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U.S. Securities and Exchange Commission
Washington, D.C. 20549
Form 10-SB/A-1
GENERAL FORM FOR REGISTRATION OF SECURITIES OF
SMALL BUSINESS ISSUERS
Under Section 12(b) or 12(g) of the Securities Exchange Act of 1934
Novamex USA Ltd.
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(Name of Small Business Issuer in its charter)
OREGON 98-0198290
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
360 rue Franquet, Suite 10, Sainte-Foy, Quebec, Canada G1P 4N9
(Address of principal executive Offices) (Zip Code)
Issuer's telephone number: (418) 652-9001
Securities to be registered under Section 12(b) of the Act:
None.
Securities to be registered under Section 12(g) of the Act:
COMMON
(Title of Class)
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INFORMATION REQUIRED IN REGISTRATION STATEMENT
This Form 10-SB contains certain forward-looking statements within the
meaning of the Private Securities Litigation Reform Act of 1995, which act
contains a safe harbor for forward looking statements. Statements made in
connection with initial public offerings, however, are not protected by the
safe harbor of the Private Securities Litigation Reform Act of 1995.
Nonetheless, the Company believes that investors would be benefitted by the
cautionary language included in this paragraph. For this purpose any
statements contained in this Form 10-SB that are not statements of
historical fact may be deemed to be forward-looking statements. Without
limiting the foregoing, words such as "may," "will," "expect," "believe,"
"anticipate," "estimate," or "continue" or comparable terminology are
intended to identify forward-looking statements. These statements by their
nature involve substantial risks and uncertainties, and actual results may
differ materially depending on a variety of factors, many of which are not
within the Company's control. These factors include but are not limited to
economic conditions generally and in the industries in which the Company
may participate; competition within the Company's chosen industry,
including competition from much larger competitors; technological advances
and failure by the Company to successfully develop business relationships.
PART I
Item 1. Description of Business
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Overview
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Novamex USA Ltd. (the "Company"), was originally incorporated in the
state of Oregon on February 12, 1991 under the name International Business
Development Ltd. The Company was organized and authorized to pursue any
lawful purpose or purposes. The Company amended its Articles of
Incorporation on June 23, 1998, changing its name to Novamex USA Ltd. The
Company has had limited revenues and is considered to be a "development
stage company."
On June 15, 1998, the Company entered into a plan of reorganization
with Novamex Diagnostic Ltee. (a/k/a Novamex Diagnostic Ltd. or "NDL"), a
corporation organized in the Province of Quebec, Canada, on March 27, 1996.
In connection with the plan of reorganization, the Company acquired all of
the issued and outstanding shares of NDL in exchange for 5,500,000 shares
of its common stock. As a result of the acquisition, NDL became a wholly
owned subsidiary of the Company. The current business of the Company is
that of its sole subsidiary, NDL.
In connection with the acquisition, shareholders of NDL obtained
control of the Company and subsequently appointed new officers and
directors. Since August 1, 1998, the Company has focused its plan of
operations on the business of further developing and marketing their
testing kits which are used for detecting pathogenic bacteria, viral
diarrhea and gestation in a non-clinical setting.
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Business of the Company
-----------------------
The Company operates in the biotechnology industry. The Company
develops and manufactures detection kits to non-clinical industry segments
including the agri-food and veterinary segments. Clinical settings
involve testing and detection in humans, whereas non-clinical settings
involve testing and detection in animals and other samples, such as food.
As with humans, it is advantageous to detect illness and/or pregnancy
in pigs and cows and unwanted bacteria in food as early as possible. The
sooner bacteria, sickness and/or pregnancy is detected, the sooner
appropriate treatment for the animal can be implemented. Early treatment
reduces negative effects on the animal and/or food and minimizes the spread
of disease to other animals and/or food.
The detection process utilized by the Company ultimately looks for
reactions between antigens and antibodies to detect and quantify bacteria
and/or viruses, biological indicators (proteins, hormones and enzymes) and
products added voluntarily (growth hormones). Antigens are protein or
carbohydrate substances in toxin form and are emitted from the previously
mentioned sources, such as viruses or hormones. Antibodies are used to
detect antigens. The Company's detection kits rely on fundamental
principles of immunology, a science that deals with the phenomena and
causes of disease resistance. The fundamental principles are, each
antibody has a corresponding antigen, and there is a specific reaction that
occurs between an antibody and its corresponding antigen. In basic terms,
the Company's test introduces certain antibodies into a sample from the
subject, often a blood sample is used. If antigens from bacteria or
hormones are present, they are detected by a naturally occuring reaction.
This reaction only occurs if the corresponding antigen to the antibody is,
in fact, present. If there is no reaction the antigen is not present and
the test results for the subject are negative.
Tests are practical if they are precise, timely and cost effective.
Generally, the faster the results the better, as long as tests are
affordable and accuracy is not compromised. The sooner detection occurs,
the sooner prompt application of appropriate and effective measures can
take place. The Company is working to develop precise, timely and cost
effective tests to detect disease and pregnancy.
Several diagnostic methods are currently used routinely. The methods
are divided into two groups; conventional methods and rapid methods.
Conventional Test Methods
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Conventional test methods are used primarily for the detection of
infectious agents such as bacteria and viruses. These methods are usually
time consuming, costly and technically difficult to implement for routine
use. Conventional test methods include microbiological culture media tests
and immunological procedures based on the reaction of antibodies and
antigens. The immunological procedure of conventional methods are more
specific than the culture methods; however, immunological procedures in
their present form are not rapid enough to be used for routine analysis.
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Two of the immunological conventional methods are called Radio-
immunological methods (RIA) and Immunoenzymatic methods (EIA). The RIA
method is a radioactive method which cannot be performed without advanced
training and is less popular because of the risks associated with the
necessary radioactive materials. The EIA methods are most commonly used in
the agri-food fields. An advantage of ths method is that it can be
adjusted to detect either the antigen or the antibody. In some
conventional methods the reaction may be visualized by means of a
colorimetric scale using the naked eye. The detection process, however;
involves numerous steps requiring approximately a half-days work by highly
trained personnel in a specialized laboratory. EIA methods are partially
automated and are generally not performed until the number of samples to be
tested is sufficient to justify setting up the procedure and time required
by the personnel. Thus, it may take up to a week to obtain results.
Conventional methods involve higher costs, due mostly to their
requirement for specialized personnel and equipment used in the detection
process. The cost of a single routine analysis done in such a laboratory
is estimated between U.S. $9 and $15. This average cost does not include
any cost of handling and/or storage for the test result during waiting
periods prior to communicating test results.
Rapid Diagnostic Methods
------------------------
Approximately ten years ago, rapid diagnostic method tests were
introduced as an alternative to conventional methods. Rapid tests also use
immunological procedures based on the reaction of antibodies and antigens.
Rapid tests provide a potentially enormous cost savings over conventional
methods by releasing the results in a timely fashion, thus reducing waste
and spread of disease. The speed comes from reduction in waiting time,
cutting down on storage time and increasing the effective shelf life of the
test itself. Most rapid methods take an average of three days to get
results. The Company is aware of a company which has developed a test that
returns results the next day. In addition, rapid methods have an average
accuracy rating of 97% leaving a 3% margin for error. Rapid tests may be
the wave of the future for both clinical and non-clinical settings for
these reasons.
The Company's Technology
------------------------
The Company is at the forefront of the antigen-antibody reaction
technology and employ rapid diagnostic methods in their detection tests.
The Company has developed unique testing methods in which any detectible
reaction takes place entirely inside a plastic cassette. Their tests also
have the other benefits of the rapid diagnostic methods such as no
incubation or washing steps. Tests developed by the Company produce
results in approximately fifteen minutes.
Test results are read visually using a colorimetric reaction.
Moreover, these methods do not need any sophisticated equipment and may be
carried out as field tests by workers having no laboratory training. The
average cost for a test is between U.S. $4.50 and $7 per sample. The
Company has developed timely, affordable tests that do not compromise
accuracy. Evaluation results have established 99.4% accuracy rating on
many of the Company's detection tests.
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The tests have a shelf life of approximately 14 months when stored at
four degrees Celsius (4 C). Each test uses enzymes or colored particles
coupled with specific antibodies. Any reaction between antibodies and
antigens are revealed by adding a chromogenic substance (pigment producing
micro-organism) to the sample. If a reaction has taken place, or in other
words the test is positive, the test will yield a blue color that is
visible to the naked eye.
The Company's Diagnostic Kits
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The Company will sell their detection tests in kits. Each kit will
cost approximately US $150 and will include the following:
30 individual testing cassettes
1 bottle containing 10 ml of blocking solution
1 bottle containing 5 ml of conjugate
1 bottle containing 10 ml of washing solution
1 bottle containing 5 ml of antigen-antibody substrates
1 flask containing 0.5 ml of positive control solution
Printed instructions for use
Over the last few years, the Company has developed seven kits that are
either already being marketed or will be commercialized and introduced to
the market this year. The following is a brief introduction of the market
and a description of each kit.
Pathogenic Bacteria Kits.
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In the United States, the number of persons contracting a food
intoxication following the consumption of a food containing pathogenic
bacteria is estimated at 80 million annually. Bacteria is pathogenic when
it causes or has the potential to cause disease. Among the 80 million
cases, approximately 9,000 cases develop complications causing death.
