As filed with the Securities and Exchange Commission on September 26, 2000
Registration No. 333- _______________
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM SB-2 REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933
BIOQUEST INTERNATIONAL, INC.
(Exact name of registrant as specified in its charter)
Virginia 7375 54-1965777
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(Primary Standard (Primary Standard (IRS Employer
Industrial Classification Industrial Classification Identification
("SIC") Number) ("SIC" Number) Number)
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11217 Silverleaf Drive
Fairfax Station, Virginia 22039
(703) 764-4464
(Address, including zip code, and telephone number,
including area code, of registrant's principal executive office)
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Copy To:
Carl N. Duncan, Esq.
Duncan, Blum & Associates
5718 Tanglewood Drive
Bethesda, Maryland 20817
(301) 263-0200
Approximate date of commencement of proposed sale to the public:
As soon as practicable after the effective date of the
Registration Statement
If any of the securities being registered on this Form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box: [x].
CALCULATION OF REGISTRATION FEE
<TABLE>
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Title of Each Class Amount to be Proposed Maxim Proposed Maximum Amount of
of Securities to be Registered* Offering Price Aggregate Registration
Registered per Share * Offering Price Fee
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<S> <C> <C> <C> <C>
Shares of Common 1,875,000 $8.00 $15,000,000 $3,960
Stock Shares
=============================================================================================================
</TABLE>
The Registrant hereby amends this Registration Statement on such date or dates
as may be necessary to delay its effective date until Registrant shall file an
amendment which specifically states that the Registration Statement shall
thereafter become effective in accordance with Section 8 (a) of the Securities
Act of 1933 or until the Registration Statement shall become effective on such
date as the Securities and Exchange Commission, acting pursuant to said Section
8(a), may determine.
<PAGE>
Subject to Completion -- Preliminary Prospectus Dated September ___, 2000
Maximum 1,875,000 Shares of Common Stock($15,000,000 if Sold at $8.00 per Share)
Minimum 62,500 Shares of Common Stock($500,000 is Sold at $8.00 per Share)
BIOQUEST INTERNATIONAL, INC.
BioQuest International, Inc., a Virginia corporation, is making this
offering of 62,500 to 1,875,000 shares of common stock on a best-efforts,
self-underwritten, Dutch Auction, minimum-maximum basis. Although a development
stage company, BioQuest is being created to design, build and operate the most
comprehensive Internet portal and allied companies focused on
alternative/complementary/integrated medicine in the world. (See "The Company.")
During this offering Shares are being offered at $8.00 per Share minimum
but, because of the Dutch Auction process being employed, purchasers may pay a
price higher than $8.00 per share. Because shares are being sold by its
principals, Peter J. Ewens and Roger Miller, on a self-underwritten basis
(without the use of broker-dealers), there is no selling commission. (See "Notes
to the Cover Page.") If a minimum of 62,500 of Shares is not sold during this
offering (up to 90 days), investor funds relating to the shares will be promptly
returned with all pro rata interest earned thereon. (See "Prospectus Summary --
The Offering" "lan of Distribution," "Risk Factors" and "Selling
Shareholders.")
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
NO PERSON IS AUTHORIZED TO GIVE ANY INFORMATION NOT CONTAINED IN THE PROSPECTUS
IN CONNECTION WITH THIS OFFERING AND, IF GIVEN OR MADE, SUCH INFORMATION OR
REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED. THIS
PROSPECTUS DOES NOT CONSTITUTE AN OFFER BY ANY PERSON WITHIN ANY JURISDICTION TO
ANY PERSON TO WHOM SUCH OFFER WOULD BE UNLAWFUL.
THESE ARE SPECULATIVE SECURITIES. See "Risk Factors" for certain factors that
should be considered by prospective investors.
<TABLE>
===========================================================================================
Minimum Offering (1)(2)(3) Maximum Offering (1)(2)(3)
===========================================================================================
Per Share Total Per Share Total
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<S> <C> <C> <C> <C>
Public Offering Prices $8.00 $500,000 $8.00 $15,000,000
-------------------------------------------------------------------------------------------
Offering Expense $4.13 $258,000 $.35 $658,000
-------------------------------------------------------------------------------------------
Net Proceeds $3.87 $242,000 $7.65 $14,342,000
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</TABLE>
(1) This presentation assumes all shares (62,500 at the minimum and 1,875,000
at the maximum) are sold at the $8.00 minimum bid. Because our shares are
being sold pursuant to a Dutch Auction (where bids must be at least $8.00
but could range higher, proceeds could be significantly higher than the
$500,000 to $15,000,000 range indicated. (See "Application of Proceeds.")
(2) The Shares are being self-underwritten by BioQuest's principals on a Dutch
Auction, minimum-maximum basis. There is no selling commission.
(3) Before deducting offering expenses (estimated at $ 258,000 for the minimum
offering and $658,000 for the maximum offering).
<PAGE>
TABLE OF CONTENTS
Descriptive Title Page
INTRODUCTORY STATEMENT: WHO SHOULD INVEST......................................3
PROSPECTUS SUMMARY.............................................................3
SUMMARY FINANCIAL DATA.........................................................4
PRO FORMA FINANCIAL INFORMATION................................................4
RISK FACTORS...................................................................4
CERTAIN PARTIES AND RELATED TRANSACTIONS.......................................9
FIDUCIARY RESPONSIBILITY OF THE COMPANY'S MANAGEMENT...........................9
APPLICATION OF PROCEEDS.......................................................10
CAPITALIZATION................................................................12
DILUTION......................................................................12
THE COMPANY...................................................................13
SELECTED FINANCIAL DATA.......................................................26
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS............................................26
ABSENCE OF PUBLIC MARKET......................................................28
DESCRIPTION OF CAPITAL STOCK..................................................28
PLAN OF DISTRIBUTION..........................................................29
ERISA CONSIDERATIONS..........................................................31
LEGAL MATTERS.................................................................31
EXPERTS.......................................................................32
AVAILABLE INFORMATION.........................................................32
APPENDIX I - FINANCIAL STATEMENTS............................................I-1
Until November___, 2000 (25 days after the date hereof), all dealers
effecting transactions in the registered securities, whether or not
participating in this distribution, may be required to deliver a current copy of
this Prospectus. This delivery requirement is in addition to the obligation of
dealers to deliver a Prospectus when acting as underwriters and with respect to
their unsold allotments or subscriptions.
Neither the delivery of this Prospectus nor any sale made hereunder shall,
under any circumstances, create any implication that the information herein is
correct as of any time subsequent to the date hereof or that there has been no
change in the affairs of BioQuest since such date or, in the case of information
incorporated herein or therein by reference, the date of filing with the
Securities and Exchange Commission.
Following the conclusion of each fiscal year, Shareholders will receive an
annual report, including a balance sheet, statements of operations, cash flows
and changes in shareholders' equity and related footnotes. The financial
statements contained in the annual report will be audited by BioQuest's
independent certified public accountants. Unaudited quarterly reports on
operations also will be distributed to Shareholders or made available through
e-mail and/or the Internet.
<PAGE>
INTRODUCTORY STATEMENT:
WHO SHOULD INVEST
PURCHASE OF THE SHARES OFFERED HEREBY SHOULD BE MADE ONLY BY THOSE PERSONS
WHO CAN AFFORD TO BEAR THE RISK OF A TOTAL LOSS OF THEIR INVESTMENT. THE COMPANY
RESERVES THE RIGHT TO REJECT ANY SUBSCRIPTION IN WHOLE OR IN PART.
The Company believes that prospective investors should consider the Shares
as a long-term investment. While BioQuest intends to seek listing on the NASDAQ
OTC Bulletin Board ("OTCBB") or Small Cap Market and will become a reporting
company, there is currently no public market for BioQuest's Shares (and none is
likely to develop for approximately 6 to 8 months after the date of this
Prospectus). (See "Absence of Public Market.")
In addition, offerees should not purchase Shares with the expectation of
sheltering income.
Potential investors are advised that an investment in Shares of BioQuest is
subject to the following considerations, among others:
o Start-up companies can be speculative and volatile and involve significant
risks, including those discussed in "Risk Factors." Moreover, prospective
investors are advised that BioQuest's auditors have issued a report (as is
often true for developmental stage entities) which raises questions about
BioQuest's ability to continue as a "going concern". (See Financial
Statement, Appendix I, and "Risk Factors - No Operating History" and
"Certain Parties and Related Transactions.")
o The Company has not had significant prior operations and market acceptance
may be beyond the control of management. (See "The Company" and "Risk
Factors.")
o Certain conflicts of interest exist in the management of BioQuest. (See
"Certain Parties and Related Transactions.")
o The success of BioQuest is dependent on its management. (See "The Company
-- Management" and "Risk Factors -- Reliance on Management.")
PROSPECTUS SUMMARY
The following summary is qualified in its entirety by the more detailed
information and financial statements appearing elsewhere or incorporated by
reference in this Prospectus. All references in this Prospectus to Shares are as
of August 23, 2000 , unless otherwise specified. Prospective investors should
carefully consider the information set forth under the heading "Risk Factors."
The Company
BioQuest International, Inc. was organized November 4, 1999 under the laws
of Virginia as a privately held corporation and to exist as a holding
corporation for the purposes of creating, establishing, acquiring, building and
developing various wholly owned subsidiary companies, all allied within the
alternative/complementary/integrative medical field.
<PAGE>
The Offering
Plan of The Shares are being offered on a best efforts,
Distribution self-underwritten, all-or-nothing minimum, Dutch Auction basis.
Specifically, during this offering, the minimum offering is
62,500 shares while the maximum offering is 1,875,000. The
minimum acceptable bid during this offering is $8.00 but, because
of the Dutch Auction process being employed, purchasers may pay a
price which may be higher than $8.00 per share. (See "Plan of
Distribution.")
Risks and An investment in BioQuest involves substantial risks due in part
Conflicts of to the highly speculative nature of our business plan. (See
Interest "Certain Parties and Related Transactions.") Risks inherent in
investing in BioQuest are discussed under "Risk Factors."
Application The proceeds of the offering are expected to be employed as
of Proceeds outlined in "Application of Proceeds," with particular emphasis
on completing the construction of our Internet portal,
BatoutofHealth.com, and outfitting Stage I of the BioQuest Center
for Integrative Medicine Limited. In the event more than the
minimum is sold, we intend to apply more capital toward
implementing our business plan. (See "Application of Proceeds",
"The Company" and "Plan of Distribution.")
SUMMARY FINANCIAL DATA
The Summary Financial Information, all of which has been derived from
audited financial statements included elsewhere in this Prospectus, reflects
operations for our limited operating history as of and for the period from
inception to August 23, 2000. This information should be read in conjunction
with the financial statements and "Management's Discussion and Analysis of
Financial Condition and Results of Operation."
------------------------------------ ------------------
Current assets $401,150
------------------------------------ ------------------
Non-current assets $25,567
------------------------------------ ------------------
Current liabilities $1,574
------------------------------------ ------------------
Revenue $0
------------------------------------ ------------------
Operating expenses $152,067
------------------------------------ ------------------
Net loss ($152,067)
------------------------------------ ------------------
PRO FORMA FINANCIAL INFORMATION
Pro forma financial information has not been presented since no significant
business combination has occurred or is probable and, even where possible or
remote, there have been no significant historical operations. Furthermore, there
has been minimal historical activity (approximately 11 months). Consequently,
pro forma information would serve no useful purpose. (See Appendix I.) In
addition, summary financial data is provided in "Selected Financial Data."
RISK FACTORS
Prospective investors should consider carefully, in addition to the other
information contained in this Prospectus, the following factors before
purchasing the Shares offered hereby. An investment in the Shares involves a
very high degree of risk. We are very early stage of development and investors
should carefully consider the information presented herein, including risks
relating to the absence of operations, uncertain market acceptance, competition,
potential technical obsolescence, future capital needs and dependence on key
personnel.
1. No Operating History. We were only recently founded and plan to commence
operations in October 2000. Since our inception, most of our time and
resources have been spent in obtaining interim financing and developing a
business plan. Accordingly, we have no meaningful operating history upon
which an evaluation of our prospects can be based. Our prospects must be
considered in light of the risks, expenses and difficulties frequently
encountered by companies in their early stage of development, particularly
companies in new and rapidly evolving markets. To address these risks, we
must, among other things, respond to competitive developments, attract,
retain and motivate qualified persons and upgrade our technologies and
commercialize products incorporating such technologies. Our success is
dependent upon obtaining needed funding from intended operations as well as
additional financing, whether from placement of our equity or debt or from
third party funding sources. There can be no assurance that we will be
successful in addressing such risks. We have incurred normal start-up
expenses since inception and expect to operate at a loss for the
foreseeable future. There can be no assurance that we will achieve or
sustain profitability.
2. Broad Discretion with Regard to Application of Proceeds. The amounts set
forth in the "Application of Proceeds" section indicates our proposed use
of proceeds from this offering. However, our actual expenditures may vary
substantially from these estimates depending upon the economic conditions
and the success, if any, of our business. A significant portion of the net
proceeds of this offering has been allocated, among other uses, to
investment in existing subsidiaries and proposed acquisitions. While we
expect to use proceeds of this Offering as outlined in "Application of
Proceeds," we retain broad discretion as to the specific use of such funds.
For example, as described in such discussion, if shares are sold at $8.00
per share, $59,000 (11.8%) of funds raised are expected to be used for
Batoutofhealth.com if the 62,500 share minimum is achieved but increases to
$1,000,000 (6.7%) at the 1,875,000 share maximum (again, assuming shares
are sold in the Dutch Auction at the $8.00 minimum bid).
3. Influence of Management and Possible Anti-Takeover Effects. Upon
consummation of the offering, assuming the maximum offering is sold,
members of our management will beneficially own 77.9% of the outstanding
shares. As a result of this ownership, management will have significant
influence over our management policies and corporate affairs. In fact,
investors who purchase shares may not have the power to elect even a single
director and, as a practical matter, current management will continue to
effectively control BioQuest. Concentration of large amounts of our shares
in the hands of management may also make more difficult any takeover or
change in control not approved by such shareholders.
