U. S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM SB-2
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
B Y & C Management, Inc.
(Exact name of registrant as specified in its charter)
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Florida 8200 65-0832987
(State or other jurisdiction (Primary Standard Industrial (I.R.S. Employer Identification No.)
of incorporation or Classification Code Number)
organization)
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23 Corporate Plaza, Suite 180, Newport Beach, California 92663
(Address of registrant's principal executive offices) (Zip Code)
(949) 720-7320
(Registrant's Telephone Number, Including Area Code)
Thomas E. Stepp, Jr.
Stepp & Beauchamp LLP
1301 Dove Street, Suite 460
Newport Beach, California 92660
949.660.9700
Facsimile 949.660.9010
(Name, Address and Telephone Number of Agent for Service)
Approximate date of proposed sale to the public: From time to time after this
Registration Statement becomes effective.
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ] _______
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ] _______
If this Form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ] _______
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
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CALCULATION OF REGISTRATION FEE
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Title of each class Amount Proposed maximum Proposed maximum Amount of
of securities to be offering price aggregate registration
to be registered registered per share offering price fee
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Common Stock, $.001 par value 85,000 $1.00 $85,000.00 $22.44
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The offering price per share for the selling security holders was estimated
solely for the purpose of calculating the registration fee pursuant to Rule 457
of Regulation C.
The Registrant hereby amends this registration statement on such date or dates
as may be necessary to delay its effective date until the Registrant shall file
a further amendment which specifically states that this Registration Statement
shall thereafter become effective in accordance with Section 8(a) of the
Securities Act of 1933, as amended, or until this Registration Statement shall
become effective on such date as the Commission, acting pursuant to said Section
8(a), may determine.
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Preliminary Prospectus
B Y & C Management, Inc.,
a Florida corporation
85,000 Shares of Common Stock
This prospectus relates to 85,000 shares of common stock of B Y & C Management,
Inc., a Florida corporation, which are issued and outstanding shares of our
common stock, acquired by the selling security holders in private placement
transactions which were exempt from the registration and prospectus delivery
requirements of the Securities Act of 1933. No national securities exchange or
the Nasdaq Stock Market lists the common stock being offered by the selling
security holders, and we have not applied for listing or quotation with any
national securities exchange or automated quotation system.
The shares of common stock offered by the selling security holders have not been
registered for sale under the securities laws of any state as of the date of
this prospectus. Brokers or dealers effecting transactions in the shares of our
common stock should confirm the registration thereof under the securities laws
of the states in which transactions occur or the existence of any exemption from
registration.
The selling security holders may from time to time sell the shares on the OTC
Bulletin Board, on any other national securities exchange or automated quotation
system on which the common stock may be listed or traded, in negotiated
transactions or otherwise, at prices then prevailing or related to the then
current market price or at negotiated prices. We will not receive any of the
proceeds from the sale of those shares being offered.
See "Risk Factors" on pages 5 to 10 for factors to be considered before
investing in the shares of our common stock.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or passed upon the
adequacy or accuracy of the prospectus. Any representation to the contrary is a
criminal offense.
The information in this prospectus is not complete and may be changed. The
selling security holders may not sell these securities until the registration
statement filed with the Securities and Exchange Commission is effective. This
prospectus is not an offer to sell these securities and it is not soliciting an
offer to buy these securities in any state where the offer or sale is not
permitted.
The date of this prospectus is November 20, 2000
Subject to completion.
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TABLE OF CONTENTS
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Prospectus Summary .........................................................................4
Risk Factors................................................................................5
Use of Proceeds............................................................................10
Determination of Offering Price............................................................10
Dilution....... .........................................................................10
Selling Security Holders...................................................................11
Plan of Distribution.......................................................................11
Legal Proceedings..........................................................................12
Directors, Executive Officers, Promoters and Control Persons...............................12
Security Ownership of Certain Beneficial Owners and Management.............................13
Description of Securities..................................................................14
Interest of Named Experts and Counsel......................................................14
Disclosure of Commission Position on Indemnification for Securities Act Liabilities........15
Organization Within Last Five Years........................................................15
Description of Business....................................................................16
Management's Discussion and Analysis of Financial Condition and Results of Operations......18
Description of Property....................................................................19
Certain Relationships and Related Transactions.............................................19
Market for Common Equity and Related Stockholder Matters...................................20
Executive Compensation.....................................................................21
Financial Statements.......................................................................22
Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.......22
Legal Matters..............................................................................22
Experts....................................................................................22
Additional Information.....................................................................22
Indemnification of Directors and Officers..................................................22
Other Expenses of Issuance and Distribution................................................23
Recent Sales of Unregistered Securities....................................................23
Exhibits...................................................................................24
Undertakings...............................................................................24
Signatures .............................................................................26
Power of Attorney..........................................................................27
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Prospectus Summary
Our Business: Our principal business address is 23
Corporate Plaza, Suite 180, Newport
Beach, California, 92663; our telephone
number (949) 720-7320.
We are a developmental stage company. We
intend to be an Internet based
association of property management
professionals and licensed real estate
brokers and agents. We anticipate that
we will provide continuing education
classes and develop certification
programs for our membership of property
management professionals and licensed
real estate brokers and agents. Our
courses of study will be designed to
increase the knowledge of our membership
in the property management industry and
provide updated information regarding
new regulations and licensing
requirements. As a professional
association, we also intend to develop
and promote the adoption of policies and
standards which provide guidance to
property management professionals in an
effort to establish a national set of
standards to be applied and upheld by
practitioners within the profession.
Our State of Organization: We were incorporated in Florida on April
29, 1998.
Number of Shares Being The selling security holders want to
Offered: sell 85,000 shares of our common stock.
The offered shares were acquired by the
selling security holders in private
placement transactions which were exempt
from the registration and prospectus
delivery requirements of the Securities
Act of 1933.
Number of Shares Outstanding 7,035,000 shares of our common stock are
After the Offering: issued and outstanding. We have no other
securities issued.
Estimated use of We will not receive any of the proceeds
proceeds: from the sale of those shares being
offered.
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RISK FACTORS
In addition to the other information in this prospectus, the following risk
factors should be considered carefully in evaluating our business before
purchasing any of our shares of common stock. A purchase of our common stock is
speculative and involves a lot of risks. No purchase of our common stock should
be made by any person who is not in a position to lose the entire amount of his
investment.
Because we are a new company with losses since our formation and we anticipate
that we will lose money in the foreseeable future, we may not be able to achieve
profitable operations.
We were incorporated in April 1998, and we began operations immediately
thereafter. As of September 30, 2000, our losses were approximately $55,704. We
do not anticipate generating any revenues in our current fiscal year. Our
prospects must be considered speculative, considering the risks, expenses, and
difficulties frequently encountered in the establishment of a new business,
specifically the risks inherent in the development of digital products. We
cannot guaranty that unanticipated technical or other problems will not occur
which would result in material delays in future product and service
commercialization or that our efforts will result in successful product and
service commercialization. We cannot guaranty that we will be able to achieve
profitable operations.
Our officers and directors are engaged in other activities that could have
conflicts of interest with us. Therefore, our officers and directors may not
devote sufficient time to our affairs.
The persons serving as our officers and directors have existing responsibilities
and may have additional responsibilities to provide management and services to
other entities. As a result, conflicts of interest between us and the other
activities of those entities may occur from time to time, in that our officers
and directors shall have conflicts of interest in allocating time, services, and
functions between our affairs and the other business ventures in which they may
be or become involved.
Robert A. Younker currently serves as managing member of Laguna Capital Group,
LLC, a California limited liability company. Laguna Capital Group, LLC provides
management consulting services to start-up companies. Mr. Younker currently
devotes approximately one fourth of his time to Laguna Capital Group, LLC. We do
not believe that we have any conflicts of interest with the business or industry
of Laguna Capital Group, LLC, other than Mr. Younker's duty to provide
management and services.
Carol Jean Gehlke currently serves as a manager of Laguna Capital Group, LLC, a
California limited liability company. Laguna Capital Group, LLC provides
management consulting services to start-up companies. Ms. Gehlke currently
devotes approximately one fourth of her time to Laguna Capital Group, LLC. We do
not believe that we have any conflicts of interest with the business or industry
of Laguna Capital Group, LLC, other than Ms. Gehlke's duty to provide management
and services.
Our ability to succeed is uncertain because we currently have no sources of
revenue and minimal marketing activities due to the lack of revenues. Therefore,
investors may lose all or part of their investment, if we do not generate
revenues.
We are currently engaged primarily in developing our website. We have not yet
generated any revenues and currently have no sources of revenue. Upon the
development of our website, our marketing activities will be significantly
limited and, to fund more sophisticated marketing activities, we need to
generate revenues. Our failure to generate revenues may cause an investor to
lose part or all of his investment. We cannot guaranty that we will generate any
revenues.
We may not be able to maintain our web domain name, which may cause confusion
among web users and decrease any potential value of our name.
We currently hold the web domain name www.bycmgmt.com. Currently, the
acquisition and maintenance of domain names is regulated by governmental
agencies and their designees. The regulation of domain names in the U.S. and in
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foreign countries is expected to change in the near future. As a result, we may
not be able to maintain our domain name. These changes could include the
introduction of additional top-level domains, which could cause confusion among
web users trying to locate our sites. Furthermore, the relationship between
regulations governing domain names and laws protecting trademarks and similar
proprietary rights is unclear. We may be unable to prevent third parties from
acquiring domain names that are similar to ours. The acquisition of similar
domain names by third parties could cause confusion among web users attempting
to locate our site and could decrease the value of our name and the use of our
site.
We anticipate that we will need to raise additional capital to complete our
website development and market our website. Our failure to raise additional
capital will significantly limit our proposed marketing activities and we may be
forced to cease operations.
To complete our website development and market our website, we will be required
to raise additional funds. We believe that we may be able to acquire additional
financing at commercially reasonable rates. We cannot guaranty that we will be
able to obtain additional financing at commercially reasonable rates. We
anticipate that we will spend a lot of funds on the marketing and promotion of
our website. The minimum amount necessary to complete our current website
development is approximately $50,000. Our failure to obtain additional funds
would significantly limit or eliminate our ability to fund our sales and
marketing activities. This would have a material adverse effect on our ability
to continue our operation and compete with other providers.
We anticipate that we may seek additional funding through public or private
sales of our securities. That could include equity securities, or through
commercial or private financing arrangements. Adequate funds may not be
available when needed or on terms acceptable to us. In the event that we are not
able to obtain additional funding on a timely basis, we may be required to limit
any proposed operations or eliminate certain or all of our marketing programs.
Our ability to raise additional capital through the sale of our stock may be
harmed by competing resales of our common stock by the selling security holders.
The price of our common stock could fall if the selling security holders sell
substantial amounts of our common stock. These sales would make it more
difficult for us to sell equity or equity-related securities in the future at a
time and price that we deem appropriate because the selling security holders may
offer to sell their shares of common stock to potential investors for less than
we do. Moreover, potential investors may not be interested in purchasing shares
of our common stock if the selling security holders are selling their shares of
common stock.