In an effort to have safer foods, governments in industrialized
countries have imposed new rules obliging producers, manufacturers and
distributors to use newer and more effective methods for rapidly detecting
pathogens before they can compromise the quality of foods. In the last few
years many governments have reviewed regulations regarding food safety and
quality and have begun implementing programs to increase standards. Some
of these new regulation programs are the HACCP (Hazard Analysis Critical
Control Points), GMP (Good Manufacturing Practice), and ISO 9000 to name a
few.
Implementation of higher standards has resulted in increased demand
for rapid, precise and low-cost tests. Subsequently, there has been
significant increases in the size of the pathogen detection market in which
the Company is positioning itself. Its positioned itself by developing the
following five kits that detect pathogenic bacteria:
Escherichia coli 0157:h7 is the pathogenic bacterium representing the
most severe cases of food toxi-infection in humans. Ingestion of E.coli
0157:H7 produces a wide variety of clinical symptoms including a severe
hemorrhagic colitis, also known as hamburger disease, which causes
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hemorrhaging and inflamation of the colon. Meats, most notably ground
beef, are the major cause of infection by E.coli 0157:H7. Contamination of
meat often occurs during slaughtering as a result of erroneous separation
of the animal from its intestines or from contact with handlers of the
carcasses. Since January of 1997, E.coli 0157:H7 has become the reference
germ of the U.S.D.A. (United States Department of Agriculture), for testing
and evaluation of hygienic conditions in agri-food institutions. The
development of a rapid test for E.coli 0157:H7 is a major asset for the
Company.
The Company's kit is intended for the detection of strains of E.coli
0157:H7 belonging to the 0157 serotype. Serotype simply means there is a
common set of antigens. This serotype is responsible for almost all of the
food toxi-infections due to E.coli 0157:H7. This kit is being evaluated by
Agriculture and Agri-food Canada and is already on the market. With a
threshold of two bacterial cells per ounce of meat, this kit is believed to
be the most sensitive available on the market.
Salmonella is usually found in poultry and eggs and may cause serious
gastro-enteritis (inflamation of the membrane lining of the stomach and
intestines) in humans. A recent study revealed that Salmonella may be
responsible for 60% to 80% of all cases of food-borne infection or
intoxication reported throughout the world. In Canada and the United
States, this pathogen is considered second in importance only to E.coli
0157:H7 in terms of seriousness of illness caused. In Western countries,
Salmonella remains the most significant pathogen with about 200 to 600
cases per million of the population annually.
Campylobacter is considered the third most important food bacterial
pathogen. The incidence of this bacterium in foods such as chicken is very
high, possibly as high as 85%. The detection of Campylobacter is vital
because infection caused by this pathogen may lead to meningitis
(inflamation of the meninges or spinal cord) and fatal gastro-enteritis.
Food toxi-infections due to Campylobacter are very frequent in
industrialized countries. Approximately 3 million cases are recorded in
Canada and 30 million in the United States annually. This kit still needs
some fine tuning and may be ready for the market in the third quarter of
this year.
Yersinia Enterocolitica is an emerging pathogen that may be
responsible for the majority of food intoxications in humans each year.
Yersinia Enterocolitica is the only pathogenic species of Yersinia and is
usually found in pork.
A toxi-infection by Yersinia is often characterized by acute diarrhoea
which may evolve into rheumatoid arthritis. This kit is in advanced stages
of development and may be evaluated by Agriculture and Agri-food Canada
sometime in the third quarter of 2000. The Company anticipates this kit to
be on the market about the same time as Campylobacter, or at the end of the
third quarter of this year.
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Listeria is omnipresent in the environment in water, soil, animal
feed, etc., and may survive at temperatures below 4 degrees Celsius. The
mode of transmission for infection is usually through milk and meats. The
first clinical signs of Listeria infection resemble the flu. If not
treated, the infection may evolve into more serious central nervous system
complications such as meningitis. The persons at greatest risk are
pregnant women, who may transmit the infection to the fetus, senior
citizens and persons with immune deficiencies due to AIDS and cancer or
recent organ transplant patients. Although the rate of incidence is low,
mortality rates among the infected are high. This kit is available in the
market and comprises the Company's pathogenic bacteria kits.
Veterinary Diagnostic Products
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Diarrhoea in Pigs and Cattle (Rotavirus). Neonatal diarrhoea is the
main disease encountered in cattle and pig raising. The agent that causes
this disease may be viral or bacterial. In either case, the manifestation
is always severe and brings about obvious drops in productivity, slowed
growth and an ever present risk of death. Morbidity rates may reach 80%
with mortality rates sometimes as high as 50%. This disease can do serious
damage in the livestock raising industry and each year several producers
report suffering significant economic losses.
Prevention remains the only active means of decreasing the incidence
of this livestock disease. An effective prophylactic program requires a
method of early identification of afflicted animals in order to implement
appropriate measures, treatment and vaccination, to decrease risks of
contagion and propagation of the disease.
This kit is currently being evaluated by two laboratories, one in
Canada and one in the United States. It is also being used at the Saint
Vallier Veterinary Clinic and other animal health divisions. Other similar
kits are being developed and the Company anticipates them to enter the
market early in 2001.
General Hygiene Detection
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General Hygiene. Ongoing evaluation of general hygiene in the agri-
food business, especially in food processing companies, may be the most
effective means of monitoring and preventing food borne toxi-infections.
Until very recently, estimations of contaminating foods and food surfaces
or work areas was done through a culture media test. These tests may
require several days before an accurate result is obtained. With the
implementation of programs such as HACCP, food companies must now apply a
standardized testing and monitoring system using more rapid, specific and
easier detection methods at the actual sites of food handling. Because of
the size of this emerging market, the Company has devoted substantial time
to developing and perfecting a rapid, easy to use test for evaluating
hygiene in food processing companies.
This kit has been commercialized since September of 1999. The tests
do not require any special equipment and can be performed by anyone. These
tests have advantages over other popular hygiene tests that are often
costly, difficult to interpret and may give variable or inconsistent
results. This test represents the largest source of revenue for the
Company.
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Kits in Development
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The Company has other detection kits which are not anticipated to be
ready for commercialization within the year 2000. The following are
descriptions of each of the kits that are in earlier stages of development:
Gestation Detection. In several countries livestock production makes
up a significant portion of the agriculture sector. Profitability is the
major preoccupation, and thus, companies are striving to increase
productivity and lower maintenance costs. The problem of reproduction,
especially inadequate diagnosis of gestation, remains a major cause of
unprofitability in livestock raising. Establishment of an early and
precise diagnosis of gestation remains the most efficient means of managing
this reality and thereby limiting losses. Currently used methods are
costly and can only be applied after the 25th day following insemination
and often require intervention of a veterinarian.
The Company is developing a gestation kit which can be used at the
farm by the livestock workers themselves. It is anticipated that this kit
will work by detecting a gestation specific protein in the peripheral
secretions such as blood, urine and milk, from a gestating female. The
kits may be capable of detection as early as the 18th day after
insemination. So far, the Company has identified the protein and is
developing the antibodies which will serve as the basis for the test. The
Company plans to develop equivalent tests for sows and mares, since it has
already been demonstrated that the structure of this protein is quite
similar.
The Company hopes to have a cattle gestation test ready for market
introduction in early 2001, and one for pigs and mares by the end of 2001.
Antibiotic Residue in Milk and Meat. Antibiotics are widely used in
veterinary medicine for the treatment of various pathological conditions in
livestock. They are introduced into the animal, usually by injection, and
can end up in peripheral secretions such as milk. Consumption by humans of
meat or milk containing antibiotics may have serious health repercussions,
especially by promoting antibiotic resistance in pathogenic bacteria.
Foodstuffs containing antibiotics are therefore considered unfit for human
consumption and may not be distributed. The Company has been developing a
rapid screening method for the detection of antibiotics for about two years
and may have the first kits ready to introduce to the market late in 2001.
Vitamin D Quantification. Vitamin D is essential for proper bone and
cartilage formation. The synthesis of vitamin D is catalyzed by exposure
to sunlight, especially where exposure to sunlight is limited, consuming
higher levels of vitamin D may be helpful. Several persons add vitamin D
to their diet by consuming more milk. Unfortunately, milk may not always
contain the levels of vitamin D claimed on labels, it may be under or over
fortified. Either condition can lead to health problems which may be
remedied by testing of all product lots. The Company has adopted a method
for measuring vitamin D in milk. These tests provide quantification of
vitamin D within one hour. These kits also may be introduced in 2001.
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Bacteriophages in Cheese Manufacturing. Bacteriophages are viruses
which attack and kill bacteria. The bacteriophages of lactic acid bacteria
are widespread in cheese production facilities and are a major problem in
this industry. The destruction of bacteriophages causes either the loss of
milk used to make cheese, or more often, cheese of poor quality. These
phenomena cause considerable economic losses annually, estimated between
15% and 20% depending on the factory and type of cheese manufactured.
Early detection generally allows a reduction in losses by implementing
appropriate adjustments. There is no rapid detection method available at
this time. Current methods are complex, costly and take 24 hours or more
to get the results. The Company hopes to develop a kit that will allow
detection within five minutes and may have kits by the end of this year but
will probably not be ready until 2001.
Regulatory Matters
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There are no specific regulatory approval processes required in Canada
for sale of the Company's test kits for non-clinical usage; however, each
test kit other than the General Hygiene test is and/or will be submitted to
Agriculture Canada for validation of effectiveness. Agriculture of Canada
has started testing on E-coli 0157 H:7, Salmonella and Listeria have been
submitted to Agriculture of Canada and testing is expected to be underway
shortly.