4. No Assurance of Profitability or Payment of Dividends. Dividends, if any,
to Shareholders are in the discretion of management. No assurance can be
given that our products will be accepted in the marketplace or that there
will be sufficient revenues generated for us to be profitable. We have not
paid any dividends. Should our operations and proposed expansion prove to
be profitable, it is likely that we will retain much or all of our earnings
in order to finance future expansion. Moreover, we may be restricted from
paying dividends to our Shareholders under future credit or other financing
agreement(s). Therefore, we do not presently intend to pay dividends, and
it is not likely that any dividends will be paid in the foreseeable future.
5. Developing Market; New Entrants; Unproven Acceptance of BioQuest's
Products. The market for our products has only recently begun to develop,
is rapidly evolving and is characterized by a number of market entrants who
have introduced or developed like products. As is typical in the case of a
new and rapidly evolving industry, demand and market acceptance for
recently introduced products is subject to a high level of uncertainty. The
industry is young and has few proven products. While we believe that our
products will offer significant advantages over existing alternatives,
there can be no assurance. In particular, our anticipated product price
structure will likely be subject to price erosion due to competition.
Because the market for our products and services is new and evolving, it is
difficult to predict the future growth rate, if any, and size of this
market. There can be no assurance that the market for our products/services
will develop or that our products/services will be adopted. If the market
fails to develop, develops more slowly than expected or becomes saturated
with competitors or if our products/services do not achieve market
acceptance, our business, operating results and financial condition will be
materially adversely affected.
6. Dependence Upon Suppliers. The development and implementation of our
business plan is placing, and will continue to place, a significant demand
on the allies and vendors on which we rely, some of which may have limited
resources and capacity. In addition, certain of our suppliers, in turn,
will rely on sole or limited sources of supply of components included in
their products. Failure of such suppliers and vendors to adjust to meet our
demands may prevent us from meeting our development and marketing
deadlines, which in turn, could have a material adverse effect on our
business, financial conditions and results of operations.
7. Management of Growth. The rapid execution necessary for us to fully exploit
the market window for our products requires an effective planning and
management process. Our rapid growth is expected to place a significant
strain on our managerial, operational and financial resources. In addition,
most of our administrative and marketing and sales staff is yet to be
hired. To manage our growth, we must implement and improve our operational
and financial systems to expand, train and manage our employee base. For
example, we are currently in the process of building an internal
maintenance and support organization. Further, we will be required to
manage multiple relationships with various customers and other third
parties. Although we believe that it has made adequate allowances for the
costs and risks associated with this expansion, there can be no assurance
that our systems, procedures or controls will be adequate to support our
operations or that management will be able to achieve the rapid execution
necessary to fully exploit the market window for our products and services.
Our future operating results will also depend on our ability to expand our
sales and marketing organizations, implement and manage new channels to
penetrate different and broader markets and expand our support organization
commensurate with the increasing base of our products. If we are unable to
manage growth effectively, our business, operating results and financial
condition will be materially adversely affected.
8. Competition. The market for our products is new and rapidly evolving and
subject to rapid technological change. We expect competition to intensify
and increase in the future. Almost all of our current and potential
competitors may have longer operating histories, greater name recognition,
larger installed customer bases and greater financial, technical and
marketing resources than we have. Such competition could materially
adversely affect our business, operating results or financial condition.
There can be no assurance that we will be able to compete successfully
against current or future competitors or that competitive pressures we face
will not materially adversely affect our business, operating results and
financial condition.
9. Seasonal Variations in Results and Business Cycle Exposure. As a result of
our lack of operating history, we do not have historical financial data on
which to base planned operating expenses. Accordingly, our expense levels
are based in part on our expectations as to future revenues and to a large
extent will be fixed. We may be unable to adjust spending in a timely
manner to compensate for any unexpected revenue shortfall. Accordingly, any
significant shortfall of demand for our products in relation to our
expectations would have an immediate adverse impact on our business,
operating results and financial condition. We plan to expand our field
sales force and organization. There can be no assurance that such internal
expansion will be successfully completed, that the cost of such expansion
will not exceed the revenues generated or that our sales and marketing
organization will be able to successfully compete against the significantly
more extensive and well-funded sales and marketing operations of many of
our current or potential competitors. Our inability to effectively manage
our internal expansion could have a material adverse effect on our
business, operating results or financial condition. In addition, we plan to
increase operating expenses to increase our sales and marketing operations,
develop new distribution channels and broaden its customer support
capabilities. To the extent that such expenses precede or are not
subsequently followed by increased revenues, our business, operating
results and financial condition will be materially adversely affected.
10. Government Regulation and Legal Uncertainties. We are not currently subject
to direct regulation by any government agency, other than regulations
applicable to businesses generally, and there are currently few laws or
regulations directly applicable to our products. However, it is possible
that a number of laws and regulations may be adopted with respect to
alternative medicine and international commerce, covering issues such as
nutritional supplements being regulated by the Food and Drug Administration
(F.D.A.) in the future. The adoption of any such laws or regulations could
decrease the demand for our products and increase our cost of doing
business or otherwise have an adverse effect on our business, operating
results or financial condition. Moreover, there can be no assurance that
export controls, either in their current form or as may be subsequently
enacted in the U.S., Mexico, The Bahamas or elsewhere, will not limit our
ability to distribute products outside of the United States. Any such
export restrictions, new legislation or regulation or unlawful exportation
could have a material adverse impact on our business, operating results or
financial condition.
11. Dependence on Key Personnel. Our performance is substantially dependent on
the performance of our executive officers and key employees, most of who
have worked together for only a short period of time. Given our early stage
of development, we are dependent on our ability to attract, retain and
motivate high quality personnel, especially management and highly skilled
development teams. We do not have "key person" life insurance policies on
any of our employees. The loss of the services of any of our executive
officers or other key employees could have a material adverse effect on our
business, operating results or financial condition. Our future success also
depends on our continuing ability to identify, hire, train and retain other
highly qualified technical and managerial personnel. Competition for such
personnel is intense, and there can be no assurance that we will be able to
attract, assimilate or retain other highly qualified technical and
managerial personnel in the future. The inability to attract and retain the
necessary technical and managerial personnel could have a material adverse
effect upon our business, operating results or financial condition.
12. Proprietary Technology. Our success and ability to compete is dependent in
part upon our proprietary technology. While we rely on patent, trademark,
trade secret and copyright law to protect our technology, we believe that
factors such as the technological and creative skills of our personnel, new
product developments, frequent product enhancements, name recognition and
reliable product maintenance are more essential to establishing and
maintaining a technology leadership position. There can be no assurance
that others will not develop technologies that are similar or superior to
ours. We will generally enter into confidentiality or license agreements
with our employees, consultants and vendors, as well as control access to
and distribution of our documentation and other proprietary information.
Despite these precautions, it may be possible for a third party to copy or
otherwise obtain and use our products or technology without authorization,
or to develop similar technology independently. In addition, effective
copyright and trade secret protection may be unavailable or limited in
certain foreign countries, and the global nature of international commerce
makes it virtually impossible to control the ultimate destination of our
products. Despite our efforts to protect our proprietary rights,
unauthorized parties may attempt to copy aspects of our products or to
obtain and use information that we regard as proprietary. Policing
unauthorized use of our products is difficult. There can be no assurance
that the steps we take will prevent misappropriation of our technology or
that such agreements will be enforceable. In addition, in the future we may
need to litigate to enforce our intellectual property rights, to protect
our trade secrets, to determine the validity and scope of the proprietary
rights of others or to defend against claims of infringement or invalidity.
Such litigation could result in substantial costs and diversion of
resources and could have a material adverse effect on our business,
operating results or financial condition.
13. Risks Associated with International Expansion. A key component of our
strategy is our planned expansion into international markets. In
particular, we intend to establish operations in The Bahamas by the end of
2000 and in Mexico by the end of 2001. If the international revenues
generated by these products/services are not adequate to offset the expense
of establishing and maintaining these foreign operations, our business,
operating results or financial condition could be materially adversely
affected. To date, we have no experience in developing localized versions
of our products and services or marketing and distributing our products and
services internationally. There can be no assurance that we will be able to
successfully market, sell and deliver in these markets. In addition to the
uncertainty as to our ability to expand our international presence, there
are certain risks inherent in doing business on an international level,
such as unexpected changes in regulatory requirements, export restrictions,
export controls, tariffs and other trade barriers, difficulties in staffing
and managing foreign operations, longer payment cycles, problems in
collecting accounts receivable, political instability, fluctuations in
currency exchange rates, seasonal reductions in business activity during
the summer months in certain parts of the world and potentially adverse tax
consequences, which could adversely impact the success of our international
operations. There can be no assurance that one or more of these factors
will not have a material adverse effect on our future international
operations and, consequently, on our business, operating results and
financial condition.
14. This Offering is Self Underwritten and Our Plan of Distribution Differs
from Traditional Plans. We plan to use a "Dutch Auction" as the primary
method of distributing our shares. We will solicit offers to purchase from
prospective investors through the Internet as well as by traditional means.
The auction is open for purposes of receiving offers to purchase following
the posting of the final prospectus on our website, which is located at
www.bioquestipo.com. This method of distribution has the inherent risk that
we will not sell the desired amount of securities or receive the desired
price for those securities. If this were to occur, we would likely postpone
or cancel the offering which could materially affect any future attempts to
sell our shares in a public offering.
15. The Distribution of Our Shares Through a Dutch Auction, Without an
Underwriter, Could Result in a Poor After- Market for our Shares. Because
we are not using a traditional underwriter for this offering, there may be
a greater risk that our common shares will not receive adequate support
from securities firms in the after market, through market-making and other
activities. If this should occur, the market price for our common shares
may decline.
16. Arbitrary Offering Price Volatility of Stock Price; Dilution. There has
been no prior secondary market for the shares. our minimum price per share
has been arbitrarily determined by our board of directors and bears no
relationship to our assets, book value or net worth. The price at which
shares may be purchased or sold may be subject to extreme fluctuations due
to such factors as actual or anticipated fluctuations in our operating
results, selection of products, execution of new contracts, general market
conditions and other factors. Moreover, our offering price per share is
substantially in excess of the net tangible book value as a "start-up".
Accordingly, this offering will result in immediate and substantial
dilution of our net tangible book value per common share. Thus, investors
who purchase shares offered hereby will experience immediate dilution based
on the difference between the subscription price and the net tangible book
value per common share. Purchasers of shares will pay at least $8.00 per
share which, while we will have a net tangible book value (based on our
August 23, 2000 balance sheet, of approximately $.07 if the $500,000
minimum offering is achieved and $1.35 if the $15,000,000 maximum offering
is achieved. That represents dilution of $7.93 per share (or approximately
99%) at the $500,000 level and $6.65 per share (or approximately 83%) at
the $15,000,000 level. Because our shares are being sold pursuant to a
Dutch Auction (where bids must be at least $8.00 but could range higher),
the resulting dilution would be proportionally reduced. (See
"Capitalization," "Dilution" and "Description of Capital Stock --
Generally.")
17. Absence of a Public Market; Publicly Reporting Company; No Current Public
Market for Shares. No trading market for the purchase and sale of these
shares exists. We intend to list our shares for trading on the NASDAQ
Market for the NASDAQ Bulletin Board ("OTCBB"). However, a purchaser of
shares may not be able to liquidate his or her investment at this time, and
shares may not be readily acceptable as collateral for loans. As a
reporting company, we will be required to file quarterly reports on Form
10-QSB and annually on Form 10-KSB and, in each case, are required to
provide the financial and other information specified in such forms. In
addition, we would be required to file on Form 8-K if specified events
occurred or upon the occurrence of other events which may be material to
Shareholders. No assurance can be given as to the liquidity of the trading
market for our shares or that an active public market will develop or, if
developed, will continue. If an active public market does not develop or is
not maintained, the market price and liquidity of the shares may be
adversely affected. Consequently, holders of shares acquired in this
offering may not be able to liquidate their investment in the event of an
emergency or for any other reason, and the shares may not be readily
accepted as collateral for a loan. Accordingly, prospective investors
should consider the purchase of shares only as a long-term investment.
18. Forward Looking Statements. We have made statements in this prospectus and
in the documents we file with the Commission that are considered
"forward-looking statements" within the meaning of pertinent securities
laws. Sometimes these statements contain words such as "will likely
result," "are expected to," "will continue," "is anticipated," "estimate"
or similar expressions or other similar words. These statements are not
guarantees of our future performance and are subject to risks,
uncertainties and other factors that could cause our actual performance or
achievements to be materially different from those we project.
19. Possible Strategic Relationships. We are open to developing various
strategic alliances. If successful, such alliances are expected to
dramatically reduce our need for capital and result in expanding our
existing and contemplated activity. There can be no assurance that such
strategic relationships can be achieved.
In addition to the above risks, businesses are often subject to risks not
foreseen by management. This is especially true for developmental stage
companies. In reviewing the prospectus, potential investors should keep in mind
that other possible risks could affect us and their investments therein,
including normal business and several economic conditions which are not within
our control.
CERTAIN PARTIES AND RELATED TRANSACTIONS
Because of certain statutory and case law relating to broad discretion
granted management of a company, typically directors and officers of a
corporation are indemnified by and have limited monetary liability to its
Shareholders. Failure of management to satisfy its fiduciary responsibility to
Shareholders could subject management to certain claims.
There have been no past transactions with its affiliates. Nonetheless,
Peter J. Ewens and, Roger Miller have had a personal and business relationship
for nearly 25 years. Mr. Miller has been Mr. Ewens personal tax advisor and Mr.
Ewens and Mr. Miller have had majority ownership in two other corporations
previously. Mr. Ewens and Mr. Miller have also made personal investments in the
same investment opportunity together, in each case as minority shareholders. No
other prior relationships exist within our management.
We may enter into transactions with our affiliates in the future. BioQuest
intends to enter into any such transactions only at prices and on terms no less
favorable to BioQuest than transactions with independent third parties. In that
context, BioQuest will require any director or officer who has a pecuniary
interest in a matter being considered to recuse themselves from any
negotiations. Moreover, our Articles of Incorporation provide that any related
party contract or transaction must be authorized, approved or ratified at a
meeting of the Board of Directors by sufficient vote thereon by directors not
interested therein or the transaction must be fair and reasonable to BioQuest.
