SMALL BUSINESS ISSUERS
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-SB
GENERAL FORM FOR REGISTRATION OF SECURITIES
OF SMALL BUSINESS ISSUERS
Under Section 12(b) or (g) of The Securities Exchange Act of 1934
ValuSALES.com, Inc.
4101 Ravenswood Road, Suite 209, Fort Lauderdale, FL 33312
954-792-3773
State of Incorporation: Florida EIN # 65-0910376
Securities to be registered under Section 12(b) of the Act:
None
Securities to be registered under section 12 (g) of the Act:
Common Stock
<PAGE>
<TABLE>
<CAPTION>
TABLE OF CONTENTS
PART I
<S> <C>
ITEM 1. DESCRIPTION OF BUSINESS..................................................................... 3
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR
PLAN OF OPERATION.................................................................... 5
ITEM 3. DESCRIPTION OF PROPERTY..................................................................... 7
ITEM 4. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT................................................................ 7
ITEM 5. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS
AND CONTROL PERSONS.................................................................. 8
ITEM 6. EXECUTIVE COMPENSATION...................................................................... 8
ITEM 7. CERTAIN RELATIONSHIPS AND RELATED
TRANSACTIONS ..................................................................... 9
ITEM 8. DESCRIPTION OF SECURITIES................................................................... 9
PART II
ITEM 1. MARKET FOR COMMON EQUITY AND RELATED
STOCKHOLDER MATTERS ................................................................. 9
ITEM 2. LEGAL PROCEEDINGS........................................................................... 10
ITEM 3. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE.................................................. 10
ITEM 4. RECENT SALE OF UNREGISTERED SECURITIES...................................................... 10
ITEM 5. INDEMNIFICATION OF DIRECTORS AND OFFICERS................................................... 10
PART F/S
FINANCIAL STATEMENTS........................................................................ 11
PART III
ITEM 1 INDEX TO EXHIBITS ................................................................... 11
SIGNATURES ........................................................................................... 12
</TABLE>
2
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NOTE REGARDING FORWARD-LOOKING STATEMENTS
Certain matters discussed in this Registration Statement on
Form 10SB are "forward-looking statements" intended to qualify for the safe
harbors from liability established by the Private Securities Litigation Reform
Act of 1995. These forward-looking statements can generally be identified as
such because the context of the statement will include words such as the Company
"believes," "anticipates," "expects," "estimates" or words of similar meaning.
Similarly, statements that describe the Company's future plans, objectives or
goals are also forward-looking statements. Such forward-looking statements are
subject to certain risks and uncertainties which are described in close
proximity to such statements and which could cause actual results to differ
materially from those anticipated as of the date of this report. Shareholders,
potential investors and other readers are urged to consider these factors in
evaluating the forward-looking statements and are cautioned not to place undue
reliance on such forward-looking statements. The forward-looking statements
included herein are only made as of the date of this report and the Company
undertakes no obligation to publicly update such forward-looking statements to
reflect subsequent events or circumstances.
ITEM 1 - DESCRIPTION OF BUSINESS
--------------------------------
ValuSALES.com, Inc. a Florida corporation (the "Company") is in the
business of marketing Internet and Technology products and services. The Company
was incorporated in the State of Florida on August 22, 1997, under the name of
September Project II Corp. Pursuant to a Merger Agreement with ValuSALES, Inc.,
the Company merged into September Project II Corp. and thereupon, changed its
name to ValuSALES.com, Inc., which is its current name. The Company is
headquartered at 4101 Ravenswood Road Suite 209, Fort Lauderdale, FL 33312.
Business
The Company provides value-added services that assist clients in
establishing, developing and maintaining their Internet and e-commerce related
businesses. The Company offers e-commerce solutions, business-to-business
services, marketing solutions, web site development, web site hosting, data base
design and management, computer hardware, computer software, computer
networking, and Internet Mortgage banking.
The company generates revenues from four Groups: the Odyssey
Advertising Group, the Web Odyssey Group, the ValuComputers.com Group and the
ValuMortgages.com Group.
Groups
1) Odyssey Advertising Group
This group is a full service Internet and media advertising, corporate
identity development, and marketing group specializing in aiding clients to
better reach their revenue potential through conventional media and the
Internet. The Company engages in various media and Internet related services,
from audio and visual solutions to Internet commercials. The Company's small to
medium customers include Kelly Tractor, Pantropic Power, and Copylite Products
all of South Florida.
2) Web Odyssey Group
This group develops, designs and hosts web sites for companies
interested in e-commerce solutions. The group provides value-added services that
assist companies in establishing, developing and maintaining their Internet and
e-commerce related businesses.
3) ValuComputers.com Group
This group provides network and Internet solutions for small and
mid-size businesses. These products and services include computer hardware,
software applications, networking, and consulting services.
3
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The Company specializes in several product areas as a Value Added
Reseller. The division assembles custom configured PC's which are typically sold
with a PC network, Internet services, and application software. All of the
Company's products are sold with hardware and software service, training, and
consulting. Because of this full service approach, the Company is able to
achieve acceptable operating profit margins. These additional value added
services, complement the Company's hardware sales.
The Company intends to grow this group through the acquisition of other
regional Value Added Resellers. Currently there are many companies offering
similar products and services. The Company's strategy is to acquire other
resellers in economically desirable areas and integrate products and services.
The Valucomputers Group offers a full line of name brand new and
refurbished computer products such as PCs and printers from manufacturers
including IBM, Compaq, and HP.