In the United States, there is also no regulatory approval required
for non-clinical usage. Nonetheless, all tests except for vitamin D, cheese
bacteriophage and General Hygiene may be submitted to the AOAC
(Association of Official Agriculture Chemists) for validation. This
process costs approximately US $10,000 per test and the Company expects the
process to take between 10 and 12 weeks to complete. So far no tests have
been submitted to the AOAC. Approval requirements and processes in other
countries vary and have not been specifically researched by the Company at
this time.
No assurance can be made on behalf of the Company, that products
submitted to regulatory and other agencies for verification will be
validated. The Company, however, has validated their tests and believes
that the tests will meet or exceed customer expectations.
Marketing Plans
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The Company has entered into non-exclusive marketing agreements with
Biovet, Inc., a biotechnology company based in Saint-Hyacinthe, Quebec.
Saint-Hyacinthe specializes in veterinary diagnostics and distributes a
wide range of products throughout Canada, the United States and Europe.
Under an agreement dated July 23, 1998, the Company granted a worldwide
distribution license to Biovet to sell the Rotavirus detection test kit for
a period of five years.
Under a preliminary agreement, final terms still in negotiation,
Biovet is being granted a year-to-year renewable license to distribute the
Company's five pathogenic bacteria detection kits in Canada and the United
States for veterinary applications only. This agreement is still of a
general nature and specific quantity and price terms for each product are
yet to be established.
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The Company has established a relationship and entered into verbal
agreements with AES Laboratory, located in Montreal, Canada, for
distribution of the Company's general hygiene and five pathogenic bacteria
tests for the application to AES agri-food clientele in the United States.
The verbal agreements call for confirmation from the Company for each order
from the clientele of AES Laboratory. Such confirmation may include
product availability, price per test and date of delivery.
Finally, the Company expects to receive from F.K. Laboratory, a
biotechnology company located in Tunisia, a proposal for exclusive
distribution rights of the general hygiene and the group of five pathogenic
bacteria tests in all Middle East countries.
As mentioned above, the Company is negotiating exclusive and non-
exclusive marketing agreements and hopes to finalize agreements; however,
there is no assurance that any of the anticipated agreements will ever be
finalized.
Research and Development
------------------------
The Company expects to continue its research and development
activities at a rate which can be supported by its available financial
resources. The current rate of expenditure of such activities is
approximately US $15,000 per quarter. In order to fully fund the ongoing
development of all the tests in various stages, and to meet the projected
time frames for their completion, the Company will need to raise
approximately US $300,000 over the next seven quarters.
The Company expects such funds to be acquired, beyond currently
available sources, from banks, product sales and other sources with which
it has had discussions in the past. The Company does not anticipate the
inability to raise the necessary funding; however, if the Company were
unable to secure such funding it would have a significant adverse effect on
the Company and may jeopardize its ability to continue as a going concern.
Number of Employees
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Currently, the Company utilizes the services of its officers and
directors and has twelve full time production and laboratory employees.
The Company plans to hire two additional laboratory research personnel when
adequate funding is obtained and other employees over time to meet
increased demand for its products.
Dependance Upon Key Customers
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The Company is dependant on two key distributors, at least initially.
Such dependance may be detrimental to Company if one or more distributors
were to be lost and were not replaced.
Raw Materials
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At the present time the Company does not anticipate any problems with
obtaining any of the materials or components which are or may be required
to manufacture their products. For each component or material, several
suppliers are available and willing to provide materials to the Company.
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Patent Information
------------------
The technology developed and being developed by the Company, through
its subsidiary NDL, is proprietary technology and no patents have been
applied for at this time. The Company believes that their technology is
better protected, at least at this time, as proprietary information and
they have no immediate plans to apply for patents. The Company also
believes that it would be very difficult for a competitor to develop
equivalent tests by attempting to analyze or reverse engineer its products
because the nature of the chemistry would be altered in the course of
analysis.
A potential distributor specifically invited a well established
research laboratory with state of the art technological capabilities,
located in Laval, Quebec, to attempt to analyze and duplicate the Company's
detection test technology. After three months of testing, they informed
the Company that they felt it was virtually impossible to analyze and
duplicate the test because the biological components are in fact altered in
the process of analyzation.
If competitors were able to independently develop similar tests
through trial and error using the proprietary technology developed by the
Company, and were able to obtain one or more patents for such technology,
the Company would be adversely affected.
The Company does plan to apply for world-wide patents at some future
date for six of their methods. (1) Detection of protein for the early
diagnosis of gestation of livestock; (2) detection and testing for
bacteriophages in cheese manufacturing; (3) measurement of vitamin D in
fortified dairy products; (4) detection of matitis in milk; (5) detection
of Salmonella in bird serum, and; (6) detection of E.coli 0157:H7 in cows
serum.
There is no assurance that if patents were to be applied for by the
Company that any would be granted. Further, there is no assurance that any
significant revenues will ever be received by applying the Company's
technology, even if it does prove to be commercially feasible. Finally,
there is no guarantee that the Company will have sufficient funding apply
for, enforce, and protect any patents that may be issued; even in the event
of patent infringement.
Seasonally of Business
----------------------
The Company has been in commercial production since the second half of
1999. Because of the short history of the Company they have not identified
if seasonality is of a significant nature. So far seasonality has not been
a major factor and at this time it does not appear that there will be a
significant seasonal comportment to the Company's potential business.
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Working Capital Requirements
----------------------------
Working capital requirements for the day-to-day operations are
currently being met through advances from related parties and pre-paid
orders from existing clients and distributors. For example, the Company
currently has a backlog which will assist in meeting capital requirements
but will not meet the needs by itself. The Company is also actively
pursuing several potential sources of development and venture capital.
The Company's ability to continue as a going concern is dependant upon
its ability to raise additional operating capital in the form of equity,
debt, prepayment of orders, or combinations thereof. Alternatively, the
Company must depend upon continued financial support from principal
shareholders who have advanced such operating capital in the past.
Although the Company has sufficient capital to fund operations through the
next twenty four months, no assurance can be made that any of the sources
of funding will be or will continue to be available in the future.
Competitive Conditions
----------------------
Competition for the Company's existing and potential products comes
mostly from larger established companies in both the United States and
Europe. The Company feels their products are very competitive; however,
their ability to be competitive is dependant upon adequate funding and
development of effective marketing and distribution networks.
The following companies, coupled with respective market share, have
been identified as major competitors in the field of rapid testing for
pathogenic bacteria based upon 1996 statistics gathered by Frost &
Sullivan, a market research firm: Organon Technika (29.7%), Biocontrol
Systems (17.2%), Tecra Diagnostics (13.7%), Bio Merieux Vitek (9.6%), Gene-
Trak Systems (5.1%). Approximately five other companies hold the remaining
25% market share.
The following companies, coupled with respective market share, have
been identified as major competitors in the field of rapid tests for
general hygiene in agri-food industries also based upon 1996 statistics
gathered by Frost & Sullivan: Biotrace (33%), Lu nac (22%), Idexx (18%),
Merck (15%), Celsis (7%), and other companies (5%).
The Company believes that to be successful amongst the competition
that exists and may develop in the future, the Company's products need to
offer superior performance and have cost advantages over the existing
products supplied by the competition.
Reports to Security Holders
---------------------------
Prior to the filing of this registration statement on Form 10-SB, the
company was not subject to the reporting requirements of Section 13(a) or
15(d) of the Exchange Act. Upon effectiveness of this registration
statement, the Company will file annual and quarterly reports with the
Securities and Exchange Commission ("SEC"). The public may read and copy
any materials filed by the Company with the SEC at the SEC's Public
Reference Room at 150 Fifth Street, N.W., Washington, D.C. 20549. The
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public may obtain information on the operation of the Public Reference Room
by calling the SEC at 1-800-SEC-0330. The Company is an electronic filer
and the SEC maintains an Internet site that contains reports and other
information regarding the Company which may be viewed at
http://www.sec.gov.
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Item 2. Managements Discussion and Analysis
------------------------------------------------
The following discussion contains comments about the financial
condition of Novamex U.S.A. Ltd., for the Fiscal Year Ended June 30, 1999
and for the nine months Ended March 31,2000.
Results of Operations
---------------------
Novamex U.S.A. Ltd., began its current operations after its
acquisition of Novamex Diagnostic Ltd., which became effective in August of
1998 or in fiscal year 1999. There are no prior periods to compare
operations with for the Fiscal Year Ended June 30, 1999. There were
however, operations during the nine months of the last fiscal year to
compare with the financial statements for the current fiscal year's interim
period.
As is typical with most new businesses, there is a period of time
before the business is profitable. Markets need to be developed, employees
trained, policies and procedures fine-tuned and the Company needs to become
known by and earn a reputation with its potential customers and clients.
The Company is still going through the startup process and/or development
stages.
Since starting operations after the acquisition, the Company has been
refining its operations and developing its market. The Company has
negotiated exclusive and non-exclusive marketing rights for various
products with a number of interested parties.
The Company has entered into an agreement with Biovet, a biotechnology
company in Quebec. Under this agreement, the Company granted a worldwide
distribution license to Biovet to sell the Rotavirus detection test kit for
a period of five years.
The Company has products to a point where they can generate revenue.
Any revenue, however, will be used primarily to fund research and
development activities. The Company is developing and is in the process of
implementing financial and other management controls and procedures.
According to management, the Company may operate profitably some time in
fiscal year 2001.