In any event, any BioQuest debt instruments in the future are expected generally
to prohibit us from entering into any such affiliate transaction on other than
arm's-length terms. In addition, a majority of the Board is (and must continue
to be) neither an officer nor has a pecuniary interest (other than as a
Shareholder or Director) in any transactions with BioQuest. In turn, commencing
immediately, a majority of the independent members of the Board of Directors
(defined as having no pecuniary interest in the transaction under consideration)
will be required to approve all matters involving interested parties.
FIDUCIARY RESPONSIBILITY OF THE COMPANY'S MANAGEMENT
Counsel has advised BioQuest's management it has a fiduciary responsibility
for the safekeeping and use of all assets of BioQuest. Management is accountable
to each Shareholder and required to exercise good faith and integrity with
respect to its affairs. For example, whether under SEC and/or general fiduciary
principles, management cannot commingle property of BioQuest with the property
of any other person, including that of management.
Cases have been decided under the common or statutory law of corporations
in certain jurisdictions to the effect that a Shareholder may institute legal
action on behalf of himself and all other similarly situated Shareholders (a
class action) to recover damages from management for violations of fiduciary
duties, or on behalf of a corporation (a corporation derivative action), to
recover damages from a third party where management has failed or refused to
institute proceedings to recover such damages. On the basis of federal and/or
state statutes, including most critically The Virginia General Corporation Law,
and rules and decisions by pertinent federal and/or state courts, accordingly,
(a) Shareholders in a corporation have the right, subject to the provisions of
the Federal Rules of Civil Procedure and jurisdictional requirements, to bring
class actions in federal court to enforce their rights under federal securities
laws; and (b) Shareholders who have suffered losses in connection with the
purchase or sale of their shares may be able to recover such losses from a
corporation's management where the losses result from a violation by the
management of SEC Rule 10b-5, promulgated under the Securities Exchange Act of
1934, as amended (the "Exchange Act"). It should be noted, however, that in
endeavoring to recover damages in such actions, it would be generally difficult
to establish, as a basis for liability, that BioQuest's management has not met
such standard. This is due to the broad discretion given the directors and
officers of a corporation to act in its best interest.
The SEC has stated that, to the extent any exculpatory or indemnification
provision purports to include indemnification for liabilities arising under the
Securities Act of 1933, as amended ( the "Securities Act"), it is the opinion of
the SEC that such indemnification is contrary to public policy and, therefore,
unenforceable. Shareholders who believe that BioQuest's management may have
violated applicable law regarding fiduciary duties should consult with their own
counsel as to their evaluation of the status of the law at such time.
APPLICATION OF PROCEEDS
The net proceeds from the sale of our shares of common stock offered
hereby, if sold at $8.00 per share, are estimated to be $14,342,000 if the
maximum offering is achieved (after associated organization and offering
expenses approximating $658,000) and $242,000, if only the 62,500-share minimum
offering is achieved (with associated $258,000 organization and offering
expenses). See "Capitalization" below with regard to our current capitalization
and that which will exist if the minimum or maximum offering is achieved.
We expect that such net proceeds will be used to finance the development
and expansion of our contemplated activities as well as for general corporate
purposes. We will review potential acquisition opportunities on an ongoing basis
and periodically engage in discussions with acquisition candidates. We have not,
however, entered into any definitive agreements with respect to the acquisition
of any properties. In the event only the minimum amount of funding is
subscribed, we will concentrate our efforts primarily on completing the
construction of our Internet portal, BatoutofHealth.com, and establishing and
outfitting Stage I of the BioQuest Center for Integrative Medicine Limited. In
the event that more than the minimum is subscribed, we intend to be more
aggressive in implementing our business plan and further develop operations,
personnel and projects. Anticipated application of proceeds below does not,
however, include cash flow from revenue. We anticipate receiving revenues from
operations, but there can be no assurance that such revenues will be sufficient
to generate positive cash flow before proceeds from this offering are expended.
At anticipated levels of capital expenditures (so-called "burn rates"), proceeds
from the minimum offering are expected to fund our operations for 6-9 months.
However, investors are advised that, given the Dutch Auction process, the
selling price could be a high as $25.00 a share, which would increase the net
proceeds to BioQuest to as much as approximately $46,000,000.
<PAGE>
<TABLE>
Gross Proceeds (1)
$500,000 $15,000,000
-------- -----------
Dollar Dollar
Amount Percentage Amount Percentage
------ ---------- ------ ----------
Offering Expenses
<S> <C> <C> <C> <C>
Accounting Fees $30,000 6.0 $30,000 0.2%
Legal Fees (2) 35,000 7.0 35,000 0.3
Printing and Related Costs 25,000 4.0 25,000 0.1
Filing Fees (SEC & State) 34,000 6.6 34,000 0.2
Software license Fee for Internet-Based Direct 25,000 5.0 25,000 0.2
Public Offering
Complete Web Site for Stage I(3) 45,000 9.0 45,000 0.3
Marketing - Internet 30,000 6.0 230,000 1.5
Marketing - Non Internet 30,000 6.0 230,000 1.5
Miscellaneous 4,000 1.8 4,000 0.1
Working Capital(4) 134,000 26.8 367,500 2.5
Investment in Existing Subsidiaries
Batoutofhealth.com 59,000 11.8 1,000,000 6.7
BioQuest Center for Integrative Medicine Limited 50,000 10.0 2,350,000 15.6
BioQuest Media Resources Group 0 0 500,000 3.3
BioQuest Seminars Program 0 0 350,000 2.3
Proposed Acquisitions (5) 0 0 9,775,500 65.2
-- ------- ---- --------- ----
Gross Proceeds $500,000 100% $15,000,000 100%
Less Offering Expenses 258,000 51.6 658,000 4.4
------- ---- ------- ---
Net Proceeds $242,000 48.4% $14,342,000 95.6%
======== ==== =========== ====
</TABLE>
(1) This presentation assumes all shares (62,500 minimum to 1,875,000 maximum)
are sold at the $8.00 minimum bid. Because of the Dutch Auction process
being used in this offering (where bids must be at least $8.00 but could
range higher), any proceeds in excess of $15,000,000 would be allocated
between Working Capital and Proposed Acquisitions.
(2) Legal fees represent the cash portion only. Warrants for the issuance of
stock in the amount of 15,000 shares, exercisable at $.01 per share at any
time prior to three years from the date of this Prospectus, will be granted
in lieu of the balance of legal fees.
(3) A portion of the total cost of the completion of Stage I of BioQuest's web
site will be granted in stock (16,000 shares). The figures listed represent
only the cash option.
(4) Portions of the proceeds of this offering will be used to pay salaries of
our management. The figures listed represent amounts for a period of 6
months from the date of this offering.
(5) We are currently conducting exploratory discussions with potential
strategic partners and/or acquisition candidates in the field of
alternative medicine. Should these relationships develop, it is anticipated
that all such transactions would involve either an all-stock transfer or
payment via a cash component and a stock component. The figures listed
assume all such transactions will be part cash and part stock and include
anticipated due diligence expenses.
<PAGE>
We reserve the right to change the application of proceeds depending on
unforeseen circumstances at the time of this offering. The intent is to
implement our business plan to the extent possible with funds raised in this
offering. Unforeseen events, timing, the general state of the economy and our
ability or inability to generate revenue could greatly alter the application of
proceeds from that shown above.
CAPITALIZATION
The following table sets forth (i) our capitalization as of August 23,
2000; and (ii) our pro forma capitalization on the same date, reflecting (a) the
sale of the 62,500 shares offered hereby, for estimated net proceeds of $3.87
per Share, if only the minimum offering is sold at the $8.00 minimum price; and
(b) the sale of 1,875,000 shares offered, for estimated net proceeds of $7.65
per Share, if the maximum offering is sold at the $8.00 minimum price. (See
"Application of Proceeds" and "Description of Capital Stock.")
<TABLE>
As Adjusted
-----------
Actual Minimum Maximum
------ ------- -------
<S> <C> <C> <C>
Shareholders' equity
Common stock, par value; 25,000,000 shares authorized; 9,040,473 shares issued
and outstanding; 9,102,973 (Minimum) and 10,915,473 (Maximum) shares to be
issued and outstanding, as adjusted $0 $0 $0
Additional Paid-in capital 842,210 1,084,210 15,184,210
Stock subscription receivable (265,000) (265,000) (265,000)
Deficit accumulated during the development stage (152,067) (152,067) (152,067)
-------- -------- --------
Total Shareholders' equity and total capitalization $425,143 $667,143 $14,767,143
======== ======== ===========
</TABLE>
DILUTION
The following table sets forth the percentage of equity the investors in
this offering will own compared to the percentage of equity owned by the present
shareholders, and the comparative amounts paid for the shares by the investors
as compared to the total consideration paid by the present shareholders of
BioQuest. (See "Description of Capital Stock," "Risk Factors" and
"Capitalization" for a more complete discussion of total number of shares and
associated rights and consequences.) This presentation assumes all shares
(62,500 at the minimum and 1,875,000 at the maximum) are sold at the $8.00
minimum bid. Because our shares are being sold pursuant to a Dutch Auction
(where bids must be at least $8.00 but could range higher), the resulting
dilution would be proportionately reduced.
Dilution for $500,000 Offering (1)
Initial public offering price per Share $8.00 (100.0%)
Net tangible book value per Share before offering 0.05 (0.6%)
Increase per Share attributable to new Shareholders 0.02 (0.3%)
Pro forma net tangible book value per Share after offering $0.07 (0.9%)
Total dilution per Share to new Shareholders $7.93 (99.1%)
<PAGE>
<TABLE>
Shares Purchased Total Consideration
---------------- -------------------
Average Price
Number Percent Amount Percent Per Share
------ ------- ------ ------- ---------
<S> <C> <C> <C> <C> <C>
Existing Shares 9,040,473 99.3 $842,210 62.7 $ .09
New Shares 62,500 0.7 500,000 37.3 8.00
------ --- ------- ---- ----
9,102,973 100.0 $1,342,210 100.0 $ .15
========= ===== ========== ===== =====
</TABLE>
Dilution for $15,000,000 Offering (2)
Initial public offering price per Share $8.00 (100.0%)
Net tangible book value per Share before offering $0.05 (0.6%)
Increase per Share attributable to new Shareholders $1.30 (16.3%)
Pro forma net tangible book value per Share after offering $1.35 (16.9%)
Total dilution per Share to new Shareholders $6.65 (83.1%)
<TABLE>
Shares Purchased Total Consideration
---------------- -------------------
Average Price
Number Percent Amount Percent Per Share
------ ------- ------ ------- ---------
<S> <C> <C> <C> <C> <C>
Existing Shares 9,040,473 82.8 $842,210 5.3 $0.09
New Shares 1,875,000 17.2 15,000,000 94.7 8.00
--------- ---- ---------- ---- ----
10,915,473 100.0 15,842,210 100.0 $1.45
========== ===== ========== ===== =====
</TABLE>
(1) Assumes issuance and sale of 62,500 of our shares during this offering
period in addition to the 9,040,473 shares currently outstanding.
(2) Assumes issuance and sale of 1,875,000 of our shares during this offering
period in addition to the 9,040,473 shares currently outstanding.
THE COMPANY
Introduction
BioQuest International, Inc. was organized November 4, 1999 under the laws
of Virginia as a privately held corporation and to exist as a holding
corporation for the purposes of creating, establishing, acquiring, building and
developing various wholly owned subsidiaries, all allied with the alternative/
complementary/ integrative medicine field. The Company generally has been
inactive, having conducted no business operations except organizational and fund
raising activities since its inception.
However, we received gross proceeds in the amount of $800,210 from the sale
of a total of 533,473 shares of common stock at $1.50 per share (the "Shares"),
in an offering conducted pursuant to Section 4(2) of the Securities Act of 1933
and Rule 506 of Regulation D promulgated there under. The proceeds from such
private placement are being used to fund a portion of the Stage I development of
our web-site and as a down payment on the property in Freeport, Grand Bahamas
(which will be used to house the BioQuest Center for Integrative Medicine
Limited). We intend to raise capital, pursue specific targeted business
development opportunities and build and expand our entities currently under
development as our basis for growth and profitability.
The field of alternative/complementary/integrative medicine is a field
which, over the past 10 years, has grown exponentially, and which is expected to
continue to do so over the next 10-20 years. This is principally due to a number
of factors, including the emergence of HMO's that has eroded the one-on-one
patient/doctor relationships of generations past. It also has to do with the
evolution of a well informed and better-educated consumer, many of whom mistrust
the profit-driven motives of giant pharmaceutical companies and the potential
side effects of chemically based drugs. While in the past, alternative medicine
has been largely misunderstood due a lack of centralized information resources
available to the masses, it is being rapidly brought into focus by the onset of
the electronic age and, more specifically, the Internet. The field is also
highly fragmented, being made up of hundreds of thousands of individual
practitioners in dozens of disciplines, each following their own practice,
perhaps belonging to a loosely knit association, and all longing for a more
competitive, cost-efficient and cohesive way of doing business in the 21st
century.
All of these elements, and many others, have created a wealth of
opportunity for us. It is, therefore, our mission to fill a major void in the
marketplace by providing the most comprehensive database of information on
medical alternatives and research available; providing the consumer a base of
knowledge through a full spectrum of educational instruction on a
condition-specific basis; and finally by furnishing our users an extensive
selection of resources appropriate for the prevention and/or treatment of a
condition, malady, illness or disease particular to them. In order to carry out
our mission, we have meticulously drafted a master blueprint of operating
entities that are designed to work in complete harmony with one another in an
effort to insure that each section of the entire loop is achieved and to
guarantee that the cooperative marketing efforts are maximized while
concurrently maintaining spending efficiencies at peak labels in order to derive
the highest profits possible.
The Proposed Operating Subsidiaries
BioQuest International Inc. has been uniquely structured by combining
existing businesses that BioQuest will acquire with businesses that it will
develop internally for two principal reasons. First, to enable the overall
company to fold in businesses which have a synergistic appeal within the field
of alternative medicine, and which fit strategically into its master business
model; have been formed and, have a beginning infrastructure; have a historical
track record; have begun to generate revenues; have solid and proven management;
have the need for capital to properly execute their business plan and to grow
the business; and have the need for a well-designed, comprehensive marketing
plan and strategies in order to facilitate their plan and achieve their goals.
Second, by infusing each of these operating entities with sufficient capital, in
addition to providing the proper marketing drivers and marketing management
through the creation of internally developed entities, we will significantly
increase the revenues and earnings of all business operations, existing,
acquired and startup. It should further be noted that this also provides an
essential opportunity to cross-market between and amongst companies, creating
substantial cost and revenue producing efficiencies within the complete system.
