U. S. Securities and Exchange Commission
Washington, D.C. 20549
Form 10-KSB
(Mark One)
|X| ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the fiscal year ended May 31, 2000
|_| TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from __________ to __________
Commission file number 2-90519
-------
Century Laboratories, Inc.
(Name of small business issuer in its charter)
Delaware 72-0510027
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
c/o Edwin Mendlinger, President, 160 East 65th Street - Suite 12F,
New York, NY 10021
(Address of principal executive offices) (Zip Code)
Issuer's telephone number: (212) 249-4900
Securities registered under Section 12(b) of the Exchange Act: None
Securities registered under Section 12(g) of the Exchange Act:
-Common Stock, par value $0.01 per share
(Title of Class)
Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such
shorter period that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days.
Yes |_| No |X|
Check if there is no disclosure of delinquent filers in response to Item
405 of Regulation S-B is not contained in this form, and no disclosure will be
contained, to the best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form 10-KSB
or any amendment to this Form 10-KSB. |X|
[Cover page 1 of 2 pages]
<PAGE>
State issuer's revenues for its most recent fiscal year: $45,000
The aggregate market value of the Common Stock held by non-affiliates of
the registrant on August 9, 2000 (computed by reference to the average bid and
asked prices of such stock on such date) was $ 997,818.
At August 9, 2000 5,233,594 shares of Common Stock, $0.01 par value, of
the registrant were outstanding.
Documents incorporated by reference: None
Transitional Small Business Disclosure Format (check one): Yes |_| No |X|
[Cover page 2 of 2 pages]
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This Report on Form 10-KSB and the other periodic reports of Century
Laboratories, Inc. (the "Company") and other documents incorporated by reference
or incorporated herein as exhibits, may contain forward-looking statements that
involve risks and uncertainties. Our Company's actual results may differ
materially from the results discussed in the forward-looking statements. Factors
that might cause such a difference include, but are not limited to, our
Company's ability to locate an acquisition candidate or another entity which may
combine its operations with it, our Company's ability and those of management to
manage growth, if any, the substantial dilution that could be experienced by
existing shareholders of our Company with a potential acquisition with another
entity in view of the fact that our Company's current operations have
essentially ceased.
PART I
Item 1. Description of Business.
General.
Our Company was originally formed as a Delaware corporation in 1958 under the
name Carrtone Laboratories, Inc. We engaged in the licensing of patents held by
our Company, collecting royalties on a patent and exploiting and acquiring other
patents and inventions including those related to heart disease treatment,
cancer treatment and asthma treatment technologies.
After pursuing our business and finding the results unsuccessful, we allowed our
patents to lapse and discontinued business operations. We eventually became
inactive and lacked the funds to maintain any operations. Our corporate charter
was thereafter revoked on February 28, 1994 by the State of Delaware for our
failure to file franchise tax reports and pay the required taxes.
We underwent an internal management restructuring in early 1998. Since January
16, 1998, a new President and Director, Edwin Mendlinger, has been serving our
Company. All non-remitted franchise taxes on behalf of our Company have been
paid. We filed a Certificate of Renewal and Revival of Certificate of
Incorporation pursuant to Section 312 of the General Corporation Law of the
State of Delaware, resulting in the reinstatement of our corporate charter on
March 16, 1999. We are currently searching for a merger or other possible
business transaction with a suitable privately held company.
We were delisted from the NASD Bulletin Board because we failed to file our
periodic reports with the Securities and Exchange Commission. However, we have
recently updated our SEC reporting in order to become potentially attractive to
a privately held company interested in becoming a publicly held company, without
the costs and the time incurred in publicly distributing its securities.
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Proposed Business.
We intend to restructure ourselves in order to be used as a "public shell" for a
suitable privately held company with both a business history and operating
assets that has the intention to become public. We do not intend to combine with
a privately held company determined to be an investment company which would then
subject our Company to the Investment Company Act of 1940, as amended.