The Company recognized limited revenue of $5,176 in the second quarter
of 2000, compared to no revenues in the same quarter in the preceding
fiscal year. During the third quarter of 2000, ending March 31, 2000, the
Company had significant revenues totaling $234,918. Again, in the same
quarter of the preceding fiscal year, the Company had no revenues. The
revenues recognized by the Company have been primarily from sales of
General Hygiene kits. Rotavirus and Pathogenic Bacteria
13
</Page>
<PAGE>
kits brought in limited revenue. The Company expects the General Hygiene
kit to continue to be its main source of revenue for fiscal year 2001.
Liquidity
---------
The Company had one bank loan of approximately $31,047 outstanding at
March 31, 2000. Since the quarter ended March 31, 2000 the Company has
received a bill of approximately US $230,000 for consulting services.
There are no other significant liabilities to unrelated parties other than
accounts payable. Funds were provided to finance the Company during its
development stage primarily by notes payable from related parties.
The proceeds from sales of General Hygiene Kits is expected to provide
liquidity for the Company to carry it through its development period.
Known Trends
------------
There are no known trends, events or uncertainties that have had or
that are reasonably expected to have a material impact on the net sales or
revenues or income from continuing operations
Item 3. Description of Property
-----------------------------------
Property & Facilities
---------------------
The Company's principal business office is located in Quebec, Canada.
The office also includes a fully equipped laboratory. The total space of
2,000 square feet is rented on a month-to-month basis at a rate of US
$1,150 per month. The Company anticipates staying at this location for
approximately five years.
As future business demand warrants, the Company may expand its
Canadian facility and may also establish a physical location in the United
States. The Company does not anticipate having difficulty obtaining such
additional space at market rates.
Investment Policies
-------------------
Currently the Company does not own any real property. In addition,
the Company has no intention to purchase any real property at this time.
Therefore, the Company does not have any policies with respect to
investments in real estate or interests in real estate, real estate
mortgages, or securities of/or interests in persons primarily engaged in
real estate activities. The Company, however, may pursue the purchase of
real property if the need arises. These properties would not be pursued
for investment purposes. Rather, they will be used to carry out the
business of the Company.
14
</Page>
<PAGE>
Item 4. Security Ownership of Certain Beneficial Owners and Management
--------------------------------------------------------------------------
The following table sets forth as of June 15, 2000, the name and the
number of shares of the Company's Common Stock held of record or
beneficially by each person who held of record, or was known by the Company
to own beneficially, more than 5% of the 10,500,000 issued and outstanding
shares of the Company's Common Stock, and the name and shareholdings of
each director and of all officers and directors as a group.
<TABLE>
<CAPTION>
Title of Name and Address of Amount and Nature of Percentage of Class
Class Beneficial Owner Beneficial Ownership(2)
------------ ------------------------- ----------------------- --------------------
<S> <C> <C> <C>
Common Ronald E. Simard (1) 3,450,000 32.86%
727, Dalquier
Sainte-Foy Qc G1V 7H4
Common Ismail Fliss (1) 3,450,000 2.86%
3316, Lambert Closse
Sainte-Foy Qc G1W 2S4
Common Edward Gosselin (1)(2)(3) 35,000 .003%
23, de la Sagamite
St-Ferreol-les-Neiges
Qc G0A 3R0
-------------------------------------------------------------------------------------
Common Officers, Directors and 6,935,000 66.04%
Nominees as a Group:
3 persons
-------------------------------------------------------------------------------------
</TABLE>
(1) Officer and/or Director of the Company
(2) The term "beneficial owner" refers to both the power of investment (the
right to buy and sell) and rights of ownership (the right to received
distributions from the company and proceeds from sales of the shares).
Inasmuch as these rights or shares may be held by more than one person, each
person who has a beneficial ownership interest in shares is deemed the
beneficial owners of the same shares because there is shared power of
investment or shared rights of ownership.
(3) Edward Gosselin is married to Joanne Brennan, a record holder of 35,000
common shares of the Company. Because Mr. Gosselin is married to Ms. Brennan
he may be considered a beneficial owner of the shares. Therefore, shares
owned by Brennan are counted as shares owned by Gosselin.
There are no arrangements which would result in a change in control of the
Company.
15
</Page>
<PAGE>
Item 5. Directors, Executive Officers, Promoters and Control Persons
------------------------------------------------------------------------
<TABLE>
<CAPTION>
Name Age Position Director or Officer Since
-------------------- ------ ----------------------- -------------------------
<S> <C> <C> <C>
Dr. Ronald E. Simard 60 President, Director, June 1998
Chairman of the
Board, CFO
Dr. Ismail Fliss 38 Secretary, Director, June 1998
Vice President
Edward Gosselin 42 Director June 1998
Vice President-
Legal Affairs
Naceur Naimi 39 Vice President- June 1998
Production
</TABLE>
The following sets forth certain biographical information relating to
the Company's Officers and Directors:
Ronald E. Simard, Ph.D.
-----------------------
Has served as chairman of the board, president and chief financial
officer since June 15, 1998. He held the same positions for the Company's
subsidiary before it was acquired since March of 1996. For the last ten
years Dr. Simard has been engaged in developing technology now owned by the
Company. He received a Ph.D. in microbiology from McGill University in
1970. In 1982 he became associate professor and department head in Food
Science at Laval University in Quebec and received tenure in 1986. In 1988
he received an MBA from Laval and between 1991 and 1995 was associate dean
of research.
Ismail Fliss, Ph.D.
-------------------
Dr. Fliss has been a director, secretary and vice president since June
15, 1998. He held the same positions for the Company's subsidiary before
it was acquired since March of 1996. Dr. Fliss received his doctorate in
veterinary medicine in 1989 from the Ecole Nationale de Medecine
Veterinaire de Tunis, in Tunis, Tunisia. The same year he received a
scholarship grant from the Canadian International Development Agency to
pursue graduate studies in Canada where he obtained a Ph.D. in food science
from Laval University in 1993. At that time he joined Dr. Simard as a
research technologist where he remained until 1997. In 1997 he also became
an assistant professor at Laval University. Dr. Fliss co-founded Novamex
Diagnostic, Ltd. in 1996 and has devoted as much time as possible since
then to developing its products.
Edward Gosselin.
----------------
Mr.Gosselin has been a director and vice president of the Company
since June 15, 1998. He received a bachelors of Social Science in
International Politics from Ottawa University in 1980 and in 1983 he
received a Law Degree from the same institution. From 1983 to 1996 he was
an associate at the law firm Aubut Chabot out of Quebec, Canada. From 1996
to 1997 he was an associate at the law firm Lavery, de Billy also out of
Quebec, Canada. From 1997 to the present Mr. Gosselin has been a partner
at Desjardins Ducharme Stein Monast.
16
</Page>
<PAGE>
Naceur Naimi, Ph.D.
-------------------
Dr. Naimi has been a vice president of the Company since June 1998.
He received a Ph.D. in physiology Endocrinology from Laval University,
Quebec, in 1995. Dr. Naimi spent three years from 1996 to 1999 as a post
doctorate fellow in physiology and pharmacology at the faculty of medicine
of Laval University.
Significant Employees & Dependance Upon Key Personnel
-----------------------------------------------------
The Company has an acute dependence upon certain key members of
management and technical personnel. Particular reliance is made on Ronald
E. Simard, Ph.D. and Ismail Fliss, Ph.D. Certain other key personnel have
been and will continue to be added on an "as needed" basis to complete the
tactical management group. Because of the specialized nature of the
Company's business, the Company's ability to achieve success will depend,
in part, upon its ability to attract and retain highly qualified people in
the areas of management and technology. The loss of Dr. Simard or Dr.
Fliss, or other key individuals may adversely affect the Company's business
and prospects. At this time, the Company does not carry key man life
insurance on any of its employees.
Family Relationships
--------------------
None
Involvement in Legal Proceedings
--------------------------------
To the knowledge of management, during the past five years, no present
or former director, executive officer or person nominated to become a
director or an executive officer of the Company:
(1) filed a petition under the federal bankruptcy laws or any state
insolvency law, nor had a receiver, fiscal agent or similar officer
appointed by a court for the business or property of such person, or any
partnership in which he was a general partner at or within two years before
the time of such filing, or any corporation or business association of
which he was an executive officer at or within two years before the time of
such filing;
(2) was convicted in a criminal proceeding or named subject of a
pending criminal proceeding (excluding traffic violations or other minor
offenses);
(3) was the subject of any order, judgement or decree, not
subsequently reversed, suspended or vacated, of any court of competent
jurisdiction, permanently or temporarily enjoining him from or otherwise
limiting, the following activities;
(i) acting as a future commission merchant, introducing broker,
commodity trading advisor, commodity pool operator, floor broker, leverage
transaction merchant, associated person of any of the foregoing, or as an
investment advisor, underwriter, broker or dealer in securities, or as an
affiliate person, director or employee of any investment company, of engaging
in or continuing any conduct or practice in connection with such activity;
17
</Page>
<PAGE>
(ii) engaging in any type of business practice; or
(iii) engaging in any activity in connection with the purchase or
sale of any security or commodity or in connection with any violation of
federal or state securities laws or federal commodities laws;
(4) was the subject of any order, judgement, or decree, not subsequently
reversed, suspended, or vacated, of any federal or state authority barring,
suspending, or otherwise limiting for more than 60 days the right of such
person to engage in any activity described above under this Item, or to be
associated with persons engaged in any such activity;
(5) was found by a court of competent jurisdiction in a civil action or
by the Securities and Exchange Commission to have violated any federal or
state securities law, and the judgment in such civil action or finding by the
Securities and Exchange Commission has not been subsequently reversed,
suspended, or vacated;
(6) was found by a court of competent jurisdiction in a civil action or
by the Commodity Futures Trading Commission to have violated any federal
commodities law, and the judgment in such civil action or finding by the
Commodity Futures Trading Commission has not been subsequently reversed,
suspended or vacated.
