
after the date hereof or to reflect the occurrence of unanticipated events.
ITEM 7. DESCRIPTION OF PROPERTY.
The Company is headquartered at 2651 Warrenville Road, Suite 560,
Downers Grove, Illinois. This location is leased by Cimnet, which permits the
Company to share its office space. See "Relationships Between the Company and
Capri After the Spin-Off."
ITEM 8. DIRECTORS, EXECUTIVE OFFICERS AND SIGNIFICANT EMPLOYEES.
Information with respect to directors and officers of the Company is
incorporated herein by reference to the information under the caption "Board of
Directors" in the Company's definitive proxy statement for its 2000 Annual
Meeting of Stockholders, as filed with the SEC (SEC File No. 0-30187).
ITEM 9. REMUNERATION OF DIRECTORS AND OFFICERS.
Information with respect to the renumeration of directors and officers
of the Company is incorporated herein by reference to the information under the
caption "Executive Compensation" in the Company's definitive proxy statement for
its 2000 Annual Meeting of Stockholders, as filed with the SEC (SEC File No.
0-30187).
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ITEM 10. SECURITY OWNERSHIP OF MANAGEMENT AND CERTAIN SECURITY HOLDERS.
Information with respect to security ownership in the Company is
incorporated herein by reference to the information contained under the caption
"Principal Stockholders" in the Company's definitive proxy statement for its
2000 Annual Meeting of Stockholders, as filed with the SEC (SEC File No.
0-30187).
ITEM 11. INTERESTS OF MANAGEMENT AND OTHERS IN CERTAIN TRANSACTIONS.
Information with respect to interests of management of the Company and
others in certain transactions is incorporated herein by reference to the
information under the caption "Certain Transactions" in the Company's definitive
proxy statement for its 2000 Annual Meeting of Stockholders, as filed with the
SEC (SEC File No. 0-30187).
PART II
ITEM 1. MARKET PRICE OF AND DIVIDENDS ON THE REGISTRANT'S COMMON EQUITY AND
OTHER SHAREHOLDER MATTERS.
There is currently no public market for the Company's Common Stock. In
addition, the stockholders of Company Common Stock are unable to transfer such
stock except in specific circumstances, as described in Item 6 of Part I. Even
after these transfer restrictions expire, there can be no assurance that a
public market for the Company's Common Stock will develop or, if such market
does develop, that it will be sustained. As of June 1, 2000, there were 63
record holders of the Common Stock.
ITEM 2. LEGAL PROCEEDINGS.
None.
ITEM 3. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS.
None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
There were no matters submitted to a vote of the holders of the
Company's Common Stock during the fourth quarter of fiscal 2000.
ITEM 5. COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT.
Nothing to report.
ITEM 6. REPORTS ON FORM 8-K.
The Company filed a report on Form 8-K dated June 1, 2000, disclosing
the consummation of the Spin-Off.
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PART F/S
The following financial statements of the Company are included herein:
AUDITED ANNUAL FINANCIAL STATEMENTS FOR THE YEARS ENDED JUNE 30, 2000
(a) Independent Auditor's Report
(b) Consolidated Balance Sheets
(c) Consolidated Statements of Operations
(d) Consolidated Statements of Stockholders' Equity
(e) Consolidated Statements of Cash Flows
(f) Notes to Consolidated Financial Statements
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Independent Auditor's Report
To the Board of Directors of InterConexus.com, Inc.
Downers Grove, Illinois
We have audited the accompanying balance sheet of InterConexus.com, Inc. (a
development stage company) as of June 30, 2000 and the related statements of
operations, stockholders' equity, and cash flows for the period from March 28,
2000 to June 30, 2000. These financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements referred to above 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 audit provides a reasonable basis for our
opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of InterConexus.com, Inc. as of
June 30, 2000, and results of its operations and cash flows for the period then
ended in conformity with generally accepted accounting principles.
/s/ KLESMAN, HALPER & CO., P.C.
Palos Heights, Illinois
September 6, 2000
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InterConexus.com, Inc.