We believe a privately held company intending to merge, consolidate or
reorganize with us will have the advantage of acquiring an ownership interest in
a public company without the costs and the time that would be incurred when
conducting an initial public offering.
We believe that the process of selecting a suitable privately held company and
the subsequent merger or business transaction with us to become a public company
may be extremely complex and risky. In our search for a suitable privately held
company to merge with us, we are determined to consider only entities, which we
believe, have growth opportunities.
We currently have little revenues and own very limited assets. We have no viable
operations. During the fiscal period ended May 31, 2000, our Company received a
nonrefundable deposit of approximately $45,000 pursuant to the terms set forth
in a purchase agreement to acquire certain shares of capital stock in our
Company. The deposit was turned over to our Company as liquidated damages when
the other party defaulted on the proposed purchase. We will continue to seek a
sale or business combination transaction.
Because we have limited revenues we may be unable to satisfy any liabilities
incurred prior to the combination with a privately held company. If negotiations
and transactions fail prior to a successful consummation, we may not be able to
continue to pursue new business opportunities with other privately held
companies. If this occurs, it is foreseeable that our Company's common stock may
become worthless and our stockholders may receive, if any, a nominal
distribution, upon our Company's liquidation and dissolution.
We can not predict the resulting value of the merger or business transaction for
the owners of the privately held company selected for a business combination.
The privately held company selected for the business combination may incur
significant expenses and costs associated with the business combination
including legal, accounting and administrative fees and expenses.
Item 2. Description of Property.
We are currently utilizing office space without charge at the residence of our
Company's President at 160 East 65th Street, Apartment 12 F, New York, New York
10021. The size of the space being utilized by us is quite small in view of the
fact that we are presently inactive. At such time as we commence to conduct
active business, or merge or otherwise combine with another entity engaged in
business, our needs will no longer be met by this arrangement and we will have
to acquire alternate premises, which we believe will be available in the New
York metropolitan region on reasonable terms to suit our needs.
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Item 3. Legal Proceedings.
We are not aware of any material pending legal proceeding to which we are a
party or of which any of our property is the subject. We are not aware of our
Company's involvement in violations of Federal, State or local statutes or
ordinances with environmental protection.
Item 4. Submission of Matters to a Vote of Security Holders.
No matters were submitted during the fourth quarter of the fiscal year covered
by this report to a vote of security holders.
Part II
Item 5. Market for Common Equity and Related Stockholder Matters.
Our Company's Common Stock is traded over the counter and is not listed on any
national or regional exchange. During the fiscal years ended May 31, 1999 and
2000, the price of our Common Stock was quoted on the "pink sheets" published by
the National Quotation Bureau, LLC (ticker symbol: "CNLB"). The "pink sheets" is
an unorganized over-the-counter market that provides significantly less
liquidity than established stock exchanges or the Nasdaq National Market, or the
NASDAQ Bulletin Board. Quotes for stocks included in the "pink sheets" are not
listed in the financial sections of newspapers as are those for established
stock exchanges and the Nasdaq National Market. Our Company is unable to
determine whether such quotations are sufficient to constitute an "established
public trading market" for our Company's Common Stock. It is our Company's
understanding that in addition to quotations appearing in the "pink sheets",
dealers have from time to time otherwise given bid and asked quotations for our
Company's Common Stock.
The following table sets forth the range of high and low bid prices that have
been provided to our Company for each of the quarters for the fiscal years ended
May 31, 1999 and 2000. These prices as so quoted are by dealers to each other
without retail mark-ups, mark-downs or commissions and do not represent actual
transactions.
Fiscal Year Ended Prices Fiscal Year Ended Prices
May 31, 1999 High Low May 31, 2000 High Low
------------ ---- --- ------------ ---- ---
First Quarter .02 .02 First Quarter .031 .02
Second Quarter .02 .02 Second Quarter .150 .02
Third Quarter .02 .02 Third Quarter .250 .02
Fourth Quarter .02 .02 Fourth Quarter .260 .03
As of August 9, 2000, there were 2,607 holders of Common Stock of our Company.
