UNITED STATES
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
NEVADA CLASSIC THOROUGHBREDS, INC.
Name of Small Business Issuer in its charter
NEVADA 86-1007952
(State of Incorporation) IRS EIN
1649 E. Hackamore, Mesa, AZ 85203
(Address of principal executive office)
Company's Telephone Number: (480) 890-0678
Securities to be registered pursuant to Section 12(g) of the
Act.
Nevada Classic Thoroughbreds, Inc. Common Stock
TABLE OF CONTENTS
Part I:
Item 1: Description of Business. . . . . . . . . . . .page 4
Item 2: Plan of Operation. . . . . . . . . . . . . . .page 12
Item 3: Description of Property . . . . . . . . . . . page 19
Item 4: Security Ownership Of Certain Beneficial
Owners and Management . . . . . . . . . . . . page 21
Item 5: Directors, Executive Officers, Promoters
and Control Persons . . . . . . . . . . . . . page 22
Item 6: Executive Compensation . . . . . . . . . . . .page 24
Item 7: Certain Relationships And Related
Transactions . . . . . . . . . . . . . . . . .page 25
Item 8: Description of Securities . . . . . . . . . . page 25
Part II
Item 1: Market Price For Common Equity
And Related Stockholder Matters. . . . . . . . page 27
Item 2: Legal Proceedings. . . . . . . . . . . . . . . page 28
Item 3: Changes In And Disagreements
With The Accountants . . . . . . . . . . . . . page 28
Item 4: Recent Sales Of Unregistered Securities. . . . page 28
Item 5: Indemnification Of Directors And Officers. . . page 28
PART F/S
Financial Statements
Table of Contents . . . . . . . . . . . . . . . . . . . page 30
PART III
Item 1: Index to Exhibits . . . . . . . . . . . . . . . page 38
Item 2: Description of Exhibits . . . . . . . . . . . . page 38
SIGNATURE
. . . . . . . . . . . . . . . . . . . . . . . . . . . . page 39
PART I:
ITEM 1: Description of Business
Nevada Classic Thoroughbreds, Inc. (henceforth referred to as
NCT) has developed a breeding, training, racing, proprietary,
unified horse racing structure. The company is vertically
structured making it possible for one or two people to maintain
real-time contact with one to four horses. This provides the
breeding, training and racing of the individual racehorse to be
accomplished completely in-house. The company has control over
the unified system.
The company's proprietary solution to the horse racing
industry's challenge is "Power Genetics", pre-potent
characteristics in horses that can reproduce themselves. The
horse characteristics include:
The horse possessing extreme speed at a certain distance and on
a particular racing surface.
The horse possessing a burst of speed for a specific distance
from the finish line.
The horse possessing cosmetic conformation that makes the
horse appealing and sellable to other breeders and potential
buyers.
The horse possessing sound racing conformation to avoid
injuries while training and racing.
This "Power Genetics" of characteristics gives NCT the
probabilities of what a particular mating of horses will produce
in their offspring. What training methods to use to capitalize
on the horse's natural running style and what races to enter the
horse into for the best chance of winning.
There are five distinct markets for the company's horses. The
first market is for the inferior foal who does not possess the
"Power Genetics" the company desires but has the other qualities
that make the horse sellable in the horse industry's auctions.
These foals will be sold as yearlings, or weanlings at horse
auctions, in the industry. The sale of these inferior horses
gives the company immediate cash flow and eliminates the costly
expenses of racing inferior racehorses.
The second market is to race the horse in "claiming races". The
claiming race is to enable people to buy the horse at the
racetrack. This is a viable means of eliminating horses that
are good but not quite able to compete at the top level of horse
racing.
The third market is to sell the broodmare after it has produced
a female foal that possesses the superior "Power Genetics",
superior to the broodmare. The broodmare would sell at the
industry's auctions, which are throughout the country and
designed for the purpose of selling breeding stock.
The fourth market is racing income from the racetrack. When the
racehorse races and performs well, NCT will receive income from
the winnings or "purse money".
The fifth market is for the syndication of stallions. The
stallions that possess outstanding pedigrees, conformation, and
race records are syndicated into breeding shares. A breeding
share entitles the owner to breed one mare to the stallion in
any one particular breeding season for the duration of the
stallion's life.
The company intends to breed only one or two broodmares per
year. The company can keep and maintain a few horses while
providing excellent hands-on care for the horses. NCT intends
to minimize costs by having only a few "Power Genetics"
breeding, training and racing horses.
The company is not dependent on a few customers since the horse
racing industry's market are virtually nationwide where the
horse can be raced or bred virtually throughout the entire
United States. The company is not limited by its customers or
limited by the location of its selected sires. The breeding
rights for these stallions are almost without exception readily
available and accessible.
The company does not require governmental approval or licensing
for any of its breeding programs. However, the racetrack
requires a normal training license where the horse is intended
to race. The licensing is to provide safety for the horse and
riders who train and compete at that specific track. NCT
intends to perform this function and there are numerous trainers
available as alternatives as the company deems beneficial. NCT
believes the licensing is not material to the company being
successful in the horserace industry.
The company was incorporated as Cherry Blossom Farms, Inc. in
Nevada on January 24, 1994. In October of 1998, the company
merged with Nevada Classic Thoroughbreds, then a private
company, and Cherry Blossom Farms ceased to exist. Nevada
Classic Thoroughbreds then incorporated in the State of Nevada
on November 1, 2000. The company's corporate office is located
at 1649 E. Hackamore, Mesa, Arizona, 85203. The company's
telephone number at that location is (480)-890-0678.
Since inception the company has devoted time for research and
development from 1994 to 1998. Since 1998 the management of the
company has maintained the broodmare, including the expenses
involved with the March 1, 2000 breeding. From 1994 to 1998,
this time was spent developing the company's business strategy
and the company's "Power Genetics" in order to make the company
competitive. NCT believes that this new technology will enable
the company to produce horses that race well and can reproduce
themselves in their offspring, thus enabling the company to
minimize costs while maximizing profits. The Board of Directors
of the company has begun to implement this principal business
purpose (see Item 2, Plan of Operation, page 12).
There are no environmental laws within any state that materially
affect the breeding, training and racing of the company's
racehorses. The maintenance and health and welfare of the
thoroughbred racehorses far exceed the environmental standards
set for the care and maintenance laws required for any
livestock.