The following is a brief summary on each of the companies in the process of
development:
(1) BatoutofHealth.com,, currently under construction, has been designed to be
the most comprehensive Internet portal within the field of alternative
medicine. This portal will provide a single source site for medical
practitioners, individual consumers and companies to go for information,
education, research, products and services related to health and well being
through non-allopathic, natural, holistic and alternative/complementary
therapies. The principal focus will be on those preventative therapies
employed and practiced in order to avert disease through a combination of
various disciplines and modalities that have been proven to promote
wellness. Alternative/ complementary treatments are available for those who
demonstrate that need. It should be carefully noted that this site has been
structured as a true profit-driven e-commerce site, with B2B and B2C
capabilities, and is not merely an informational site. In addition, our
portal has been structured as a powerful market driver for each of the
other brick and mortar business entities within the BioQuest International
family, and is therefore not a pure play site. Most of the component
elements contained within the site, and listed below, are revenue producing
and profit driven.
o Comprehensive database of information and articles published on all aspects
of up-to-the-moment alternative/complementary medicine and preventative
therapies.
o On-line periodicals.
o On-line lectures and regular talk shows featuring respected and known
experts taking calls live. o Full-featured electronic mail. o A database of
practitioners broken down by country, state, and city, and including a
brief biography and areas of specialization on each.
o Want ads.
o An alternative medicine "yellow pages" type format, which will include ads
from practitioners and companies selling related products and services.
o A shopping mall featuring products related to alternative and preventative
medicine including, but not limited to, books, tapes, videos, CD-ROMS,
nutritional supplements, vitamins, herbs and equipment.
o E-banner advertising.
o Sales transaction fees.
o Discounted wholesale product sales.
o Consumer membership fees for discounted product purchases.
o Major medical insurance program for alternative/complementary medical
coverage.
o A complete line of private label "BioQuest" products manufactured under our
specifications and sold on our site and through traditional channels of
distribution.
o Site hosting fees.
o Link fees.
o Print media advertising.
o Multi-media advertising.
o Audio ads.
(2) The BioQuest Center for Integrative Medicine Limited is being developed and
is dedicated to the administration of efficacious alternative, natural
treatment modalities to patients from around the world who are afflicted
with various' diseases. BioQuest has selected The Bahamas as its choice for
the location of this facility, in order to provide an ideally situated,
relaxed, upscale environment, which will be conducive to the integrative
healing and recovery of the patient. BioQuest will incorporate
case-specific treatment protocols that combine or "integrate" those
modalities which have been demonstrated to be the most efficacious, with
the least side effects, and which may include alternative, complementary
and allopathic (traditional) therapies. Of equal importance is the
recognition that the patient is a holistic person, one that is intimately
connected and not just an arrangement of body systems, parts and organs. In
addition to treating the physical being, we must integrate a harmonious,
synergistic approach that addresses the mental and spiritual components
that are interrelated to one's health, balance and wellness.
This "World Class" facility will house a treatment clinic offering
principally outpatient services, but will include a limited number of inpatient
rooms, along with a state-of-the-art research center devoted to finding new,
effective, natural treatments for disease and illness. The Center will also
train professional doctors and medical practitioners, from countries throughout
the world, in the specific methods and techniques used in administering these
highly effective treatments and therapies. The training component will be added
during Phase II of the development of The Center, anticipated to occur in 2002.
It is important to note that this facility will not have the "look and feel" of
a traditional clinic or hospital. In our Center, you will not see staff members
wearing white coats or carrying stethoscopes around their necks. The reason is
simple. Many, if not most of the patients we will treat, have been through the
conventional medical system, where they have undergone surgery, radiation,
chemotherapy and the like. They have come to us because traditional medicine has
failed them. We believe that the last thing they want to see is another medical
institution that looks and feels like one more potential disappointment.
The treatments and methods The Center's doctors will employ are all
modalities that are proven through extensive research, as well as years of
positive results through their administration to thousands of satisfied patients
in clinics and hospitals throughout the world. The doctors and medical
practitioners who have joined, and will join the Center's staff, bring with them
many patients who we will treat.
Some of the therapies to be employed individually or in combination are:
o Hyperthermia
o Colonics
o Ozone Therapy
o Massage
o Chelation Therapy
o Polyatomic Oxygen Therapy
o Blood Irradiation
o Hydrotherapy
o Acupuncture
o Reflexology
o Rolfing
o Chiropractic
o Yoga
o Cold Sheet Treatments
o Visualization
o Counseling/Stress Management
o Physical Therapy
o Psychological and Spiritual Support
(3) The BioQuest Seminar Program is a business component being established to
provide a grass roots approach to educating the general public as to ways
in which they can increase their overall feeling of health and well being.
The seminar programs will be directed by Dr. James Chappell, a retired
chiropractic and naturopathic physician, clinical nutritionist and medical
herbalist, who has treated over 7,000 patients in his 30 year career. The
outreach mission of the seminar program will be accomplished through
lectures, seminars, symposiums, conferences, classes and retreats and will
be given in all major markets throughout the United States and in select
cities abroad. The topics covered in each of these venues will focus on
health and well being, and will provide a valuable forum and structure for
participants to "live the experience" while involved, and then take such
education and experience home and put it into active daily practice.
Several of the topics are:
o "There Is No Incurable Disease"
o "Immunologic Rejuvination"
o "Systematic Detoxification"
o "Wellness Education"
Among the conditions addressed are:
o Heart Disease
o Cancer
o AIDS
o Alzheimer's Disease
o Diabetes
o Arthritis
o Chronic Fatigue Syndrome
o Herpes
o Sexual Dysfunction
o Depression
o Allergies
o Colds
o Flu
(4) BioQuest Media Resources Group has been created to support each of the
operating subsidiaries through its use of and promotion through traditional
media resources. These include: newspaper, radio, television, cable,
infomercials, live-streaming audio and video broadcasts on the Internet as
well as newsletters.
The first enterprise underneath the Media Resources Group umbrella to be
developed is a monthly newspaper (to be named) that will focus on "truth
journalism" reporting on topics that are little known to the public, and yet are
of great concern regarding our health and well being. The President of BioQuest
Media Resources Group is Ms. Nicole Shoong, formerly Editor in Chief of the
California Sun, a regional newspaper that focused on exposing potential threats
and dangers to mankind. BioQuest's intent is to establish distribution of this
publication within every major market in the U.S. and to include it as an
on-line publication within BatoutofHealth.com, our proposed Internet portal. We
intend to utilize existing distributors, and will establish health food stores
and alternative medical practioner's offices as our primary channels of
distribution. In addition, editions will be mailed to all paid subscribers.
The second entity to be developed is Heart to Heart Radio, a weekly radio
talk show which will be syndicated nationally and will feature Ms. Nicole Shoong
and Dr. James Chappell, formerly the hosts of the Shoong and Chappell Show, a
regional weekly broadcast in California and operating with a similar format.
Heart to Heart, hosted by Nicole Shoong and Dr. James Chappell, offers a
featured guest each week who is preeminent in his or her discipline within the
health industry. The shows will also be aired via live-streaming broadcasts
through our contemplated Internet portal, BatoutofHealth.com.
(5) The BioQuest International Health Foundation will be set up as a non-profit
foundation, which will channel private charitable contributions and
government grants and funding into the research of new treatment protocols,
as well as providing treatment, through The BioQuest Center for Integrative
Medicine, to a group of patients that are financially less fortunate.
Future Acquisitions
The Company has identified a number of synergistic business areas which fit
its master business model, and with which it intends on establishing additional
profit centers in the future. These include, but are not limited to, wellness
retreat centers, alternative medical publications, direct mail nutritional
supplement marketing companies, nutritional supplement manufacturing operations
and a strategic alliance with a major health insurance carrier for the purposes
of underwriting an alternative health only major medical insurance plan. We have
investigated a number of business and acquisition opportunities and have
performed preliminary due diligence on several. It is our intent to use a
portion of the proceeds of this offering to continue the due diligence process
on these projects (which may include third party feasibility studies where
management considers such studies prudent to complete the due diligence).
[Balance of page intentionally left blank]
<PAGE>
Organizational Chart
[To be inserted separately.]
<PAGE>
Business Potential
In the future, BioQuest will develop additional strategic allied markets
and products and acquire additional companies providing fundamental synergies
toward the overall growth and development of BioQuest. We are committed to
becoming the dominant provider of information, education, products and services
related to integrative/alternative/complementary medicine throughout the world.
We believe it is essential to provide a "complete loop" that offers the consumer
a comprehensive base of information, a process of education, and finally,
resources for purchase, implementation and treatment of products, services,
methods, disciplines and therapies specific to their individual wants, needs,
makeup and situation. In pursuit of this mission, and in order to achieve this
preeminent status, we will employ four key business strategies throughout our
growth and development.
o Dedicate our resources to the development and marketing of information,
educational resources, products, services and sources for the establishment
and maintenance of health and well being in addition to sources for the
treatment of illnesses and diseases within the
alternative/integrative/complementary medicine domain, to the greatest
number of people possible, on a global scale.
o Penetrate target markets through comprehensive consumer and institutional
oriented marketing strategies. Drive toward market saturation through
aggressive and effective advertising and promotion for all of the products
and services we offer, and consolidate and direct all effort toward
building the BioQuest brand.
o Within all elements of brand and product development for market readiness,
adhere to the philosophy of differentiation such that our presence,
products and services stand out and stand alone within each of our
categories.
o Maintain our competitive edge over time through the development and
implementation of new breakthrough technologies and processes; the creation
of new products that establish distribution within additional
niche-oriented segments of the market; and invest in new technological
developments via strategic alliances, partnerships, joint ventures,
acquisitions and consulting agreements.
In examining the market conditions relative to our overall business
model, we believe we are in a fertile market for our products and services as
indicated by the following:
o We have a very large consumer base/market size with over 80 million baby
boomers in the U.S. alone, a segment of the population which is
increasingly concerned with slowing the aging process, preventing disease,
optimizing health and improving their overall quality of life as they
approach or enter mid-life.
o In addition, the generation X population is better educated, have higher
incomes and demonstrate an established and growing regard for health and
fitness that exceeds that of previous generations.
o Today, 45% of all Americans take vitamins, supplements, herbal products or
dietary aids on a daily basis, with an additional 23% who do so several
times per week.
o The explosive growth of the "nutraceutical" market, which includes all
dietary supplements, is an $86 billion industry, and is predicted to grow
to $250 billion within the next 5 years.
o A pendulous shift from conventional medical care and practices to
alternative therapies and treatments has taken place within the past
decade. Americans in 1998 made 425 million visits to alternative medical
practitioners, versus 388 million visits to conventional primary care
physicians. They also spent $27 billion out of pocket on alternative care,
compared to $29 billion in un-reimbursed physicians' services.
o The "War on Cancer" is being lost, through billions being spent on cancer
research, the incidence rate having increased by 18%, and the mortality
rate having increased by over 6% over the past 30 years.
o According to the American Cancer Society, 1.5 million new cases of cancer
were diagnosed in 1999, with nearly 600,000 dying in the U.S. Predictions
indicate that one out of three of us will develop cancer in our lifetime,
which is 88 million people in the United States alone. This creates a
significant opportunity for BioQuest and anyone else that possesses proven
and effective means for treating cancer patients. Nearly 80% of all
patients treated in our Center initially will be those who conventional
medicine has failed. Over time through the education process to be
administered via our Internet portal, we will get to these patients much
earlier, and will arm them with natural alternatives, which they may choose
over those available within conventional medicine.
o The pandemic spread of HIV/AIDS has infected more than 200,000 people in
the U.S. in the last decade. More than half have died, most within 4 years
of showing symptoms of the disease. The Center for Disease Control (CDC)
reports that 2.2 million Americans now carry the HIV virus, but are not yet
symptomatic. Global estimates are very low due to a lack of reporting and
lack of adequate definition. It is estimated, however, that there are over
33 million people living with HIV/AIDS at this time, with over 5 million
new cases being reported, and claiming 2.5 million lives, each year.
o Today there are over 40 million Internet users in the U. S. alone, with
that number expected to grow exponentially over the next decade. It is
estimated that 50% of Internet users will be shopping on-line by 2001, with
53% being women. It is further estimated that by 2004, on-line shopping
will reach $3.2 trillion.
o The founders of BioQuest, and the key management team are comprised of
individuals who bring significant experience and expertise in:
>> Entrepreneurship
>> Top Level Business Management
>> Medicine
>> Medical Research
>> Marketing
>> Information Technology
>> Electronic Commerce
>> International Commerce
>> Financial Management
>> Retail Concept Development
o BioQuest will remain mostly virtual in each of its operations. We will
outsource nearly all manufacturing of raw supplies in addition to finished
goods. We will smart source most of the component operations of our
Internet portal. Where practical our fulfillment operations will be
contracted out. In structuring the business this way, we have very little
capital tied up in hard assets; have the flexibility in changing suppliers
and contractors based upon economic and functional demands; can create
operating efficiencies by using the competitive bidding process to our
advantage; can use a number of suppliers at once, thus avoiding crises of
being at the mercy of a single supplier in the event of a supply/demand
imbalance.
o BioQuest will reinvest heavily in new developments, technologies, processes
and products in an effort to maintain our competitive edge across all lines
of business. We will establish strategic alliances globally with
individuals and companies who possess innovative technology that we can
incorporate into our overall business model. Further, BioQuest will license
certain technology, processes and patented products developed by
independent sources.Markets and Customers
In order to successfully establish and develop the BioQuest brand
throughout all of our operating entities, we have carefully researched our
markets to identify our core customers and target markets. What is of interest
is that there is a significant overlap in our customer base, creating a unique
opportunity to leverage the brand in a most cost-efficient manner, by utilizing
cross-over marketing and sales campaigns, which will result in driving customers
and sales to multiple business entities at once. BioQuest has devised a
comprehensive marketing strategy designed to facilitate the achievement of our
overall sales, distribution and profit objective. Our approach for our initial
stage of growth is to combine the elements of high volume, high margin venues
with aggressive consumer-oriented advertising via a combination of the Internet
and traditional media, along with promotional programs intended to maximize both
product trial and repeat sales.