4) ValuMortgages.com Group
ValuMortgages.com, is what the Company believes to be, a next
generation Internet mortgage banking firm. ValuMORTGAGES.com combines Internet
technology with its role as a mortgage banker to make mortgages easier, faster
and cheaper for customers to obtain. The Company also believes that its services
are more efficient for lenders, brokers, Realtors and homebuilders to provide to
their clients. The Company, ValuSales.com, Inc. d/b/a Valumortgages.com has a
web site, www.valumortgages.com and is licensed with the State of Florida,
Department of Banking and Finance, License audit Number: 0000042 as a Mortgage
Lender.
The Company believes that on-line mortgages represent a large,
rapidly growing market. The Company is dedicated to service when providing
on-line mortgages directly to consumers. Additionally, ValuMortgages.com was
recently launched in Spanish. By targeting the Hispanic marketplace,
Valumortgages.com the Company believes it has targeted a growing niche market.
There are many factors that could affect the success of the
Company. To the extent that our marketing efforts do not result in significantly
higher net sales, we will be materially adversely affected. Also, we could
expect to experience significant fluctuations in our future operating results
due to a variety of factors, many of which are outside our control. Factors that
may affect our operating results include the availability of competitive
products for resale, success of joint ventures, mix of product sales and the
ability to attract and maintain high quality sales, marketing and technology
staff.
Marketing
The Company promotes its various sales and marketing group's
by direct sales efforts using telephone sales, conventional media advertising,
and some Internet marketing. These advertisements are targeted at small and
medium business customers who are likely to respond to specific ads or visit
specific web sites to make a purchase. The Company employs several inside and
outside sales people to help customers and to prospect business from various
forms of lead generation.
Market
Growth in Internet usage has been fueled by a number of factors,
including the large and growing base of personal computers installed in the
workplace and the increased awareness of the Internet among consumer and trade
customers.
According to Internet World, computers and computer equipment represent
the number one category on the Internet in terms of what consumers are
purchasing on line. The market for new and used computers is estimated at well
over $100 billion for 1999 worldwide and U.S. personal computer sales at more
than $50 billion, according to the Computer Almanac. Experts predict growth
rates in this market of 6% annually well into the twenty-first century. Industry
analysts agree, citing that changing technologies will continue to drive the
demand for newer and faster personal computers.
Internet services as well are seeing more and more business. Growing
demand for better performance and more useful content has driven many companies
to out-source their Web hosting resources.
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The Company currently has an extremely small portion of these markets
and there can be no assurances that it will be able to penetrate these markets
further in the future.
Competition
There are many competitors in the Internet commerce and services
markets. The premiere web development, hosting, and advertising companies
include; Mindspring, Highway Technologies, AOL, and Double Click. The
competition the Company faces in the PC products and services markets are IBM,
DELL, Compaq, Egghead, Cyberian Outpost, and many more. These companies are
formidable competitors for direct marketing of PC hardware and Internet
services.
Most, if not all of the Company's competitors have significant
competitive advantages. Internet search engines, and large traditional retailers
have significantly greater operating histories, customer bases and brand
recognition and/or e-commerce experience. In addition, certain competitors may
be able to devote significantly greater resources to marketing campaigns,
attracting traffic to their Web sites and attracting and retaining key
employees. As we expand the Company's business through the introduction of new
products and services, the Company will face competition from established
providers of these products and services.
The Company also potentially faces competition from a number of on-line
services that have expertise in developing on-line commerce and facilitating
Internet traffic. These potential competitors include Amazon.com, America
Online, Microsoft and Yahoo! who could choose to compete with the Company either
directly or indirectly through affiliations with other e-commerce companies.
Other large companies with strong brand recognition, technical expertise and
experience in on-line commerce and direct marketing could also seek to compete
in the buyer driven commerce market.
Competitive Position
Competition in this area is extremely active; the growth rate of
Internet commerce far exceeds the number of new players entering the field.
Though several notable Internet players operate under a similar model as the
Company's, most of these companies distribute solely through the Internet and
utilize only one major supply channel for their source of new hardware, software
and other equipment. We believe that the infancy of the Internet and e-commerce
is far from blossoming and opportunities will continue to be abundant in all
areas of Internet merchandise sales and services.
The Company believes it differentiates from our competitors in the following
main areas:
We are broadly diversified through our network of acquired companies, joint
ventures and affiliations.
o We offer companies a full-service Internet solution: e-commerce
solutions, B2B services ,marketing solutions, web site design and
hosting, computer hardware, software & networking, and Internet
Mortgage banking.
o We operate multiple sales formats that include direct sales, web site
sales, B-inventory sales (closeouts/liquidations) and email sales.
o We cater to the Hispanic market by providing ValuMortgages.com in
Spanish.
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
--------------------------------------------------------------------------------
OF OPERATIONS
-------------
The following discussion of the financial condition and results of
operations of the Company should be read in conjunction with the Financial
Statements, including the Notes thereto, of the Company included elsewhere in
this registration statement. Forward-looking statements and comments in this
document are made pursuant to the safe harbor provision of Section 21E of the
Securities Exchange Act of 1934. Such statements relating to, among other
things, the prospects for the Company to increase the level of sales, maintain
current sales levels, add new products and services and develop new Web sites
are necessarily subject to risks and uncertainties, some of which are
significant in scope and nature, including risks related to the demand for the
Company's products and services, competition, and availability of capital.
5
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Overview
The Company provides value-added services that assist clients in
establishing, developing and maintaining their Internet and e-commerce related
businesses. The Company intends to leverage as an Internet solutions provider by
enhancing its brand recognition, developing incremental revenue opportunities
and building its product and service offerings.
Management believes that the key factor affecting the Company's
long-term financial success is its ability to attract and retain customers in a
cost-effective manner. Currently, the Company is seeking to expand its customer
base and encourage repeat buying through multiple domestic marketing programs.