Our Company has paid no dividends with respect to our Common Stock during the
past two fiscal years. Our Company is not subject to any restriction (other than
non-contractual business
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considerations) affecting its present or future ability to pay dividends with
respect to our Common Stock. However, our Company does not presently have any
plans to pay dividends in the foreseeable future.
Item 6. Management's Discussion and Analysis or Plan of Operation.
Discussion of Financial Condition
We currently have little revenue and own limited assets. We have no viable
operations. During the fiscal period ending May 31, 2000, our Company received a
nonrefundable deposit of approximately $45,000 pursuant to terms set forth in a
purchase agreement to acquire certain shares of capital stock in our Company.
The deposit was turned over to our Company as liquidated damages when the other
party defaulted on the proposed purchase. Our Company will continue to seek a
sale or a business combination transaction. No prediction of the future
financial condition of our Company can be made. By virtue of being a small
business filer and having revenues for only one of the last two fiscal years, we
are providing our Company's Plan of Operation.
Plan of Operation
Within the next twelve months, we intend to restructure ourselves in order
to be used as a "public shell" for a suitable privately held company with both a
business history and operating assets that has the intention to become public.
We do not intend to combine with a privately held company determined to be an
investment company that would then subject our Company to the Investment Company
Act of 1940, as amended. We believe a privately held company will combine with
our "public shell" in either a merger, consolidation, reorganization, or any
other form that will subsequently create a publicly held company when the two
companies combine.
We believe a combination will create the advantage of acquiring an
ownership interest in a public company without the costs or the time that would
be incurred when conducting an initial public offering.
We believe that the process of selecting a suitable privately held company
and the subsequent merger or business transaction with us to become a public
company may be extremely complex and risky. In our search for a suitable
privately held company to combine with us, we are determined to consider only
companies we believe have growth potential and opportunities. There may be
significant changes in the number of our employees if a business combination
occurs. Because we will rely on the information as provided by the management of
the potential company, there may be information concerning the potential company
that we may not have discovered through our own investigative research of the
management, key personnel, financial structure and facilities, or there may be
information which might have been concealed by the potential company.
We will continue to seek a sale or business combination transaction. We
are an inactive Delaware corporation and may remain dormant if we do not merge
or combine with another business company. We cannot predict the future financial
condition of our Company. We may be unable to satisfy any liabilities incurred
prior to the combination with a privately held company. If
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negotiations and transactions fail prior to a successful consummation, we may
not be able to continue to pursue business opportunities with other privately
held companies. If this occurs, it is foreseeable that our Company's Common
Stock may become worthless and our stockholders may receive a nominal
distribution, if any, upon our Company's liquidation and dissolution.
We cannot predict the resulting value of a merger or business transaction
for the owners of the privately held company selected for the business
combination. The privately-held company selected for the business combination
may incur significant expenses and costs associated with the business
transaction including legal, accounting and administrative fees and expenses.
Further, it may be difficult for the combined companies to afford marketing
campaigns, new developments or the ability to manufacture, if any.
We also cannot provide any assurance that the combined company will be
able to receive additional equity or debt financing or funding from a
third-party if the combined company subsequently requires it.
Under Delaware Law our Certificate of Incorporation permits our Board of
Directors to issue up to 1,000,000 shares of "blank check" preferred stock. Our
Board of Directors also has the authority to determine the price, rights,
preferences, privileges and restrictions of those shares without any further
vote or action by our stockholders. If we issue preferred stock with voting and
conversion rights, the rights of our common stockholders could be adversely
affected by, among other things, the loss of their voting control to others. Any
additional issuances could also delay, defer or prevent a change in control of
our Company, even if these actions would benefit our stockholders.