Competition
In assessing the competition in each of our divisions, we have carefully
analyzed all factors involved in assessing who our "true" competition is.
Included are those entities that we feel are, or could be, in direct competition
with BioQuest. With some of the entities, there are hundreds of competitors and
with others virtually none. A breakout by business division follows:
(1) BatoutofHealth.com
There are hundreds, if not thousands, of web sites with a relationship to
health, fitness and alternative or complementary medicine. There are many
hundreds more that involve traditional medicine. BioQuest, in having spent
nearly two years developing its concept, researched thousands of sites to
determine what was, and what was not, available on the Internet. It is our
opinion that a major Internet portal, as completely comprehensive as
contemplated in this Prospectus, does not exist.
What we have found are many sites which play a supportive role with already
established businesses, most of which are attempting to create their own web
presence, but only in direct support of their brick and mortar business. An
example of the several of those are:
o alternativemedicine.com
o altmedadvisor.com
o onhealth.com
o drkoop.com
o healthdoctor.net
o healthcentral.com
o n2health.com
o National Center for Complimentary and Alternative Medicine (NCAAM) -
National Institutes of Health
o medmarket.com
o altmednet.com
Our Internet shopping mall, BatoutofHealth.com (for "better alternative
therapies"), will incorporate an encyclopedic product listing, including
sources, uses, doses, visuals as well as prices per unit and per dose.
In addition, most of these sites possess very limited information links and
do not include database architecture. Further, their shopping malls and
e-commerce presence fall very short.
o vitamins.com
o healthnyou.com
o vitamins4life.com
o virtuvites.com
o vitaminshoppe.com
o naturallyvitamins.com
o vitanet.com
o ultravitamins.com
<PAGE>
(2) BioQuest Center for Integrative Medicine Limited
There are a number of "alternative" medical clinics and hospitals, located
principally within Mexico and a few in the Caribbean, where patients seeking
alternative therapies can travel and be treated. Nearly all of these
clinics/hospitals specialize in one, and in a few cases, several therapies, and
treat several diseases at maximum.
What BioQuest has done is to structure a center which will offer a full and
complete selection of alternatives and some traditional allopathic therapies for
the treatment of most diseases, having chosen and incorporated only those which
have been proven to be most effective.
Of perhaps utmost importance, and what we believe will set the BioQuest
Center For Integrated Medicine Limited apart from the rest of the world, is the
individuality with which we will diagnose, and prescribe an integrated course of
treatments to each patient we deal with. A panel of doctors and practitioners
with different disciplines and expertise on staff at the Center, will as a
group, evaluate each and every patient, and will then determine the component
treatment program deemed most effective for him/her. To the best of our
knowledge and understanding, there is no known facility employing this approach,
which currently exists.
Several of the clinics/hospitals which offer limited treatment modalities are:
>> BioPulse (Tijuana, Mexico): This clinic offers inpatient and outpatient
medical treatments. Specializing in cancer, it uses induced hypoglycemic
treatment (IHT) as its primary therapy.
>> Europa Institute of Integrated Medicine (Tijuana, Mexico): This clinic
offers only outpatient treatments. It offers hyperthermia, high pH cesium
therapy, sterile aloe vera therapy, U.B.I., ozone, cytokine, chelation and
orthomolecular therapies.
>> IB Hospital and Medical Center (Tijuana, Mexico): This clinic specializes
in cancer and chronic degenerative disease, utilizing hyperthermia, U.B.I.
and bioelectrical repolarization (BER) therapies.
>> Immuno-Augmentation Therapy (IAT) (Freeport, Bahamas): This clinic treats
cancer only, utilizing subcutaneous injections of human proteins found in
blood sera, to stimulate the immune system, rather than treating the cancer
itself.
(3) BioQuest Seminar Program:
While there are many seminars and lecture circuits on everything from
personal finance to investing in the stock market to learning the art of
negotiation, there are only a limited number of seminars available which
directly address the alternatives available for the treatment of disease
and the maximization of health and well-being
(4) BioQuest Media Resources Group:
The first two venues within the Media Resources Group are a monthly
newspaper and a weekly radio talk show. While there are a plethora of
newspapers, and many talk shows, there are very few which will feature the
style, format and content that ours will. Thereafter we feel it would be
difficult if at all possible, to include others as competition.
Industry Regulation
As an employer, we are subject to all federal, state and local statutes and
regulations governing its relationship with our employees and affecting
businesses generally.
Management
By way of summary, the following table reflects the name, age and position
of our Executive Officers and Directors. Please see the biographical
information, which follows:
Name Age Position
Peter J. Ewens 51 President, Chief Executive Officer
and Director
Roger Miller, C.P.A. 68 Chief Financial Officer, Secretary
and Director
James Chappell, D.C., N.D. 50 Vice President of Medical and
Ph.D., M.H. Scientific Technology
Nicole Shoong 47 President of BioQuest and Media
Resources Group
All directors hold office until the next annual meeting of our shareholders
and until their successors have been elected and qualify. Officers serve at the
pleasure of the Board of Directors. Mr. Peter Ewens, and Mr. Miller will devote
such time and effort to the business and affairs of the company as may be
necessary to perform their responsibilities as executive officers and/or
directors of BioQuest.
It is expected that additional personnel will be employed to assist in
operations and financial management. The Company has also identified several
people that are candidates for key positions within the organization. The
Company has discussed opportunities with some of these people and intends to
actively recruit them upon obtaining adequate funding. Management recognizes
that their expertise and experience is essential to success of our business
plan. We also intend to continue to expand our advisory group in the areas of
business and finance.
(4) Directors
(See "Executive Officers" above.)
Peter J. Ewens, Chief Executive Officer and President
-----------------------------------------------------
Mr. Ewens has been the driving force behind the creation, development and
growth of several successful companies over the past 25 years. Mr. Ewens possess
over 25 years of experience in executive corporate management in a variety of
fast-paced, time-critical environments.
Prior to BioQuest, Mr. Ewens founded and built a food manufacturing and
marketing company established to provide niche-oriented, products to the retail
and food service industries in the United States. This company grew from concept
to a multimillion-dollar company, and was named to the Inc. 500 in 1989 as one
of the fastest growing private companies in the United States. In addition, Mr.
Ewens was an owner and executive vice president of sales and marketing for a
chain of private business schools principally involved in computer training.
Prior to that, Mr. Ewens served as director of marketing and sales for a
$200 million division of a Fortune 500 company involved in vocational
post-secondary training, including business, computer, secretarial and welding.
In this capacity, Mr. Ewens was responsible for the production and management of
all media advertising for schools in over 20 major markets.
Roger Miller, C.P.A., Chief Financial Officer and Secretary
-----------------------------------------------------------
Mr. Miller is a practicing tax consultant and has been in this field for
the past 50 years. In addition to his involvement in the field of tax
consulting, Mr. Miller was a Presidential appointee during the Carter
Administration, responsible for the creation and implementation of the
allocation and price regulations for propane, butane and other fuels for the
entire United States.
Mr. Miller, a C.P.A., is currently the President of Miller and Associates,
Inc., newly located in Naples, Florida (formerly of Annandale, Virginia). The
firm represents a significant number of high net worth clients in the
Washington, D.C. area, clients in all fifty states and fifteen foreign
countries.
James Chappell, D.C., N.D., Ph.D., M.H.,
Vice President of Medial and Scientific Technology
--------------------------------------------------
Dr. Chappell has treated over 7,000 patients in a career that began in 1971
and included many Hollywood actors, producers and directors. Dr. Chappell
recently retired from active practice as a chiropractic and naturopathic
physician, clinical nutritionist and medical herbalist, and is now active
teaching people his respected technique for health and natural healing. This
technique specializes in chronic and terminal diseases through education in
immunologic rejuvenation(TM) and systemic detoxification (TM). Among the
conditions addressed are cancer, AIDS, heart disease, chronic fatigue syndrome,
arthritis, herpes, sexual dysfunction, Alzheimer's disease, Parkinson's disease
and diabetes.
Dr. Chappell, in his capacity as Vice President of Medical and Scientific
Technology will oversee all aspects of professional medical administration and
technology within each of BioQuest's operating subsidiaries.
Nicole Shoong, President of BioQuest Media Resources Group
----------------------------------------------------------
Nicole Shoong has been an active advocate behind critical health issues for
the past 20 years. In 1994, she created the California Sun newspaper, a monthly
publication devoted to issues of health, science, the environment, politics,
self-empowerment and personal discovery. As publisher and editor of the
Californian Sun, Ms. Shoong has built readership to over 400,000 worldwide.
In 1998, Ms. Shoong established The California Sun News Hour, an hour talk
radio program with an interview listener call-in format. The program aired on
KFNX in Phoenix, Arizona and WALE in providence, Rhode Island, a coverage area
population of approximately 10 million.
Ms. Shoong has joined us as our BioQuest Media Resources Group President
which has been established to support each of the operating subsidiaries through
its use of, and promotion through, traditional media resources.
Remuneration and Employment Contracts
BioQuest was formed on November 4, 1999, and therefore paid no compensation
prior to that time. At such time as we commence operations, it is expected that
the Board of Directors will approve the payment of salaries in a reasonable
amount to each of its officers for their services to BioQuest.
All key management personnel have executed Employment Agreements with us.
All agreements are for a term of five (5) years from October 15, 2000. All carry
standard terms that include compensation, benefits, disability, non-competition
and termination of employment provisions. In addition, incentives in the form of
options to be issued under a proposed stock option plan is contemplated but has
not yet been developed.
As BioQuest's operations develop, it is anticipated that additional
personnel may be hired. It is generally anticipated that any such future
individuals will devote full time to BioQuest. At such time, the Board of
Directors may, in its discretion, approve the payment of additional cash or
non-cash compensation to the foregoing for their services to BioQuest.
BioQuest does not provide officers with pension, stock appreciation rights,
long-term incentive or other plans but has the intention of implementing such
plans in the future.
<PAGE>
Since all directors are also officers, members of the Board of Directors
will not be paid separately for their services. Directors out-of-pocket expenses
will be reimbursed upon presentation of appropriate documents.
Employee Benefits
It is anticipated that we will implement, in the near future, a restricted
employee stock option plan under which our Board of Directors may grant
employees, directors and certain advisors of BioQuest options to purchase its
Shares at exercise prices of not less than 85% of the then current market price
on the date of their grant. Income from any such options is not expected to be
tax deferrable. As of the date of this Prospectus, the plan has not been defined
and no options have been granted but it is anticipated that Shares will be
reserved.
BioQuest anticipates that it will adopt, in the future, an employee bonus
program to provide incentive to our employees. It is anticipated that such a
plan would pay bonuses in cash or stock to employees based upon BioQuest's
pre-tax or after-tax profit for a particular period. It is anticipated that we
will adopt a retirement plan such as a 401(k) retirement plan and that we will
implement an employee health plan comparable to the industry standard.
Establishment of such plans and their implementation will be at the discretion
of the Board of Directors; any such bonus plan will be based on annual
objective, goal-based criteria developed by the Board of Directors for eligible
participants and will be exercisable only at prices greater than or equal to the
market value of the underlying Shares on the date of their grant.
Employee(s)
As of August 23, 2000, BioQuest has engaged Peter J. Ewens and his
part-time assistant as independent contractors. Such relationships are expected
to change to that of employee following the initial closing on this offering. It
is not expected that future employees will be represented by employee union(s).
BioQuest currently maintains its office rent-free at facilities provided by
Mr. Peter J. Ewens, the CEO and a director of BioQuest, at 11217 Silverleaf
Drive, Fairfax Station, Virginia 22039. Its telephone number is (703) 764-4464.
BioQuest anticipates that it will have continued use of this office on a
rent-free basis for the foreseeable future and that this arrangement will be
adequate for our needs while it is in the development stage. Assuming that
BioQuest obtains the necessary additional financing and is successful in
implementing its business plan, BioQuest will require its own commercial
facility to be located in northern Virginia. In such event, management believes
that BioQuest would be able to locate adequate facilities at reasonable rental
rates in Northern Virginia, suitable for its future needs.
Litigation
There has not been any material civil, administrative or criminal
proceedings concluded, pending or on appeal against BioQuest or its affiliates
and principals. (nor are any threatened or pending)
Securities Ownership Of Certain Beneficial Owners and the Principal Shareholder
The following table summarizes certain information with respect to the
beneficial ownership of BioQuest's Shares, immediately prior to and after this
offering. The following table sets forth information as of August 23, 2000,
regarding the ownership of BioQuest's common stock by each shareholder known by
BioQuest to be the beneficial owner of more than ten per cent (10%) of its
outstanding Shares, each director and all executive officers and directors as a
group. Except as otherwise indicated, each of the shareholders has sole voting
and investment power with respect to the shares of Common Stock beneficially
owned.
<PAGE>
<TABLE>
After the Offering(1)
---------------------
Prior to Offering(1) Minimum(2) Maximum(3)
-------------------- ---------- ----------
Name of Beneficial Owner: Number % Number % Number %
------------------------- ------ - ------ - ------ -
<S> <C> <C> <C> <C> <C> <C>
Peter J. Ewens 4,000,000 44.2% 4,000,000 43.9% 4,000,000 36.6%
Roger Miller 4,000,000 44.2% 4,000,000 43.9% 4,000,000 36.6%
Dr. James Chappell 250,000 2.8% 250,000 2.7% 250,000 2.3%
Nicole Shoong 250,000 2.8% 250,000 2.7% 250,000 2.3%
------- --- ------- --- ------- ---
All Directors, Officers and 10%
Shareholders as a Group: 8,500,000 94.0% 8,500,000 93.3% 8,500,000 77.8%
--------- ---- --------- ---- --------- ----
All Beneficial Owners as a Group 9,040,473 100.0% 9,102,973 00.0% 10,915,473 100.0%
========= ===== ========= ==== ========== =====
</TABLE>
(1) Reflects total outstanding shares of 9,040,473 as of August 23, 2000.
(2) Assumes issuance and sale of 62,500 shares of BioQuest during this offering
(the "inimum" offering) in addition to the 9,040,473 shares outstanding as
of August 23, 2000, an aggregate 9,102,973 shares.
(3) Assumes issuance and sale of 1,875,000 shares during this offering (the
"maximum" offering) in addition to the 9,040,473 shares outstanding as of
August 23, 2000, an aggregate 10,915,473 shares.