Such programs include: (i) brand development, (ii) on-line and off-line
marketing and promotional campaigns (iii) direct marketing programs designed to
generate repeat sales from existing customers, and (iv) growth of the Company's
direct sales force concentrating on small to medium sized businesses. The
Company believes it can use its sales and marketing expertise along with the
Internet as a powerful marketing tool to develop revenues in a consistent
manner.
The Company expects to experience fluctuations in its future operating
results due to a variety of factors, many of which are outside the control of
the Company. Factors that may affect the Company's operating results include the
frequency of new product releases, success of strategic alliances, mix of
product sales and seasonality of sales typically experienced by retailers. Sales
in the computer retail industry are significantly affected by the release of new
products. Infrequent or delayed new product releases, when they occur,
negatively impact the overall growth in computer retail sales. Gross profit
margins for Internet solutions, hardware, software and peripheral products vary
widely, with computer hardware generally having the lowest gross profit margins.
While the Company has some ability to affect its gross margins by varying its
product mix with higher margin products such as Internet related services
orders, the Company's sales mix will vary from period to period and the
Company's gross margins will fluctuate accordingly.
Results of Operations: Calendar year 1999
-----------------------------------------
Net sales are comprised of product and services sales, net of returns
and allowances. Net sales were $776,302 in 1999.
Cost of sales for the calendar year ended December 31,1999 were
$552,410. As a percentage of net sales, the Company's gross margin was 28.8% in
1999.
Selling, general and administrative expense includes administrative,
finance and purchasing personnel and related costs, general office and
depreciation expenses, as well as professional fees and advertising costs.
Selling, general and administrative expenses were $381,008 for the year ended
December 31, 1999.
Net cash used in operating activities was $146,275 for the year ended
December 31,1999. Net cash used in operating activities was primarily
attributable to net losses and partially offset by increases in trade payables.
Net cash provided by financing activities was $305,210 for the year
ended December 31,1999. Net cash provided by financing activities resulted from
the issuance of common stock in a Private Placement Offering and a loan from a
shareholder.
Results of Operations: Six-months ended June 30, 2000
-----------------------------------------------------
Net sales are comprised of product and services sales, net of returns
and allowances. Net sales were $1,250,865 for the six-months ended June 30,
2000.
Cost of sales for the six-months ended June 30, 2000 was $1,000,397.
As a percentage of net sales, the Company's gross margin was 20% for the
six-months ended June 30, 2000.
Selling, general and administrative expense includes administrative,
finance and purchasing personnel and related costs, general office and
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depreciation expenses, as well as professional fees and advertising costs.
Selling, general and administrative expenses were $318,471 six-months ended
June 30, 2000.
Net cash used in operating activities was $76,501 for the six-months
ended June 30, 2000. Net cash used in operating activities was primarily
attributable to net losses and partially offset by increase in trade payables.
Net cash provided by financing activities was $45,602 for the
six-months ended June 30, 2000. Net cash provided by financing activities
resulted from a loan form a shareholder.
As of June 30, 2000, the Company had $123,278 of working capital. The
Company believes that its current working capital, and cash generated from
operations in 2000 will be sufficient to meet the Company's cash requirements
through December 31, 2000. The Company's capital requirements will depend on
numerous factors, including the rates at which the Company expands its personnel
and infrastructure to accommodate growth and invests in new technologies. In
addition, as part of its strategy, the Company evaluates potential alliances
with businesses that extend or complement the Company's business. Future
alliances may be funded with alliance financing, institutional financing, or
additional equity offerings. There can be no assurance that future alliances, if
identified, will be consummated by the Company.
Management believes that based upon the current operating plan,
existing cash and cash equivalents, and cash generated from operations will be
sufficient to fund operating activities, capital expenditures and other
obligations through December 31, 2000. However, if the Company is not successful
in generating sufficient cash flow from operations or in raising additional
capital when required in sufficient amounts and on acceptable terms, these
failures could have a material adverse effect on the Company's business, results
of operations and financial condition. If additional funds are raised through
the issuance of equity securities, the percentage ownership of the Company's
then-current stockholders would be diluted.
There can be no assurance that the Company will be able to raise any
required capital necessary to achieve its targeted growth rates and future
continuance on favorable terms or at all.
The Company expects to continue with its current revenue growth plan as
experienced in the first two quarters of 2000 and believes that with current
available funds and funds generated from operations in 2000, there will be
sufficient capital resources to allow the Company to continue in existence as a
going concern.
ITEM 3 - DESCRIPTION OF PROPERTY
--------------------------------
The Company's corporate office is currently located at 4101 Ravenswood
Road, Suite 209, Fort Lauderdale, FL 33312. Pursuant to a written lease, the
Company leases approximately 2,950 square feet at an annual rent of $ 37,000.
The lease is for a term of 2 years.
The Company's ValuComputers.com office is currently located at 3310
Hillsboro Blvd. Deerfield Beach, FL 33442. Pursuant to a written lease, the
Company leases approximately 2,050 square feet at an annual rate of $32,000. The
lease is for a term of 1 year.
7
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ITEM 4 - SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
-----------------------------------------------------------------------
As of June 30, 2000, the Company had 10,000,000 shares of its Common
Stock issued and outstanding. The following table sets forth, as of June 30,
2000, the beneficial ownership of the Company's Common Stock (i) by the only
persons who are known by the Company to own beneficially more than 5% of the
Company's Common Stock; (ii) by each director of the Company; and (iii) by all
directors and officers as a group.