Accordingly, our Board of Directors is empowered, without stockholder
approval, to issue preferred stock with dividend, liquidation, conversion,
voting or other rights that could adversely affect the rights of holders of our
Common Stock.
Item 7. Financial Statements.
The Independent Auditor's Report and financial statements listed in the
accompanying index are filed as part of this report. See "Index to Financial
Statements" on page 11.
Item 8. Changes In and Disagreements With Accountants on Accounting and
Financial Disclosure.
None.
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PART III
Item 9. Directors, Executive Officers, Promoters and Control Persons; Compliance
with Section 16(a) of the Exchange Act.
The following table contains information regarding the Executive Officers and
Directors of our Company:
Director
Name Age Principal Occupation Since
---------------- --- -------------------- --------
Edwin Mendlinger 64 Director, President 1998
Louis Birner 73 Director 1999
The following is a brief description of the business experience for the past
five years of our Company's Executive Officers and Directors:
Edwin Mendlinger became our President and a director on January 16, 1998.
For the last five years, Mr. Mendlinger has been President of Abbey Group, Inc.,
a privately owned financial services company. He received a B.S. Degree in
Accounting from New York University and attended the University of Miami School
of Law.
Louis Birner became a director of our Company in April 1999. For the last
five years, he has been a practicing psychologist. He received a B.A. Degree
from Brooklyn College and a Ph.D. in Psychology from Yeshiva University.
Item 10. Executive Compensation.
Mr. Mendlinger is an officer and a director of our Company and has received no
monetary compensation for services rendered during his tenure. In consideration
for Mr. Mendlinger's services rendered, Mr. Mendlinger was issued 244,500 share
of Common Stock.
Item 11. Security Ownership of Certain Beneficial Owners and Management.
The following table sets forth as of August 9, 2000 certain information with
regard to each person known by our Company to own beneficially 5% or more of our
Company's Common Stock, as well as the Common Stock ownership of the all the
executive officers and Directors of our Company as a group. Unless otherwise
stated, the persons named in the table have sole voting and investment power
with respect to all Common Stock shown as beneficially owned by them.
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Name and Address Common Stock Percent
of Beneficial Owner Beneficially Owned of Class (1)
------------------------------ ------------------------ ------------
Estate of Albert Raisin 554,341(2) 10.59%
99 Soundview Drive
Port Washington, NY 11050
Dr. David Rubin 332,500(3) 6.35%
8949 Montrose Way
San Diego, California 92122
Dan Schwinner 279,750(4) 5.35%
121 Cooper Place
New Haven, CT 06515
Edwin Mendlinger 244,500 4.67%
160 East 65th Street, Apt. 12F
New York, New York 10021
All Directors and Officers 244,500 4.67%
as a Group (2 persons)
----------
(1) Based on 5,233,594 shares outstanding as of August 9, 2000.
(2) Includes 102,627 shares beneficially owned by the widow of Albert
Raisin, Audrey M. Raisin, and 235,714 shares owned by Puritan
Investors Corporation, of which Albert Raisin was former President
and a director. The Estate of Albert Raisin disclaims beneficial
ownership of all shares of the Common Stock of our Company owned by
Audrey M. Raisin. Carrie K. Bellware, the Estate of Benjamin Raisin,
the Estate of Albert Raisin, Audrey M. Raisin, and other members of
their families collectively own approximately 55% of the outstanding
shares of the capital stock of Puritan Investors Corporation. Carrie
K. Bellware, Audrey Raisin, the Estate of Benjamin Raisin and the
Estate of Albert Raisin each disclaims beneficial ownership of all
shares of the Common Stock of our Company owned by Puritan Investors
Corporation.
(3) Represents 332,500 shares presently owned by Dr. Rubin and/or his
wife.
(4) Held of record according to the records of the Transfer Agent for
our Company's Common Stock. Our Company does not know whether the
beneficial ownership of such shares is the same as the record
ownership.