Item 6. Executive Compensation
----------------------------------
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
Long Term Compensation
Annual Compensation --------------------------
----------------------- Awards Payouts
Other ---------- -------
Name & Annual Restricted Other
Principal Bonus Compen Stock Options LTIP Compen
Position Year Salary $ -sation Awards /SARs Payout -sation
-------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Ronald Simard 1999 -0- -0- -0- -0- -0- -0- -0-
President 1998 -0- -0- -0- -0- -0- -0- -0-
1997 -0- -0- -0- -0- -0- -0- -0-
Ismail Fliss 1999 -0- -0- -0- -0- -0- -0- -0-
Vice President 1998 -0- -0- -0- -0- -0- -0- -0-
Secretary 1997 -0- -0- -0- -0- -0- -0- -0-
Edward Gosselin 1999 -0- -0- -0- -0- -0- -0- -0-
VP Legal Affairs 1998 -0- -0- -0- -0- -0- -0- -0-
1997 -0- -0- -0- -0- -0- -0- -0-
Naceur Naimi 1999 -0- -0- -0- -0- -0- -0- -0-
VP Production 1998 -0- -0- -0- -0- -0- -0- -0-
1997 -0- -0- -0- -0- -0- -0- -0-
</TABLE>
18
</Page>
<PAGE>
The Company has not in the past, nor does it currently have if effect
any pension, profit sharing, stock option or any other type of incentive or
long-term compensation plan.
Compensation of Directors
-------------------------
None
Employment Contracts and Termination of Employment and Change in Control
Arrangement
---------------------------------------------------------------------------
None. The Company has no other agreement at this time with any officer
or director regarding employment with the Company or compensation for
services other than herein described. Compensation of officers and directors
is determined by the Company's Board of Directors and is not subject to
shareholder approval.
Item 7. Certain Relationships and Related Transactions
----------------------------------------------------------
On May 8, 1998, Dr. Simard and Dr. Fliss each acquired 700,000 common
shares of the Company's stock in a private transaction. On June 15, 1998,
the Company entered into an agreement with Dr. Simard and Dr. Fliss to
acquire all of the outstanding shares of Novamex Diagnostic, Ltd., of which
Dr. Simard and Dr. Fliss were the principal shareholders, in exchange for
5,500,000 common shares of the Company. Upon completion of this transaction
Novamex Diagnostic, Ltd., became a wholly owned subsidiary of the Company.
As a result, Dr. Simard and Dr. Fliss owned 6,900,000 common shares of the
10,500,000 total outstanding common shares.
Item 8. Description of Securities
-------------------------------------
The Company's authorized capital stock consists of 100,000,000 shares of
common stock with no par value. The Company has 10,500,000 outstanding shares
of its common stock, all of which are validly issued, fully paid and
nonassessable. Holders of the common stock are entitled to receive dividends
when and as declared by the Board of Directors out of funds legally available
therefore. Any such dividends may be paid in cash, property, or shares of the
Company's common stock.
All shares of the Company's common stock have equal voting rights and,
when validly issued and outstanding, will have one vote per share on all
matters to be voted upon by the shareholders. Cumulative voting in the
election of directors is not allowed, and a quorum for shareholder meetings
shall result from a majority of the issued and outstanding shares present or
by proxy. Accordingly, the holders of a majority of the shares of common
stock present, in person or by proxy, at any legally convened shareholders'
meeting at which the Board of Directors is to be elected, may be able to
elect all directors and the minority shareholders may not be able to elect a
representative to the Board of Directors.
19
</Page>
<PAGE>
Shares of the Company's common stock have no pre-emptive or conversion
rights, no redemption or sinking fund provisions, and are not liable for
further call or assessment. Each share of the Company's common stock is
entitled to share on a pro rata basis in any assets available for
distribution to holders of its equity securities upon liquidation of the
Company.
In addition, the Company has authorized 1,000,000 shares of preferred
stock, $0.10 par value which are identical to common shares in all rights
which they convey to their holders except that in the case of liquidation of
the Company, holders of preferred shares are entitled to receive,
preferentially to holders of common shares, any proceeds which may be
available from the sale of assets of the Company. Currently, no shares of
preferred stock are issued and/or outstanding.
The Company appointed American Securities Transfer & Trust, Inc. as the
transfer agent and registrar for the Company's securities. They are located
at 12039 West Alameda Parkway, Suite Z-2, Lakewood, Colorado 80228 and their
phone number is (303) 986-5400.
PART II
--------
Item 1. Market Price of and Dividends on the Registrant's Common Equity and
other Shareholder Matters.
---------------------------------------------------------------------------
The Company's common stock is listed on the National Quotation Bureau or
"Pink Sheets", under the symbol "NOVM". As of June 26, 2000 the Company had
52 shareholders holding 10,500,000 shares of common stock. Of the issued and
outstanding common stock 1,997,953 are free trading, the balance are
restricted stock as that term is used in Rule 144. The Company has never
declared a dividend on its common stock.
<TABLE>
<CAPTION>
CLOSING BID CLOSING ASK
HIGH LOW HIGH LOW
<S> <C> <C> <C> <C>
1999
First Available
Apr 13-June 30 .125 .125 .375 .375
July 1-Sept 30 .9375 .125 1.125 .375
Oct 1-Dec 31 2.375 .50 2.5625 .9375
2000
Jan 3-Mar 31 1.625 .875 1.9375 1.1875
</TABLE>
20
</Page>
<PAGE>
The above quotations, as provided by the National Quotation Bureau,
LLC., represent prices between dealers and do not include retail markup,
markdown or commission. In addition, these quotations do not represent
actual transactions.
Item 2. Legal Proceedings.
------------------------------
The Company is not a party to any pending material legal proceedings.
To the knowledge of management, no federal, state, or local governmental
agency is presently contemplating or proceeding against the Company. To the
knowledge of the management, no director, officer or affiliate of the Company
or owner of record or beneficiary of more than 5% of the Company's common
stock is a party adverse to the Company or has a material interest adverse to
the Company in any proceeding.
Item 3. Changes in and Disagreements with Accountants
---------------------------------------------------------
Rogers, Ankerson, Sumner & P.C., were previously the principal
accountants for Novamex U.S.A. Ltd., f/k/a International Business Development
Ltd. On December 22, 1999, the Company terminated the engagement of Rogers,
Ankerson & Sumner, P.C. and appointed KPMG, LLP as the Company's independent
auditor and certifying accountant. The Board of Directors of the Company
approved the decision to change accountants.
Rogers, Ankerson & Sumner, P.C.'s report with respect to Novamex U.S.A.
Ltd.'s balance sheets at June 30, 1998 and at December 31, 1997 and 1996, and
the related statements of operations, changes in stockholder's equity and
of cash flows for the six months and each year then ended, respectively, was
unqualified.
In connection with the audit of the Company's financial statements for
the six months ended June 30, 1998 and fiscal years ended June 30, 1999 and
any interim period preceding the date of the Rogers, Ankersen & Sumner, P.C.'s
termination, there were no disagreements, as that term is defined in Item
304 of Regulation S-B, with Rogers, Ankersen & Sumner, P.C. would have caused
Rogers, Ankersen & Sumner, P.C. to make reference to the matter in their
report. Rogers, Ankersen & Sumner, P.C. did not advise the Company regarding
any "reportable events" as defined in Item 304 (a) (1) (iv) (B) of
Regulation S-B.
Haud, Renaud,Charmichael, Dostie, c.a., were previously the principal
accountants for Novamex Diagnostic Ltd., subsidiary of Novamex U.S.A. Ltd. On
December 22, 1999, the Company's subsidiary terminated the engagement of
Haud, Renaud,Charmichael, Dostie, c.a., and appointed KPMG, LLP as the
Company's independent auditor and certifying accountant. The Board of
Directors of the Company approved the decision to change accountants.
21
</Page>
<PAGE>
Haud, Renaud,Charmichael, Dostie, c.a., report with respect to Novamex
Diagnostic Ltd. balance sheets for the fiscal years ended June 30, 1998 and
1997 and the related statements of operations, stockholder's equity
(deficit), and cash flows for the years ended June 30, 1998, 1997 and from
inception of March 27, 1996 through June 30, 1998 did not contain an adverse
opinion or a disclaimer of opinion and was not qualified as to uncertainty,
audit scope or accounting principles, but was modified as to going concern.
In connection with the audit of the Novamex Diagnostic Ltd. financial
statements for the fiscal years ended June 30, 1998 and June 30, 1999 and
any interim period preceding the date of the Haud, Renaud,Charmichael,
Dostie, c.a. termination, there were no disagreements, as that term is
defined in Item 304 of Regulation S-B, with Haud, Renaud,Charmichael, Dostie,
c.a. on any matter of accounting principles or practices, financial statement
disclosure or auditing scope or procedures which, if not resolved to the
satisfaction of Haud, Renaud,Charmichael, Dostie, c.a. would have caused
Haud, Renaud,Charmichael, Dostie, c.a. to make reference to the matter in
their report. Haud, Renaud,Charmichael, Dostie, c.a. did not advise the
Company regarding any "reportable events" as defined in Item 304
(a)(1)(iv)(B) of Regulation S-B.