<TABLE>
<CAPTION>
Name and Amount
Address of of
Title of beneficial beneficial Percent of
Class owner owner class
<S> <C> <C>
Common Peter Fisher 650,000 6.5%
3310 Hillsboro Blvd.
Deerfield Beach, FL 33442
Albert Smith 620,000 6.2%
7727 Meadow Glen La.
Houston, TX 77063
Jim Joachimczyk 600,000 6.0%
1845 N. Warren
Milwaukee, WI 53202
Jonathan B. Silverstein 300,000 3.0%
1607 Osprey Bend
Weston, FL 33327
All officers and
Directors as a
Group (3 persons) 1,050,000 10.5%
</TABLE>
ITEM 5 - DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS
---------------------------------------------------------------------
Directors and Executive Officers. The following are the Directors and
Executive Officers of the Company. None of the Directors hold similar positions
in any reporting company. The directors named below will serve until the next
annual meeting of the Company's stockholders. Thereafter, directors will be
elected for one-year terms at the annual stockholders' meeting.
V. Jeffrey Harrell, age 34, is the Chairman of the Board, President,
and CEO of the Company. Mr. Harrell has held these positions since December
1999. Prior to joining ValuSales.com Mr. Harrell was employed by Southeast
Bankers Mortgage Corp. as Vice President of Sales from December 1998 to January
1999, and before that he served as Vice President of Kensington-Ashworth
Financial Group, Inc. from March 1994 to January 1998.
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Jonathan B. Silverstein, age 30, is the Vice President, Secretary and
Director of the Company. Mr. Silverstein has held these positions since December
1999. Prior to that, Mr. Silverstein was President and Founder of Odyssey
Advertising, Inc. from April 1997 to July 1999, and before that he served as
President of Silverstein Graphics, Inc. from December 1993 to January 1997.
Peter G. Fisher, age 38 is Executive Vice President and Director of the
Company. Mr. Fisher has held these positions since December 1999. Prior to that,
Mr. Fisher was President and Founder of Boca Technologies, Inc. from May 1997 to
July 1999, and before that he was Sales Manager for Computer Access
International, Inc. from January 1995 to May 1997.
ITEM 6 - EXECUTIVE COMPENSATION
-------------------------------
The Company paid the following salaries to its executives:
<TABLE>
<CAPTION>
1999 2000
<S> <C> <C>
V. Jeffrey Harrell, President, CEO, and
Chairman of the Board $2,000 $25,315
Jonathan B. Silverstein, VP and Secretary $25,500 $49,500
Peter Fisher, Executive VP $24,000 $49,500
</TABLE>
None of the executives received any stock options or stock dividends.
The three above executives received reimbursement for health insurance as part
of their compensation. The directors were not compensated for any Board of
Directors meetings.
ITEM 7 - CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
-------------------------------------------------------
On July 20, 1999 the Company acquired the assets of Boca Technologies,
Inc. for $50,000 and 600,000 shares of common stock.
On July 20, 1999 the Company acquired the assets of Odyssey
Advertising, Inc. for $25,000 and 300,000 shares of common stock.
At June 30, 2000 the Company owed $45,602 to one of its shareholders,
Latitude26 Venture Corp.
ITEM 8- DESCRIPTION OF SECURITIES
---------------------------------
The Company is authorized to issue up to 50,000,000 shares of Common
Stock, par value $.001 per share. Currently the Company has 10,000,000 shares
issued and outstanding. Holders of Common Shares are entitled to one vote per
Common Share on all matters to be voted on by stockholders. The Common Shares do
not have cumulative voting rights. Therefore, holders of a majority of the
Common Shares can elect all the members of the Board of Directors. A majority
vote is also sufficient for most other actions requiring the vote or concurrence
of stockholders. The Company's Officers and Directors as a group (three persons)
own directly approximately 10.9% of the Issuer's capital stock.
All Shares are entitled to share equally in dividends when and if
declared by the Board of Directors out of funds legally available therefore. It
is anticipated that the Company will not pay cash dividends on its Shares in the
foreseeable future. In the event of liquidation or dissolution of the Company,
whether voluntary or involuntary, holders of the Shares are entitled to share
equally in all assets of the Company legally available for distribution to
stockholders. The holders of Shares have no preemptive or other subscription
rights to acquire authorized but unissued capital stock of the Company, and
there are no conversion rights or redemption or sinking fund provisions with
respect to such Shares. All of the outstanding Shares of the Company are fully
paid and non-assessable.
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PART II
ITEM 1 - MARKET FOR COMMON EQUITY AND OTHER SHAREHOLDER MATTERS
---------------------------------------------------------------
The Company's Common Stock is listed for trading on the National
Quotation Bureau Pink Sheets and it trading symbol VLUS. There was no trading of
the Company's Common Stock prior to December 1999. The following table shows the
quarterly high and low bid prices for the calendar year 1999 and the first half
of 2000 as reported by the National Quotations Bureau Incorporated. These prices
reflect inter-dealer quotations without adjustments for retail markup, markdown
or commission, and do not necessarily represent actual transactions.
YEAR PERIOD HIGH LOW
1999 Fourth Quarter 0.00 0.00
2000 First Quarter 0.00 0.00
Second Quarter .51 .25
As of June 30, 2000, there were approximately 91 holders of record of
the company's Common Stock.
Holders of the Company's Common Stock are entitled to dividends when,
as and if declared by the Board of Directors out of funds legally available
therefore. The Company does not anticipate the declaration or payment of any
dividends in the foreseeable future.
The Company intends to retain earnings, if any, to finance the
development and expansion of its business. Future dividend policy will be
subject to the discretion of the Board of Directors and will be contingent upon
future earnings, if any, the Company's financial condition, capital
requirements, general business conditions and other factors. Therefore, there
can be no assurance that any dividends of any kind will ever be paid.
The Company registrar and transfer agent is Interwest Transfer Co.,
Inc., which is located at 1981 East 4800 South, Suite 100, Salt Lake City, UT
84117 phone 801.272.9294.