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Item 12. Certain Relationships and Related Transactions.
Edwin Mendlinger received 244,500 shares of our Common Stock as compensation for
services rendered, as described in Item 10 of this Report.
Item 13. Exhibits and Reports on Form 8-K.
a. Exhibits
3(a)(1) Certificate of Incorporation, as amended on August 10,
1977(1)
3(a)(2) Certificate of Amendment of Certificate of Incorporation,
dated April 22, 1983(2)
3(a)(3) Certificate of Reduction of Capital, dated April 22,
1983(2)
3(a)(4) Certificate for Renewal and Revival of Charter (3)
3(b) By-Laws of the Company (3)
4(a) Form of Common Stock Certificate for shares of Common
Stock, $.01 par value per share, of the Registrant (4)
b. No reports on Form 8-K were filed by the registrant during the
fiscal quarter ended May 31, 2000.
----------
(1) Incorporated by reference from the Company's Annual Report on Form
10-K for the fiscal year ended May 31, 1992.
(2) Incorporated by reference from the Company's Annual Report on Form
10-K for the fiscal year ended May 31, 1983.
(3) Incorporated by reference from the Company's Annual Report on Form
10-KSB for the fiscal year ended May 31, 1999.
(4) Incorporated by reference from the Company's Annual Report on Form
10-K for the fiscal year ended May 31, 1981.
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Item 7.
INDEX TO FINANCIAL STATEMENTS
Century Laboratories, Inc.
Years Ended May 31, 1999 and May 31, 2000
Page
----
Report of Independent Auditors F-1
Consolidated Balance Sheet as at May 31, 2000 and May 31, 1999 (Audited) F-2
Consolidated Statement of Operations for the Years Ended May 31, 2000
and May 31, 1999 (Audited) F-3
Consolidated Statement of Cash Flows for the Years ended May 31, 2000
and May 31, 1999 (Audited) F-4
Statements of Stockholders' Equity for the Years Ended May 31, 2000
and May 31, 1999 F-5
Notes to Financial Statements F-6
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DAVID SUSS
CERTIFIED PUBLIC ACCOUNTANT
271 MADISON AVENUE
SUITE 208
NEW YORK, NEW YORK 10016
Tel: (212) 883-1050
Fax: (212) 867-4258
Board of Directors
Century Laboratories, Inc.
INDEPENDENT AUDITORS' REPORT
I have audited the accompanying balance sheets of Century Laboratories,
Inc. as of May 31, 2000, and May 31, 1999, and the related statements of
operations, cash flows and stockholders' equity for the years then ended. These
financial statements are the responsibility of management. My responsibility is
to express an opinion on these financial statements based on our audits.
I conducted my audits in accordance with generally accepted audited
standards. Those standards require that we plan and perform the audits to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
I believe that my audit provides a reasonable basis for my opinion.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note 1 to the
financial statements, the Company has no viable operations or significant assets
and is dependent upon its president to provide sufficient working capital to
maintain the integrity of the corporate entity. The circumstances create
substantial doubt about the Company's ability to continue as a going concern and
are discussed in Note 1. The financial statements do not contain any adjustments
that might result from the outcome of these uncertainties.
In my opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Century Laboratories, Inc.
as of May 31, 2000, and May 31, 1999, and the results of its operations and cash
flows for the years then ended in conformity with generally accepted accounting
principles.
David Suss, CPA
July 10, 2000
F-1
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CENTURY LABORATORIES, INC.