The company is filing this registration statement to enhance
stockholder protection and to provide information to the general
public.
On January 4, 1999 the Securities and Exchange Commission
adopted that only those companies that report their current
financial information to the Securities and Exchange Commission,
Banking, or insurance regulators are to be quoted on the OTC
Bulletin Board. While at the present time, the company is a
non-reporting company with no market for its securities or does
not foresee any market for its securities in the foreseeable
future, the company is voluntarily filing. The company believes
that, if successful, the company will eventually want their
securities tradable. The decision of January 4, 1999, the
company feels will tend to eliminate markets for the private
sales of securities and enlarging the market for public tradable
securities. The company believes that if it is to avoid deep
discounts in the private sale of its securities, it will need to
voluntarily list its securities so that the public will be
appraised of its true market value of the securities.
RISK RELATING TO THE COMPANY'S BUSINESS
The company's business is subject to numerous risk factors
including but not limited to the following:
The company is a development stage company: limited
operating industry. NCT is an early stage company and
expects to encounter risks and difficulties frequently
faced by early stage companies. NCT dates back to
1994 and purchased its first broodmare in 1998. The
company's limited operating history makes an
evaluation of the company's future prospects very
difficult. NCT cannot be certain that the company's
business strategy will be successful or that NCT will
successfully address these risks.
NCT anticipates future losses and negative cash flow. The
care and maintenance of the company's broodmare, the
problems and expenses of foaling, and the normal expenses
of feed and shoeing will continue while the income to the
company will be in the racing and breeding of the company's
horses. This occurs at a minimum of two years after the
foal is born. Thus the expenses of the company will
continue for at least two years, while the income to the
company may not take place for at least two years. While
there are available blood stock companies that give horse
loans on foals, the company intends to use either the
private sale of its securities or the public sale of it
securities to finance the company on an ongoing basis,
until such time as the company receives income to meet its
expenses.
The company's limited operating history makes future
forecasting difficult. Because of the company's limited
operating history, NCT finds it difficult to forecast its
net sales. NCT has limited meaningful historical data on
which to base planned operating expenses. NCT has been in
the research and development stage without sales since
1994.
The nature of the breeding, training and racing of race
horses is highly speculative. The foal may be injured or
deformed at birth, the weanlings or yearlings may injure
themselves in the pasture or stall or get a disease even
before it goes into training. The horses frequently injure
themselves while in training and some horses never do make
it to the track to have an opportunity to obtain racing
income and thus their breeding potential is severely
limited. Even if the horse races well with the proper
conformation and a desirable pedigree the horse may become
infertile and any breeding income would be completely lost,
thus all the expenses going into the breeding, training and
racing of the horse would be unrecoverable. The horse
racing of any particular individual horse is subject to
wide and varied circumstances, any one of which could
render the horse useless and the company incurring a
substantial loss of potential cash flow. Thus anyone
interested in the company for investment purposes should
look at the company as being highly speculative and the
chance of them losing a portion or their entire investment
a real possibility.
The greatest controllable risk to the company is whether
its "Power Genetic" research technology will be successful.
While a healthy foal possessing the predictable "Power
Genetics" characteristics enables the company to have a
positive and optimistic view to the future, only after
several breedings over a period of years can the outcome of
the company's "Power Genetic" technology be fully judged.
However, if the first few breedings do not produce the
predictable "Power Genetics", then the company has lost its
advantage and will not be able to compete with the well-
established horse farms currently in existence. The
company may be forced out of business and the company'
stock, become worthless.
The company faces locational problems. The company's
advantage is in the development of the foal from birth to
training and racing and back to the breeding. This is
unique in the industry using only one or two broodmares.
This unique business strategy requires that the broodmare
and weanling and yearlings be in close proximity to a
public training center or racetrack. The company sees this
as a minor problem. The company has the ability to locate
anywhere within the United States without compromising its
ability to race or sell or breed its racehorses.
The uniqueness of the company in having few horses and its
unique business strategy in keeping the breeding, training
and racing of its horses within the company is inherently
risk-taking. It's similar to "putting all the eggs into
one basket". If the company's few horses race well, then
the company's vertical structure has the potential to be
very profitable, receiving the maximum profits while
maintaining the lowest cost. If the company's few horses
perform poorly for reasons uncontrollable to the company,
such as injury or disease, then the company will experience
a great loss or be without revenue for a substantial period
of time and may eventually be forced out of business.
These are the reasons most companies specialize in one or
two areas of the horse racing industry to avoid the
potential catastrophic lapses in income inherent in the
horse racing business.
There are many other material factors that affect most
companies that are not material to NCT. The national races
set a value on the horse's ability. This along with its
heritage and conformation puts a value upon the horse and
this value is reflected in the industry's readily available
thoroughbred magazines. Thus the marketing and promotion
is not material. Increasing the company's markets is not
material. Expansion of the company's services is not
material. Price competition is not material. Marketing
strategies for promotional material, cost of advertising,
or other marketing techniques are not material. The true
value of the horse is its performance, its pedigree and its
conformation. This value is standardized and reflected
through the industry's national thoroughbred magazines.
An important but not critical factor is the timing of
operating costs and capital expenditures relating to
specific races. The breeder's cup race has a $40,000 entry
fee at the time. The purse money is generally over
$1,000,000. If the racehorse was capable and ready to race
and the company could not pay the entry fee, then this
would be a very real tragedy to the company. Thus the
company must maintain sufficient cash to enable it to take
advantage of racing opportunities when they present
themselves (See Reporting Time and Cost Risks, page 10).
The company at the present time has no cash on hand to meet
these entry fee requirements. The company's net income is
dependent upon the company's ability to implement it "Power
Genetics" Research Technology and to develop horses that
race well and can reproduce themselves.
The loss of Brad Brimhall, Operations Manager, would be a
key problem for NCT. It is unlikely that anyone in the
company could take over the selection and care of the
company's horses, including the breeding, training and
racing of the company's horses. Brad Brimhall is the only
employee of the company and he is employed only on a part-
time basis at the present time. Furthermore, the company
does not have key person life insurance.