ITEM 2 - LEGAL PROCEEDINGS
--------------------------
The Company is subject to one lawsuit by a former employee who is suing
it for wrongful discharge. The Company is vigorously defending the suit and does
not believe that it is material to its operations.
ITEM 3 - CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
------------------------------------------------------
Not Applicable
ITEM 4 - RECENT SALES OF UNREGISTERED SECURITIES
------------------------------------------------
As a result of the merger with ValuSales, Inc., the Company issued
5,000,000 shares of its common stock in that transaction. The shares were
distributed to the prior shareholders of ValuSales, Inc., as part of the merger.
No underwriters were involved in any of the offerings and all current
offerings of the Company's securities have been completed.
ITEM 5 - INDEMNIFICATION OF DIRECTORS AND OFFICERS
--------------------------------------------------
The Company's Amended Articles of Incorporation provide for the
indemnification of Directors in that Directors of this Corporation shall not be
personally liable for monetary damages to the Company or any other person for
any statement, vote, decision or failure to act, regarding corporate management
or policy, by a director unless the director breached or failed to perform his
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duties as Director. Such indemnification is available to any person who was or
is a party to any proceeding (other than an action by, or in the right of, the
Company), by reason of the fact that he or she is or was a Director, officer,
employee or agent of the Company or is or was serving at the request of the
Company.
Insofar as indemnification for liabilities arising under the Act may be
permitted to directors, officers and controlling persons of the small business
issuer pursuant to the foregoing provisions, or otherwise, the small business
issuer has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the Act
and is, therefore, unenforceable.
PART F/S - FINANCIAL STATEMENTS
See index to Financial Statements on Page F-1.
PART III
ITEM 1 INDEX TO EXHIBITS
EX-3.(I) - ARTICLES OF INCORPORATION
EX-3.(II) - AMENDED ARTICLES OF INCORPORATION
EX-3.(III) - BY_LAWS
11
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SIGNATURES
In accordance with Section 12 of the Securities Exchange Act of 1934, the
registrant caused this registration statement to be signed on its behalf by
the undersigned, thereunto duly authorized.
VALUSALES.COM, INC.
By: /s/ V. Jeffrey Harrell Date: 9/8/00
----------------------------------- -------------
V. Jeffrey Harrell, President
12
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INDEX TO FINANCIAL STATEMENTS
December 31, 1999 - Audited
Page #
Independent Auditor's Report.................................... F-2
Balance Sheet................................................... F-3
Statement of Operations......................................... F-4
Statement of Shareholders' Equity............................... F-5
Statement of Cash Flows......................................... F-6
Notes to Financial Statements................................... F-7- F-10
June 30, 2000 - Unaudited
Balance Sheet - Unaudited....................................... F-11
Statement of Operations - Unaudited............................. F-12
Statement of Shareholders' Equity - Unaudited................... F-13
Statement of Cash Flows - Unaudited............................. F-14
Notes to Financial Statements................................... F-15 - F-18
F-1
<PAGE>
INDEPENDENT AUDITOR'S REPORT
To the Board of Directors
ValuSales.Com, Inc.
I have audited the accompanying balance sheet of ValuSales.Com, Inc. as
of December 31, 1999 and the related statements of operations, shareholders'
equity, and cash flows for the period March 19, 1999 (inception) to December 31,
1999. These financial statements are the responsibility of the Company's
management. My responsibility is to express an opinion on these financial
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.
In my opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of ValuSales.Com, Inc.
as of December 31, 1999, and the results of its operations and cash flows for
the period March 19, 1999 (inception) to December 31, 1999, in conformity with
generally accepted accounting principles.
/s/ ROBERT JARKOW
---------------------------
ROBERT JARKOW
May 29, 2000 CERTIFIED PUBLIC ACCOUNTANT
3111 North Andrews Avenue
Fort Lauderdale, Florida 33309
(954) 630-9070
F-2
<PAGE>
VALUSALES.COM., INC.
BALANCE SHEET
December 31, 1999
<TABLE>
<CAPTION>
ASSETS
Current Assets
<S> <C>
Cash $ 83,935
Accounts receivable 143,360
Inventories 92,578
---------
Total current assets 319,873
Property and equipment, net 37,038
Other
---------
$ 356,911
=========
LIABILITIES & SHAREHOLDERS' EQUITY
Current Liabilities
Accounts payable and accrued liabilities $ 106,104
Due to shareholder 11,000
---------
Total current liabilities 117,104
---------
Shareholders' Equity
Common stock-par value $.001; 50,000,000 shares authorized,
10,000,000 issued and outstanding at
December 31, 1999 10,000
Additional paid-in capital 386,923
Deficit (157,116)
---------
Total shareholders' equity 239,807
---------
$ 356,911
=========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-3
<PAGE>
VALUSALES.COM., INC.
STATEMENT OF OPERATIONS
March 19, 1999 (Inception) to December 31, 1999
Revenues $ 776,302
Cost of sales 552,410
-----------
Gross profit 223,892
Selling, general, and administrative expenses 381,008
-----------
Net loss ($ 157,116)
===========
(Loss) per share-basic ($ 0.043)
===========
Weighted - average common shares outstanding 3,695,250
===========
The accompanying notes are an integral part of these financial statements.
F-4
<PAGE>
VALUSALES.COM, INC.