Item 4. Recent Sales of Unregistered Securities
---------------------------------------------------
On August 1, 1998, the Company issued 5,500,000 shares of common stock
to acquire Novamex Diagnostic Ltd., a Quebec corporation, pursuant to an
exemption from registration under section 4(2) of the Securities Act of 1933
to the shareholders of Novamex Diagnostic Ltd., which became the controlling
shareholders of the Company. No cash was received by the Company.
Item 5. Indemnification of Directors and Officers
-----------------------------------------------------
The statutes, charter provisions, bylaws, contracts or other
arrangements under which controlling persons, directors or officers of the
registrant are insured or indemnified in any manner against any liability
which they may incur in such capacity are as follows:
The registrant's Articles of Incorporation limit liability of its
Officers and Directors to the full extent permitted by the Oregon Business
Corporation Act as follows:
It is provided in the Articles of Incorporation that the corporation
shall indemnify to the fullest extent permitted by the Oregon Business
Corporation Act any person who is made, or threatened to be made, a party to
any action, suit or proceeding, whether civil, criminal, administrative,
investigative, or otherwise (including an action, suit or proceeding by or in
the right of the corporation) by reason of the fact that the person is or was
a director or officer of the corporation or a fiduciary within the meaning of
the Employee Retirement Income Security Act of 1974 with respect to any
employee benefit plan of the corporation, or serves or served at the request
of the corporation as a director or officer, or as a fiduciary of an employee
benefit plan, of another corporation, partnership, joint venture, trust or
other enterprise. The right to, and amount of indemnification shall be
determined in accordance with the provisions of the Oregon Business
Corporation Act in effect at the time of the determination.
22
</Page>
<PAGE>
The Oregon Revised Statutes provide for indemnification where a person
who was or is a party or is threatened to be made a party to any threatened,
pending or contemplated action, suit or proceeding, whether civil, criminal,
administrative or investigative (other than action by or in right of a
corporation), by reason of fact he or she is or was a director, officer,
employee or agent of a corporation or serving another corporation at the
request of the corporation, against expenses (including attorneys' fees),
judgements, fines, and amounts paid in settlement, actually and reasonable
incurred by him or her if that person acted in good faith and in a manner
which was reasonably believed to be in or not opposed to the best interest of
the corporation and, with respect to criminal action or proceeding, had no
reasonable cause to believe the conduct unlawful. Lack of good faith is not
presumed from settlement or "nolo contendere plea" indemnification of
expenses (including attorneys' fees) allowed in derivative actions except in
the case of misconduct in performance of duty to the corporation unless the
court decides indemnification is proper. To the extent any such person
suceeds on the merits or otherwise, that person shall be indemnified against
expenses (including attorney's fees). Determination that the person to be
indemnified met applicable standards of conduct, if not made by the court, is
made by the Board of Directors by majority vote of quorum consisting of the
Directors not party to such action, suit or proceeding or, if a quorum is not
obtainable or a disinterested quorum so directs, by independent legal council
or by the stockholders. Expenses may be paid in advance upon receipt of
undertakings to repay unless it shall ultimately be determined that the
person is entitled to be indemnified by the corporation. The corporation may
purchase indemnity insurance.
Insofar as indemnification for liability arising from the Securities Act
of 1933 may be permitted to directors, officers or persons controlling the
Company, it has been informed 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.
PART III
---------
Item 1. Index and Description of Exhibits
---------------------------------------------
<TABLE>
<CAPTION>
Exhibit
Number Title of Document Location
--------- ---------------------------------------------- ------------
<S> <C> <C>
2.01 Articles of Incorporation As Filed
2.02 Amendment to the Articles As Filed
of Incorporation
2.03 Bylaws As Filed
6.01 Material Contracts As Filed
16.01 Letter Regarding Change in Certifying See Attached
Accountant
27.01 Financial Data Schedule As Filed
</TABLE>
23
</Page>
<PAGE>
Item 2. Description of Exhibits
-----------------------------------
See Item 1.
--------------------------------------------------------------------------
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,
thereunto duly authorized.
Novamex USA, Ltd.
Date: July 13, 2000 By: /s/ Ronald E. Simard
-----------------------------
President
Date: July 13, 2000 By: /s/ Ismail Fliss
---------------------
Secretary
24
</Page>
<PAGE>
Item 2. Description of Exhibits
-----------------------------------
See Item 1.
--------------------------------------------------------------------------
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,
thereunto duly authorized.
Novamex USA, Ltd.
Date: July 13, 2000 By:
-----------------------------
President
Date: July 13, 2000 By:
---------------------
Secretary
25
</Page>
<PAGE>
PART F/S
26
</Page>
<PAGE>
Consolidated Financial Statements of
Novamex USA LTD AND
SUBSIDIARY
(A development stage company)
Year ended June 30, 1999
27
</Page>
<PAGE>
[Letterhead]
INDEPENDENT AUDITORS' REPORT TO THE SHAREHOLDERS
We have audited the accompanying consolidated balance sheet of Novamex USA
Ltd and subsidiary (a development stage company) as at June 30, 1999 and the
related consolidated statements of income and deficit and cash flows for the
year then ended. 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 in United States. Those standards require that we plan and perform
an audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining,
on a test basis, evidence supporting the amounts and disclosures in the
financial statements. An audit also includes assessing the accounting
principles used and 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, these consolidated financial statements referred to above
present fairly, in all material respects, the financial position of the
Company as at June 30, 1999 and the results of its operations and its cash
flows for the year then ended in conformity with generally accepted
accounting principles in United States.
Our audit was conducted for the purpose of forming an opinion on the basic
financial statements of the Company taken as a whole. The supplementary
information included in the schedule is presented for purposes of additional
analysis and is not a required part of the basic financial statements. Such
supplementary information has been subjected to the auditing procedures
applied in the audit of the basic financial statements and, in our opinion,
is fairly stated in all material respects in relation to the basic financial
statements taken as a whole.
/s/ KPMG LLP
-----------------
Chartered Accountants
Quebec, Canada
December 30, 1999
28
</Page>
<PAGE>
NOVAMEX USA LTD AND SUBSIDIARY
(A development stage company)
Consolidated Financial Statements
Year ended June 30, 1999
Consolidated Financial Statements
Consolidated Balance Sheet 1
Consolidated Statement of Income and Deficit 2
Consolidated Statement of Cash Flows 3
Consolidated Statement of Stockholders' Equity 4
Notes to Consolidated Financial Statements 5
Schedule
--------
Operating expenses, selling expenses, administrative
expenses and financial expenses 10
29
</Page>
<PAGE>
NOVAMEX USA LTD AND SUBSIDIARY
(A development stage company)
Consolidated Balance Sheet (in U.S. dollars)
<TABLE>
<CAPTION>
June 30, 1999
---------------------------------------------------------------------------
<S> <C>
Assets
Current assets:
Cash $ 2,826
Accounts receivable 2,908
Income taxes receivable 101
Prepaid expenses 10,093
----------
15,928
Deferred income taxes (note 2) 25,856
Intangible assets:
Proprietary technology 12,287
---------------------------------------------------------------------------
$ 54,071
===========================================================================
Liabilities and deficiency in assets
Current liabilities:
Accounts payable and accrued liabilities $ 80,626
Long-term debt (note 3) 61,201
Deficiency in assets:
Capital stock (note 4) 10,066
Deficit accumulated during the development stage (95,828)
Accumulated other comprehensive income (note 5) (1,994)
---------------------------------------------------------------------------
(87,756)
Commitments (note 8)
---------------------------------------------------------------------------
$ 54,071
===========================================================================
</TABLE>
See accompanying notes to consolidated financial statements.
On behalf of the Board:
_____________________________ Director
_____________________________ Director
1
30
</Page>
<PAGE>
NOVAMEX USA LTD AND SUBSIDIARY
(A development stage company)
Consolidated Statement of Income and Deficit (in U.S. dollars)
<TABLE>
<CAPTION>
Year ended June 30, 1999
---------------------------------------------------------------------------
<S> <C>
Revenues:
Hygiene kits $ 447
Expenses:
Operating (schedule) 12,610
Selling (schedule) 8,579
Administrative (schedule) 88,186
Financial (schedule) 2,340
---------------------------------------------------------------------------
111,715
---------------------------------------------------------------------------
Loss before income taxes (111,268)
Income taxes (note 2):
Current (recovered) (98)
Deferred (25,088)
---------------------------------------------------------------------------
(25,186)
---------------------------------------------------------------------------
Net loss (86,082)
Deficit at beginning of year (9,746)
---------------------------------------------------------------------------
Deficit at end of year $ (95,828)
===========================================================================
Per share:
Loss per common share $ 0.01
Weighted average number of common shares outstanding 10,041,667
===========================================================================
</TABLE>
See accompanying notes to consolidated financial statements.