(A Development Stage Company)
Balance Sheet
June 30, 2000
<TABLE>
<CAPTION>
Assets
<S> <C>
Current assets:
Cash and cash equivalents $ 11,291
Fixed assets 17,499
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Total assets $ 28,790
=========
Liabilities and stockholder's equity
Liabilities:
Amounts due related party $ 434,672
---------
Stockholder's equity:
Common Stock (par value $.0001 per share,
20,000,000 shares authorized, 12,908,091
shares issued and outstanding) 1,291
Additional paid-in capital 10,000
Deficit accumulated during
the development stage (417,173)
---------
Total stockholder's equity (405,882)
---------
Total liabilities and stockholders' equity $ 28,790
=========
</TABLE>
The accompanying notes to financial statements are
an integral part of this statement.
13
<PAGE> 15
InterConexus.com, Inc.
(A Development Stage Company)
Statement of Operations
Period from March 28, 2000 to June 30, 2000
<TABLE>
<CAPTION>
<S> <C>
Sales revenue $ --
---------
Gross Profit --
Operating expenses 417,173
---------
Operating loss (417,173)
---------
Net loss before income taxes (417,173)
Income taxes --
---------
Net loss $(417,173)
=========
Earnings per share:
Basic $ (0.03)
=========
Diluted $ (0.03)
=========
</TABLE>
The accompanying notes to financial statements
are an integral part of this statement.
14
<PAGE> 16
InterConexus.com, Inc.
(A Development Stage Company)
Statement of Stockholders' Equity
Period from March 28, 2000 to June 30, 2000
<TABLE>
<CAPTION>
Additional
Common paid-in
Total stock capital Deficit
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
Balance, beginning of period $ -- $ -- $ -- $ --
Net loss (417,173) (417,173)
Common stock issued,
(12,908,091 shares) 11,291 1,291 10,000 --
--------- --------- --------- ---------
Balance, end of period $(405,882) $ 1,291 $ 10,000 $(417,173)
========= ========= ========= =========
</TABLE>
The accompanying notes to financial statements
are an integral part of this statement.
15
<PAGE> 17
InterConexus.com, Inc.
(A Development Stage Company)
Statement of Cash Flows
Period from March 28, 2000 to June 30, 2000
<TABLE>
<CAPTION>
<S> <C>
Cash flows from operating activities:
Net loss $(417,173)
Adjustments to reconcile net loss
to net cash provided by operating activities:
Increase in amounts due related party 434,672
---------
Net cash provided in operating activities 17,499
Cash flows from investing activities:
Purchase of fixed assets (17,499)
Cash flows from financing activities:
Common stock issued 11,291
---------
Net increase in cash and cash equivalents 11,291
Cash and cash equivalents:
Beginning of period --
---------
End of period $ 11,291
=========
</TABLE>
The accompanying notes to financial statements
are an integral part of this statement.
16
<PAGE> 18
INTERCONEXUS.COM, INC.
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2000
Note 1. Summary of significant accounting policies
Description of business
InterConexus.com, Inc., a Delaware corporation, (the Company) was
organized on March 16, 2000 as a wholly-owned subsidiary of Capri
Corp., a Minnesota corporation (Capri). On June 1, 2000, Capri spun-off
the common shares of the Company, in a taxable distribution, to Capri
shareholders of record on May 30, 2000 on the basis of one share of
Company stock for each share of Capri stock held on the record date.
The Company intends to pursue certain E-commerce opportunities within
the global interconnect industry.
The Company was initially funded on March 28, 2000. Accordingly, the
reporting period reflects activity of the Company from March 28, 2000
through June 30, 2000.
Use of estimates
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
For purposes of the balance sheet and statement of cash flows, cash and
cash equivalents consist of cash in a demand deposit account held at a
local bank.
Fixed assets
Fixed assets consist of computer equipment and are stated at cost. No
depreciation expense has been recorded during this period.