STATEMENT OF SHAREHOLDERS' EQUITY
March 19, 1999 (Inception) to December 31, 1999
<TABLE>
<CAPTION>
Additional
Common Stock Paid-in
Shares Amount Capital (Deficit)
----------------------------------------------------------------
<S> <C> <C> <C> <C>
Sale of common stock-net 375,000 $375 $293,835
Stock issued for services 1,052,000 1,052 101,361
Stock issued for acquired companies 900,000 900
Sale of common stock for acquisition of public shell 2,673,000 2,673 172,327
Purchase of public shell (175,000)
Reverse acquisition of ValuSales.Com, Inc. 5,000,000 5,000 (5,000)
(Loss) for period 03-19-99 (inception) to 12-31-99 ($157,116)
----------------------------------------------------------------
Balance December 31, 1999 10,000,000 $10,000 $387,523 ($157,116)
================================================================
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-5
<PAGE>
VALUSALES.COM, INC.
STATEMENT OF CASH FLOWS
March 19, 1999 (Inception) to December 31, 1999
Cash flows from operating activities
Net (loss) ($157,116)
Adjustments to reconcile net (loss) to net cash
(used) by operating activities
Stock issued for services and acquired companies 102,713
Depreciation 2,962
Decrease(increase) in accounts receivable (143,360)
(Increase) in inventories (57,578)
(Increase) in other
Increase in accounts payable 106,104
---------
Total adjustments 10,841
---------
Net cash (used) by operating activities (146,275)
---------
Cash flows from investing activities
Purchase of property and equipment
Purchase of business assets (75,000)
---------
(75,000)
---------
Cash flows from financing activities
Loan from shareholder 11,000
Sale of common stock 469,210
Purchase of public shell (175,000)
---------
Net cash provided by financing activities 305,210
---------
Net change in cash 83,935
Cash - beginning
---------
Cash - end $ 83,935
=========
Supplemental disclosures of cash flow information:
Interest paid $ --
=========
Taxes paid $ --
=========
The accompanying notes are an integral part of these financial statements.
F-6
<PAGE>
VALUSALES.COM, INC.
NOTES TO FINANCIAL STATEMENTS
December 31, 1999
Note 1. Nature of Business
ValuSales.Com, Inc. (the Company) offers Internet business-to-business
and business-to-consumers products and services through the Worldwide Web. The
Company also maintains retail outlets. The Company's divisions, and the business
each of them conducts, are as follows:
A. Odyssey Advertising designs and hosts websites for small and medium
size companies. Their products and services include media advertising, corporate
identity development and communications.
B. Valucomputers.com offers a full line of brand name new and
refurbished computer products, such as PC's and printers, from manufacturers
including IBM, Compaq, and HP.
Note 2. Summary of Significant Accounting Policies
Basis of Presentation
ValuSale.Inc. was incorporated in the State of Florida, on March 19,
1999 and had no operations. On July 20, 1999, it acquired the assets of, and
signed employment agreements with the principals of, two privately held
operating companies for $75,000 and 900,000 shares of common stock. The
transaction was accounted for as a purchase. The assets were recorded at cost,
which approximated market value. Operations are included from the date of
acquisition.
F-7
<PAGE>
VALUSALES.COM, INC.
NOTES TO FINANCIAL STATEMENTS
December 31, 1999
Note 2. Summary of Significant Accounting Policies-Continued
On December 1, 1999, the Company, a public shell changed its name to
ValuSales.Com, Inc., and acquired 100% of the outstanding stock of ValuSales,
Inc. for 5,000,000 shares . For accounting purposes, the acquisition has been
treated as a capital transaction rather than a business combination. The
accounting is identical to that resulting from a reverse acquisition. Therefore,
a recapitalization of the Acquired Company took place with the Acquired Company
as the acquirer. The historical financial statements prior to December 1, 1999
are those of the Acquired Companies. All significant interdivisional
transactions and balances have been eliminated.
Revenues
The Company recognizes revenues as follows:
A. Product sales revenue is recognized when the product is
delivered.
B. Service revenue is recognized when the services arc performed.
C. Mortgage fee revenue is recognized when the mortgage is closed.
Use of Estimates
Use of estimates and assumptions by management is required in the
preparation of financial statements in conformity with generally accepted
accounting principles. Actual results could differ from those estimates and
assumptions.
Inventories
Inventories consists of computers and accessories and is stated at the
lower of cost or market.
Property and Equipment
Property and equipment is recorded at cost. Depreciation is computed
using the straight-line method over the five year estimated useful lives of the
assets.
Property and equipment at December 31, 1999 consist of:
1999
Computer equipment $25,000
Furniture and fixtures 15,000
------
40,000
Less: accumulated depreciation (2,962)
-------
$37,038
F-8
<PAGE>
VALUSALES.COM, INC.
NOTES TO FINANCIAL STATEMENTS
December 31, 1999
Note 2. Summary of Significant Accounting Policies-Continued
(Loss) Per Share
Basic (loss) per share equals net (loss) divided by the weighted
average shares outstanding during the period. There are no items to give rise to
diluted shares.
Note 3. Other Matters
Employment Contracts-The Company entered into employment contracts with
two shareholders on July 20, 1999, as part of the previously mentioned business
acquisition. The contracts expire on July 20, 2000 and December 31, 2000,
respectively. The agreements require total annul salaries of $176,000, and 10%
pre tax income salary bonus.
Leases-The Company's operating facilities are leased for two years thru
June 2002, for an annual rent of approximately $37,000. Prior rent was under
month-to-month arrangements for approximately $3,300 monthly.
Due to Shareholder-is due on demand and bears no interest.
Note 4. Income taxes
At December 31, 1999 the Company had net operating loss carry forward of
approximately $54,400 which expires in 2014. The deferred benefit of the net
operating loss carryforward has been fully reserved for due to the uncertainty
of the timing of its recognition.
At December 31, 1999, there are no items that give rise to deferred
income taxes.
Note 5. Shareholders' Equity
On April 1, 1999, ValuSales, Inc. had a private placement offering of
375,000 shares of its common stock at $1 per share. Cost of the offering was
approximately $81,000. Such stock was sold pursuant to Rule 504 of Regulation D
under the United States Securities Act of 1933.