2
31
</Page>
<PAGE>
NOVAMEX USA LTD AND SUBSIDIARY
(A development stage company)
Consolidated Statement of Cash Flows (in U.S. dollars)
<TABLE>
<CAPTION>
Year ended June 30, 1999
<S> <C>
Cash provided by (used in):
Operations:
Net loss $ (86,082)
Items not involving cash:
Amortization of proprietary technology 1,290
Deferred income taxes (25,088)
Effect of foreign currency translation (1,994)
---------------------------------------------------------------------------
(111,874)
Change in non-cash operating working capital:
Accounts receivable (2,908)
Income taxes receivable (101)
Prepaid expenses 1,992
Accounts payable and accrued liabilities 67,622
---------------------------------------------------------------------------
66,605
---------------------------------------------------------------------------
(45,269)
Financing:
Long-term borrowings 47,837
---------------------------------------------------------------------------
Increase in cash 2,568
Cash at beginning of year 254
Currency translation adjustment on cash 4
---------------------------------------------------------------------------
Cash at end of year $ 2,826
===========================================================================
</TABLE>
See accompanying notes to consolidated financial statements.
3
32
</Page>
<PAGE>
<PAGE>
NOVAMEX USA LTD AND SUBSIDIARY
(A development stage company)
Consolidated Statement of Stockholders' Equity (in U.S. dollars)
<TABLE>
<CAPTION>
Year ended June 30, 1999
-------------------------------------------------------------------------------------
Deficit
-------------------------------------------------------------------------------------
Accumulated
-------------------------------------------------------------------------------------
Additional during the
-------------------------------------------------------------------------------------
Common paid-in development
-------------------------------------------------------------------------------------
stocks capital stage Total
-------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Balance - December 31, 1995 5,000,000 $ 10,000 $ (9,746) $ 254
Balance - December 31, 1996 5,000,000 10,000 (9,746) 254
Balance - December 31, 1997 5,000,000 10,000 (9,746) 254
Balance - June 30, 1998 5,000,000 10,000 (9,746) 254
Stocks issued for acquisition of
Novamex Diagnostic Ltd deemed
value of $66 5,500,000 66 - 66
Balance - August 1, 1998 10,500,000 10,066 (9,746) 320
Net loss for the period from
August 1, 1998 to June 30, 1999 - - (86,082) (86,082)
Accumulated other comprehensive
income - - (1,994) (1,994)
-------------------------------------------------------------------------------------
Balance - June 30, 1999 10,500,000 $ 10,066 $ (97,822) $(87,756)
=====================================================================================
</TABLE>
See accompanying notes to consolidated financial statements.
4
33
</Page>
<PAGE>
NOVAMEX USA LTD AND SUBSIDIARY
(A development stage company)
Notes to Consolidated Financial Statements
Year ended June 30, 1999
---------------------------------------------------------------------------
The Company is a development stage company which was incorporated under the
laws of the state of Oregon on February 12, 1991 as International Business
Development Ltd (IBD). In June 1998 IBD changed its name to Novamex USA Ltd
(Novamex) and the Company entered into an agreement, effective August 1,
1998, under which it acquired all of the outstanding class A shares of
Novamex Diagnostic Ltd "NDL" or "Novamex Diagnostic", a biotechnology company
incorporated on March 27, 1996 under the Canada Business Corporations Act in
exchange for the issuance of 5,500,000 shares of the Company's common stock,
to the shareholders of NDL. Novamex Diagnostic Ltd is a development stage
biotechnology company engaged in research and development in the field of
rapid diagnosis tests using immunodetection, specifically for agri-food and
veterinary applications.
1. Significant accounting policies:
a) Basis of consolidation:
The consolidated financial statements include the accounts of the
Company and those of its wholly-owned subsidiary, Novamex Diagnostic
Ltd. These financial statements are stated in U.S. currency.
b) Basis of accounting:
Novamex follows the accrual basis of accounting, revenues are recorded
as earned and expenses are recorded as incurred.
c) Income taxes:
Because Novamex has accumulated deficits for both book and tax bases,
no current income taxes are accruable by the Company. Deferred taxes
related to losses carry forward have been recognized provided it is
more likely than not that this future benefit will be realized.
d) Proprietary technology:
Proprietary technology is amortized using straight-line basis over a
period of ten years.
e) Loss per share:
The loss per share is based on the weighted average number of shares
outstanding during the year.
f) Foreign currency translation:
All assets and liabilities of the canadian self-sustaining subsidiary
are translated using the current rate prevailing at the consolidated
balance sheet date and all revenues and expenses are translated using
the average rate of the year.
Exchange gains and losses arising from the translation are deferred
and included in a separate component of shareholders' equity.
5
34
</Page>
<PAGE>
NOVAMEX USA LTD AND SUBSIDIARY
(A development stage company)
Notes to Consolidated Financial Statements (continued)
Year ended June 30, 1999
---------------------------------------------------------------------------
1. Significant accounting policies (continued):
g) Basis of presentation:
These financial statements have been prepared using the going concern
basis of accounting which assumes that the Company will realize its
assets and discharge its liabilities in the normal course of business.
The Company is currently operating at a loss and has minimal net
tangible assets. Should the Company be unable to continue as a going
concern it may be required to realize its assets and settle its
liabilities at amounts substantially different from the current
carrying values.
The Company's business is subject to all the risks inherent in the
establishment of a new business, including a limited operations
history, lack of current revenues and cash flows from operations, and
competition from larger, well established and financially stronger
competitors. Current and future operations also depend upon the
continued employment and services of certain key executives.
The Company's ability to continue as a going concern is dependent
significantly on its being able to raise additional operating capital
in the form of equity, debt, prepayment on orders or some combination
thereof. Alternatively, it must depend upon the continued financial
support from its major shareholders and others who have advanced such
operating capital in the past. Although the Company believes that it
has sufficient funding available to continue to operate for the next
12 months, no assurance can be given that any of these sources of
funding will be or will continue to be available in the future.
2. Deferred income taxes:
In 1999, subsidiary's effective income tax rate from the determination
of the income taxes expense does not differ from the statutory
canadian taxes rates, because there were no "temporary differences"
between the balance sheet carrying amounts and the tax bases of assets
and liabilities.
At June 30, 1999, the Company's subsidiary can carry forward losses
totalling CDN$173,744 for federal income tax purpose and CDN$170,019
for provincial income tax purpose.
Tax losses carry forward which give rise to future income tax benefits
are as follows:
---------------------------------------------------------------------------
Long-term deferred taxes asset $ 25,856
---------------------------------------------------------------------------
Deferred income taxes benefit $ (25,088)
---------------------------------------------------------------------------
10
35
</Page>
<PAGE>
NOVAMEX USA LTD AND SUBSIDIARY
(A development stage company)
Notes to Consolidated Financial Statements (continued)
Year ended June 30, 1999
---------------------------------------------------------------------------
3. Long-term debt:
Due to a related company, non-interest bearing and
without specific terms of repayments $ 13,392
Due to directors, non-interest bearing and without
specific terms of repayments 28,223
Due to an individual, non-interest bearing and without
specific terms or repayments 19,586
---------------------------------------------------------------------------
$ 61,201
===========================================================================
4. Capital stock:
Authorized:
100,000,000 common shares, without par value.
1,000,000 shares, preferred stock, $0.10 par value, no shares
outstanding.
---------------------------------------------------------------------------
Issued and paid:
10,500,000 common shares $ 10,066
---------------------------------------------------------------------------
5. Accumulated other comprehensive income:
Foreign currency translation:
---------------------------------------------------------------------------
Effect of translation during the year $ (1,994)
---------------------------------------------------------------------------
Balance at end of year $ (1,994)
---------------------------------------------------------------------------
---------------------------------------------------------------------------
7
36
</Page>
<PAGE>
NOVAMEX USA LTD AND SUBSIDIARY
(A development stage company)
Notes to Consolidated Financial Statements (continued)
Year ended June 30, 1999
---------------------------------------------------------------------------
6. Cash flows:
Cash flows used for payments of interest amounted to $ 1,662.
7. Business acquisition:
On August 1, 1998, the Company acquired all the outstanding shares of
Novamex Diagnostic ltd, a company in development stage. The business
acquisition is accounted for using the purchase method and the
earnings are included from the date of acquisition. The fair value of
net assets acquired is as follows:
Cash $ 772
Prepaid expenses 12,085
Proprietary technology 13,577
Accounts payable (13,004)
Long-term debt (13,364)
$ 66
---------------------------------------------------------------------------
Consideration:
Issuance of 5,500,000 common shares $ 66
---------------------------------------------------------------------------
8. Commitments:
In August 1999, the Company entered into a rental agreement covering
the period from August 15 to November 15, 1999, subject to an
automatic three months renewal. The monthly rental cost is CDN$475.
The Company has no other ongoing commitments.
9. Related party transactions:
The Company received advances from directors and from a related
company wholly-owned by a shareholder. The amounts received under
those advances have been accounted for and classified as "long-term
debt".
8
37
</Page>
<PAGE>
NOVAMEX USA LTD AND SUBSIDIARY
(A development stage company)
Notes to Consolidated Financial Statements (continued)
Year ended June 30, 1999
---------------------------------------------------------------------------
10. Subsequent event:
On July 9, 1999, the Company signed a bank loan agreement for an
authorized line of credit of CDN$75,000 at prime rate plus 2%. This
bank loan agreement is subjected to renewal on September 30, 2000.
11. Uncertainty due to the Year 2000 Issue:
The Year 2000 Issue arises because many computerized systems use two
digits rather than four to identify a year. Date-sensitive systems
may recognize the year 2000 as 1900 or some other date, resulting in
errors when information using year 2000 dates is processed. In
addition, similar problems may arise in some systems which use certain
dates in 1999 to represent something other than a date. The effects
of the Year 2000 Issue may be experienced before, on, or after
January 1, 2000, and, if not addressed, the impact on operations and
financial reporting may range from minor errors to significant systems
failure which could affect an entity's ability to conduct normal
business operations. It is not possible to be certain that all
aspects of the Year 2000 Issue affecting the Company, including those
related to the efforts of customers, suppliers, or other third
parties, will be fully resolved.