We operate in a highly competitive industry and we may not have adequate
resources to market our products in order to compete successfully.
Competition in the Internet industry is intense. We compete directly with other
companies and businesses that have developed and are in the process of
developing online services which are functionally equivalent or similar to our
proposed online services. We expect that these competitors who have developed
similar websites will market those websites to our target customers, which will
significantly affect our ability to compete.
Most of our competitors have substantially greater experience, financial and
technical resources, marketing and development capabilities than we do. Many of
those competitors with greater financial resources can afford to spend more
resources than we can to market their websites. We cannot guaranty that we will
succeed in marketing our websites and generating revenues. We cannot guaranty
that our competitors will not succeed in marketing their websites and generating
revenues.
Our ability to generate business depends on continued growth of online commerce.
Our ability to generate business through our website depends on continued growth
in the use of the Internet and in the acceptance and volume of commerce
transactions on the Internet. Rapid growth in the use of the Internet and online
services is a recent phenomenon. This growth may not continue. A sufficiently
broad base of consumers may not accept, or continue to use, the Internet as a
medium of commerce. We cannot guaranty that the number of Internet users will
continue to grow in general or with respect to our site or that commerce over
the Internet will become more widespread
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or that our sales will grow at a comparable rate. As is typical in the case of a
new and rapidly evolving industry, demand and market acceptance for recently
introduced services are subject to a high level of uncertainty. The Internet may
not prove to be a viable commercial marketplace for a number of reasons
including but not limited to:
o the lack of acceptable security technologies;
o the lack of access and ease of use;
o congestion of traffic;
o inconsistent quality of service and the lack of availability of cost
effective, high speed service;
o potentially inadequate development of the necessary infrastructure;
o governmental regulation and/or taxation; and
o uncertainty regarding intellectual property ownership or the
enforcement of intellectual property rights.
We may not be able to attract and expand our online traffic.
We believe that redeveloping, maintaining and enhancing our website is a
critical aspect of our efforts to attract and expand our online traffic. The
number of Internet sites that offer competing services increases the importance
of establishing and maintaining brand recognition. Many of these Internet sites
already have well-established brands in online services or the travel industry
generally. Promotion of our website will depend largely on our success in
providing a high-quality online experience supported by a high level of customer
service. In addition, we intend to increase our spending on marketing and
advertising with the intention of expanding the recognition of our website to
attract and retain online users and to respond to competitive pressures.
However, our proposed expenditures may not be effective to promote our brand or
that our marketing efforts generally will achieve our goals.
We may not be able to maintain our web domain name, which may cause confusion
among web users and decrease the value of our brand name.
We currently hold a web domain name relating to our brand. Currently, the
acquisition and maintenance of domain names is regulated by governmental
agencies and their designees. The regulation of domain names in the U.S. and in
foreign countries is expected to change in the near future. As a result, we may
not be able to maintain our domain name. These changes could include the
introduction of additional top-level domains, which could cause confusion among
web users trying to locate our sites. Furthermore, the relationship between
regulations governing domain names and laws protecting trademarks and similar
proprietary rights is unclear. We may be unable to prevent third parties from
acquiring domain names that are similar to ours. The acquisition of similar
domain names by third parties could cause confusion among web users attempting
to locate our site and could decrease the value of our brand name and the use of
our site.
A failure in the performance of our web hosting facility systems could harm our
business and reputation.
We depend upon a third party Internet service provider to host our web site. Any
system failure, including network, software or hardware failure, that causes an
interruption in the delivery of our web site or a decrease in responsiveness of
our web site service could result in reduced revenue, and could be harmful to
our reputation and brand. Our Internet service provider does not guarantee that
our Internet access will be uninterrupted, error free or secure. Any disruption
in the Internet service provided by such provider could significantly harm our
business. In the future, we may experience interruptions from time to time. We
do not have insurance to compensate us for any losses that may occur due to any
failures in our system or interruptions in our service. Our web servers must be
able to accommodate a high volume of traffic and we may in the future experience
slower response times for a variety of reasons. If we are unable to add
additional software and hardware to accommodate increased demand, this could
cause unanticipated system disruptions and result in slower response times. The
costs associated with accommodating such increased demand may exceed the
revenues the increased demand may generate. Users may become dissatisfied by any
system failure that interrupts our ability to provide access or results in
slower response time and thereby not return to the site.
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Although Internet commerce has yet to attract significant regulation, government
regulation may result in fines, penalties, taxes or other costs that may reduce
our future earnings.
Our Internet and e-commerce businesses currently are not directly regulated by
any governmental agency, other than through regulations applicable to businesses
generally. However, due to the increasing popularity and use of the Internet, it
is possible that a number of laws and regulations may be adopted with respect to
the Internet covering, among other things, the following issues:
o taxation of consumer transactions;
o advertising;
o user privacy;
o unsolicited marketing;
o pricing;
o quality of products and services;
o intellectual property;
o information security; and
o anti-competitive practices.
The adoption of laws or regulations covering these issues may decrease the
growth of Internet commerce. Such laws could decrease the demand for our
products and services, increase our cost of doing business, or otherwise have an
adverse effect on our business, operating results or financial condition.
Moreover, the applicability to the Internet of existing laws governing issues
including intellectual property ownership, libel and personal privacy is
uncertain. If these existing laws were to be applied to the Internet, our
business may be harmed.
Taxing authorities in a number of states are currently reviewing the appropriate
tax treatment of companies engaged in Internet commerce. New state tax
regulations may subject us to additional state sales, use and income taxes. The
adoption of any of these laws or regulations may decrease the growth of Internet
usage or the acceptance of Internet commerce which could, in turn, decrease the
demand for our products and services, increase costs and otherwise have a
material adverse effect on our business, results of operations and financial
condition. To date, we have not spent significant resources on lobbying or
related government affairs issues, but we may need to do so in the future.
Federal legislation imposing limitations on the ability of states to impose new
state taxes on e-commerce was enacted in 1998. The Internet Tax Freedom Act, as
this legislation is known, exempts specific types of sales transactions
conducted over the Internet from multiple or discriminatory state and local
taxation through October 21, 2001. It is possible that this legislation will not
be renewed when it terminates in October 2001. Failure to renew this legislation
or the enactment of new legislation could allow state and local governments to
impose taxes on Internet-based sales and use. Such taxes could decrease the
demand for our products and services or increase our costs of operations.
Our proposed computer infrastructure may suffer security breaches. Any such
breaches could jeopardize confidential information transmitted over the
Internet, cause interruptions in our operations or cause us to have liability to
third parties.
We intend to rely on technology that is designed to facilitate the secure
transmission of confidential information. Our computer infrastructure is
potentially vulnerable to physical or electronic computer break-ins, viruses and
similar disruptive problems. A party who is able to circumvent our proposed
security measures could misappropriate proprietary information, jeopardize the
confidential nature of information transmitted over the Internet or cause
interruptions in our operations. Concerns over the security of Internet
transactions and the privacy of users could also inhibit the growth of the
Internet in general, particularly as a means of conducting commercial
transactions. To the extent that our activities involve the storage and
transmission of proprietary information, including personal financial
information, security breaches could expose us to a risk of financial loss,
litigation and other liabilities. We do not have insurance to protect us against
these losses. Any security breach would have a material adverse effect on our
business, results of operations and
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financial condition.
Rapid technological changes may render our technology obsolete or decrease the
competitiveness of our services.
To become competitive in the online real estate industry, we must enhance and
improve the functionality and features of our proposed website. The Internet and
the online commerce industry are rapidly changing. In particular, the online
real estate industry is characterized by increasingly complex systems and
infrastructures. If competitors introduce new services with new technologies, or
if new industry standards and practices emerge, our proposed website and
proprietary technology and systems may become obsolete. Our future success will
depend on our ability to do the following:
o enhance our existing services;
o develop and license new services and technologies that address the
increasingly sophisticated and varied needs of our prospective
customers and suppliers; and
o respond to technological advances and emerging industry standards and
practices on a cost-effective and timely basis.
Developing our websites and other proprietary technology entails significant
technical and business risks. We may use new technologies ineffectively or we
may fail to adapt our websites, transaction-processing systems and network
infrastructure to customer requirements or emerging industry standards. If we
face material delays in introducing new services, products and enhancements, our
customers and suppliers may forego the use of our services and use those of our
competitors.
Our officers, directors and principal security holders own approximately 98.08%
of our outstanding shares of common stock. Such concentrated control allows
these shareholders to exert significant influence in matters requiring approval
of our shareholders.
Our directors, officers and principal (greater than 5%) security holders, taken
as a group, together with their affiliates, beneficially own, in the aggregate,
approximately 98.08% of our outstanding shares of common stock. Such
concentrated control of the company may adversely affect the price of our common
stock. These security holders may be able to exert significant influence, or
even control, matters requiring approval by our security holders, including the
election of directors. Such concentrated control may also make it difficult for
our shareholders to receive a premium for their shares of our common stock in
the event we merge with a third party or enter into a different transaction
which requires shareholder approval.
Because we may be subject to the "penny stock" rules, the level of trading
activity in our stock may be reduced.
Broker-dealer practices in connection with transactions in "penny stocks" are
regulated by certain penny stock rules adopted by the Securities and Exchange
Commission. Penny stocks, like shares of our common stock, generally are equity
securities with a price of less than $5.00, other than securities registered on
certain national securities exchanges or quoted on Nasdaq. The penny stock rules
require a broker-dealer, prior to a transaction in a penny stock not otherwise
exempt from the rules, to deliver a standardized risk disclosure document that
provides information about penny stocks and the nature and level of risks in the
penny stock market. The broker-dealer also must provide the customer with
current bid and offer quotations for the penny stock, the compensation of the
broker-dealer and its salesperson in the transaction, and, if the broker-dealer
is the sole market maker, the broker-dealer must disclose this fact and the
broker-dealer's presumed control over the market, and monthly account statements
showing the market value of each penny stock held in the customer's account. In
addition, broker-dealers who sell these securities to persons other than
established customers and "accredited investors" must make a special written
determination that the penny stock is a suitable investment for the purchaser
and receive the purchaser's written agreement to the transaction. Consequently,
these requirements may have the effect of reducing the level of trading
activity, if any, in the secondary market for a security subject to the penny
stock rules, and investors in our common stock may find it difficult to sell
their shares.
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We lack a public market for shares of our common stock, which may make it
difficult for investors to sell their shares.
There is no public market for shares of our common stock. We cannot guaranty
that an active public market will develop or be sustained. Therefore, investors
may not be able to find purchasers for their shares of our common stock. Should
there develop a significant market for our shares, the market price for those
shares may be significantly affected by such factors as our financial results
and introduction of new products and services. Factors such as announcements of
new or enhanced products by us or our competitors and quarter-to-quarter
variations in our results of operations, as well as market conditions in the
high technology sector may have a significant impact on the market price of our
shares. Further, the stock market has experienced extreme volatility that has
particularly affected the market prices of stock of many companies and that
often has been unrelated or disproportionate to the operating performance of
those companies.