COMPETITION RISKS
The company is practically alone in its concepts of
breeding, training, and racing only a few horses by a
single person. If the horses are good the company is
extremely profitable. If the horses are not good, it could
be catastrophic for the company. NCT believes there are
few people or companies that have the research necessary to
warrant such risks. Thus the company knows of no person or
company in the horse racing industry that can operate as
the company intends to operate. The company believes it is
on the cutting-edge of new technology in the industry. If
the company is wrong in its assertions, then the company
will not be able to compete and will be forced out of
business. And any stockholder that may have invested money
in the company would lose their entire investment.
SECURITIES RISKS
There currently is no market for the company's securities.
Unless the company can show substantial signs of producing
its "Power Genetics" in it's foals, then the company feels
that there should not be a market for the company
securities. The company does not intend to have securities
tradable until such time as the company feels that its
"Power Genetics" can be produced. Even if the "Power
Genetics" are produced in the company's horses, there are
still the uncontrollable factors of disease or injury that
makes the company's securities extremely volatile. The
company also has few shareholders, approximately 200, thus
there is an extremely thin market and the volatility of the
company may make a stock holder unable to liquidate their
securities if the company's horses are unable to race.
REPORTING TIME AND COST RISKS
The sheer cost involved in an audited financial statement
for other companies is incidental to their cost of doing
business. Because NCT has such low overhead and such high
profit potentials, the cost of its financial statement is a
very real risk to the company. The audited financial
statement may be as high as 50% of the total cost in any
one fiscal year. When considering the time and detail
involved in reporting, reporting is a major risk to the
company. The cost of an company audit runs $3,500 to
$5,500. This cost would represent a year's worth of
broodmare care and may even include the breeding costs. On
the other hand, if NCT does not become a reporting company,
then it does not have access to the OTC Bulletin Board and
the ability of the company to have access to the public's
securities markets may be non-existent. Even if the
company sells its securities by private transaction, the
company would incur deep discounts. The company, when
selling its private securities may be unrealistic because
of the deep discounts incurred. The risk involved in horse
racing industry and in NCT specifically may curtail many
private security investors from investing in the company.
Furthermore, there is the impact of January 4, 1999, making
OTC Bulletin Board Companies reporting companies. The
company feels that this will have a negative impact. This
impact has not yet materialized as it affects the private
sale and marketability of private securities.
The time it takes to register securities could affect the
business strategy of the company. NCT has decided to be a
voluntary reporting company. If the reporting time is
extensive, then the company may elect not to breed its
broodmare, but to put its operating capital from management
into making the company's registration statement effective
and the company's ongoing reporting to the Securities and
Exchange Commission in effect. Thus, if the reporting time
is extensive, the company will sacrifice its potential for
income to meet the requirements of the Securities and
Exchange Commission, which do not directly provide the
company with operating capital. Furthermore, the
information provided to the Securities and Exchange
Commission would need to be provided in an efficient and
timely manner due to the volatility and the sudden abrupt
changes in the company's financial position as a result of
the health and welfare and racing ability of the company's
horses. This timely manner of reporting may take away time
from other direct income producing activities of the
company.
ANNUAL REPORTS
The company intends to file unaudited financial reports
until such time as the company can reasonably incur the
costs involved with an audited financial statement. The
company expects to be able to provide audited financial
statements, fiscal year ending June 30, 2002. The company
is voluntarily filing reports to the Securities and
Exchange Commission and is a reporting company by its own
volition. The company also will be required to file the
10-Q and 10-K reports. The company intends to file an
annual report, fiscal year ending June 30, 2002. The
company hopes that any person interested in the business of
the company will have an opportunity to read any and all
information reported to the Securities and Exchange
Commission.
CONFLICT OF INTEREST RISKS
The officers and directors of the company may in the future
participate in business ventures that could be deemed to
compete directly with the company. Additionally, conflicts
of interest and long arm's-length transactions may arise in
the future, in the event the company's officers or
directors are involved in the management of any firm with
which the company may transact business. The company has
adopted a policy that the company will not seek to breed,
train or race racehorses outside the company due to the
proprietary nature of the company's technology.
Item 2: Plan of Operation
NCT was founded to breed, train and race thoroughbred
racehorses. The company recognizes a technological
breakthrough and a major marketing opportunity in
developing a unified operation to maximize profits and
minimize costs. Currently, only a few of the horse farms
are unified in operation. They are, however, extremely
large operations with many broodmares, weanlings, and
yearlings. Yet, even with all these seemingly large
advantages, they are unable to consistently compete at the
top level of racing.
NCT delivers a full suit of horse racing that integrates
seamlessly with the company's existing horse racing
infrastructure or work as a stand-alone solution. Because
of the proprietary manner in which NCT can deliver its race
horse product, NCT believes it is a low-cost, high-profit
racehorse product provider when compared with its
competition.
The NCT proprietary solution to the horse racing challenge
is the company's "Power Genetics" technology, which would
enable the company to determine the following:
The horses' speed capability at a certain distance on a
particular racing surface.
The horses' burst of speed for a particular distance from
the finish line
The horses' appearance, which would make it valuable at
the national sales auctions.
The horses' real sound conformation, which would enable
the horses to train and race without injury.
The "Power Genetics" enables the company to determine what
horses to breed, what horses to keep and train, what horses
to race, and in what races the horses will perform at
maximum capability. The company will know the quality of
its horses as yearlings, thus eliminating the need for many
horses in order to find the "one" really good horse. It
also eliminates the high cost associated with many horses.
The "Power Genetics" takes the guesswork out of how to
train a particular horse for its ultimate racing style.
NCT will be able to compete in races that the horse has a
good opportunity to win.
MARKET STRATEGY
The first objective is to find a broodmare with the "Power
Genetics" in the price range the company can afford. It is
similar to trying to find the proverbial needle in the
haystack. The second objective would be to find a second
needle in the haystack, a stallion with not only the "Power
Genetics", but also the genetics to complement the
broodmare and his service in a price range the company can
afford.
The company has selected a broodmare named "Ms. Walkin",
and was purchased in 1998. The broodmare has these "Power
Genetics":
Race a mile on the turf surface as her best distance and
racing surface
Burst of speed of three/sixteenths of a mile from the finish
line
Does not have cosmetic appearances that would make her
valuable in the auction ring
Does not have perfect sound racing conformation
The company has selecting a stallion, "Half-Term". The stallion
has the following "Power Genetics":
Race a mile on a turf surface as the best distance and racing
surface
Burst of speed of one-fourth of a mile from the finish line
Does have good cosmetic appearance and would be very valuable
in a sales auction
Does have good sound conformation for racing without being
injured.