Family Relationships
There are no family relationships between BioQuest and any director or
executive officer.
SELECTED FINANCIAL DATA
The following table sets forth certain financial data for BioQuest. The
selected financial data should be read in conjunction with BioQuest's
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" and the Financial Statements of BioQuest and Notes thereto. The
selected financial data as of and for the period from inception to August 23,
2000 have been derived from BioQuest's financial statements and are included as
Appendix I to this Prospectus.
Current assets................. $401,150
Non-current assets............. $25,567
Current liabilities............ $1,547
Revenue........................ $0
Operating Expenses............. $152,067
Net loss....................... $(152,067)
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
1. Liquidity and Capital Resources. BioQuest was incorporated on November 4,
1999 in Virginia as a privately held corporation for the purpose of
establishing a business or businesses all allied with the field of
alternative medicine. Our goals are to brand BioQuest as the premiere
provider of information, products and services within the field of
alternative medicine. BioQuest has not yet commenced generating revenue.
BioQuest has raised $800,210 through a private placement to fund 8-12
months of operations. BioQuest intends to raise up to $15,000 ,000 in the
initial public offering ("IPO") and utilize these funds to finance
operations and execute its business plan.
BioQuest has not yet commenced generating any revenue. BioQuest expects to
fund development expenditures and incur losses until it is able to generate
sufficient income and cash flows to meet such expenditures and other
requirements. BioQuest does not currently have adequate cash reserved to
continue to cover such anticipated expenditures and cash requirements. These
factors, among others, raise substantial doubt about BioQuest's ability to
continue as a going concern. In this regard, see the Independent Certified
Public Accountant's Report appearing elsewhere herein which cites substantial
doubt about BioQuest's ability to continue as a going concern.
2. Plan of Operation. Through August 2000, BioQuest's activities have been
organizational and devoted to developing a business plan, raising capital,
creating its web site, as well as beginning to develop its other subsidiary
operations. Where such costs are indirect and administrative in nature,
they have been expensed in the accompanying statement of operations. Where
such costs relate to capital raising and are both direct and incremental,
such costs have been treated as deferred offering costs in the accompanying
balance sheet.
BioQuest can be classified as an "early stage" start-up company with
essentially no operating history and no revenues. Our web site is expected to be
launched in October 2000.
No assurance can be given that our products and services will be accepted
in the marketplace or that there will be sufficient revenues generated for us to
be profitable. Besides the risk factors (see Risk Factors"), businesses are
often subject to risks not foreseen by management. In reviewing this Prospectus,
potential investors should keep in mind other potential risks that could be
important.
BioQuest has developed an action plan geared to varying amounts of capital
being raised. We will structure our operations based on both the amount of
capital raised in the IPO and the timing of the receipt of the proceeds. Hence,
during our initial 12 months of operation, we will devote a significant portion
of our day-to-day operations on marketing, recruiting and retaining key
personnel, planning, well establishing, branding and marketing a variety of
unique products and services.
Specifically, assuming that only $500,000 of capital is raised, BioQuest's
goals will be to further develop its website and hospital. Additionally, at the
$7,500,000 level, BioQuest would increase its investment in Batoutofhealth.com,
BioQuest Center for Integrative Medicine Limited, BioQuest Media Resources Group
and BioQuest Seminar Program. If a total of $15,000,000 is raised, BioQuest
would devote substantially more capital to all of its developing subsidiaries
and acquisitions.
If the minimum proceeds are achieved, BioQuest expects to retain 5
full-time employees and to continue to outsource the majority of the web
development. If the maximum proceeds are achieved, we expect to retain up to 25
full-time employees while continuing, because of the associated efficiency and
cost-effectiveness, to outsource a significant portion of the Website
development to outside firms.
Because BioQuest has no history of operations, there is no assurance that
our business plan can be developed and implemented. As a result, there is no
assurance that revenues will ever be generated sufficient to recover the capital
raised in the IPO, let alone provide a return to shareholders on invested
capital.
3. Safe Harbor. "SAFE HARBOR" STATEMENT UNDER THE PRIVATE SECURITIES
LITIGATION REFORM ACT OF 1995: Statements contained in this document which
are not historical fact are forward-looking statements based upon
management's current expectations that are subject to risks and
uncertainties that could cause actual results to differ materially from
those set forth in or implied by forward-looking statements.
4. Recent Accounting Pronouncements. There are no recently issued accounting
standards for which the impact on our financial statements at August 23,
2000 is not known.
ABSENCE OF CURRENT PUBLIC MARKET
There is no current public trading market for the Shares. While BioQuest
intends to qualify its Shares for quotation on the NASDAQ Bulletin Board under
the symbol "BIOQ", that is not expected to occur, if at all, for at least 6-18
months from the date of this Prospectus. There is no assurance that BioQuest can
satisfy then-current pertinent listing standards or, if successful in getting
listed, avoid later delisting. (See "Risk Factors.")
DESCRIPTION OF CAPITAL STOCK
BioQuest is authorized to issue 25,000,000 shares of common stock, no par
value. The issued and outstanding shares of common stock (the "Shares") being
registered hereby are validly issued, fully paid and non-assessable. The holders
of outstanding Shares are entitled to receive dividends out of assets legally
available therefore at such times and in such amounts as the Board of Directors
may from time to time determine.
All Shares have equal voting rights and, when validly issued and
outstanding, have one vote per share in all matters to be voted upon by the
stockholders. A majority vote is required on all corporate action. Cumulative
voting in the election of directors is not allowed, which means that the holders
of more than 50% of the outstanding shares can elect all the directors as they
choose to do so and, in such event, the holders of the remaining shares will not
be able to elect any directors. (See "Risk Factors - Control by Principal
Shareholders; No Cumulative Voting; and Possible Anti-Takeover Effects.") The
Shares have no preemptive, subscription, conversion or redemption rights and can
only be issued as fully paid and non-assessable shares. Upon liquidation,
dissolution or winding-up of BioQuest, the holders of Shares are entitled to
receive a pro rata of the assets of BioQuest, which are legally available for
distribution to stockholders.
Preferred Stock
The Company is authorized to issue 5,000,000 shares of preferred stock, no
par value. Currently there are no issued and outstanding preferred shares of
BioQuest and we do not anticipate any to be issued.
Certain Provisions of Virginia Law.
The only classes of stock outstanding at this time are the common shares
(the "Shares"). Shareholders are entitled to one vote per Share on all matters
to be voted upon by Shareholders and, upon issuance in consideration of full
payment, are non-assessable. In the event of liquidation, dissolution or winding
up of BioQuest, the Shareholders are entitled to share ratably in all assets
remaining after payment of liabilities. Shares do not have cumulative voting
rights with respect to the election of directors and, accordingly, the holders
of more than 50% of the Shares could elect all the directors of BioQuest. (See
"Risk Factors - Control by Principal Shareholders; No Cumulative Voting; and
Possible Anti-Takeover Effects.") There are no redemption or sinking fund
provisions or preemptive rights with respect to the Shares, and Shareholders
have no right to require BioQuest to redeem or purchase Shares.
Dividend Rights
Each Share is entitled to dividends if, as and when BioQuest's Board of
Directors declares dividends. We intend to retain future earnings for use in its
business and do not anticipate paying any dividends on Shares in the foreseeable
future. While not currently so restricted, we may be prohibited from paying
dividends on the Shares in the future under credit or other financing
agreement(s) unless certain amounts are available and certain other conditions
are satisfied.
<PAGE>
PLAN OF DISTRIBUTION
We propose to offer directly to the public, at $8.00 per share, a minimum
of 62,500 shares up to a maximum of 1,875,000 shares of our common stock.
Investors should be advised we believe that the final offering price could be
higher than $8.00 per share based on competitive bids received under the Dutch
Auction process ("Bids"). While the minimum acceptable bid is $8.00, it is
possible that the Bids could equal to or exceed $25.00 per share. Of course, the
actual price will be determined in accordance with the Dutch Auction process
described below. We will offer and sell the shares on a best-efforts,
self-underwritten basis through several of our officers and employees who will
not be compensated for these services. There are no underwriters involved in
this offering and we do not intend to retain brokers to offer our common shares.
Accordingly, we will receive the gross proceeds of this offering, a portion of
which will be applied to the costs associated with this offering.
The Dutch Auction process which will be used in connection with this
offering operates as follows:
1. Prior to the effectiveness of the registration statement relating to this
offering, we will post the preliminary prospectus on our www.
bioquestipo.com web site (the "Website"). A copy of our preliminary
prospectus for this offering in electronic format (the "electronic
prospectus") is available on our separate and special offering Website. The
electronic prospectus has the same content as the paper copy of the
preliminary prospectus prepared for the offering. We may also solicit
prospective investors by publicizing the offering through tombstone
advertisements and as otherwise permitted by SEC Rule 134. Any such
publications will invite persons interested in the offering to view a copy
of the preliminary electronic prospectus on the Website or to obtain a
paper copy of our preliminary prospectus by contacting us. We may reach
additional potential investors by direct mail (including email)
solicitation. All potential investors will be invited to register on our
Website. Registration will require prospective investors to provide us with
their name, address and social security number as well as certain other
basic information. After the final prospectus is posted on the Website (see
2 below), registered investors will be able to submit a Bid at any price
the investor chooses, at or above the minimum $8.00 per share price. All
Bids and other information disclosed by potential investors are maintained
as confidential.
2. The auction is open for purposes of receiving Bids to purchase following
the posting of the final prospectus on the Website. The Bids will specify
the number of shares the potential investor proposes to purchase and the
price the investor is willing to pay for the shares. All Bids must be
accompanied by "good funds" made payable to American Stock Transfer and
Trust Company ("AST") which acts as our escrow agent and will also act as
our transfer agent. If a Bid is submitted and subsequently confirmed, it
may be withdrawn at any time until the auction is closed. As inidicated the
Bid can be at the $8.00 minimum price or at any price above. Similarly, new
or substituted Bids may be placed at any time prior to the close of the
auction. The principal factor in establishing the price the public pays us
for the shares will be the "clearing price" resulting from the Bid that
equals the lowest price set forth in valid firm Bids which "clears" all of
the shares in the amount we elect to sell between the 62,500 share minimum
up to the 1,875,000 share maximum. The clearing price may be equal to or
greater than the public offering price set by us, but it will not be lower.
The "clearing price" will also determine the allocation of shares to
successful bidders. All Bids which are below the "clearing price" will be
rejected even if they are higher than the public offering price. If
sufficient Bids are not received or the clearing price is not equal to or
greater than the public offering price of $8.00 per share, we will either
cancel the offering or file a post-effective amendment and conduct a new
auction.
Set forth below is a simplified example of the auction process: Company X
offers to sell 1,000,000 shares in its public offering through the Dutch Auction
process and sets the minimum public offering price at $20. Company X receives
bids, all of which are kept confidential until the auction process ends, as set
forth in the following table.
<PAGE>
Number of Shares Clearing
Requested by Bidders Bid Price($) Price Success
-------------------- ------------ ----- -------
200,000 $36 $24 100%
150,000 30 24 100
350,000 28 24 100
400,000 24 24 75
700,000 20 - 0
The bids in the above table include offers to purchase 700,000 shares at
$28 to $36, leaving 300,000 of the 1,000,000 shares offered still available.
(These 300,000 shares are deemed the "clearing shares.") Since the 400,000
shares are bid in at $24, the 300,000 available shares will be allocated among
the 400,000 shares bid for at $24. Thus, $24 is the "clearing" price and, since
300,000 shares is three quarters of the 400,000 shares, everyone who bids $24
will be able to purchase 75% of the number of shares for which they bid. All of
the 1,000,000 shares sold to the public in the offering will be sold at $24 per
share. All bids at $20, which was the stated minimum public offering price,
would be rejected.
We are offering a minimum of 62,500 shares and a maximum of 1,875,000
shares pursuant to our Dutch Auction. Throughout the bidding process, we intend
to examine the number of Bids to purchase and the amounts per share of the Bids.
We will then select the number of shares between the minimum offering of 62,500
shares and our maximum offering of 1,875,000 shares to be included in this
offering (since we reserve the right to fix the number of shares between such
minimum and maximum offerings). The following table illustrates a hypothetical
bid process for our offering.
<TABLE>
Number of Shares Aggregate Number of Success % If 1,875,000
Requested By Bidders Bid Price($) Shares at Bid Price and Greater Maximum Accepted
-------------------- ------------ ------------------------------- ----------------
<S> <C> <C> <C> <C>
100,000 24 100,000 100%
100,000 22 200,000 100
150,000 20 350,000 100
400,000 18 750,000 100
750,000 17 1,500,000 100
1,000,000 16 2,500,000 37.5
2,000,000 14 4,500,000 0
2,500,000 12 6,000,000 0
3,000,000 10 9,000,000 0
3,500,000 8 12,500,000 0
</TABLE>
In the above example, if we accepted only the 62,500 share minimum, the
resulting clearing price would be $24 per share. (Note the clearing price for
all the 1,875,000 shares would be $16 per share -- in which case the gross
proceeds would be $30,000,000.) However, we have reserved the right to select
any number of shares between the 62,500 share minimum and the 1,875,000 share
maximum, and thus the resulting clearing price for all the shares in this
offering, based on our desire to raise adequate funds to support our maximum
shareholder value, would occur between $16-$24. BioQuest specifically reserves
the right to choose any combination of shares and prices which will maximize the
proceeds to the company with the lowest number of shares to be issued. We do not
know how many offers to purchase will be submitted or what the prices will be
for any offers to purchase. The above hypothetical table is included merely to
explain our auction process.
The auction may remain open for up to 90 days after the effective date of
this prospectus, or we may elect to close the auction at any time prior to the
90-day maximum period based on the rate at which we receive Bids and the price
of the Bids. The actual time at which the Dutch Auction closes will be
determined by us based on general market conditions during the period
immediately following effectiveness of the registration statement. We will
notify these investors by email (or by other means) as soon as practicable
following its close that the auction has been closed and that their Bids have
either been accepted or rejected and the allocation amounts for accepted Bids.