Because we lack a public market for shares of our common stock, the offering
price of the shares will be arbitrarily determined by the selling security
holders. Therefore, investors may lose all or part of their investment if the
price of their shares is too high.
Our common stock is not publicly traded and we do not participate in the OTC
Bulletin Board, an electronic quotation medium for securities traded outside the
Nasdaq Stock Market. We cannot guaranty that an active public market for our
stock will develop or be sustained. Therefore, the offering price of shares of
our common stock may be arbitrarily determined by the selling security holders.
Accordingly, purchasers may lose all or part of their investments if the price
of their shares is too high. A purchase of our stock in this offering would be
"unsuitable" for a person who cannot afford to lose his entire investment.
Information in this prospectus contains "forward looking statements" which can
be identified by the use of forward-looking words, such as "believes",
"estimates", "could", "possibly", "probably", "anticipates", "estimates",
"projects", "expects", "may", "will", or "should" or other variations thereon or
similar words. No assurances can be given that the future results anticipated by
the forward-looking statements will be achieved. The following matters
constitute cautionary statements identifying important factors with respect to
those forward-looking statements, including certain risks and uncertainties that
could cause actual results to vary materially from the future results
anticipated by those forward-looking statements. Among the key factors that have
a direct bearing on our results of operations are the effects of various
governmental regulations, the fluctuation of our direct costs and the costs and
effectiveness of our operating strategy. Other factors could also cause actual
results to vary materially from the future results anticipated by those
forward-looking statements.
Use of Proceeds
We will not receive any proceeds from the sale of shares of our common stock
being offered by the selling security holders.
Determination of Offering Price
Factors Used to Determine Share Price. The selling security holders may sell our
common stock at prices then prevailing or related to the then current market
price or at negotiated prices. The offering price has no relationship to any
established criteria of value, such as book value or earnings per share.
Additionally, because we have no significant operating history and have not
generated any revenues to date, the price of our common stock is not based on
past earnings, nor is the price of the shares of our common stock indicative of
current market value for the assets owned by us. No valuation or appraisal has
been prepared for our business and potential business expansion.
Dilution
The shares offered for sale by the selling security holders are already
outstanding and, therefore, do not contribute to dilution.
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Selling Security Holders
The following table sets forth the number of shares which may be offered for
sale from time to time by the selling security holders. The shares offered for
sale constitute all of the shares known to us to be beneficially owned by the
selling security holders. None of the selling security holders has held any
position or office with us, except as specified in the following table. Other
than the relationships described below, none of the selling security holders had
or have any material relationship with us. Michael J. Muellerleile is an
employee of Stepp & Beauchamp LLP, which serves as our legal counsel.
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Name of Selling Security Holder Shares of Common Stock
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David Bennett 2,000
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James M. Butchy 10,000
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Daniel J. Cooney 1,000
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Robert Deluwa 1,000
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Albert M. DiPaolo 1,000
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Steven T. Erlinger 2,000
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Kent Handleman 1,000
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Phillip Handleman 1,000
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William E. Manrow III 1,000
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James A. Nesbitt 10,000
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Nadia Perisi 3,000
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Bradley M. Podosin 1,000
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Larry Richardson 1,000
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Ronald Rosenow 1,000
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Thomas J. Swanecamp 20,000
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Chris Tharp 1,000
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Timothy M. Thomas 1,000
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George Scott Watrous 1,500
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Kasey Lusk Watrous 1,500
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Jacqueline A. Handleman 1,000
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John G. Obrey III 3,000
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Bruce Younker 15,000
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Michael Muellerleile 5,000
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Plan of Distribution
The selling security holders may sell our common stock in the over-the-counter
market, or on any securities exchange on which our common stock is or becomes
listed or traded, in negotiated transactions or otherwise. The selling security
holders may sell our common stock at prices then prevailing or related to the
then current market price or at negotiated prices. The shares will not be sold
in an underwritten public offering.
The shares may be sold directly or through brokers or dealers. The methods by
which the shares may be sold include:
o purchases by a broker or dealer as principal and resale by such broker
or dealer for its account;
o ordinary brokerage transactions and transactions in which the broker
solicits purchasers; and
o privately negotiated transactions.
Brokers and dealers engaged by selling security holders may arrange for other
brokers or dealers to participate. Brokers or dealers may receive commissions or
discounts from selling security holders (or, if any such broker-dealer acts as
agent for the purchaser of such shares, from such purchaser) in amounts to be
negotiated. Broker-dealers may agree with the selling security holders to sell a
specified number of such shares at a stipulated price per share, and, to the
extent such broker-dealer is unable to do so acting as agent for a selling
security holder, to purchase as principal any unsold shares at the price
required to fulfill the broker-dealer commitment to such selling security
holder. Broker-dealers who acquire shares as principal may resell those shares
from time to time in the over-the-counter market or otherwise at
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<PAGE>
prices and on terms then prevailing or then related to the then-current market
price or in negotiated transactions and, in connection with such resales, may
receive or pay commissions.
The selling security holders and any broker-dealers participating in the
distributions of the shares may be deemed to be "underwriters" within the
meaning of Section 2(11) of the Securities Act of 1933. Any profit on the sale
of shares by the selling security holders and any commissions or discounts given
to any such broker-dealer may be deemed to be underwriting commissions or
discounts. The shares may also be sold pursuant to Rule 144 under the Securities
Act of 1933 beginning one year after the shares were issued.
We have filed the Registration Statement, of which this prospectus forms a part,
with respect to the sale of the shares by the selling security holders. There
can be no assurance that the selling security holders will sell any or all of
the offered shares.
Under the Securities Exchange Act of 1934 and the regulations thereunder, any
person engaged in a distribution of the shares of our common stock offered by
this prospectus may not simultaneously engage in market making activities with
respect to our common stock during the applicable "cooling off" periods prior to
the commencement of such distribution. Also, the selling security holders are
subject to applicable provisions which limit the timing of purchases and sales
of our common stock by the selling security holders.
We have informed the selling security holders that, during such time as they may
be engaged in a distribution of any of the shares we are registering by this
Registration Statement, they are required to comply with Regulation M. In
general, Regulation M precludes any selling security holder, any affiliated
purchasers and any broker-dealer or other person who participates in a
distribution from bidding for or purchasing, or attempting to induce any person
to bid for or purchase, any security which is the subject of the distribution
until the entire distribution is complete. Regulation M defines a "distribution"
as an offering of securities that is distinguished from ordinary trading
activities by the magnitude of the offering and the presence of special selling
efforts and selling methods. Regulation M also defines a "distribution
participant" as an underwriter, prospective underwriter, broker, dealer, or
other person who has agreed to participate or who is participating in a
distribution.
Regulation M prohibits any bids or purchases made in order to stabilize the
price of a security in connection with the distribution of that security, except
as specifically permitted by Rule 104 of Regulation M. These stabilizing
transactions may cause the price of our common stock to be more than it would
otherwise be in the absence of these transactions. We have informed the selling
security holders that stabilizing transactions permitted by Regulation M allow
bids to purchase our common stock if the stabilizing bids do not exceed a
specified maximum. Regulation M specifically prohibits stabilizing that is the
result of fraudulent, manipulative, or deceptive practices. Selling security
holders and distribution participants are required to consult with their own
legal counsel to ensure compliance with Regulation M.
Legal Proceedings
There are no legal actions pending against us nor are any legal actions
contemplated by us at this time.
Directors, Executive Officers, Promoters and Control Persons
Executive Officers and Directors. We are dependent on the efforts and abilities
of certain of our senior management. The interruption of the services of key
management could have a material adverse effect on our operations, profits and
future development, if suitable replacements are not promptly obtained. We have
not entered into employment agreements with any of our key executives. We cannot
guaranty that each executive will remain with us. In addition, our success
depends, in part, upon our ability to attract and retain other talented
personnel. Although we believe that our relations with our personnel are good
and that we will continue to be successful in attracting and retaining qualified
personnel, we cannot guaranty that we will be able to continue to do so. Our
officers and directors will hold office until their resignation or removal.
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<PAGE>
The following table sets forth information regarding our executive officers and
directors as well as other key members of our management.
<TABLE>
<CAPTION>
======================================================================
Name Age Position
----------------------------------------------------------------------
<S> <C> <C>
Robert A. Younker 56 President and a Director
----------------------------------------------------------------------
Carol Jean Gehlke 47 Secretary, Treasurer and a Director
----------------------------------------------------------------------
Calvin K. Mees 40 Director
======================================================================
</TABLE>
Robert A. Younker. Mr. Younker has been the President and one of our directors
since our inception. Mr. Younker is responsible for management of our day-to-day
operations. Since 1997, Mr. Younker has managed the commercial division of REMAX
Real Estate in Newport Beach. From 1996 to 1997, Mr. Younker worked as a real
estate investment sales agent for Marcus & Millichap, Inc., in Miami and Fort
Lauderdale, Florida. Mr. Younker has been involved in the real estate industry
for approximately 28 years and has possessed a California Real Estate
Salesperson license since 1978. Mr. Younker also currently serves as managing
member of Laguna Capital Group, LLC, a California limited liability company,
which provides management consulting services to start-up companies. Mr. Younker
is not an officer or a director of any other reporting company.
Carol Jean Gehlke. Ms. Gehlke has been the Secretary, Treasurer and one of our
directors since our inception. Ms. Gehlke is responsible for day-to-day
operations as well as our sales and marketing activities. Since 1986, Ms. Gehlke
has been the Chief Executive Officer of REO Nationwide Outsource Services which
manages a network of real estate agents who process and liquidate real estate
owned (REO) properties for lenders and servicers nationally. Ms. Gehlke has
extensive experience in the real estate industry and possesses a California Real
Estate Salesperson license since 1980. Ms. Gehlke graduated from the University
of California, Irvine with a Bachelor of Arts in urban planning in 1975. Ms.
Gehlke also currently serves as a manager of Laguna Capital Group, LLC, a
California limited liability company, which provides management consulting
services to start-up companies. Ms. Gehlke is not an officer or a director of
any other reporting company.
Calvin K. Mees. Mr. Mees has been one of our directors since our inception. Mr.
Mees has been self-employed as a small business financial consultant since March
1996. Mr. Mees was a securities broker and account executive with Lew Lieber
Baum & Company from April 1994 through March 1996, and held a Series 7 general
securities representative license until March 1996. Mr. Mees is currently an
officer and a director of the CATNK, Inc., a Nevada corporation.