From this mating, a foal is expected on February 4, 2001. The
predictability in the "Power Genetics" is as follows:
78% probability of the horse racing at the top level of
competition at a mile on the turf racing surface
97% probability of the horse possessing a burst of speed of
one-fourth of a mile from the finish line at the top level of
racing
94% probability of the horse racing a mile on the turf as its
best racing distance and racing surface
52% probability of perfect cosmetic conformation
76% probability that the horse will have conformation which
will not interfere with the horse's ability to train or race
In summary the foal has a predictability of 76% of earning
over $200,000 over its racing career. The career usually
lasts over two and one-half year period.
The company intends to continue this mating until a filly
can replace the broodmare in the production of the
company's horses. This mating however was not the
company's first choice. It ranked seventh. The other
horses available were outside of the company's financial
ability at the present time. The stallion stud fees were
over $20,000 and the purchases of broodmares were over
$100,000.
The mating the company has made is the acid test for the
company's proprietary technology. Given that this
particular mating ranked seventh in desirability, if the
foal is healthy and sound with the "Power Genetics" numbers
that the company is predicting, this would indicate that
the company could possibly be very successful. If the foal
is not healthy or does not have the power numbers, the
company may not have the ability to produce good
racehorses. It's the company's ability to consistently
produce top racehorses that is critical to the company's
success. If the company produces a top racehorse from this
mating, then the company will have improved its breeding
stock. Future breedings with the offspring would be
anticipated to produce even a higher quality racehorse in
the company's future.
The company will have a cash flow lag until the company
sells or races its horses.
The company has a current cash flow lag. It takes two years
to race the company's first foal. The general overall
maintenance for each individual horse usually amounts to
$150 per month or $1,800 yearly per horse. The company
needs to have the availability of the public security
markets. The company feels that the deep discounts that
most investors require from private restricted stock, is
unfair to future shareholders. Furthermore, the private
stock transactions could be even less available, and would
indicate even deeper discounts when considering the
Securities and Exchange Commission requiring OTC trading
companies to be reporting companies. These facts compel
the company to voluntarily report and to have access to
what the company feels would be reasonable price per share
transactions for the company's stock.
Thus the two most single critical events in the company's
Plan of Operation are the February 4, 2001 due date of the
unborn foal to indicate strongly the proprietary technology
of the company. The other event is the speed of which the
company can register and report its stock to the Securities
and Exchange Commission. The failure of anyone of these
two factors would result in the company being unsuccessful
and any stockholder losing his entire investment.
COMPETITION
While there are a number of horse breeders, there has not
been a dominant horse farm breeder in the thoroughbred
industry. The company knows of no farm or individual that
intends to unify the breeding, training and racing of a few
horses as the sole means of income to the company. The
risks for the farms are substantial. If they are not
successful by their horses racing well, there is no income.
Having no income will eventually put the horse farm out of
business. These risks eliminate horse farms from using
this business strategy. Thus the horse racing industry is
segmented to reduce risks. Only the largest most
financially sound horse farms unify the breeding, training
and racing segments of the industry. Their strategy is
numbers of broodmares bred to a few good stallions. Their
objective is to produce the one good horse that would
support the racehorse farm's expenses. As an example,
Fusaichi Pegasus was syndicated at the end of his racing
career for approximately $60,000,000. $60,000,000 for one
horse is a sizeable amount to most any individual or horse
farm for a single horse.
The company's competition is these extremely large and
financially powerful horse farms. The Phipps, the
Paulson's, and the Young's, are the perennial leaders in
the horse racing industry. So how does the company hope to
compete against such powerful horse racing industry
leaders? The company intends to use its "Power Genetics",
technology producing horses that can compete at the top
level of racing and reproduce themselves consistently, thus
maximizing profits while minimizing costs. NCT feels that
its "Power Genetics" technology is on the cutting edge and
uses State of The Art technology for the thoroughbred horse
racing industry. This technology will lead the horse racing
industry into the end of the 21st century.
There are few if any public horse farms for two main
reasons: first, is the inability to reduce the risk
involved in producing top race horses, and secondly, the
people who have traditionally been in the horse racing
industry are financially extremely well-off. These
individuals do not need or desire public or private
funding. Losing a few million dollars would not alter
their lifestyle in any significant manner.
CORPORATE INFORMATION
The company has relatively small capital needs at the
present time. However, the company also has no operating
capital at the present time. Thus, even the slightest
expense, is examined carefully by the company. The company
has an agreement with the Officers and Directors, and
Operations Manager of the company to maintain the company's
horses through June 30, 2001. At such time the company
will need to sell some of its securities either privately
or through the public markets to obtain sufficient capital
to continue its business plans. The registration of these
securities is critical to its future success (see Reporting
Time and Cost Risks, page 10). The company has a time lag
of two years or more of expenses until its first racehorses
will be able to compete and the opportunity for the company
to generate income to be realized. The company has no
definitive plans for any public or any private transactions
at the present time.
There exists two major differences between NCT's Plan of
Operation and other companies' Plan of Operation.
First, NCT Officers and Directors and Operations Manager do
not gain from the securities appreciation until after the
public or private investors have received a substantial
appreciation in the company's securities value.
The book value of the company is .19 cents per share.
Descendant Trust beneficiaries are JoAnna Curtis, Pamela J.
Brimhall and Bradley E. Brimhall. The Descendant Trust is
required to pay $30 per share for the first 500,000 shares
and $50 per share for the second 500,000 shares (See
Description of Securities, page 25). This means investors
in the company, if they invested at book value at .19 cents
per share. The investors would receive 158 times and 263
times their investment respectively before Descendant Trust
would receive any appreciation on their securities. While
this reverse dilution is rare in other companies, NCT feels
that due to the potential volatility and high risk in the
company's securities by the stockholders. The stockholders
deserve to reap the initial rewards if the company is
successful.
Secondly, Section 240.12(b)-21: Unavailable audited
financial statement due to financial hardship or reporting.
The following is a statement asserting the financial
hardships that would be incurred in an audited financial
statement: Any investor investing in the company should
take the unaudited financial statement as another risk to
be considered in investing in the company.