Our software will automatically determine what is the clearing price as
well as the allocation. The Bids and documents evidencing the Bids to purchase
will be maintained by BioQuest through the Website's licensed technology. AST
will hold all funds in escrow until the closing of the offering, at which time
it will close the escrow and distribute the appropriate number of common shares
to successful bidders and distribute to us the offering proceeds. Any excess
funds sent with successful Bids to purchase, and all funds sent with
unsuccessful Bids to purchase, will be returned to those persons or entities
that had excess or unsuccessful bids.
Once the auction is closed, as stated previously, we will determine the
highest price at which valid Bids for at least 62,500 shares have been received.
We will also employ an independent auditor to verify and certify that the
auction results are accurate and comply with the rules of the Dutch Auction
process. Bids for fewer than one (1) share will not be accepted and no one
bidder may purchase more than 10% of the number of shares accepted. In order to
facilitate the orderly completion of this offering, we reserve the right to
reject Bids that we deem to be manipulative or disruptive and, in exceptional
circumstances, to alter our method of allocation as we deem necessary to ensure
an orderly distribution of shares. For example, large orders may be reduced to
ensure a broader public distribution.
Price and volume volatility in the market for our common shares may result
from the somewhat unique nature of the proposed plan of distribution. Price and
volume volatility in the market for our common shares after the completion of
this offering may adversely affect the market price of our common shares,
assuming a market does in fact develop.
Prior to the offering, there has been no public market for our common
shares. The initial public offering price for the common shares will be
determined by the process described above and does not necessarily bear any
direct relationship to our assets, current earnings or book value or to any
other established criteria of value, although these factors were considered in
establishing the initial public offering price range. Other factors considered
in determining the initial public offering price range include:
o market conditions;
o the industry in which we operate;
o an assessment of our management;
o our initial operating results;
o our business potential; and
o other factors deemed relevant.
ERISA CONSIDERATIONS
Persons who contemplate purchasing Shares on behalf of Qualified Plans are
urged to consult with tax and ERISA counsel regarding the effect of such
purchase and, further, to determine that such a purchase will not result in a
prohibited transaction under ERISA, the Code or a violation of some other
provision of ERISA, the Code or other applicable law. The management and
BioQuest necessarily will rely on such determination made by such persons,
although no Shares will be sold to any Qualified Plans if management believes
that such sale will result in a prohibited transaction under ERISA or the Code.
LEGAL MATTERS
The validity of Shares being offered by this Prospectus will be passed upon
for BioQuest International, Inc. by Duncan, Blum & Associates, Bethesda,
Maryland and Washington, D.C.
EXPERTS
The financial statements included in this Prospectus and in the
Registration Statement have been audited by Hill, Barth and King LLC,
independent certified public accountants, to the extent and for the period set
forth in their report, which contains an emphasis paragraph regarding BioQuest's
ability to continue as a going concern, appearing elsewhere herein and in the
Registration Statement, and are included in reliance upon such report given upon
the authority of said firm as experts in auditing and accounting.
AVAILABLE INFORMATION
BioQuest International, Inc. has filed with the Securities and Exchange
Commission (the "SEC") a Registration Statement on Form SB-2 with respect to the
securities offered hereby. This Prospectus does not contain all the information
set forth in such Registration Statement, certain portions of which have been
omitted pursuant to the rules and regulations of the SEC. Reference is made to
such Registration Statement, including the amendment(s) and exhibits thereto,
for further information with respect to BioQuest and such securities. The
Registration Statement can be inspected and copied at the public reference
facilities of the SEC at 450 Fifth Street, N.W., Washington, D.C. 20549, as well
as at the SEC's following regional offices: at Seven World Trade Center, 13th
Floor, New York, New York 10048; and 500 West Madison, Suite 1400, Chicago,
Illinois 60601. Copies of the Registration Statement can be obtained from the
Public Reference Section of the SEC at Room 1024, 450 Fifth Street, N.W.,
Washington, D.C. 20549, at prescribed rates. Statements made in this Prospectus
concerning the contents of any documents referred to herein are not necessarily
complete, and in each instance are qualified in all respects by reference to the
copy of such document filed as an exhibit to the Registration Statement.
For further information with respect to BioQuest and the shares of common
stock offered hereby, reference is made to the Registration Statement and the
exhibits and the financial statements, notes and schedules filed as a part
thereof or incorporated by reference therein, which may be inspected at the
public reference facilities of the SEC, at the addresses set forth above.
Moreover, BioQuest has filed such materials electronically with the SEC;
accordingly, such materials can be accessed through the SEC's Website that
contains reports, proxy and information statements and other information
regarding registrants (http// www.sec.gov).
While BioQuest has not previously been subject to the informational and
periodic reporting requirements of the Securities and Exchange Act of 1934, as
amended (the "Exchange Act"), by filing this registration statement, it
immediately becomes subject to Exchange Act requirements to file annual (Form
10-KSB), quarterly (Form 10-QSB) and periodic material reports (Form 8-KSB).
<PAGE>
APPENDIX I
FINANCIAL STATEMENTS
<PAGE>
CONSOLIDATED FINANCIAL STATEMENTS
BIOQUEST INTERNATIONAL, INC. AND SUBSIDIARIES
(A Development Stage Company)
August 23, 2000
- - - o o O o o - - -
C O N T E N T S
P A G E
Independent Auditors' Report - - - - - - - - - - - - - - - - - - - -I-1
Consolidated Balance Sheet - - - - - - - - - - - - - - - - - - - -I-2
Consolidated Statement of Operations - - - - - - - - - - - - - - - -I-3
Consolidated Statement of Stockholders' Equity - - - - - - - - - - -I-4
Consolidated Statement of Cash Flows - - - - - - - - - - - - - - - I-5
Notes to Consolidated Financial Statements - - - - - - - - - -I-6 - I-8
- - - o o O o o - - -
<PAGE>
Board of Directors
BioQuest International, Inc.
Naples, Florida
Independent Auditors' Report
We have audited the accompanying consolidated balance sheet of BioQuest
International, Inc. and its subsidiaries BioQuest International Company Limited
and BioQuest Center for Integrative Medicine Limited (collectively, the Company)
as of August 23, 2000 and the related consolidated statements of operations,
stockholders' equity and cash flows for the period from November 4, 1999 (date
of inception) to August 23, 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 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 consolidated financial statements referred to above present
fairly, in all material respects, the consolidated financial position of
BioQuest International, Inc. and its subsidiaries as of August 23, 2000 and the
consolidated results of their operations and their consolidated cash flows for
the period from November 4, 1999 (date of inception) to August 23, 2000 in
conformity with generally accepted accounting principles.
The accompanying consolidated financial statements have been prepared assuming
the Company will continue as a going concern. As discussed in Note F to the
consolidated financial statements, the Company's ability to continue as a going
concern is dependent on a successful public offering of the Company's common
stock. The consolidated financial statements do not include any adjustments that
might result from the outcome of this uncertainty.
/s/ HILL, BARTH & KING LLC
Certified Public Accountants
Naples, Florida
August 29, 2000
I-1
<PAGE>
<TABLE>
CONSOLIDATED BALANCE SHEET
BIOQUEST INTERNATIONAL, INC. AND SUBSIDIARIES
(A Development Stage Company)
August 23, 2000
A S S E T S
<S> <C>
Cash - NOTE C $ 348,470
Prepaid expenses 3,438
Deferred offering costs 49,242
Premise and equipment - NOTE B 25,567
-----------------
$ 426,717
=================
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Accounts payable $ 1,574
Stockholders' Equity:
Preferred stock, no par value, 5,000,000 shares
authorized, no shares issued and outstandi 0
Common stock, no par value, 25,000,000
shares authorized, 9,040,473 shares issued and o 0
Additional paid-in capital 842,210
Stock subscription receivable (265,000)
Deficit accumulated during the development stage (152,067)
-----------------
TOTAL STOCKHOLDERS' EQUITY 425,143
-----------------
$ 426,717
=================
See accompanying notes to consolidated financial statements
I-2
</TABLE>
<PAGE>
CONSOLIDATED STATEMENT OF OPERATIONS
BIOQUEST INTERNATIONAL, INC. AND SUBSIDIARIES
(A Development Stage Company)
For the period from November 4, 1999 (date of inception) to August 23, 2000
<TABLE>
<S> <C>
REVENUE $ 0
EXPENSES
Bank charges 371
Outside services 5,398
Consulting fees 97,065
Conventions 2,562
Interest expense 233
Legal fees 14,640
License and permits 435
Meals 5,427
Office expense 8,437
Telephone 2,829
Travel 14,229
Miscellaneous 441
------------------
TOTAL EXPENSES 152,067
------------------
NET LOSS $ (152,067)
==================
</TABLE>
See accompanying notes to consolidated financial statements
I-3
<PAGE>
<TABLE>
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
BIOQUEST INTERNATIONAL, INC. AND SUBSIDIARIES
(A Development Stage Company)
For the period from November 4, 1999 (date of inception) to August 23, 2000
DEFICIT
ACCUMULATED
ADDITIONAL DURING STOCK
COMMON PAID-IN DEVELOPMENT SUBSCRIPTION
STOCK CAPITAL STAGE RECEIVABLE TOTAL
--------------- ------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C> <C> <C>
November 4, 1999 $ 0 $ 0 $ 0 $ 0 $ 0
Proceeds from issuance
of common stock 0 842,210 0 (265,000) 577,210
Net loss from inception to
August 23, 2000 0 0 (152,067) 0 (152,067)
--------------- ------------ --------------- -------------- ---------------
Balance (deficit)
August 23, 2000 $ 0 $ 842,210 $ (152,067) $ (265,000) $ 425,143
=============== ============= =============== ============== ================
See accompanying notes to consolidated financial statements
I-4
</TABLE>
<PAGE>
<TABLE>
CONSOLIDATED STATEMENT OF CASH FLOWS
BIOQUEST INTERNATIONAL, INC. AND SUBSIDIARIES
(A Development Stage Company)
For the period from November 4, 1999 (date of inception) to August 23, 2000
CASH FLOWS FROM OPERATING ACTIVITIES
------------------------------------
<S> <C>
Net loss $ (152,067)
Adjustments to reconcile net loss to net
cash used in operating activities:
Increase in prepaid expenses (3,438)
Increase in other assets (49,242)
Increase in accounts payable 1,574
-----------------
NET CASH USED IN OPERATING ACTIVITIES (203,173)
-----------------
CASH FLOWS FROM INVESTING ACTIVITIES
------------------------------------
Investment in website development (25,567)
----------------
NET CASH USED IN INVESTING ACTIVITIES (25,567)
----------------
CASH FLOWS FROM FINANCING ACTIVITIES
------------------------------------
Proceeds from issuance of common stock 577,210
---------------
NET CASH PROVIDED BY FINANCING ACTIVITIES 577,210
---------------
NET INCREASE IN CASH 348,470
CASH
----
Beginning of period 0
--------------
End of period $ 348,470
==============
See accompanying notes to consolidated financial statements
I-5
</TABLE>
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
BIOQUEST INTERNATIONAL, INC. AND SUBSIDIARIES
(A Development Stage Company)
August 23, 2000
NOTE A - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
--------------------------------------------------------------------
Organization:
BioQuest International, Inc. (the Company) was incorporated under the laws of
the State of Virginia on November 4, 1999. The Company's activities to date have
been limited to the organization of the Company and its subsidiaries, as well as
preparation for a maximum $15,000,000 common stock offering (the offering). A
substantial portion of the offering will be used by the Company to provide the
initial capitalization of the subsidiaries and for future acquisitions.
The consolidated financial statements of the Company include the accounts of the
Company and its wholly-owned subsidiaries, BioQuest International Company
Limited and BioQuest Center for Integrative Medicine Limited. The wholly-owned
subsidiaries are Bahamian Corporations. There has been no activity or assets
purchased by these companies.
Nature of Business:
The Company was formed to create, design, establish, build and operate
wholly-owned subsidiaries allied with and providing alternative, complementary
and integrative medical services as well as a comprehensive internet portal
focused on medicine in the world.
Use of Estimates:
The preparation of financial statements, in conformity with generally accepted
accounting principles, requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
Deferred offering Costs:
Deferred offering costs consist primarily of legal and accounting fees related
to the initial public stock offering and will be offset against the offering
proceeds when received.
Income Taxes:
Provisions for income taxes are based on taxes payable or refundable for the
current year and deferred taxes on temporary differences between the amount of
taxable income and pretax financial income and between the tax basis of assets
and liabilities and their reported amounts in the financial statements. Deferred
tax assets and liabilities are included in the financial statements at currently
enacted income tax rates applicable to the period in which the deferred tax
assets and liabilities are expected to be realized or settled.
I-6
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
BIOQUEST INTERNATIONAL, INC. AND SUBSIDIARIES
(A Development Stage Company)
August 23, 2000
NOTE B - PREMISE AND EQUIPMENT
------------------------------
Capitalized assets at August 23, 2000 consists of the following:
Website development costs $25,567
=======
Depreciation has not been computed on this asset since it has not been placed
into operation. Depreciation will be computed using the straight-line method
over the estimated useful life of the asset.
NOTE C - CONCENTRATIONS OF CREDIT RISK
--------------------------------------
The Company maintains its cash balances at various financial institutions
located in Naples, Florida and Fairfax, Virginia. These balances are insured by
the Federal Deposit Insurance Corporation up to $100,000. At August 23, 2000,
uninsured amounts held at these financial institutions total $225,783.
NOTE D - INCOME TAXES
---------------------
Deferred taxes are recognized for temporary differences between the basis of
assets and liabilities for financial statement and income tax purposes. The tax
effect of the differences that gave rise to a deferred tax asset of $53,223 and
corresponding valuation allowance of ($53,223) at August 23, 2000 relate
primarily to the capitalization of preoperating start-up costs which are
amortized over a five year term from the date operations commence for tax
purposes.
NOTE E - RELATED PARTY TRANSACTIONS
-----------------------------------
Under an oral agreement, the Company paid consulting fees to Peter Ewens, the
Chief Executive Officer, totaling $90,780. These payments are anticipated to
continue until the commencement of the employment agreement detailed in Note G.
Roger Miller, the Chief Financial Officer, is also a partner in the consulting
firm of Miller & Associates, Inc. During the period, Miller & Associates, Inc.
incurred expenses for supplies and other office related functions for the
Company. Miller & Associates, Inc. was reimbursed by the Company for all
expenses incurred on the Company's behalf, totaling $5,793.