There is no family relationship between any of our officers or directors. There
are no orders, judgments, or decrees of any governmental agency or
administrator, or of any court of competent jurisdiction, revoking or suspending
for cause any license, permit or other authority to engage in the securities
business or in the sale of a particular security or temporarily or permanently
restraining any of our officers or directors from engaging in or continuing any
conduct, practice or employment in connection with the purchase or sale of
securities, or convicting such person of any felony or misdemeanor involving a
security, or any aspect of the securities business or of theft or of any felony,
nor are any of the officers or directors of any corporation or entity affiliated
with us so enjoined.
Security Ownership of Certain Beneficial Owners and Management
The following table sets forth certain information regarding the beneficial
ownership of our common stock as of November 20, 2000 by each person or entity
known by us to be the beneficial owner of more than 5% of the outstanding shares
of common stock, each of our directors and named executive officers, and all of
our directors and executive officers as a group.
13
<PAGE>
<TABLE>
<CAPTION>
=======================================================================================================================
Title of Class Name of Beneficial Owner Amount of Beneficial Owner Percent of Class
-----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Common Stock Robert Younker, President, Director 4,500,000 shares 64.10%
-----------------------------------------------------------------------------------------------------------------------
Common Stock Carol Jean Gehlke, Secretary, Treasurer, 2,000,000 shares 28.49%
Director
-----------------------------------------------------------------------------------------------------------------------
Common Stock Calvin K. Mees, Director 400,000 shares 5.70%
-----------------------------------------------------------------------------------------------------------------------
Common Stock All directors and named executive 98.08%
officers as a group
=======================================================================================================================
</TABLE>
Beneficial ownership is determined in accordance with the rules of the
Securities and Exchange Commission and generally includes voting or investment
power with respect to securities. In accordance with Securities and Exchange
Commission rules, shares of our common stock which may be acquired upon exercise
of stock options or warrants which are currently exercisable or which become
exercisable within 60 days of the date of the table are deemed beneficially
owned by the optionees. Subject to community property laws, where applicable,
the persons or entities named in the table above have sole voting and investment
power with respect to all shares of our common stock indicated as beneficially
owned by them.
Changes in Control. Our management is not aware of any arrangements which may
result in "changes in control" as that term is defined by the provisions of Item
403(c) of Regulation S-B.
Description of Securities
Our authorized capital stock originally consisted of 7,000 shares of $1.00 par
value common stock. On June 26, 2000, we amended our Articles of Incorporation
to authorize 100,000,000 shares of $.001 par value common stock, of which
7,035,000 are issued and outstanding as of November 20, 2000, and 50,000,000
shares of $.001 par value preferred stock, of which no such shares are issued
and outstanding as of November 20, 2000. On July 10, 2000, our Board of
Directors authorized a forward split of 1000 to 1.
Each shareholder of our common stock is entitled to a pro rata share of cash
distributions made to shareholders, including dividend payments. The holders of
our common stock are entitled to one vote for each share of record on all
matters to be voted on by shareholders. There is no cumulative voting with
respect to the election of our directors or any other matter. Therefore, the
holders of more than 50% of the shares voted for the election of those directors
can elect all of the directors. The holders of our common stock are entitled to
receive dividends when, as and if declared by our Board of Directors from funds
legally available therefore. Cash dividends are at the sole discretion of our
Board of Directors. In the event of our liquidation, dissolution or winding up,
the holders of common stock are entitled to share ratably in all assets
remaining available for distribution to them after payment of our liabilities
and after provision has been made for each class of stock, if any, having any
preference in relation to our common stock. Holders of shares of our common
stock have no conversion, preemptive or other subscription rights, and there are
no redemption provisions applicable to our common stock.
Dividend Policy. We have never declared or paid a cash dividend on our capital
stock. We do not expect to pay cash dividends on our common stock in the
foreseeable future. We currently intend to retain our earnings, if any, for use
in our business. Any dividends declared in the future will be at the discretion
of our Board of Directors and subject to any restrictions that may be imposed by
our lenders.
Interest of Named Experts and Counsel
No "expert", as that term is defined pursuant to Regulation Section 228.509(a)
of Regulation S-B, or our "counsel", as that term is defined pursuant to
Regulation Section 228.509(b) of Regulation S-B, was hired on a contingent
basis, or will receive a direct or indirect interest in us, except as specified
below, or was a promoter, underwriter, voting trustee, director, officer, or
employee of the company, at any time prior to the filing of this Registration
Statement.
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<PAGE>
Michael J. Muellerleile is an employee of Stepp & Beauchamp LLP, which serves as
our legal counsel. Michael J. Muellerleile owns 5,000 shares of our common
stock.
Disclosure of Commission Position on Indemnification for Securities Act
Liabilities
Article VIII of our Bylaws provides, among other things, that our officers or
directors shall not be personally liable to us or our shareholders for monetary
damages for breach of fiduciary duty as an officer or director, except for
liability
o for any breach of such director's duty of loyalty to us or our
security holders;
o for acts or omissions not in good faith or which involve intentional
misconduct or a knowing violation of law;
o for unlawful payments of dividends or unlawful stock purchase or
redemption by the corporation; or o for any transaction from which
such officer or director derived any improper personal benefit.
Accordingly, our officers or directors may have no liability to our shareholders
for any mistakes or errors of judgment or for any act or omission, unless such
act or omission involves intentional misconduct, fraud, or a knowing violation
of law or results in unlawful distributions to our shareholders.
Indemnification Agreements. We anticipate that we will enter into
indemnification agreements with each of our executive officers pursuant to which
we will agree to indemnify each such person for all expenses and liabilities,
including criminal monetary judgments, penalties and fines, incurred by such
person in connection with any criminal or civil action brought or threatened
against such person by reason of such person being or having been our officer or
director or employee. In order to be entitled to indemnification by us, such
person must have acted in good faith and in a manner such person believed to be
in our best interests and, with respect to criminal actions, such person must
have had no reasonable cause to believe his or her conduct was unlawful.
Insofar as indemnification for liabilities arising under the Securities Act of
1933 may be permitted to our directors, officers and controlling persons
pursuant to the foregoing provisions, or otherwise, we have been advised that in
the opinion of the Securities and Exchange Commission such indemnification is
against public policy as expressed in the Act and is, therefore, unenforceable.
Organization Within Last Five Years
Transactions with Promoters. Robert A. Younker, Carol Jean Gehlke, Calvin K.
Mees, Bruce Younker, Richard Ross, Mark Jacques and Cindy Podosin were issued
6,950 shares of our $1.00 par value common stock in exchange for their services
relating to founding and organizing the business, which were valued at $6,950.
Description of Business
Our Background. We were incorporated in Florida on April 29, 1998.
Our Business. We are a developmental stage company. We intend to be an Internet
based association of property management professionals and licensed real estate
brokers and agents. We anticipate that we will provide continuing education
classes and develop certification programs for our membership of property
management professionals and licensed real estate brokers and agents. Our
courses of study will be designed to increase the knowledge of our membership in
the property management industry and provide updated information regarding new
regulations and licensing requirements. As a professional association, we also
intend to develop and promote the adoption of policies and standards which
provide guidance to property management professionals in an effort to establish
a national set of standards to be applied and upheld by practitioners within the
profession.
Our Website. We anticipate that our website will initially be developed as a
corporate presence for us and used for marketing of our services. If we raise
substantial capital or generate significant revenues, we anticipate that our
website will be expanded to provide advice and information to property
management professionals in a community based format
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<PAGE>
as well as offer users free information on changing laws. We intend to further
develop the website to serve as an online distributor of our continuing
education products. If we generate significant revenues, we plan to expand and
design our website to broadcast educational programs to our member and function
as a marketplace for property management professionals as well as related
businesses and consumers. We believe that our website could be developed to
allow users to interact with other property management professionals to obtain
advice and services from other property management professionals as well as
purchase our various industry related products. We anticipate that in order to
view or download our continuing education programs, customers will be issued a
password.
Internet Advertising. If we generate significant revenues, we anticipate that we
will expand and develop our website to broadcast educational programs to our
member and function as a marketplace for property management professionals as
well as related businesses and consumers. If we develop our website into such a
marketplace, we anticipate that we will be able to generate advertising revenues
from companies which have complementary products and services and desire to
advertise our on website. The Internet is emerging as an attractive method for
advertisers, due to the growth in the number of Internet users, the amount of
time Internet users spend on the Internet, the increase in electronic commerce,
the interactive nature of the Internet, the Internet's global reach, the ability
to reach targeted audiences and a variety of other factors. We believe that
significant revenues can be generated from online advertising, initially from
small business service providers and product vendors and, as use of our website
increases, from advertisers, such as consumer products companies.
Future Products. If we generate significant revenues in the next twelve to
twenty-four months, we may further expand our website to provide multiple
location real estate listings for properties listed by our property management
professionals and real estate brokers and agents.
Our Target Markets and Marketing Strategy. We believe that our primary target
market will consist of property management professionals and real estate brokers
and agents licensed in California and other states. We intend to enter other
markets by purchasing the lists of property management professionals and
licensed real estate brokers and agents in good standing from the various
states. We plan to mail to property management professionals and licensed real
estate brokers and agents postcards which display information concerning our
products and services.
We anticipate that we will market and promote our website on the Internet. Our
marketing strategy is to promote our services and products and attract users to
our website. Our marketing initiatives include the following:
o utilizing direct response print advertisements placed primarily in
small business, entrepreneurial, and property management-oriented
magazines and special interest magazines;
o links to industry focused websites;
o advertising by television, radio, banners, affiliated marketing and
direct mail;
o presence at industry tradeshows; and
o entering into relationships with other website providers to increase
our access to Internet business consumers.
Growth Strategy. Our objective is to become a dominant Internet based provider
of continuing education classes and develop certification programs for our
membership of property management professionals and licensed real estate brokers
and agents. Key elements of our strategy include
o create awareness of our products and services;
o increase the number of Internet users to our websites;
o continue our websites;
o develop our relationships with clients;
o provide additional services for clients; and
o pursue relationships with joint venture candidates which will support
our development. We currently do not have plans, agreements,
understandings or arrangements to engage in joint ventures.
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<PAGE>
We believe that creating awareness of our website is critical in our effort to
be a dominant Internet provider of continuing education classes and develop
certification programs for our membership of property management professionals
and licensed real estate brokers and agents.
Our Competition. While we compete with traditional "brick and mortar" providers
of continuing education classes and develop certification programs, we believe
that we will also compete with other Internet based companies and businesses
that have developed and are in the process of developing websites which will be
competitive with the products developed and offered by us. We cannot guaranty
that other websites or products which are functionally equivalent or similar to
our websites and products have not been developed or are not in development.
Many of these competitors have greater financial and other resources, and more
experience in research and development, than us.
Government Regulation. We believe that we may need governmental approval for our
continuing education classes and certification programs. Our business is subject
to the California Department of Real Estate regulation and other federal and
state laws relating to the continuing education classes and certification
programs. We anticipate that we will be in compliance with all laws, rules and
regulations material to our operations.