Due to the potentially extreme low costs and extreme high
income for the company, the audited financial statement
usually is an insignificant cost to most other companies
when considering their overall cost of operation. However,
the cost of an audited financial statement to NCT could be
more than the company's cost of operation in any one fiscal
year. The management maintains the company's broodmare and
has paid the following costs for the fiscal years beginning
June 30, 1999:
pasture: $100 per month for a yearly total of $1,200
veterinarian: $25 a month, average of $300 yearly total
farrier: $25 per month, average of $300 yearly total
broodmare shipping: $242 one-way for a yearly total of
$484
breeding expenses: $315 for a yearly total of $315
stud fee: $25,000 live foal guarantee, for the fiscal
year 2000 total of $2,500
Total costs: $5,099
The company asserts that in the maintenance of the
company's horses, as shown above, these costs are accurate
and represent the true cost incurred by management from the
fiscal year beginning July 1, 1999 and ending June 30,
2000.
The cost of an audited financial statement for an ongoing
business is estimated between $3,500 and $5,500 per year.
When considering the potential value of a foal, which could
be as high as $60,000,000, then the company with limited
resources is in a real dilemma if the company has to choose
between an ongoing audited financial statement or the
breeding of the company's broodmare.
The company has elected to have management of the company
pay for the maintenance of the company's horses until June
30, 2001 (See Description of Securities, page 25 and
Corporation Information, page 16). The required audited
financial statement would only show the cost of the
broodmare purchase. Showing only the broodmare purchase
will not reflect any true cost of operation and may be
misleading to the stockholders, therefore, an unaudited
financial statement is provided by the company. The cost
of maintenance and breeding of the company's broodmare is
provided in this section herein.
While the Securities and Exchange Commission was originally
designed and intended to enable the public to have access
on information about the company, the company feels that
the Securities and Exchange Commission was not intended to
be the critical "make or break" factor for a company's
success. However, the company feels that registering of
the company's securities, is one of the two most critical
factors involved in the company's success. (See Reporting
Time and Cost Risks, page 10 and Corporation Information,
page 16)
ITEM 3: Description of Property
The company leases two acres of pasture for $100 per month.
The company has located its broodmare in various locations
throughout Phoenix, Arizona and the surrounding
metropolitan area, depending upon the quality of the grass
in those locations. The total cost including feed
supplements, veterinarian care, and farrier service is
approximately $150 per month. With the unborn foal, this
cost will increase to $200 per month. This cost should be
incurred when the foal is weaned about June 30, 2001.
These costs should remain relatively constant, excluding
any disease or major injuries to the company's broodmare or
unborn foal.
The company owns various tack and horse supplies,
sufficient for the care and maintenance of its broodmare
and anticipated foal. These tack and supplies are rather
insignificant and usually last many years and are
approximately $200 in total.
The company's real asset is its broodmare, "Ms Walkin".
The company spent a vast amount of time and energy in
research to find the genetic pedigree of natural horse
racing ability. Sound conformation and extremely low
purchase price: Thus the company purchased "Ms Walkin" for
$5,000. "Ms. Walkin" sold as a weanling for $4,500, $5,000
as a two-year old, and $5,000 as a nine-year old broodmare.
The company feels "Ms Walkin" has the genetics, heritage,
and conformation encompassed by the technology of "Power
Genetics". The company feels that "Ms Walkin" should have
sold for a much larger price tag. The broodmare is
invaluable to the company in producing its racehorses. So
why did the broodmare sell so cheaply? "Ms Walkin" has
cosmetic flaws that would not affect her racing ability but
would affect her selling in the national auctions. The
cosmetic flaws include her right front foot turns out
slightly from the shoulder. Her left back foot is slightly
a clubfoot. The broodmare is generally slightly off balance
and the broodmare is slightly out of proportion. The
broodmare raced in three races at three/fourths of a mile
on the dirt surface, placing fifth in all three of these
allowance races. Her "Power Genetics" indicated that her
best racing distance would be a mile on the turf or grass
surface. Therefore, she never was able to compete on the
proper racetrack surface or the proper distance that would
have showed her true capability as a racehorse.
Thus the company feels fortunate to have procured her at
such a low price, considering what her purchase price might
have been if she had been raced and trained for racing at a
mile on the grass or turf-racing surface. Furthermore, the
broodmare's sire, "Misawaki's" 2001 stud fee is $35,000.
"Misawaki's" life time average yearling sales are $110,021
according to the industry's national magazine, The
Bloodhorse Magazine, Stallion Register 2001. The
broodmare's dam, "Split-Sentence" has a foal that sold for
over $200,000 as a yearling. The company using its "Power
Genetics", technology was able to procure what it feels is
a topnotch broodmare at an almost absurd low price.
"Half-Term", who is the stallion of the unborn foal costs
the management of the company $484 in shipping, breeding
expenses of $315 and $2,500 for the right to obtain his
services. This mating was not the company's first choice,
but was within the company's financial ability and ranked
seventh in desirability when breeding to our broodmare.
The unborn foal is a line-breeding to the stallion, "Mr.
Prospector". "Mr. Prospector" is a legend in the
thoroughbred horse racing industry. The company's foal
will be genetically three/eighths "Mr. Prospector". A
direct son of "Mr. Prospector" would be genetically
four/eighths "Mr. Prospector". The unborn foal is
genetically very similar to "Fusaichi Pegasus" whose sire
is "Mr. Prospector" and whose dam by "Dansig", a "Northern
Dancer" son. Thus both the sire and dam side are
genetically similar to the company's unborn foal.
"Fusaichi Pegasus" was syndicated for approximate
$60,000,000 at the end of his racing career.
The unborn foal has been checked by Arizona Equine, a local
veterinarian hospital, to report that the foal is alive and
kicking and in good health. This is important because
abortion is nature's way of eliminating any naturally
deformed foals.
ITEM 4: SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT
Security Ownership of Certain Beneficial owners
The following table sets forth the beneficial ownership for
the company's sole class of common stock of the company's
beneficially owned by all directors, officers, and 5% or
more holders.
The par value for the company's issued and outstanding
common stock as shown below, has a par value of .1923 cents
per share. The company does not issue dividends on the
common stock. The company's common stock is non-
cumulative. The common stock has no preference over or
under any other common stock. The common stock has no
convertible common stock or warrants or options to obtain
common stock.