Income taxes
Income taxes are provided for the tax effect of transactions reported
in the financial statements and consist of taxes currently due plus
deferred taxes related to differences between financial and income tax
reporting. The deferred tax assets and liabilities represent the future
tax return consequences of those
17
<PAGE> 19
INTERCONEXUS.COM, INC.
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2000
Note 1. Summary of significant accounting policies
Income taxes (continued)
differences, which will either be taxable or deductible when the assets
and liabilities are recovered or settled.
Note 2. Development stage operations
The Company is in the initial stage of developing an e-commerce
business-to-business trading exchange which would make up an electronic
trading community within the global electronic interconnect industry
which comprises the areas of integrated circuits, semi-conductors,
contract assembly, printed circuit boards and electronic manufacturing
service providers. Other efforts of the Company at June 30, 2000 are
spent on raising additional capital and procuring other financing
arrangements, as well as other administrative functions. As of June 30,
2000, the Company's planned principal operations had not commenced. The
Company has relied solely on services provided by Capri and Cimnet
Systems, Inc. (a wholly-owned subsidiary of Capri), obtained under a
separate services agreement as further described in note 7.
Note 3. Stockholder's equity
The Company's certificate of incorporation authorizes 40,000,000 shares
of common stock, par value $.0001 and 20,000,000 shares of preferred
stock, par value $.001. At the balance sheet date, 12,908,091 shares of
common stock were issued and outstanding. There were no preferred
shares issued or outstanding.
The Company's amended and restated Certificate of Incorporation
restricts the transfer of the Company's common stock until the first to
occur of the following: 1) the second anniversary of the spin-off 2)
the consummation of an initial public offering of the common stock of
the Company under the Securities Act of 1933, as amended, or 3) the
Board of Directors of the Company determines, in its sole discretion,
that the business of the Company has developed to support a trading
market.
18
<PAGE> 20
INTERCONEXUS.COM, INC.
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2000
Note 4. Stock option plan
The Company adopted a stock incentive plan providing for incentive and
nonqualified stock options as well as grants of restricted stock for
certain directors, employees and employees of Capri Corp., its former
parent company beginning on May 5, 2000. The stock incentive plan is
intended to qualify under Section 422 of the Internal Revenue Code.
Under the terms of the plan, options to purchase common stock are
granted at not less than the estimated fair market value at the date of
the grant and are exercisable during specified future periods.
A summary of the stock option transactions follows:
<TABLE>
<CAPTION>
Weighted
Number average
of price
shares per share
------ ---------
<S> <C> <C>
Balance, beginning
of year -- --
Granted 980,000 $0.01
--------
Balance, end of
year 980,000 $0.01
========
</TABLE>
No options were exercised, cancelled or expired during the period.
As of June 30, 2000, there were 150,000 shares that were exercisable.
The remaining options vest during periods ranging from one to four
years from the grant date. All options expire in 2005.
Note 5. Income taxes
The Company has recognized a loss for the period ended June 30, 2000
and cannot reasonably predict when they will be able to recover that
loss through current operations. Accordingly, no provision for income
taxes has been made.
19
<PAGE> 21
INTERCONEXUS.COM, INC.
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2000
Note 5. Income taxes (continued)
A reconciliation of income taxes benefit calculated using the Federal
statutory income tax rate of 34% to the income taxes reported on the
statement of operations follows:
% of pretax
Amount loss
--------- -----------
Income tax benefit at the
Federal statutory rate $(142,000) (34.0)%
State income tax benefit,
net of Federal effect (20,000) (4.8)%
Change in deferred tax
valuation allowance 162,000 38.8 %
--------- ----
-- -- %
========= ====
The components of the Company's deferred tax assets and liabilities at
June 30, 2000 follows:
Deferred tax assets:
Net operating loss $ 162,000
Deferred tax liabilities:
None --
Deferred tax valuation
allowance (162,000)
---------
$ --
==========
The Company has a net operating loss of approximately $417,000
available to offset against future taxable income. This net operating
loss expires in 2020.
20
<PAGE> 22
INTERCONEXUS.COM, INC.