There is currently only a small body of laws and regulations directly applicable
to access to or commerce on the Internet. However, due to the increasing
popularity and use of the Internet, it is possible that a number of laws and
regulations may be adopted at the international, federal, state and local levels
with respect to the Internet, covering issues such as user privacy, freedom of
expression, pricing, characteristics and quality of products and services,
taxation, advertising, intellectual property rights, information security and
the convergence of traditional telecommunications services with Internet
communications. Moreover, a number of laws and regulations have been proposed
and are currently being considered by federal, state and foreign legislatures
with respect to these issues. The nature of any new laws and regulations and the
manner in which existing and new laws and regulations may be interpreted and
enforced cannot be fully determined.
In addition, there is substantial uncertainty as to the applicability to the
Internet of existing laws governing issues such as property ownership,
copyrights and other intellectual property issues, taxation, libel, obscenity
and personal privacy. The vast majority of these laws were adopted prior to the
advent of the Internet and, as a result, did not contemplate the unique issues
and environment of the Internet. Future developments in the law might decrease
the growth of the Internet, impose taxes or other costly technical requirements,
create uncertainty in the market or in some other manner have an adverse effect
on the Internet. These developments could, in turn, have a material adverse
effect on our business, prospects, financial condition and results of
operations.
We provide our services through data transmissions over public telephone lines
and other facilities provided by telecommunications companies. These
transmissions are subject to regulation by the Federal Communications
Commission, state public utility commissions and foreign governmental
authorities. However, we are not subject to direct regulation by the Federal
Communications Commission or any other governmental agency, other than
regulations applicable to businesses generally. Nevertheless, as Internet
services and telecommunications services converge or the services we offer
expand, there may be increased regulation of our business, including regulation
by agencies having jurisdiction over telecommunications services. Additionally,
existing telecommunications regulations affect our business through regulation
of the prices we pay for transmission services, and through regulation of
competition in the telecommunications industry.
The Federal Communications Commission has ruled that calls to Internet service
providers are jurisdictionally interstate and that Internet service providers
should not pay access charges applicable to telecommunications carriers. Several
telecommunications carriers are advocating that the Federal Communications
Commission regulate the Internet in the same manner as other telecommunications
services by imposing access fees on Internet service providers. The Federal
Communications Commission is examining inter-carrier compensation for calls to
Internet service providers, which could affect Internet service providers' costs
and consequently substantially increase the costs of communicating via the
Internet. This increase in costs could slow the growth of Internet use and
thereby decrease the demand for our services.
Federal legislation imposing limitations on the ability of states to impose new
state taxes on e-commerce was enacted in
17
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1998. The Internet Tax Freedom Act, as this legislation is known, exempts
specific types of sales transactions conducted over the Internet from multiple
or discriminatory state and local taxation through October 21, 2001. It is
possible that this legislation will not be renewed when it terminates in October
2001. Failure to renew this legislation or the enactment of new legislation
could allow state and local governments to impose taxes on Internet-based sales
and use. Such taxes could decrease the demand for our products and services or
increase our costs of operations.
Patents and Proprietary Rights. Our success depends in part upon our ability to
preserve our trade secrets and operate without infringing the proprietary rights
of other parties. However, we may rely on certain proprietary technologies,
trade secrets, and know-how that are not patentable. We currently own the web
domain name www.bycmgmt.com. Under current domain name registration practices,
no one else can obtain an identical domain name, but someone might obtain a
similar name, or the identical name with a different suffix, such as ".org", or
with a country designation. The regulation of domain names in the United States
and in foreign countries is subject to change, and we could be unable to prevent
third parties from acquiring domain names that infringe or otherwise decrease
the value of our domain names.
Our Research and Development. We are not currently conducting any research and
development activities and do not anticipate conducting such activities in the
near future. If we generate significant revenues, we may expand our product line
by entering into relationships with third parties, who have the expertise and
capabilities to develop software which will enhance our product offerings. For
example, we believe that our website can be developed to provide multiple
listing services for condominiums and homes. Rather than develop the software
ourselves, we anticipate that we would attempt to purchase or license the
software from companies that already developed such software. We currently do
not have plans, agreements, understandings or arrangements for such activities.
Employees. As of November 20, 2000, we have two (2) part time employees. We do
not currently anticipate that we will hire any employees in the next six months,
unless we generate significant revenues. We believe our future success depends
in large part upon the continued service of our key senior management personnel
and our ability to attract and retain managerial personnel. From time-to-time,
we anticipate that we will use the services of independent contractors and
consultants to support marketing and sales and business development.
Facilities. Our executive, administrative and operating offices are located at
23 Corporate Plaza, Suite 180, Newport Beach, California 92663. Robert A.
Younker, our President and a director, currently provides office space to us at
no charge.
Management's Discussion and Analysis of Financial Condition and Results of
Operations
Liquidity and Capital Resources. We have cash of $14,547 as of September 30,
2000. We were incorporated April 1998, and our only material expense has been
legal fees of approximately $42,800.
Results of Operations. We have not yet realized any significant revenues from
operations for the fiscal year ended June 30, 2000 and the fiscal year ended
June 30, 1999. Our expenses of approximately $169,132 consist of start-up costs
from formation through September 30, 2000.
Our Plan of Operation for the Next Twelve Months. We are currently designing our
website to provide a wide range of services to property management professionals
and licensed real estate brokers and agents. Our prospects must be considered
speculative, considering the risks, expenses, and difficulties frequently
encountered in the establishment of a new business, specifically the risks
inherent in the development of electronic commerce.
Our objective is to complete the development of our website in the next three to
six months. During the next three to six months, we anticipate that we will need
to spend funds to continue the development of our website. If we complete the
development of our website, then we anticipate that we will begin to generate
revenues so that we can further market our website. However, we may not be able
to generate revenues to market our website effectively. Our failure to market
our website will harm our business and financial performance. If we are unable
to generate revenues, we anticipate that our marketing activities will be very
limited. In addition, our ability to generate revenues through our website
depends on continued growth in the use of the Internet and in the acceptance and
volume of commerce transactions on the Internet.
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<PAGE>
Our plan of operation is materially dependent on our ability to complete the
development of our website and raise additional capital to market our website.
If we are able to raise additional capital or generate significant revenues, we
anticipate that those revenues will be used to market our website, provide us
with working capital and pay our legal and accounting fees for the next twelve
months. If we raise additional capital or generate those revenues, then we
expect that our expenses for the next twelve months will be approximately
$100,000. If we are unable to raise additional capital or generate revenues,
then we anticipate that our expenses for the next twelve months will be limited
to the day-to-day expenditures necessary to conduct business.
In our opinion, our available funds will satisfy our working capital
requirements through February 2001. Our forecast for the period for which our
financial resources will be adequate to support our operations involves risks
and uncertainties and actual results could fail as a result of a number of
factors. We anticipate that we may need to raise additional capital to develop
and conduct our operations. Such additional capital may be raised through public
or private financing as well as borrowings and other sources. There can be no
assurance that additional funding will be available on favorable terms, if at
all. If adequate funds are not available, we believe that our officers and
directors will contribute funds to pay for our expenses. Our belief that our
officers and directors will pay our expenses is based on the fact that our
officers and directors have significant equity interests in us. We believe that
our officers and directors will continue to pay our expenses as long as they
maintain a significant equity interest in us. Therefore, we have not
contemplated any plan of liquidation in the event that we do not generate
revenues.
We are not currently conducting any research and development activities, other
than the development of our website. We do not anticipate conducting any other
such activities in the next twelve months. We do not anticipate that we will
purchase or sell any significant equipment in the next six to twelve months
unless we generate significant revenues.
We do not anticipate that we will hire any employees in the next six to twelve
months, unless we generate significant revenues. We believe our future success
depends in large part upon the continued service of our key personnel.
Description of Property
Property held by Us. As of the date specified in the following table, we held
the following property:
===========================================================================
Property September 30, 2000 June 30, 2000
---------------------------------------------------------------------------
Cash $14,547 $251.00
---------------------------------------------------------------------------
Property and Equipment, net $0.00 0.00
===========================================================================
We define cash equivalents as all highly liquid investments with a maturity of 3
months or less when purchased. We do not presently own any interests in real
estate. We do not presently own any inventory or equipment.
Our Facilities. Our executive, administrative and operating offices are located
at 23 Corporate Plaza, Suite 180, Newport Beach, California 92663. Robert A.
Younker, our President and a director, currently provides office space to us at
no charge. We do not have a written lease or sublease agreement and Mr. Younker
does not expect to be paid or reimbursed for providing office facilities.
Certain Relationships and Related Transactions
Conflicts Related to Other Business Activities. The persons serving as our
officers and directors have existing responsibilities and, in the future, may
have additional responsibilities, to provide management and services to other
entities in addition to us. As a result, conflicts of interest between us and
the other entities may occur from time to time.
Robert A. Younker currently serves as managing member of Laguna Capital Group,
LLC, a California limited liability company. Laguna Capital Group, LLC provides
management consulting services to start-up companies. Mr. Younker currently
devotes approximately one fourth of his time to Laguna Capital Group, LLC. We do
not believe that we have any conflicts of interest with the business or industry
of Laguna Capital Group, LLC, other than Mr. Younker's duty to provide
management and services.
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Carol Jean Gehlke currently serves as a manager of Laguna Capital Group, LLC, a
California limited liability company. Laguna Capital Group, LLC provides
management consulting services to start-up companies. Ms. Gehlke currently
devotes approximately one fourth of her time to Laguna Capital Group, LLC. We do
not believe that we have any conflicts of interest with the business or industry
of Laguna Capital Group, LLC, other than Ms. Gehlke's duty to provide management
and services.
We will attempt to resolve any such conflicts of interest in our favor. Our
officers and directors are accountable to us and our shareholders as
fiduciaries, which requires that such officers and directors exercise good faith
and integrity in handling our affairs. A shareholder may be able to institute
legal action on our behalf or on behalf of that shareholder and all other
similarly situated shareholders to recover damages or for other relief in cases
of the resolution of conflicts in any manner prejudicial to us.
Related Party Transactions. There have been no related party transactions,
except for the following:
Robert A. Younker, our President and a director, currently provides office space
to us at no charge.
On November 7, 2000, we issued 15,000 shares of our common stock to Bruce
Younker, the brother of our President, in exchange for consulting services
provided to us.
With regard to any future related party transaction, we plan to fully disclose
any and all related party transactions, including, but not limited to, the
following:
o disclosing such transactions in prospectus' where required;
o disclose in any and all filings with the Securities and Exchange
Commission, where required;
o obtain uninterested directors consent; and
o obtain shareholder consent where required.
Market for Common Equity and Related Stockholder Matters
Reports to Security Holders. Our securities are not listed for trading on any
exchange or quotation service. We are not required to comply with the timely
disclosure policies of any exchange or quotation service. The requirements to
which we would be subject if our securities were so listed typically include the
timely disclosure of a material change or fact with respect to our affairs and
the making of required filings. Although we are not required to deliver an
annual report to security holders, we intend to provide an annual report to our
security holders, which will include audited financial statements.