9
38
</Page>
<PAGE>
NOVAMEX USA LTD AND SUBSIDIARY
(A development stage company)
Operating expenses, selling expenses, administrative expenses and financial
expenses (in U.S. dollars)
<TABLE>
<CAPTION>
Year ended June 30, 1999
---------------------------------------------------------------------------
<S> <C>
Operating expenses:
Amortization of proprietary technology $ 1,290
Maintenance 236
Materials 4,134
Rent 5,839
Taxes and permits 1,111
---------------------------------------------------------------------------
$ 12,610
===========================================================================
Selling expenses:
Advertising and promotion $ 1,341
Traveling 7,238
---------------------------------------------------------------------------
$ 8,579
===========================================================================
Administrative expenses:
Corporate taxes $ 165
Equipment rental 2,952
Office expenses 2,541
Professional fees 81,085
Registration and trustee fees 1,443
---------------------------------------------------------------------------
$ 88,186
===========================================================================
Financial expenses:
Interest and bank charges $ 2,125
Loss on foreign exchange 215
---------------------------------------------------------------------------
$ 2,340
===========================================================================
10
39
</Page>
<PAGE>
<PAGE>
INTERIM FINANCIAL STATEMENTS
40
</Page>
<PAGE> Page 1
NOVAMEX USA LTD AND SUBSIDIARY
(A DEVELOPMENT STAGE COMPANY)
---------------------------------------------------------------------------
CONSOLIDATED BALANCE SHEETS
---------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
ASSETS
March 31,
-----------------------
2000 1999
----------- -----------
<S> <C> <C>
CURRENT ASSETS
Cash $ 12,824 $ 5,904
Accounts receivable 229,897 1,733
Prepaid expenses 10,208 10,659
----------- -----------
252,929 18,206
DEFERRED TAXES 649 20,000
EQUIPMENT 24,249 -
INTANGIBLE ASSETS - net of amortization
Proprietary technology 11,270 12,641
----------- -----------
$ 289,097 $ 50,847
=========== ===========
LIABILITIES
CURRENT LIABILITIES
Bank Loan $ 31,047 $ -
Accounts payable and accrued liabilities 185,943 63,963
----------- -----------
216,990 63,963
LONG-TERM DEBT
Due to a related company non-interest bearing
and without specific methods of repayment 13,544 12,967
Due to directors non-interest bearing
and without specific methods of repayment 22,253 27,123
Due to an individual, non-interest bearing
and without specific methods of repayment 34,430 16,868
----------- -----------
287,217 120,921
STOCKHOLDERS' EQUITY (DEFICIENCY IN ASSETS)
CAPITAL STOCK
1,000,000,000 common stock; without par value
Issued and paid:
10,500,000 shares 10,066 10,066
1,000,000 preferred stock, $0.10 par value,
no shares outstanding - -
----------- -----------
DEFICIT ACCUMULATED DURING THE DEVELOPMENT STAGE (5,633) (80,296)
ACCUMULATED OTHER COMPREHENSIVE INCOME
Balance at beginning of period (3,872) 1,333
Effect of translation during period 1,319 (1,177)
----------- -----------
Balance at the end of period (2,553) 156
----------- -----------
1,880 (70,074)
----------- -----------
$ 289,097 $ 50,847
=========== ===========
41
</Page>
<PAGE> Page 2
NOVAMEX USA LTD AND SUBSIDIARY
(A DEVELOPMENT STAGE COMPANY)
---------------------------------------------------------------------------
CONSOLIDATED STATEMENT OF INCOME AND DEFICIT
---------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
2000 1999
------------------------ ------------------------
(3 months) (9 months) (3 months) (9 months)
<S> <C> <C> <C> <C>
REVENUES
Reagants $ - - - -
Royalties - - - -
Hygiene kits 234,918 240,094 - -
------------ ------------ ------------ ------------
234,918 240,094 - -
------------ ------------ ------------ ------------
EXPENSES
Operating 68,698 90,170 598 15,064
Selling 1,578 7,039 298 5,844
Administrative 17,074 23,610 20,631 68,378
Financial 1,047 3,580 723 1,264
------------ ------------ ------------ ------------
88,397 124,399 22,250 90,550
------------ ------------ ------------ ------------
INCOME (LOSS) BEFORE INCOME TAXES 146,521 115,695 (22,250) (90,550)
INCOME TAXES
Deferred (32,268) (25,500) 2,950 20,000
------------ ------------ ------------ ------------
NET INCOME (LOSS) 114,233 90,195 (19,390) (70,550)
DEFICIT AT BEGINNING OF PERIOD (119,866) (95,828) (60,996) (9,746)
------------ ------------ ------------ ------------
DEFICIT AT END OF PERIOD $ (5,633) $ (5,633) $ (80,296) $ (80,296)
============ ============ ============ ============
PER SHARE
Income (loss) per common share 0.01 0.01 (0.01) (0.01)
============ ============ ============ ============
Weighted average number of
common shares outstanding 10,500,000 10,500,000 10,500,000 10,500,000
============ ============ ============ ============
</TABLE>
42
</Page>
<PAGE> Page 3
NOVAMEX USA LTD AND SUBSIDIARY
(A DEVELOPMENT STAGE COMPANY)
---------------------------------------------------------------------------
CONSOLIDATED STATEMENT OF CASH FLOWS
---------------------------------------------------------------------------
Period ending March 31
---------------------------------------------------------------------------
<TABLE>
<CAPTION>
2000 1999
------------------------ ------------------------
(3 months) (9 months) (3 months) (9 months)
<S> <C> <C> <C> <C>
CASH PROVIDED BY (USED IN)
OPERATIONS
Net income (loss) $ 114,233 90,195 (19,500) (70,550)
Items not involving cash
Amortization of proprietary
technology 339 1,017 351 936
Deferred income taxes 32,355 25,207 (2,950) (20,000)
------------ ----------- ------------- ------------
146,927 116,419 (21,899) (89,614)
Change in:
Accounts receivable (220,546) (226,989) 4,933 (1,733)
Income taxes receivable - 101 - -
Prepaid expenses 26 (115) (167) 1,516
Accounts payable and
accrued liabilities 93,520 105,317 19,179 50,959
Other comprehensive income 1,319 (559) (1,177) 156
------------ ------------ ------------ ------------
Net cash used in operating
activities 21,246 (5,826) 869 (38,716)
------------ ------------ ------------ ------------
INVESTING
Acquisition of equipment (23,170) (22,249) - -
------------ ------------ ------------ ------------
Net cash used in investing
activities 923,170) (22,249) - -
FINANCING
Long-term borrowings 207 9,026 6,276 43,594
------------ ------------ ------------ ------------
207 9,026 6,276 43,594
------------ ------------ ------------ ------------
CASH INCREASE (DECREASE) (1,717) (21,049) 7,145 4,878
CASH (DEFICIENCY) AT BEGINNING
OF PERIOD (16,506) 2,826 (1,241) 1,026
------------ ------------ ------------ ------------
CASH (DEFICIENCY) AT END OF
PERIOD $ (18,223) $ (18,223) 5,904 5,904
============ ============ ============ ============
CASH (DEFICIENCY) CONSIST OF:
Cash $ 12,824 12,824 5,904 5,904
Bank loan (31,047) (31,047) - -
------------ ------------ ------------ ------------
$ (18,223) (18,223) 5,904 5,904
============ ============ ============ ============
</TABLE>
43
</Page>
<PAGE> Page 4
NOVAMEX USA LTD AND SUBSIDIARY
(A DEVELOPMENT STAGE COMPANY)
---------------------------------------------------------------------------
CONSOLIDATED FINANCIAL EXPENSES
---------------------------------------------------------------------------
Period ending March 31
---------------------------------------------------------------------------
<TABLE>
<CAPTION>
2000 1999
------------------------ ------------------------
(3 months) (9 months) (3 months) (9 months)
<S> <C> <C> <C> <C>
OPERATING EXPENSES
Amortization of proprietary
technology $ 339 1,017 351 936
Taxes and permits 36 495 - 1,193
Maintenance fees 118 118 - 235
Rent 705 2,312 17 9,609
Materials 54,654 64,533 230 3,091
Subcontracts 5,796 14,645 - -
Wages 7,050 7,050 - -
------------ ------------ ------------ ------------
$ 68,698 90,170 598 15,064
============ ============ ============ ============
SELLING EXPENSES
Advertising and promotion $ 225 798 298 5,844
Traveling 1,353 6,241 - -
------------ ------------ ------------ ------------
$ 1,578 7,039 298 5,844
============ ============ ============ ============
ADMINISTRATIVE EXPENSES
Management fees $ 2,328 2,328 - -
Office expenses 1,875 3,738 1,075 1,075
Professional fees 12,004 16,064 18,576 66,229
Registration and trustees fees 697 1,312 980 980
Rental fees 170 170 - -
------------ ------------ ------------ ------------
$ 17,074 23,610 20,631 68,378
============ ============ ============ ============
FINANCIAL EXPENSES
Interest and bank charges $ 1,112 3,531 618 1,159
(Gain) loss on foreign exchange (65) 49 105 105
------------ ------------ ------------ ------------
$ 1,047 3,580 723 1,264
============ ============ ============ ============
</TABLE>
44
</Page>