F-9
<PAGE>
VALUSALES.COM, INC.
NOTES TO FINANCIAL STATEMENTS
December 31, 1999
Note 6. Business Segments
The Company is organized into two business segments (See Note 1).
Summarized financial information concerning the Company's reportable segments is
shown in the following table. Corporate related items not allocated to
reportable segments are included in the reconciliation to the Balance Sheets and
Statements of Operations.
Valu Odyssey
Computers Advertising Total
--------- ----------- -----
1999
Net Sales $484,717 $291,585 $776,302
Operating earnings
(loss) (17,553) 4,197 (13,356)
Depreciation 875 2,087 2,962
Total Assets 145,886 153,899 299,785
Capital Expenditures 15,000 25,000 40,000
Reconciliation to Balance Sheets and Statements of Operations:
1999
Assets
Totals for reportable segments $299,785
Corporate 57,126
--------
Total $356,911
========
Operating results
Totals for reportable segments ($13,356)
Corporate (143,760)
--------
Total ($157,116)
=========
F-10
<PAGE>
VALUSALES.COM., INC.
BALANCE SHEET
June 30, 2000
(unaudited)
ASSETS
Current Assets
Cash $ 44,516
Accounts receivable 249,722
Inventories 112,454
---------
Total current assets 406,692
Property and equipment, net 42,183
Other 6,343
---------
$ 455,218
=========
LIABILITIES & SHAREHOLDERS' EQUITY
Current Liabilities
Accounts payable and accrued liabilities $ 226,812
Due to shareholder 56,602
---------
Total current liabilities 283,414
---------
Shareholders' Equity
Common stock-par value $.001; 50,000,000 shares
authorized, 10,000,000 issued and outstanding
at June 30, 2000 and December 31, 1999 10,000
Additional paid-in capital 386,923
Deficit (225,119)
---------
Total shareholders' equity 171,804
---------
$ 455,218
=========
The accompanying notes are an integral part of these financial statements.
F-11
<PAGE>
VALUSALES.COM., INC.
STATEMENT OF OPERATIONS
Six Months Ended June 30, 2000 (Unaudited)
Revenues $ 1,250,865
Cost of sales 1,000,397
Gross profit 250,468
Selling, general, and administrative expenses 318,471
------------
Net loss ($ 68,003)
============
(Loss) per share-basic ($ 0.007)
============
Weighted - average common shares outstanding 10,000,000
============
The accompanying notes are an integral part of these financial statements.
F-12
<PAGE>
VALUSALES.COM, INC.
STATEMENT OF SHAREHOLDERS' EQUITY
Six Months Ended June 30, 2000 (Unaudited)
<TABLE>
<CAPTION>
Additional
Common Stock Paid-in
Shares Amount Capital (Deficit)
------------------------------------------------------------
<S> <C> <C> <C> <C>
Sale of common stock-net 375,000 $375 $293,835
Stock issued for services 1,052,000 1,052 101,361
Stock issued for acquired companies 900,000 900
Sale of common stock for acquisition of public shell 2,673,000 2,673 172,327
Purchase of public shell (175,000)
Reverse acquisition of ValuSales.Com, Inc. 5,000,000 5,000 (5,000)
(Loss) for period 03-19-99 (inception) to 12-31-99 ($157,116)
------------------------------------------------------------
Balance December 31, 1999 10,000,000 10,000 387,523 (157,116)
(Loss) for the six months ended June 30, 2000 (68,003)
------------------------------------------------------------
Balance June 30, 2000 (Unaudited) 10,000,000 $10,000 $387,523 ($225,119)
============================================================
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-13
<PAGE>
VALUSALES.COM, INC.
STATEMENT OF CASH FLOWS
Six Months Ended June 30, 2000 (Unaudited)
Cash flows from operating activities
Net (loss) ($ 68,003)
Adjustments to reconcile net (loss) to net cash
(used) by operating activities
Stock issued for services and acquired companies --
Depreciation 3,375
Decrease(increase) in accounts receivable (106,362)
(Increase) in inventories (19,876)
(Increase) in other (6,343)
Increase in accounts payable 120,708
---------
Total adjustments (8,498)
---------
Net cash (used) by operating activities (76,501)
---------
Cash flows from investing activities
Purchase of property and equipment (8,520)
Purchase of business assets
---------
(8,520)
---------
Cash flows from financing activities
Loan from shareholder 45,602
Sale of common stock
Purchase of public shell
---------
Net cash provided by financing activities 45,602
---------
Net change in cash (39,419)
Cash - beginning 83,935
---------
Cash - end $ 44,516
=========
Supplemental disclosures of cash flow information:
Interest paid $ --
=========
Taxes paid $ --
=========
The accompanying notes are an integral part of these financial statements.
F-14
<PAGE>
VALUSALES.COM, INC.
NOTES TO FINANCIAL STATEMENTS
December 31, 1999
June 30, 2000 (Unaudited)
Note 1. Nature of Business
ValuSales.Com, Inc. (the Company) offers Internet business-to-business
and business-to-consumers products and services through the Worldwide Web. The
Company also maintains retail outlets. The Company's divisions, and the business
each of them conducts, are as follows:
A. Web Odyssey, which began operations in April 2000, designs and hosts
websites for small and medium size companies.
B. Odyssey Advertising offers media advertising, corporate identity
development and communications.
C. Valumortgages.com, which began operation in January 2000, is a web
based Mortgage banking firm. Valumortgages.com combines Internet technology with
its role as a mortgage banker to make mortgages easier and faster for customers
to obtain - and significantly more efficient for lenders, brokers, Realtors, and
homebuilders. Valumortgages.com is in Spanish as well as English.