On November 6, 2000, we became a reporting company with the Securities and
Exchange Commission. The public may read and copy any materials filed with the
Securities and Exchange Commission at the Security and Exchange Commission's
Public Reference Room at 450 Fifth Street N.W., Washington, D.C. 20549. The
public may also obtain information on the operation of the Public Reference Room
by calling the Securities and Exchange Commission at 1-800-SEC-0330. The
Securities and Exchange Commission maintains an Internet site that contains
reports, proxy and information statements, and other information regarding
issuers that file electronically with the Securities and Exchange Commission.
The address of that site is http://www.sec.gov.
There are no outstanding options or warrants to purchase, or securities
convertible into, shares of our common stock. There are no outstanding shares of
our common stock that we have agreed to register under the Securities Act for
sale by security holders. The approximate number of holders of record of shares
of our common stock is twenty-nine (29).
There have been no cash dividends declared on our common stock. Dividends are
declared at the sole discretion of our Board of Directors.
On July 10, 2000, our Board of Directors authorized a forward split of 1000 to
1.
20
<PAGE>
Penny Stock Regulation. Shares of our common stock are subject to rules adopted
by the Securities and Exchange Commission that regulate broker-dealer practices
in connection with transactions in "penny stocks". Penny stocks are generally
equity securities with a price of less than $5.00 (other than securities
registered on certain national securities exchanges or quoted on the Nasdaq
system, provided that current price and volume information with respect to
transactions in those securities is provided by the exchange or system). The
penny stock rules require a broker-dealer, prior to a transaction in a penny
stock not otherwise exempt from those rules, deliver a standardized risk
disclosure document prepared by the Securities and Exchange Commission, which
contains the following:
o a description of the nature and level of risk in the market for penny
stocks in both public offerings and secondary trading;
o a description of the broker's or dealer's duties to the customer and
of the rights and remedies available to the customer with respect to
violation to such duties or other requirements of securities' laws;
o a brief, clear, narrative description of a dealer market, including
"bid" and "ask" prices for penny stocks and the significance of the
spread between the "bid" and "ask" price;
o a toll-free telephone number for inquiries on disciplinary actions;
o definitions of significant terms in the disclosure document or in the
conduct of trading in penny stocks; and
o such other information and is in such form (including language, type,
size and format), as the Securities and Exchange Commission shall
require by rule or regulation.
Prior to effecting any transaction in penny stock, the broker-dealer also must
provide the customer the following:
o the bid and offer quotations for the penny stock;
o the compensation of the broker-dealer and its salesperson in the
transaction;
o the number of shares to which such bid and ask prices apply, or other
comparable information relating to the depth and liquidity of the
market for such stock; and
o monthly account statements showing the market value of each penny
stock held in the customer's account.
In addition, the penny stock rules require that prior to a transaction in a
penny stock not otherwise exempt from those rules, the broker-dealer must make a
special written determination that the penny stock is a suitable investment for
the purchaser and receive the purchaser's written acknowledgment of the receipt
of a risk disclosure statement, a written agreement to transactions involving
penny stocks, and a signed and dated copy of a written suitably statement. These
disclosure requirements may have the effect of reducing the trading activity in
the secondary market for a stock that becomes subject to the penny stock rules.
Holders of shares of our common stock may have difficulty selling those shares
because our common stock will probably be subject to the penny stock rules.
Executive Compensation
Any compensation received by our officers, directors, and management personnel
will be determined from time to time by our Board of Directors. Our officers,
directors, and management personnel will be reimbursed for any out-of-pocket
expenses incurred on our behalf.
Compensation of Officers and Directors. During fiscal year 1999, our chief
executive did not receive any compensation. As of November 20, 2000, none of our
officers or directors have been paid any compensation. We do not have any plans
for our officers or directors to be paid any compensation in the immediate
future.
Employment Contracts. We anticipate that we will enter into employment contracts
with Robert Younker and Carol Jean Gehlke, although we currently do not have
plans, agreements, understandings or arrangements at this time.
Stock Option Plan. We anticipate that we will adopt a stock option plan,
pursuant to which shares of our common stock will be reserved for issuance to
satisfy the exercise of options. The stock option plan will be designed to
retain qualified and competent officers, employees, and directors. Our Board of
Directors, or a committee thereof, shall administer the stock option plan and
will be authorized, in its sole and absolute discretion, to grant options
thereunder to all of our
21
<PAGE>
eligible employees, including officers, and to our directors, whether or not
those directors are also our employees. Options will be granted pursuant to the
provisions of the stock option plan on such terms, subject to such conditions
and at such exercise prices as shall be determined by our Board of Directors.
Options granted pursuant to the stock option plan shall not be exercisable after
the expiration of ten years from the date of grant.
Financial Statements
<PAGE>
Board of Directors
B Y & C Management, Inc.
INDEPENDENT AUDITOR'S REPORT
I have audited the accompanying balance sheet of B Y & C Management, Inc.
(Company) as of June 30, 2000 and the related statement of operations, statement
of stockholders' equity, and the statement of cash flows for the years then
ended June 30, 2000 and 1999 and from April 28, 1998 (inception) to June 30,
2000. These financial statements are the responsibility of the Company's
management. My responsibility is to express an opinion on these statements based
on my audit.
I conducted my audit in accordance with generally accepted auditing standards.
Those standards require that I 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.
I believe that my audit provides a reasonable basis for my opinion.
The Company is a development stage enterprise, as defined in Financial
Accounting Standards Board No. 7. The Company is devoting all of its present
efforts in securing and establishing a new business, and its planned principal
operations have not commenced, and, accordingly, no revenue has been derived
during the organizational period.
In my opinion, the financial statements referred to above present fairly, in all
material respects, the financial position of the Company as of June 30, 2000 and
the results of its operations for the year then ended in conformity with
generally accepted accounting principles.
S/ Clyde Bailey
Clyde Bailey
Certified Public Accountant
San Antonio, Texas
August 28, 2000
F-1
<PAGE>
B Y & C Management Inc.
(A Development Stage Enterprise)
Balance Sheet
As of June 30, 2000
ASSETS
Current Assets
Cash $ 251
-------
Total Current Assets $ 251
-------
Total Assets 251
=======
LIABILITIES
Current Liabilities
Taxes Payable --
-------
Total Current Liabilities --
-------
Total Liabilities --
Commitments and Contingencies --
STOCKHOLDERS' EQUITY
Preferred Stock --
50,000,000 authorized shares, par value $.001
no shares issued and outstanding
Common Stock 6,950
100,000,000 authorized shares, par value $.001
6,950,000 shares issued and outstanding
Additional Paid-in-Capital --
Accumulated Deficit (6,699)
-------
Total Stockholders' Equity (Deficit) 251
-------
Total Liabilities and Stockholders' Equity 251
=======
The accompanying notes are integral part of consolidated financial statements.
F-2
<PAGE>
B Y & C Management, Inc.
(A Development Stage Enterprise)
Statement of Operations
<TABLE>
<CAPTION>
-------------------------- ------------
For the Year Ended From 4/28/98
June 30 to June 30
-------------------------- ------------
2000 1999 2000
----------- ----------- ------------
<S> <C> <C> <C>
Revenues:
Revenues -- 10,000 126,000
----------- ----------- -----------
Total Revenues $ -- $ -- $ 126,000
Expenses:
Consulting 2,350 -- 56,226
Professional Fees -- 35,879 39,085
Operating Expenses 9,122 16,746 23,117
----------- ----------- -----------
Total Expenses 11,472 52,625 118,428
Net Income (Loss) from Operations $ (11,472) $ (42,625) $ 7,572
Other Income and Expenses:
Sale of Assets (14,271) -- (14,271)
----------- ----------- -----------
Net Income before Taxes $ (25,743) $ (42,625) $ (6,699)
Provision for Income Taxes:
Income Tax Benefit -- -- --
Net Income (Loss) $ (25,743) $ (42,625) $ (6,699)
=========== =========== ===========
Basic and Diluted Earnings Per Common Share (0.004) (0.006) (0.001)
----------- ----------- -----------
Weighted Average number of Common Shares
used in per share calculations 6,950,000 6,950,000 6,950,000
=========== =========== ===========
</TABLE>
The accompanying notes are integral part of consolidated financial statements.
F-3
<PAGE>
B Y & C Management, Inc.
(A Development Stage Enterprise)
Statement of Stockholders' Equity
As of June 30, 2000
<TABLE>
<CAPTION>
$0.001 Paid-In Accumulated Stockhoders'
Shares Par Value Capital Deficit Equity
--------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
Balance, April 28, 1998 -- $ -- $ -- $ -- $ --
Stock Issuance* 6,950,000 6,950 -- -- 6,950
Net Income (Loss) 61,669 61,669
--------- --------- --------- --------- ---------
Balance, June 30, 1998 6,950,000 6,950 -- 61,669 68,619
Net Income (Loss) (42,625) (42,625)
--------- --------- --------- --------- ---------
Balance, June 30, 1999 6,950,000 6,950 -- 19,044 25,994
Net Income (Loss) (25,743) (25,743)
--------- --------- --------- --------- ---------
Balance May 31, 2000 6,950,000 $ 6,950 $ -- $ (6,699) $ 251
========= ========= ========= ========= =========
</TABLE>
*Retroactively Restated
The accompanying notes are integral part of consolidated financial statements.
F-4
<PAGE>
B Y & C Management Inc.
(A Development Stage Enterprise)
Statement of Cash Flows
<TABLE>
<CAPTION>
-------------------------- ------------
For the Year Ended From 4/28/98
June 30 to June 30
-------------------------- ------------
2000 1999 2000
----------- ----------- ------------
<S> <C> <C> <C>
Cash Flows from Operating Activities:
Net Income (Loss) $(25,743) $(42,625) $ (6,699)
Changes in operating assets and liabilities:
Stock issued for Services -- -- 6,950
-------- -------- --------
Total Adjustments -- -- 6,950
-------- -------- --------
Net Cash Used in Operating Activities $(25,743) $(42,625) $ 251
Cash Flows from Investing Activities:
Assets Sold 25,081 -- --
Investments Purchased -- (3,633) --
-------- -------- --------
Net Cash Used in Investing Activities $ 25,081 $ (3,633) $ --
-------- -------- --------
Cash Flows from Financing Activities:
Note Payable -- -- --
Common Stock -- -- --
-------- -------- --------
Net Cash Provided for Financing Activities $ -- $ -- $ --
-------- -------- --------
Net Increase (Decrease) in Cash $ (662) $(46,258) $ 251
Cash Balance, Begin Period 913 47,171 --
-------- -------- --------
Cash Balance, End Period $ 251 $ 913 $ 251
======== ======== ========
Supplemental Disclosures:
Cash Paid for interest $ -- $ -- $ --
Cash Paid for income taxes $ -- $ -- $ --
Stock Issued for Services $ -- $ -- $ 6,950
</TABLE>
The accompanying notes are integral part of consolidated fina ncial statements.