Name and Nature of Number of Percent
Address of Beneficial Shares
Beneficial Ownership
Owner
---------- ----------- --------- ------
Nevada Classic Record 74,000(1) 74%
Thoroughbreds, Inc. Treasury Stock
1649 E. Hackamore
Mesa, AZ 85203
Brad Brimhall Record 2,000 7.7%
Beneficial Owner
No more than 10,000 shares may be sold in any one fiscal year.
(See Description of Securities, page 25).
The following table sets forth the beneficial ownership for
the company's sole class of preferred stock of the
company's beneficially owned by all directors, officers,
and 5% or more holders.
The par value for the company's issued and outstanding
preferred stock as shown below, has a par value of $1.00
per share. The company does not intend to issue dividends
on the preferred stock at the present time or in the
foreseeable future. The preferred stock has no preference
over or under any other preferred stock.
Name and Nature of Number of Percent
Address of Beneficial Shares
Beneficial Ownership
Owner
---------- ----------- --------- ------
Nevada Classic Record 5,000 100%
Thoroughbreds, Inc.
1649 E. Hackamore
Mesa, AZ 85203
(See Description of Securities, page 25)
Item 5: DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND
CONTROL PERSONS.
The Directors and Officers of the company are as follows:
Name Age Position
---- --------- ---------
JoAnna Curtis 56 President/CEO
Pamela J. Brimhall 50 Secretary/Treasurer
Bradley E. Brimhall 56 Operations Manager
Carol A. Bushman 51 Accounting Officer
Kristen Curtis 27 Transfer Agent
The management term of office is for one fiscal year,
beginning July 1st and ending June 30th. There exists a
family relationship: JoAnna Curtis is the mother of Kristen
Curtis. No other family relationships exist. Ms. Brimhall
and Brad Brimhall are of no relation even though they have
the same last name.
JOANNA CURTIS. Ms. Curtis became President of Nevada
Classic Thoroughbreds in 1998. JoAnna Curtis has operated
Nevada Classic Thoroughbreds since 1998. In 1998, Nevada
Classic Thoroughbreds, Inc. merged with Cherry Blossom
Farms, incorporated in Nevada on January 24, 1994. JoAnna
has been influential in the Charter School system,
developing one of the first charter schools in the Phoenix,
area of Arizona. The Charter School she co-established is
called EduPrize. JoAnna is a graduate of Brigham Young
University in Provo, Utah. Ms. Curtis majored in
Education and has been in the educational field teaching
and developing curriculum for approximately the last twenty
years. Joanna's duties for the company include the
maintenance of the company's horses and provided funding
for research and development and in the planning and
development of the corporation's business plans.
PAMELA J. BRIMHALL. Ms. Brimhall is a technical computer
systems analyst for the company. She has been a legal
secretary and computer systems analyst for legal firms.
Her duties for the company include formation of the
company's business strategies, Securities and Exchange
Commission correspondence as well as the graphic designing
of the company's brochures, cards and other correspondence.
Ms. Brimhall will also be involved in Internal Revenue
Service tax forms along with the corporation's accountant
officer, Carol Bushman.
BRADLEY E. BRIMHALL. Mr. Brimhall is the originator of
"Power Genetics", the proprietary technology of the
company. Mr. Brimhall is a graduate of the University of
Utah in Salt Lake City, Utah. His major course of study
was Economics in the College of Letters and Science. Mr.
Brimhall's expertise for the company will be in the
breeding, training and racing of the company's horses.
Brad has been an owner of racehorses, managing horse
syndications, and President and CEO of Cherry Blossom
Farms. Brad has also trained various types of animals,
such as dogs, birds as well as horses, in the areas of
behavior modifications. Mr. Brimhall will be involved in
the day-to-day activities of the company.
CAROL A. BUSHMAN. Ms. Bushman is the company's accountant
officer. She is an author and also is currently employed
by the accounting firm, Skinner Tameron & Co., LLP. Ms.
Bushman's responsibilities are to maintain NCT's accounting
records, and help provide financial data for the Securities
and Exchange Commission as well as the Internal Revenue
Service. Ms. Bushman will hold the bank account records,
and along with Ms. Brimhall is responsible for the
financial reporting to the Securities and Exchange
Commission.
KRISTEN CURTIS. Ms. Curtis is the company's transfer
agent. She is currently employed by a large commercial
contracting company, Builders Guild. Her duties at
Builders Guild are keeping the records of construction bids
for various commercial construction projects. Ms. Curtis
corresponds with various subcontractors and performs the
duties similar to that of a transfer agent as far as
computer technology and integrating business systems into a
single database. Ms. Curtis, along with Ms. Brimhall and
Ms. Bushman comprised a system for the company website, e-
mail, marketing and graphic designs as well as the
financial and reporting criteria for the Internal Revenue
Service and the Securities and Exchange Commission.
Item 6: EXECUTIVE COMPENSATION
Executive Compensation. The following table sets forth the
compensation received for services rendered to the Company
during the fiscal year ended June 30, 2001 by our
Operations Manager.
SUMMARY COMPENSATION TABLE
Name and Principal Annual Compensation Other Annual Long-Term
All Other
Positions Salary($) Bonus($) Compensation Compensation Awards
--------- ------ ----- ------------ ------------ -----
-
Bradley E. 2,000 shares of None None None
Brimhall(1) company stock
The common stock is valued at .1923 (cents) per share, which
amounts to $364 compensation for the year beginning July 1, 1999
and ending June 30, 2000. (See Description of Securities, page
25.)
(1) Bradley E. Brimhall became Operations Manager of Nevada
Classic Thoroughbreds, Inc. on November 1, 2000. Mr.
Brimhall is issued 2,000 shares of common stock on an
annual basis and as part of his employment agreement.
The company did not pay to its President/CEO or Secretary or any
Executive Officers or Directors any compensation. The company
does not have any defined benefit or actuarial plan with respect
to any Executive Officer or Director under which benefits are
determined primarily by final compensation and years of service.
None of the company's Officers or Directors has received such
compensation in the past. All Officers and Directors act
without compensation until authorized by the Board of Directors.
Further, none of the Directors is accruing any compensation
under any agreement with the company.