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2000
Note 6. Earnings per share
A reconciliation of net loss and shares outstanding relating to the
calculation of basic and diluted earnings per share follows:
<TABLE>
<CAPTION>
Per-share
Income Shares amount
---------- ---------- ---------
<S> <C> <C> <C>
Basic earnings per share $ (417,173) 12,908,091 $(0.03)
======
Effect of Dilutive
Securities:
Stock options -- 980,000
---------- ----------
Diluted earnings per
share $ (417,173) 13,888,091 $(0.03)
========== ========== ======
</TABLE>
Note 7. Related party transactions
The Company and Capri have common members of their respective Board of
Directors.
For the purpose of governing certain ongoing relationships between the
Company and its former parent company Capri, Capri's wholly-owned
operating subsidiary Cimnet Systems, Inc. ("Cimnet") and the Company
have entered into a services agreement and adopted certain policies as
follows:
The services agreement enables either company to provide certain
services to the other on an as-needed basis, at cost. The services
provided under this agreement include, but are not limited to,
accounting services, computer services, insurance coverage, payroll
processing services and management of employee benefits programs, or
any other similar services. The agreement does not preclude either
party from obtaining these services from unrelated third parties or
from developing their own in-house capabilities.
21
<PAGE> 23
INTERCONEXUS.COM, INC.
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2000
Note 7. Related party transactions (continued)
Cimnet has agreed to share office space with the Company and allocates
to the Company its pro rata share of rent, common area maintenance
charges and other costs and expenses under Cimnet's lease for the
Company occupied office space.
During the period ended June 30, 2000, Cimnet billed the Company
$434,672 for services under this agreement. Included in those billings
were charges for certain computers and software amounting to $17,499.
Cimnet did not utilize any services of the Company during this period.
22
<PAGE> 24
PART III
INDEX TO EXHIBITS
EXHIBIT NO. DESCRIPTION
----------- -----------
2.1 Amended and Restated Certificate of Incorporation of the Company
[Incorporated by reference to Exhibit 2.1 to the Company's
Registration Statement on Form 10-SB (SEC File No. 0-30187)]
2.2 Amended and Restated By-laws of the Company [Incorporated by
reference to Exhibit 2.2 to the Company's Registration Statement
on Form 10-SB (SEC File No. 0-30187)]
3.1 Specimen Certificate for Common Stock [Incorporated by reference
to Exhibit 3.1 to the Company's Registration Statement on Form
10-B (SEC File No. 0-30187)]
6.1 Services Agreement [Incorporated by reference to Exhibit 6.1 to
the Company's Registration Statement on Form 10-SB (SEC File No.
0-0187)]
6.2 InterConexus 2000 Stock Incentive Plan [Incorporated by reference
to Exhibit 6.2 to the Company's Registration Statement on Form
10-B (SEC File No. 0-30187)]
10.1 Consent of Klesman, Halper & Co., P.C.
24.1 Power of Attorney
27.1 Financial Data Schedule
23
<PAGE> 25
SIGNATURES
In accordance with Section 13 or 15(d) of the Exchange Act, the
registrant caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
Dated: September 26, 2000 INTERCONEXUS.COM, INC.
By: /s/ Mehul J. Dave
--------------------------------
Name: Mehul J. Dave
Title: Chairman of the Board,
President and Chief
Executive Officer
In accordance with the Exchange Act, this report has been signed below
by the following persons on behalf of the registrant and in the capacities and
on the date indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
Mehul J. Dave* Director, Chairman of the Board, President and September 26, 2000
Chief Executive Officer (Principal Executive,
Financial and Accounting Officer)
P. Balasubramanian* Director, Vice President, Secretary and September 26, 2000
Treasurer
Robert W. Heller* Director September 26, 2000
Thomas Mueller* Director September 26, 2000
Jason W. Levin* Director September 26, 2000
Utpal J. Dave* Director and Chief Operating Officer September 26, 2000
David L. Harris* Director September 26, 2000
------------
*By: /s/ Mehul J. Dave Individually and as Attorney-in-Fact September 26, 2000
-----------------------
Name: Mehul J. Dave
</TABLE>
24