F-5
<PAGE>
B Y & C Management, Inc.
Notes to Financial Statements
Note 1 - Summary of Significant Accounting Policies
Organization
B Y & C Management, Inc. ("the Company") was incorporated under the laws of the
State of Florida on April 28, 1998 for the purpose to promote and carry on any
lawful business for which a corporation may be incorporated under the laws of
the State of Florida. The company has a total of 100,000,000 authorized common
shares with a par value of $.001 per share and with 6,950,000 common shares
issued and outstanding as of June 30, 2000. The Company has a total of
50,000,000 authorized shares of preferred stock with a par value of $.001 and no
shares are outstanding. On June 27, 2000, the Company filed a Certificate of
Amendment to the Articles of Incorporation with the Florida Corporation
Commission to increase the authorized common shares to 100,000,000, authorize
50,000,000 in preferred shares, and change the par value to $.001. The Company
has been mostly inactive since inception and has little or no operating revenues
or expenses.
Development Stage Enterprise
The Company is a development stage enterprise, as defined in Financial
Accounting Standards Board No. 7. The Company is devoting all of its present
efforts in securing and establishing a new business, and its planned principal
operations have not commenced, and, accordingly, no revenue has been derived
during the organizational period other than the initial revenue of $126,000.
Fixed Assets
The Company has no fixed assets at this time.
Federal Income Tax
The Company has adopted the provisions of Financial Accounting Standards Board
Statement No. 109, Accounting for Income Taxes. The Company accounts for income
taxes pursuant to the provisions of the Financial Accounting Standards Board
Statement No. 109, "Accounting for Income Taxes", which requires an asset and
liability approach to calculating deferred income taxes. The asset and liability
approach requires the recognition of deferred tax liabilities and assets for the
expected future tax consequences of temporary differences between the carrying
amounts and the tax basis of assets and liabilities.
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 on
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.
F-6
<PAGE>
B Y & C Management, Inc.
Notes to Financial Statements
Note 1 - Summary of Significant Accounting Policies (con't)
Accounting Method
The Company's financial statements are prepared using the accrual method of
accounting. Revenues are recognized when earned and expenses when incurred.
Fixed assets are stated at cost. Depreciation and amortization using the
straight-line method for financial reporting purposes and accelerated methods
for income tax purposes.
Earnings per Common Share
The Company adopted Financial Accounting Standards (SFAS) No. 128, "Earnings Per
Share," which simplifies the computation of earnings per share requiring the
restatement of all prior periods.
Basic earnings per share are computed on the basis of the weighted average
number of common shares outstanding during each year.
Diluted earnings per share are computed on the basis of the weighted average
number of common shares and dilutive securities outstanding. Dilutive securities
having an anti-dilutive effect on diluted earnings per share are excluded from
the calculation.
Comprehensive Income
Statement of Financial Accounting Standards (SFAS) No. 130, "Reporting
Comprehensive Income," establishes standards for reporting and display of
comprehensive income, its components and accumulated balances. Comprehensive
income is defined to include all changes in equity except those resulting from
investments by owners and distributions to owners. Among other disclosures, SFAS
No.130 requires that all items that are required to be recognized under current
accounting standards as components of comprehensive income be reported in a
financial statement that is displayed with the same prominence as other
financial statements. The Company does not have any assets requiring disclosure
of comprehensive income.
Segments of an Enterprise and Related Information
Statement of Financial Accounting Standards (SFAS) No. 131, Disclosures about
Segments of an Enterprise and Related Information, supersedes SFAS No. 14,
"Financial Reporting for Segments of a Business Enterprise." SFAS 131
establishes standards for the way that public companies report information about
operating segments in annual financial statements and requires reporting of
selected information about operating segments in interim financial statements
issued to the public. It also establishes standards for disclosures regarding
products and services, geographic areas and major customers. SFAS 131 defines
operating segments as components of a company about which separate financial
information is available that is evaluated regularly by the chief operating
decision maker in deciding how to allocate resources and in assessing
performance. The Company has evaluated this SFAS and does not believe it is
applicable at this time.
F-7
<PAGE>
B Y & C Management, Inc.
Notes to Financial Statements
Note 2 - Common Stock
In April of 1998, a total of 6,950 shares of stock were issued for consulting
services to the founders of the Company. On June 26, 2000, the Company approved
a 1000/1 forward split of the common shares making the total shares outstanding
as 6,950,000 as of June 30, 2000.
Note 3 - Other Income and Expenses
The Company had acquired an automobile in June of 1998 for $21,448. The
automobile was sold for $5,100 in September of 1999 which resulted in a loss of
$16,348. Also, the Company had purchased some stock in March of 1999 and sold
the shares in September of 1999 which resulted in a gain of $2,077.
Note 4 - Related Parties
The Organization has no significant related party transactions and/or
relationships any individuals or entities.
Note 5 - Subsequent Events
There were no other material subsequent events that have occurred since the
balance sheet date that warrants disclosure in these financial statements.
F-8
<PAGE>
B Y & C Management Inc.
(A Development Stage Enterprise)
Balance Sheet
<TABLE>
<CAPTION>
September 30 June 30
2000 2000
------------------------
A S S E T S
(Unaudited) (Audited)
<S> <C> <C>
Current Assets
Cash $ 14,547 $ 251
-------- --------
Total Current Assets 14,547 251
-------- --------
Total Assets $ 14,547 $ 251
======== ========
L I A B I L I T I E S
Current Liabilities
Taxes Payable --
-------- --------
Total Current Liabilities -- --
-------- --------
Total Liabilities -- --
Commitments and Contingencies -- --
S T O C K H O L D E R S ' E Q U I T Y
Preferred Stock --
50,000,000 authorized shares, par value $.001
no shares issued and outstanding
Common Stock 7,020 6,950
100,000,000 authorized shares, par value $.001
7,020,000 and 6,950,000 shares issued and outstanding
Additional Paid-in-Capital 69,930 --
Accumulated Deficit (62,403) (6,699)
-------- --------
Total Stockholders' Equity (Deficit) 14,547 251
-------- --------
Total Liabilities and Stockholders' Equity $ 14,547 $ 251
======== ========
</TABLE>
The accompanying notes are integral part of the financial statements.
F-9
<PAGE>
B Y & C Management Inc.
(A Development Stage Enterprise)
Statement of Operations
(Unaudited)
<TABLE>
<CAPTION>
---------------------------------- -----------
For the Three Months Ended From 4/28/98
September 30 to Sept 30
---------------------------------- -----------
2000 1999 2000
----------- ----------- -----------
<S> <C> <C> <C>
Revenues:
Revenues -- -- 126,000
----------- ----------- -----------
Total Revenues $ -- $ -- $ 126,000
Expenses:
Consulting Services 8,000 2,000 64,226
Professional Fees 42,800 0 76,885
Operating Expenses 4,904 8,464 28,021
----------- ----------- -----------
Total Expenses 55,704 8,464 169,132
Net Income (Loss) from Operations $ (55,704) $ (8,464) $ (43,132)
Other Income and Expenses:
Sale of Assets -- -- (14,271)
----------- ----------- -----------
Net Income before Taxes (55,704) (8,464) (57,403)
Provision for Income Taxes:
Income Tax Benefit -- -- --
Net Income (Loss) $ (55,704) $ (8,464) $ (57,403)
=========== =========== ===========
Basic and Diluted Earnings Per Common Share (0.008) (0.001) (0.008)
----------- ----------- -----------
Weighted Average number of Common Shares 7,000,560 6,950,000 7,000,560
used in per share calculations =========== =========== ===========
</TABLE>
The accompanying notes are integral part of the financial statements.
F-10
<PAGE>
B Y & C Management Inc.
(A Development Stage Enterprise)
Statement of Stockholders' Equity
As of September 30, 2000
<TABLE>
<CAPTION>
$0.001 Paid-In Accumulated Stockholders'
Shares Par Value Capital Deficit Equity
---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Balance, April 28, 1998 -- $ -- $ -- $ -- $ --
Stock Issuance * 6,950,000 6,950 -- -- 6,950
Net Income (Loss) 61,669 61,669
---------- ---------- ---------- ---------- ----------
Balance, June 30, 1998 6,950,000 6,950 -- 61,669 68,619
Net Income (Loss) (42,625) (42,625)
---------- ---------- ---------- ---------- ----------
Balance, June 30, 1999 6,950,000 6,950 -- 19,044 25,994
Net Income (Loss) (25,743) (25,743)
---------- ---------- ---------- ---------- ----------
Balance June 30, 2000 6,950,000 6,950 -- (6,699) 251
Shares Issued for Cash 65,000 65 64,935 65,000
Shares Issued for Services 5000 5 4,995 5,000
Net Income (Loss) (55,704) (55,704)
-------------------------------------------------------------------------------------
Balance September 30, 2000 7,020,000 $ 7,020 $ 69,930 $ (62,403) $ 14,547
=====================================================================================
</TABLE>
The accompanying notes are integral part of the financial statements.
F-11
<PAGE>
B Y & C Management Inc.
(A Development Stage Enterprise)
Statement of Cash Flows
(Unaudited)
<TABLE>
<CAPTION>
-------------------------- ------------
For the Three Months Ended From 4/28/98
September 30 to Sept 30
-------------------------- ------------
2000 1999 2000
---------- ---------- ------------
<S> <C> <C> <C>
Cash Flows from Operating Activities:
Net Income (Loss) $(55,704) $ (8,464) $(57,403)
Changes in operating assets and liabilities:
Stock issued for Services 5,000 -- 6,950
-------- -------- --------
Total Adjustments 5,000 -- 6,950
-------- -------- --------
Net Cash Used in Operating Activities $(50,704) $ (8,464) $(50,453)
Cash Flows from Investing Activities:
Assets Sold --
Investments Purchased -- -- --
-------- -------- --------
Net Cash Used in Investing Activities $ -- $ -- $ --
-------- -------- --------
Cash Flows from Financing Activities:
Note Payable -- -- --
Common Stock 65,000 -- 65,000
-------- -------- --------
Net Cash Provided for Financing Activities $ 65,000 $ -- $ 65,000
-------- -------- --------
Net Increase (Decrease) in Cash $ 14,296 $ (8,464) $ 14,547
Cash Balance, Begin Period 251 9,123 --
-------- -------- --------
Cash Balance, End Period $ 14,547 $ 659 $ 14,547
======== ======== ========
Supplemental Disclosures:
Cash Paid for interest $ -- $ -- $ --
Cash Paid for income taxes $ -- $ -- $ --
Stock Issued for Services 5,000 -- 6,950
</TABLE>
The accompanying notes are integral part of the financial statements.