I-7
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
BIOQUEST INTERNATIONAL, INC. AND SUBSIDIARIES
(A Development Stage Company)
August 23, 2000
NOTE F - GOING CONCERN
----------------------
As shown in the accompanying financial statements, the Company incurred a net
loss of $152,067 during the development stage, November 4, 1999 (date of
inception) to August 23, 2000. The ability of the Company to continue as a going
concern is dependent on a successful public offering of the Company's common
stock and the Company's ability to generate sufficient revenue from future
operations. The consolidated financial statements do not include any adjustments
that might be necessary if the Company is unable to continue as a going concern.
NOTE G - COMMITMENTS
--------------------
The Company has entered into two separate contracts to develop an internet
website. Under the contracts, the Company has agreed to make future payments
totaling $41,133 in cash and $16,000 payable in stock. These amounts are not due
until services are provided in future months and, therefore, are not included in
accounts payable as of August 23, 2000.
The Company has entered into an agreement with an individual to provide public
relations services to the Company. Under the agreement, the Company has agreed
to compensate the individual with 5,000 shares of the Company's common stock.
The shares will be issued upon the registration of the Company's common stock
with the Securities and Exchange Commission (SEC).
The Company has entered into employment agreements commencing on October 15,
2000 and expiring on October 14, 2005 with four executive officers providing for
annual compensation aggregating $640,000.
NOTE H - STOCK PURCHASE WARRANTS
--------------------------------
The Company has agreed to grant Stock Purchase Warrants in consideration for
certain legal services provided to the Company. The Company intends to issue
warrants, which will entitle the holder to purchase 15,000 shares of common
stock. The Warrants will vest immediately commencing on the date of grant. The
warrants may be exercised in whole or in part for $0.01 per share beginning on
the date of initial registration of the Company's common stock with the SEC and
expiring three (3) years after that date.
I-8
<PAGE>
<TABLE>
No dealer, salesperson or other individual has been authorized to
give any information or to make any representations not contained
in this Prospectus in connection with the offering covered by this
Prospectus. If given or made, such information or representation
must not be relied upon as having been authorized by BioQuest.
This Prospectus does not constitute as an offer to sell, or a
solicitation of an offer to buy, the common stock in any BIOQUEST INTERNATIONAL, INC.
jurisdiction where, or to any person to whom, it is unlawful to
make such offer or solicitation. Neither the delivery of this
Prospectus nor any sale made hereunder shall, under any A Minimum of 62,500 Shares of Common Stock
circumstances, create an implication that there has not been any Up to a Maximum 1,875,000 Shares at $8.00
change in the facts set forth in this Prospectus or in the affairs
of BioQuest since the date hereof.
TABLE OF CONTENTS
Descriptive Title Page
PROSPECTUS
<S> <C>
INTRODUCTORY STATEMENT: WHO SHOULD INVEST.......................3
PROSPECTUS SUMMARY..............................................3
SUMMARY FINANCIAL DATA......................................... 4
PRO FORMA FINANCIAL INFORMATION.................................4
RISK FACTORS....................................................4
CERTAIN PARTIES AND RELATED TRANSACTIONS........................9
FIDUCIARY RESPONSIBILITY OF
THE COMPANY'S MANAGEMENT........................................9
APPLICATION OF PROCEEDS........................................10
CAPITALIZATION.................................................12
DILUTION.......................................................12 October _____, 2000
THE COMPANY....................................................13
SELECTED FINANCIAL DATA........................................26
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS..............26
ABSENCE OF PUBLIC MARKET.......................................28
DESCRIPTION OF CAPITAL STOCK...................................28
PLAN OF DISTRIBUTION...........................................29
ERISA CONSIDERATIONS...........................................31
LEGAL MATTERS..................................................31
EXPERTS........................................................32
AVAILABLE INFORMATION..........................................32
APPENDIX I -- FINANCIAL STATEMENTS............................I-1
</TABLE>
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 24. Indemnification of Directors and Officers
Reference is made to "Fiduciary Responsibility of Registrant's
Management" and "Description of Capital Stock" contained in the Prospectus
relating to the indemnification of Registrant's officers, directors,
stockholders, employees and affiliates. The Registrant is prohibited from
indemnifying its affiliates for liabilities resulting from violations or alleged
violations of the Securities Act of 1933 or any state securities laws in
connection with the issuance or sale of the Shares of common stock, except in
the case of successful defense of an action in which such violations are
alleged, and then only if a court approves such indemnification after being
appraised of relevant regulatory positions on indemnification.
Specifically, each director or officer of Registrant will be
indemnified against expenses (including attorneys' fees), judgments, fines and
amounts paid in settlement actually and reasonably incurred by the director or
officer in connection with the defense or settlement of any threatened, pending
or completed action, suit or proceeding, whether civil, criminal, administrative
or investigative, in which he is involved by reason of the fact that he is or
was a director or officer of Registrant; such indemnification, of course, is
conditioned upon such officer or director having acted in good faith and in a
manner that he reasonably believed to be in or not opposed to the best interests
of Registrant and, with respect to any criminal action or proceeding, if he had
no reasonable cause to believe that his conduct was unlawful. If, however, any
threatened, pending or completed action, suit or proceeding is by or in the
right of Registrant, the director or officer shall not be indemnified in respect
to any claim, issue or matter as to which he is adjudged to be liable to us
unless a court determines otherwise.
Moreover, the Certificate of Incorporation of Registrant provides that
no director of Registrant shall be personally liable to us or any of our
shareholders for monetary damages for any breach of fiduciary duty as a
director, except with respect to: (i) any breach of the director's duty of
loyalty to us or its shareholders; (ii) for acts or omissions that are not in
good faith or involve intentional misconduct or a knowing violation of the law;
(iii) violation of the Virginia Uniform Securities Act; or (iv) for any
transaction from which the director derived an improper personal benefit. In
addition, such Certificate of Incorporation authorizes us to indemnify any
person to the fullest extent permitted by The Virginia Code.
Item 25. Other Expenses of Issuance and Distribution. *
The following table sets forth an itemized statement of all cash
expenses in connection with the issuance and distribution of the securities
being registered:
<TABLE>
Minimum Maximum
------- -------
<S> <C> <C>
Securities and Exchange Commission filing $3,960 $3,960
Blue sky fees and expenses** 30,040 30,040
Printing and related costs 25,000 25,000
Legal fees and expenses 35,000 35,000
Accounting fees and expenses** 30,000 30,000
Software license fee for Internet-Based Direct Public Offering 25,000 25,000
Marketing-- Internet and Non-Internet 60,000 460,000
Complete web site for Stage I 45,000 45,000
Miscellaneous 4,000 4,000
Total
* There are no selling commissions paid by Registrant.
* * Estimated.
</TABLE>
Item 26. Recent Sales of Unregistered Securities
The Company received gross proceeds in the amount of $800,210 from the
sale of a total of 530,140 shares of common stock at $1.50 per value per share
(the "Shares"). In an offering conducted pursuant to Section 4(2) of the
Securities Act of 1993 and Rule 506 of Regulation D promulgated there under. The
proceeds from such private placement are being used to fund a portion of the
Stage I development of the Company's web-site and as a down payment on the
property in Freeport, Grand Bahamas (which will be used to house the BioQuest
Center for Integrative Medicine Limited).
There has been no established public trading market for the
Registrant's common stock since its inception on November 4, 1999. As of August
23, 2000, Registrant had 79 shareholders of record owning 9,040,473 outstanding
shares of common stock.
On January 1, 2000, Registrant issued 4,000,000 shares of restricted
common stock to Mr. Peter J. Ewens, the President and Treasurer of Registrant
and record and beneficial owner of approximately 44.2% of Registrant's
outstanding Shares, in consideration and exchange for his services in connection
with the organization of Registrant.
On January 1, 2000, Registrant issued 4,000,000 shares of unrestricted
common stock to Mr. Roger Miller, Registrant's Chief Financial Officer and
Secretary and record and beneficial owner of approximately 44.2% of Registrant's
outstanding common stock, in consideration and exchange for his services in
connection with the organization of Registrant.
No underwriter was employed in connection with the offering and sale
of the shares. The Company claimed the exemption from registration in connection
with each of the offerings provided under Section 3 (b) of the Act and Rule 504
of Regulation D promulgated thereunder as well as similar provisions under state
law.
The facts relied upon the by Registrant to make the federal exemption
available include the following: (1) the aggregate offering price for the
offering of the shares of common stock did not exceed $1,000,000, less than the
aggregate offering price for all securities sold within the twelve months before
the start of and during the offering of the shares in reliance on an exemption
under Section 3(b) of, or in violation of Section 5(a) of, the Act: (ii) no
general solicitation of advertising was conducted by Registrant in connection
with the offering of any of the shares; (iii) the Registrant has not been since
its inception (a) subject to the reporting requirements of Section 13 or 15 (d)
of the Securities Exchange Act of 1934, as amended; (b) an ""investment company"
within the meaning of the Investment Company Act of 1940, as amended; or (c) a
development stage Company that either has no specific business plan or purpose
or has indicated that its business plan is to engage in a merger or acquisition
with an unidentified company or companies, or other entity or person; and (iv)
the required number of manually executed originals and true copies of Ford D
were duly and timely filed with the U.S. Securities and Exchange Commission.
Item 27. Index to Exhibits
(a)(1) Financial Statements -- Included in Prospectus:
Independent Certified Public Accountants' Report.
Balance Sheet as of August 23, 2000.
Statements of Operations for the period November 4, 1999 (date of
inception) to August 23, 2000.
Statement of Changes in shareholder's Equity for the period November 4,
1999 (date of inception) to August 23, 2000.
Statement of Cash flows for the period November 4, 1999 (date of
inception) to August 23, 2000.
Notes to Financial Statements.
(a)(2) Included Separately from Prospectus: Consent of Independent Public
Accountants. (See Exhibit 3.4 below.)
Other than the Financial Data Schedule, no schedules are included for
the reason that all required information is contained in the financial
statements included in the Prospectus.
(b) Exhibits:
3.1.1 Certificate of Incorporation of Registrant.
3.1.2 Articles of Amendment to the Certificate of Incorporation
3.2 Bylaws of Registrant
3.3 Form of Stock Certificate
3.4 Subscription Agreement and Power of Attorney (attached to the
Prospectus as Exhibit A).
5.1 Opinion of Counsel as to the legality of the Shares.
10.1 Employment Agreement between Registrant and Pete Ewens.
10.2 Employment Agreement between Registrant and Roger Miller.
10.3 Employment Agreement between Registrant and Dr. James Chappell
10.4 Employment Agreement between Registrant and Nicole Shoong.
10.5 Technology Leasing Agreement between Registrant and
MainStreetIPO.com, Inc
10.6 Professional Services Agreement between Registrant and
Vertical Solutions.
10.7 Dynamic Web Site Development Proposal between Registrant and
Kirk Cizerle.
10.8 Letter of Agreement Between Registrant and Tani Hurley Public
Relations.
10.9 Letter of Agreement between Registrant and Alexander Creative
Consulting, Inc.
10.10 Agreement of Purchase and Sale and Deposit Receipt between
Registrant and Hastings Investment Limited.
10.11 Engagement Agreement between Registrant and Ray Stewart, Esq.
10.12 Engagement Agreement between Registrant and Duncan, Blum
& Associates.
10.13 Warrant Agreement between Registrant and Duncan, Blum
& Associates.
23.1 Consent of Counsel (Duncan, Blum & Associates).
23.2 Consent of Auditors (Hill, Barth & King LLC).
[Balance of page intentionally left blank.]
<PAGE>
Item 28. Undertakings
A. Certificates: Inapplicable
B. Rule 415 Offering
The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this Registration
Statement to: (i) include any prospectus required by Section
10(a) (3) of the Securities Act of 1933 (the "1933 Act"); (ii)
reflect in the Prospectus any facts or events which, together,
represent a fundamental change in the information in the
Registration Statement; and (iii) include any additional or
changed material information on the plan of distribution.
(2) For determining liability under the 1933 Act, treat each
post-effective amendment as a new Registration Statement of
the securities offered, and the offering of the securities at
that time to be the initial bona fide offering.
(3) File a post-effective amendment to remove from registration
any of the securities that remain unsold at the end of the
offering.
C. Request for Acceleration of Effective Date
The Registrant may elect to request acceleration of the effective date
of the Registration Statement under Rule 461 of the 1933 Act.
D. Indemnification
Insofar as indemnification for liabilities arising under the 1933 Act
may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the foregoing provisions, or otherwise, Registrant has
been advised that, in the opinion of the Securities and Exchange Commission,
such indemnification is against public policy as expressed in the 1933 Act and
is, therefore, unenforceable.
In the event that a claim for indemnification against such liabilities
(other than the payment by the Registrant of expenses incurred or paid by a
director, officer or controlling person of the Registrant in the successful
defense of any action, suit or proceeding) is asserted by such director, officer
or controlling person in connection with the securities being registered, the
Registrant will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate jurisdiction
the question whether such indemnification by it is against public policy as
expressed in the 1933 Act and will be governed by the final adjudication of such
issue.
E. Rule 430A
The undersigned Registrant will:
(1) For determining any liability under the Act, treat the
information omitted from the form of Prospectus filed as part
of this Registration Statement in reliance upon Rule 430A and
contained in the form of a Prospectus filed by the Registrant
under Rule 424(b) (1) or (4) or 497(h) under the Act as part
of this Registration Statement as of the time the Commission
declared it effective.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form SB-2 and has duly caused this
Registration Statement to be signed on its behalf by the Undersigned, thereunto
duly authorized, in the City of Fairfax Station, State of Virginia, on the 26th
day of September, 2000.
BioQuest International, Inc.
By: /s/ Peter J. Ewens
-----------------------------------
Peter J. Ewens, Chairman and Chief Executive Officer
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in their
respective capacity as officer and/or director of the Registrant on the date
indicated.
Signatures/Title Date
---------------- ----
/s/ Peter J. Ewens September 26, 2000
------------------
Peter J. Ewens, Chairman and Chief Executive Officer
/s/ Roger Miller September 26, 2000
----------------
Roger Miller, Director, Secretary and Treasurer
/s/ James Chappell September 26, 2000
------------------
James Chappell, Vice President of Medical and
Scientific Technology
/s/ Nicole Shoong September 26, 2000
-----------------
Nicole Shoong, President of BioQuest
Media Resources Group