Nevada Classic Thoroughbreds, Inc. has not reimbursed any
expenses incurred by management in the maintenance of the
company's horses. The purchase of the broodmare and the
maintenance of the company's horses are a part of the original
merger with Cherry Blossom Farms and the exchange of stock (See
Description of Securities, page 25).
GRANTS AND OPTIONS
The company did not offer any stock options to any Officer or
Director in the fiscal year ending June 30, 2000.
Item 7: CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
There have been no party transactions or any other transactions
or relationship required to be disclosed pursuant to Item 404,
Regulation S-B.
Item 8: DESCRIPTION OF SECURITIES
The company's authorized capital stock consists of 5,000,000
shares or value .001 per share. There are 100,000 shares of
common stock issued and outstanding as of the date of this
filing. All shares of common issued and outstanding stock
(100,000 shares) have equal voting rights, one vote per share in
all matters to be voted upon by the shareholder. The shares of
common stock have no preemptive, subscription, conversion or
redemption rights and may be issued as fully paid and non-
assessable shares. Cumulative voting in the election of
Directors is not permitted, and all shares of the Company's
common stock, issued and outstanding are fully paid and non
assessable.
Descendant Trust common stock is held by the company in the name
of Descendant Trust until the shares are fully paid. The
Descendant Trust shares are full voting shares as provided for
in the Company's Bylaws, Exhibit 2. (See Stockholder's Equity
below).
STOCKHOLDER'S EQUITY
1) 100,000 shares of common stock issued, outstanding, and
tradable within one year when accepted for trading with the
Securities and Exchange Commission.
a) 14,000 shares of common stock issued and outstanding
b) 2,000 shares of common stock earmarked for salaries
within any one fiscal year.
c) 10,000 shares of common stock issued to Nevada Classic
Thoroughbreds, Inc. that can be sold within any one year
d) 74,000 shares issued and outstanding to Nevada Classic
Thoroughbreds, Inc. reserved for issuance.
2) 1,000,000 shares of restricted insider stock to Descendant
Trust
The address of the Descendant Trust is 1649 E. Hackamore, Mesa,
Arizona, 85203. The joint trustees are JoAnna Curtis, Pamela J.
Brimhall and Bradley Brimhall. JoAnna Curtis, Pamela J. Brimhall
and Bradley Brimhall have joint beneficial interest of the
Descendant Trust on an equal basis.
The Descendant Trust is to have the following requirements and
restrictions:
a) The 1,000,000 shares of restricted stock cannot be sold
until January 1, 2002.
b) The Descendant Trust cannot trade, sell, or otherwise
transfer stock until the stock is exercised.
c) The stock is exercised by paying the purchase price per
share.
d) The purchase price is $30 per share for the initial
500,000 shares.
e) Purchase price is $50 per share for the remaining
500,000 shares.
f) There is no time limit on the exercise of the stock.
g) Nevada Classic Thoroughbreds, Inc. will hold the stock
certificates in the name of Descendant Trust until the stock is
exercised.
h) The stock shares issued to Descendant Trust are full
voting shares at the time of issuance and recorded on the books
of the company in the name of Descendant Trust whether the stock
is exercised or unexercised by the Descendant Trust (See
Description of Securities, page 25. This was part of the merger
agreement between Cherry Blossom Farms and Nevada Classic
Thoroughbreds in October 1998 as provided for in the company's
Bylaws (Section 11 and Section 12).
2) 5,000 shares of preferred stock issued and outstanding to
Nevada Classic Thoroughbreds, Inc.
Per Share Earnings
Earnings equal earnings or inventory evaluation in the company's
horses. The earnings per share of the company's common stock
issued and outstanding or to be issued and outstanding are
$ .1923 per share on the 26,000 shares, year ending July 1, 2000
to June 30, 2001.
The earnings per share of the company's preferred stock, issued
and outstanding are $1.00 per share on the 5,000 shares.
PART II
Item 1: MARKET PRICE FOR COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS.
There is no market for the company's securities at the present
time.
The failure of the company to qualify it's company securities or
to meet the relevant maintenance criteria after such
qualification in the future, may result in the company being
unable to publicly trade its securities. As a result, a
stockholder may find it more difficult to dispose of, or to
obtain accurate information as to the market value of the
company's securities.
There are approximately 200 holders of the company's common
stock between 1999 and 2000
The company has not paid any dividends to date and has no plans
to do so in the immediate foreseeable future.
Item 2: LEGAL PROCEEDINGS
There is no litigation pending or threatened by or against the
company or any of its Officers, Directors or Employee. This
includes any securities complaint. No person in the company is
restricted from operating in any fashion within the horse racing
industry due to any litigation.
Item 3: CHANGES IN AND DISAGREEMENTS WITH THE ACCOUNTANTS
There are no disagreements with the accountant.
Item 4: RECENT SALES OF UNREGISTERED SECURITIES
There has been no sale of company securities within the last two
fiscal or calendar years.
Underwriters and Other Purchasers:
There were no underwriters in the sale and issuance of any
of the company's securities. All of the initial holders of the
common stock from the company have been through business
relationships with the company.
Item 5: INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Except for acts or omissions which involve intentional
misconduct, fraud or known violation of law or for the payment
of dividends in violation of the Nevada Revised Statutes, there
shall be no personal liability of a Director or Officer to the
Company, or its stockholders for damages for breach of fiduciary
duty as a Director or Officer. The Company may indemnify any
person for expenses incurred, including attorneys fees, in
connection with their good faith acts if they reasonably believe
such acts are in and not opposed to the best interests of the
Company and for acts for which the person had no reason to
believe his or her conduct was unlawful. The Company may
indemnify the officers and directors for expenses incurred in
defending a civil or criminal action, suit or proceeding as they
are incurred in advance of the final disposition of the action,
suit or proceeding, upon receipt of an undertaking by or on
behalf of the director or officer to repay the amount of such
expenses if it is ultimately determined by a court of competent
jurisdiction in which the action or suit is brought determined
that such person is fairly and reasonably entitled to
indemnification for such expenses which the court deems proper.
Insofar as indemnification for liabilities arising under the
1933 Act may be permitted to officers, directors or persons
controlling the Company pursuant to the foregoing, the Company
has been informed that in the opinion of the Securities and
Exchange Commission such indemnification is against public
policy as expressed in the Securities Act of 1933, as amended,
and is therefore unenforceable.