D. Valucomputers.com offers a full line of brand name new and
refurbished computer products, such as PC's and printers, from manufacturers
including IBM, Compaq, and HP.
Note 2. Summary of Significant Accounting Policies
Basis of Presentation
ValuSales.Inc. was incorporated in the State of Florida, on March 19,
1999 and had no operations. On July 20, 1999, it acquired the assets of, and
signed employment agreements with the principals of, two privately held
operating companies for $75,000 and 900,000 shares of common stock. The
transaction was accounted for as a purchase. The assets were recorded at cost,
which approximated market value. Operations are included from the date of
acquisition.
F-15
<PAGE>
VALUSALES.COM, INC.
NOTES TO FINANCIAL STATEMENTS
December 31, 1999
June 30, 2000 (Unaudited)
Note 2. Summary of Significant Accounting Policies-Continued
On December 1, 1999, the Company, a public shell (with no historical
operations) changed its name to ValuSales.Com, Inc., and acquired 100% of the
outstanding stock of ValuSales, Inc. for 5,000,000 shares . For accounting
purposes, the acquisition has been treated as a capital transaction rather than
a business combination. The accounting is identical to that resulting from a
reverse acquisition. Therefore, a recapitalization of the Acquired Company took
place with the Acquired Company as the acquirer. The historical financial
statements prior to December 1, 1999 are those of the Acquired Companies. All
significant interdivisional transactions and balances have been eliminated.
Revenues
The Company recognizes revenues as follows:
A. Product sales revenue is recognized when the product is
delivered.
B. Service revenue is recognized when the services arc performed.
C. Mortgage fee revenue is recognized when the mortgage is
closed.
Use of Estimates
Use of estimates and assumptions by management is required in the
preparation of financial statements in conformity with generally accepted
accounting principles. Actual results could differ from those estimates and
assumptions.
Inventories
Inventories consists of computers and accessories and is stated at the
lower of cost (specific identity) or market.
Property and Equipment
Property and equipment is recorded at cost. Depreciation is computed
using the straight-line method over the five year estimated useful lives of the
assets.
Property and equipment at December 31, 1999 and June 30, 2000 consist
of:
<TABLE>
<CAPTION>
2000 1999
---- ----
Unaudited
<S> <C> <C>
Computer equipment $25,000 $25,000
Furniture and fixtures 23,520 15,000
------ ------
48,520 40,000
Less: accumulated depreciation (6,337) (2,962)
------- -------
$42,183 $37,038
======= =======
</TABLE>
F-16
<PAGE>
VALUSALES.COM, INC.
NOTES TO FINANCIAL STATEMENTS
December 31, 1999
June 30, 2000 (Unaudited)
Note 2. Summary of Significant Accounting Policies-Continued
(Loss) Per Share
Basic (loss) per share equals net (loss) divided by the weighted
average shares outstanding during the period. There are no items to give rise to
diluted shares.
Note 3. Other Matters
Employment Contracts-The Company entered into employment contracts with
two shareholders on July 20, 1999, as part of the previously mentioned business
acquisition. The contracts expire on July 20, 2000 and December 31, 2000,
respectively. The agreements require total annul salaries of $176,000, and 10%
pre tax income salary bonus.
Leases-The Company's operating facilities are leased for two years thru
June 2002, for an annual rent of approximately $37,000. Prior rent was under
month-to-month arrangements for approximately $3,300 monthly.
Due to Shareholder-is due on demand and bears no interest.
Note 4. Income taxes
June 30, 2000 the Company had net operating loss carry forward of
approximately $225,000 which expires tliru 2015. The deferred benefit of the net
operating loss carryforward has been fully reserved for due to the uncertainty
of the timing of its recognition.
At December 31, 1999 and June 30, 2000, there are no items that give
rise to deferred income taxes.
Note 5. Shareholders' Equity
On April 1, 1999, ValuSales, Inc. had a private placement offering of
375,000 shares of its common stock at $1 per share. Cost of the offering was
approximately $81,000. Such stock was sold pursuant to Rule 504 of Regulation D
under the United States Securities Act of 1933.
F-17
<PAGE>
VALUSALES.COM, INC.
NOTES TO FINANCIAL STATEMENTS
December 31, 1999
June 30,2000 (Unaudited)
Note 6. Business Segments
The Company is organized into four business segments (See Note 1).
Summarized financial information concerning the Company's reportable segments is
shown in the following table. Corporate related items not allocated to
reportable segments are included in the reconciliation to the Balance Sheets and
Statements of Operations.
<TABLE>
<CAPTION>
Valu Odyssey Valu Web
Computers Advertising Mortgages Odyssey Total
--------- ----------- --------- ------- -----
<S> <C> <C> <C> <C> <C>
1999
----
Net Sales $484,717 $291,585 $776,302
Operating earnings
(loss) (17,553) 4,197 (13,356
Depreciation 875 2,087 2,962
Total Assets 145,886 153,899 299,785
Capital Expenditures 15,000 25,000 40,000
2000
----
Net Sales 657,251 481,545 $37,626 $74,443 1,250,865
Operating earnings
(loss) 30,664 (20,242) (59,343) 52,790 3,869
Depreciation 875 2,500 3,375
Total Assets 153,557 284,763 438,320
Capital Expenditures 8,520 8,520
Reconciliation to Balance Sheets and Statements of Operations:
2000 1999
---- ----
Assets Unaudited
Totals for reportable segments $438,320 $299,785
Corporate 16,898 57,126
------ ------
Total $455,218 $356,911
======== ========
Operating results
Totals for reportable segments $3,869 ($13,356)
Corporate (71,872) (143,760)
-------- ---------
Total ($68,003) ($157,116)
========= ==========
</TABLE>
F-18