F-12
<PAGE>
PART I
Item 1. Financial Statements
The financial statements included herein have been prepared by the Company,
without audit, pursuant to the rules and regulations of the Securities and
Exchange Commission. Certain information and footnote disclosures normally
included in financial statements prepared in accordance with the generally
accepted accounting principles have been omitted. However, in the opinion of
management, all adjustments (which include only normal recurring accruals)
necessary to present fairly the financial position and results of operations for
the period presented have been made. The results for interim periods are not
necessarily indicative of trends or of results to be expected for the full year.
These financial statements should be read in conjunction with the financial
statements and notes thereto included in the Company's registration statement on
Form 10KSB, as amended.
Common Stock
The Company has issued 65,000 shares of Common Stock pursuant to a private
placement memorandum in July 2000. The Company received a total of $65,000 cash
for the common shares issued. Also, the Company issued 5,000 shares of Common
Stock in August 2000 for legal services. The shares for legal services was
valued at $5,000 by the Company.
F-13
<PAGE>
Changes in and Disagreements with Accountants on Accounting and Financial
Disclosure
In July 2000, our Board of Directors appointed Clyde Bailey, P.C., independent
accountants, to audit our financials statements from April 29, 1998 (our date of
formation) through June 30, 2000.
There have been no disagreements with our accountants since our formation
required to be disclosed pursuant to Item 304 of Regulation S-B.
LEGAL MATTERS
The validity of the issuance of the shares of common stock offered by the
selling security holders has been passed upon by the law firm of Stepp &
Beauchamp LLP, located in Newport Beach, California.
EXPERTS
Our financial statements for the period ended June 30, 2000 appearing in this
prospectus which is part of a Registration Statement have been audited by Clyde
Bailey, P.C., and are included in reliance upon such reports given upon the
authority of Clyde Bailey, P.C., as experts in accounting and auditing.
ADDITIONAL INFORMATION
We have filed a Registration Statement on Form SB-2 with the Securities and
Exchange Commission pursuant to the Securities Act of 1933 with respect to the
common stock offered by the selling security holders. This prospectus does not
contain all of the information set forth in the Registration Statement and the
exhibits and schedules to the Registration Statement. For further information
regarding us and our common stock offered hereby, reference is made to the
Registration Statement and the exhibits and schedules filed as a part of the
Registration Statement.
PART II - INFORMATION NOT REQUIRED IN PROSPECTUS
Indemnification of Directors and Officers
Article VIII of our Bylaws provides, among other things, that our officers or
directors shall not be personally liable to us or our shareholders for monetary
damages for breach of fiduciary duty as an officer or director, except for
liability
o for any breach of such director's duty of loyalty to us or our
security holders;
o for acts or omissions not in good faith or which involve intentional
misconduct or a knowing violation of law;
o for unlawful payments of dividends or unlawful stock purchase or
redemption by the corporation; or
o for any transaction from which such officer or director derived any
improper personal benefit.
Accordingly, our officers or directors may have no liability to our shareholders
for any mistakes or errors of judgment or for any act or omission, unless such
act or omission involves intentional misconduct, fraud, or a knowing violation
of law or results in unlawful distributions to our shareholders.
Indemnification Agreements. We anticipate that we will enter into
indemnification agreements with each of our
22
<PAGE>
executive officers pursuant to which we will agree to indemnify each such person
for all expenses and liabilities, including criminal monetary judgments,
penalties and fines, incurred by such person in connection with any criminal or
civil action brought or threatened against such person by reason of such person
being or having been our officer or director or employee. In order to be
entitled to indemnification by us, such person must have acted in good faith and
in a manner such person believed to be in our best interests and, with respect
to criminal actions, such person must have had no reasonable cause to believe
his or her conduct was unlawful.
Insofar as indemnification for liabilities arising under the Securities Act of
1933 may be permitted to our directors, officers and controlling persons
pursuant to the foregoing provisions, or otherwise, we have been advised that in
the opinion of the Securities and Exchange Commission such indemnification is
against public policy as expressed in the Act and is, therefore, unenforceable.
Other Expenses of Issuance and Distribution
We will pay all expenses in connection with the registration and sale of the
common stock by the selling security holders. The estimated expenses of issuance
and distribution are set forth below.
===========================================================================
Registration Fees Approximately $22.44
---------------------------------------------------------------------------
Transfer Agent Fees Approximately $500.00
---------------------------------------------------------------------------
Costs of Printing and Engraving Approximately $500.00
---------------------------------------------------------------------------
Legal Fees Approximately $10,000.00
---------------------------------------------------------------------------
Accounting Fees Approximately $2,500.00
===========================================================================
Recent Sales of Unregistered Securities
There have been no sales of unregistered securities within the last three (3)
years which would be required to be disclosed pursuant to Item 701 of Regulation
S-B, except for the following:
On November 7, 2000, we issued 15,000 shares of our common stock to Bruce
Younker, in a transaction which we believe satisfies the requirements of that
certain exemption from the registration and prospectus delivery requirements of
the Securities Act of 1933, which exemption is specified by the provisions of
Section 4(2) of that act and Rule 506 of Regulation D promulgated pursuant to
that act by the Securities and Exchange Commission. The shares were issued in
exchange for consulting services provided to us.
On August 25, 2000, we issued 5,000 shares of our common stock to Michael
Muellerleile, in a transaction which we believe satisfies the requirements of
that certain exemption from the registration and prospectus delivery
requirements of the Securities Act of 1933, which exemption is specified by the
provisions of Section 4(2) of that act and Rule 506 of Regulation D promulgated
pursuant to that act by the Securities and Exchange Commission. The shares were
issued in exchange for legal services provided to us.
On or about August 9, 2000, we issued 65,000 shares of our common stock for
$1.00 per share. The shares were issued in a transaction which we believe
satisfies the requirements of that certain exemption from the registration and
prospectus delivery requirements of the Securities Act of 1933, which exemption
is specified by the provisions of Section 4(2) of that act and Rule 506 of
Regulation D promulgated pursuant to that act by the Securities and Exchange
Commission. Specifically, the offer was made to "accredited investors", as that
term is defined under applicable federal and state securities laws, and no more
than 35 non-accredited investors. The value of the shares was arbitrarily set by
us and had no relationship to our assets, book value, revenues or other
established criteria of value. There were no commissions paid on the sale of
those shares. The net proceeds were $65,000. All twenty one purchasers of shares
of our common stock were business associates, personal friends or family members
of Robert A. Younker, our President and one of our directors, or Carol Jean
Gehlke, our Secretary, Treasurer and one of our directors.
In May 1998, we issued 6,950 shares of our $1.00 par value common stock to
Robert A. Younker, Carol Jean Gehlke, Calvin K. Mees, Bruce Younker, Richard
Ross, Mark Jacques and Cindy Podosin in exchange for their services in
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reliance on the exemption specified by the provisions of Section 4(2) of the
Securities Act of 1933, as amended. On June 26, 2000, we amended our Articles of
Incorporation to authorize 100,000,000 shares of $.001 par value common stock.
On July 10, 2000, our Board of Directors authorized a forward split of 1000 to
1.
Exhibits
Copies of the following documents are filed with this Registration
Statement as exhibits:
Exhibit No.
1. Underwriting Agreement (not applicable)
3.1 Articles of Incorporation* (Charter Document)
3.1 Certificate of Amendment to Articles of Incorporation* (Charter Document)
3.2 Bylaws*
5. Opinion Re: Legality
8. Opinion Re: Tax Matters (not applicable)
11. Statement Re: Computation of Per Share Earnings**
15. Letter on unaudited interim financial information (not applicable)
23.1 Consent of Auditors
23.2 Consent of Counsel***
24. Power of Attorney is included on the Signature Page of the Registration
Statement
27. Financial Data Schedule
* Included in Registration Statement on Form 10-SB filed on September 7,
2000.
** Included in Financial Statements
*** Included in Exhibit 5
Undertakings
A. Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to our directors, officers and controlling persons
pursuant to the foregoing provisions, or otherwise, we have been advised that in
the opinion of the Securities and Exchange Commission such indemnification is
against public policy as expressed in the Securities Act of 1933 and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by us of expenses incurred or paid by
our director, officer or controlling person 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, we will, unless in
the opinion of our 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 Securities
Act of 1933 and will be governed by the final adjudication of such issue.
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B. We hereby undertake:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this Registration Statement:
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
(ii) To specify in the prospectus any facts or events arising after
the effective date of the Registration Statement (or most
recent post-effective amendment thereof) which, individually
or in the aggregate, represent a fundamental change in the
information set forth in the Registration Statement.
Notwithstanding the foregoing, any increase or decrease in
volume of securities offered (if the total dollar value of
securities offered would not exceed that which was registered)
and any deviation from the low or high end of the estimated
maximum offering range may be reflected in the form of
prospectus filed with the Securities and Exchange Commission
pursuant to Rule 424(b) (Section 230.424(b) of Regulation S-B)
if, in the aggregate, the changes in volume and price
represent no more than a 20% change in the maximum aggregate
offering price set forth in the "Calculation of Registration
Fee" table in the effective Registration Statement; and
(iii) To include any additional or changed material information with
respect to the plan of distribution not previously disclosed
in the Registration Statement or any material change to such
information in the Registration Statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be
deemed to be a new Registration Statement relating to the securities
offered therein, and the offering of such securities at that time
shall be deemed to be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment any
of the securities being registered which remain unsold at the
termination of the offering.
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SIGNATURES
In accordance with the requirements of the Securities Act of 1933, as amended,
we certify that we have reasonable grounds to believe that we meet all of the
requirements of filing on Form SB-2 and authorized this Registration Statement
to be signed on our behalf by the undersigned, in the city of Newport Beach,
California, on November 20, 2000.
B Y & C, Management, Inc.,
a Florida corporation
By: /s/ Robert A. Younker
--------------------------------
Robert A. Younker
Its: President, Director
In accordance with the requirements of the Securities Act of 1933, this
Registration Statement was signed on this 20th day of November, 2000, the
following persons in the capacities and on the dates stated:
/s/ Robert Younker November 20, 2000
------------------------------------
Robert Younker
President, Director
/s/ Carol Jean Gehlke November 20, 2000
------------------------------------
Carol Jean Gehlke
Secretary, Treasurer, Director
/s/ Calvin K. Mees November 20, 2000
------------------------------------
Calvin K. Mees
Director
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POWER OF ATTORNEY
Each person whose signature appears below constitutes and appoints and hereby
authorizes Robert A. Younker with the full power of substitution, as
attorney-in-fact, to sign in such person's behalf, individually and in each
capacity stated below, and to file any amendments, including post-effective
amendments to this Registration Statement.
In accordance with the requirements of the Securities Act of 1933, this
Registration Statement was signed by the following persons in the capacities and
on the dates stated.
B Y & C Management, Inc.
/s/ Robert Younker November 20, 2000
------------------------------------
Robert Younker
President, Director
/s/ Carol Jean Gehlke November 20, 2000
------------------------------------
Carol Jean Gehlke
Secretary, Treasurer, Director
/s/ Calvin K. Mees November 20, 2000
------------------------------------
Calvin K. Mees
Director
27