PART F/S
Financial Statements. The following financial statements are
attached to this report and filed as a part thereof.
Nevada Classic Thoroughbreds, Inc.
FINANCIAL REPORT
FINANCIAL STATEMENTS
TABLE OF CONTENTS
Report of NCT Management. . . . . . . . . . . . . . . . .page 2
Balance Sheet. . . . . . . . . . . . . . . . . . . . . . page 3
Footnotes . . . . . . . . . . . . . . . . . . . . . . . .page 4
Statements of Operations . . . . . . . . . . . . . . . . page 5
Statements of Cash Flows . . . . . . . . . . . . . . . . page 6
Notes to the Financial Statements . . . . . . . . . . . .page 7
Report of Nevada Classic Thoroughbreds, Inc.
Board of Directors
This report contains Nevada Classic Thoroughbreds, Inc.'s
accompanying Balance Sheet, the related Statement of Operations
and Statement of Cash Flows for the years ended December 31,
2000 and 1999. These financial statements are the responsibility
of the Company's management. Our management responsibility is
to express an opinion on these financial statements.
In the company management's opinion, the financial statements,
referred to in all material respects, as well as the financial
position of Nevada Classic Thoroughbreds, Inc., as of December
31, 2000, and the results of its operations and its cash flows
for the years ended December 31, 1999 and 2000, are in
conformity with generally accepted accounting principles.
The accompanying financial statements have been prepared
assuming that the company will continue as a going concern. As
discussed in Notes to the financial statement, the company's
liabilities are presently being met through company management
and will continue being met by company management through fiscal
year end, June 30, 2001.
2
FINANCIAL INFORMATION
PART 1
FINANCIAL STATEMENT
NEVADA CLASSIC THOROUGHBREDS, INC.
Unaudited Balanced
Sheet
November 1, 2000 - December 31, 2000
Startup
ASSETS
Cash
$
-
Horse
Inventory(2)
5,000
Other Assets
-
TOTAL ASSETS
$
5,000
26,000(1)
LIABILITIES & STOCKHOLDERS EQUITY
Current Liabilities(2)
$
-
Long Term Liabilities
-
Stockholders Equity:
Common Stock ($.001/share)
5,000
TOTAL LIABILITIES &
STOCKHOLDERS EQUITY
$
5,000
26,000(1)
Book Value -
Tradable Shares
Issued and
Outstanding
$.1923/share
3
Footnotes:
(1) The maximum number of securities refers to both the
tradable and common stock to be tradable for the years
ending June 30, 2000 and ending June 30, 2001
(2) The management of Nevada Classic Thoroughbreds, Inc. has
absorbed all expenses and will maintain the company's
horses until June 30, 2001. The liabilities were included
in this financial statement for the stockholders as a more
realistic picture of Nevada Classic Thoroughbreds, Inc.
4
NEVADA CLASSIC THOROUGHBREDS, INC.
STATEMENT OF OPERATIONS
Period Ended December 31, 2000 and 1999
(unaudited)
2000
1999
Revenues
Racing
0.00
0.00
Breeding
0.00
0.00
Inventory Evaluation
$ 5,000.00
$ 5,000.00
Costs and Expenses(2)
Operation and
Administration and
general expenses
0.00
0.00
Loss before income
taxes/credit for income
taxes
0.00
0.00
Preferred stock dividend
Requirement
0.00
0.00
Weighted Average of Share
Outstanding
26,000.00
14,000.00
Net Loss/Income per share
0.00
0.00
Dividends paid per share
Preferred stock
None
None
Common stock
None
None
5
NEVADA CLASSIC THOROUGHBREDS, INC.
STATEMENT OF CASH FLOWS
Period Ended December 31, 2000 and 1999
(unaudited)
2000
1999
Cash flows from operating
activities
$ 0.00
$ 0.00
Net loss/Income
$ 0.00
$ 0.00
Increase in receivables
$ 0.00
$ 0.00
Increase in accounts payable
Income taxes, accrued expenses
and other Liabilities
$ 0.00
$ 0.00
Others
$ 0.00
$ 0.00
Net cash used by operating
Activities
$ 0.00
$ 0.00
Cash flows from investing
Activities
$ 0.00
$ 0.00
Cash flows from financing
Activities
$ 0.00
$ 0.00
See accompanying notes
6
NEVADA CLASSIC THOROUGHBREDS, INC.
NOTES TO FINANCIAL STATEMENTS
December 31, 2000
(unaudited)
GENERAL
The financial statements included herein have been prepared by
the Company without audit. Since 1998, the company management
has maintained the cost of the broodmare as well as other
company expense and will continue until fiscal year end, June
30, 2001.
Footnote (1): The company's management has agreed to pay
for the maintenance of the company's broodmare through June 30,
2001 as additional paid-in capital for its stock in the
formation of Nevada Classic Thoroughbreds, Inc. The company's
management at its own option may extend the maintenance of the
company's horses. The company management may also at its own
discretion pay for the breeding right for the June 30, 2000 to
June 30, 2001 breeding season. The company management, at its
option, may pay for the filing and expenses of this registration
statement. The company's management may pay for any expense it
7
deems necessary or beneficial at its own discretion. These
payments will be shown as additional paid-in capital for
management's original full voting shares of common stock as
reported on the company's stockholder's book.
Certain information and footnote disclosures normally included
in financial statements prepared in accordance with generally
accepted accounting principles have been omitted.
8
PART III
Item 1: Index to Exhibits
Exhibit 1: Articles of Incorporation
Exhibit 2: Bylaws
Item 2: Exhibit Descriptions
Exhibit 1 shall contain the Nevada Classic Thoroughbreds, Inc.
Article of Incorporation filed with the State of Nevada on
November 1, 2000.
Exhibit 2 shall contain the Nevada Classic Thoroughbreds, Inc.
Bylaws on the records of the company adopted November 1, 2000.
SIGNATURE
Pursuant to the requirements of Section 12 of the Securities
Exchange Act of 1934, the registrant has duly caused this
registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized.
Nevada Classic Thoroughbreds, Inc.
Date: January 15, 2001 By: /s/ Carol A. Bushman
Duly Authorized
Chief Accounting Officer
7
6