CONSOLIDATED BALANCE SHEET
AUDITED
ASSETS
May 31, May 31,
2000 1999
----------- -----------
Cash $ 2,570 $ 0
Fixed Assets:
Office Equipment 2,395 0
----------- -----------
Total Assets $ 4,965 0
=========== ===========
LIABILITIES AND SHAREHOLDER EQUITY
Liabilities:
Accounts Payable $ 10,002 $ 19,500
Due Shareholder 5,166 0
----------- -----------
Total Liabilities: $ 15,168 $ 19,500
Shareholders' Equity:
Common Stock, $.01 par value
per share; 10,000,000 shares
authorized, 5,233,594 shares
issued and outstanding 52,336 52,336
Additional Paid-in Capital 7,287,774 7,287,774
Retained Earnings
(Deficit) (7,350,313) (7,359,610)
-----------
Total Shareholders' Equity
(Deficit) (10,203) (19,500)
----------- -----------
Total Liabilities and
Shareholders' Equity $ 4,965 $ 0
=========== ===========
F-2
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CENTURY LABORATORIES, INC.
CONSOLIDATED STATEMENT OF OPERATIONS
AUDITED
For the Years Ended May 31,
-------------------------------
2000 1999
------------- -------------
Revenue $ 45,000 $ 0
Expenses:
Commissions 16,875 0
Professional Fees 10,854 0
Regulatory Expense 1,068 0
Advertising and Marketing 0 0
Travel and Entertaining 598 0
Office Expense 541 0
Transfer Agent Fees 5,150 0
Franchise Tax 516 0
Miscellaneous Expense 110 0
---------- ----------
Total Expenses: $ 35,703 $ 0
========== ==========
Net Income Before Taxes 9,297 0
Net Income 9,297 0
Net Earnings Per Common Share 0 0
Weighted Average Number of
Common Shares Outstanding 5,233,594 5,233,594
========== ==========
F-3
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CENTURY LABORATORIES, INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
AUDITED
For the Years Ended May 31,
--------------------------
2000 1999
------- -------
Cash Flows from
Operating Activities $ 9,297 $ 0
Increase in Fixed Assets (2,395) 0
Decrease in Accrued Expenses (9,498) 0
Increase in Due 5,166 0
------- -------
Shareholder
Total Cash Flows $ 2,570 $ 0
Cash at Beginning $ 0 $ 0
Net Increase in Cash 2,570 0
------- -------
Cash at End of Period $ 2,570 $ 0
======= =======
F-4
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CENTURY LABORATORIES, INC.
STATEMENT OF STOCKHOLDERS' EQUITY YEARS ENDED MAY 31
Additional Retained
Common Stock Paid-In Earnings
Shares Amount Capital (Deficit)
------ ------ ------- ---------
Balance
May 31, 1998 5,233,594 52,336 7,287,774 (7,359,610)
Balance
May 31, 1999 5,233,594 52,363 7,287,744 (7,359,610)
Net Income 9,297
Balance
May 31, 2000 5,233,594 52,363 7,287,774 (7,350,313)
F-5
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CENTURY LABORATORIES INC.
NOTES TO FINANCIAL STATEMENTS
1. ORGANIZATION AND DESCRIPTION OF BUSINESS
Century Laboratories, Inc. (the "Company") is an inactive Delaware
corporation. Century Laboratories, Inc. was originally incorporated as Carrtone
Laboratories, Inc. in 1958 under the laws of the State of Delaware. During
fiscal year 1994, the Company had its charter revoked by the State of Delaware
for failure to file franchise tax reports and pay the required taxes and/or
fees.
A certificate of renewal and a revival of its charter of incorporation
pursuant to Section 312 of the General Corporation Law of the State of Delaware
were filed. As a result, the charter of the corporation was reinstated in March
1999.
2. STOCKHOLDERS' EQUITY
The Company issued 393,500 shares of common stock in February 1996. Of
those shares, 149,000 shares were issued to settle unpaid professional fees of
$149,000 and 224,500 shares were issued to the Company's president for services
rendered.
3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Significant Credit Risk and Estimates:
Management of the Company uses estimates and assumptions in preparing
financial statements in accordance with generally accepted accounting
principles. Those estimates and assumptions affect the reported amounts of
assets and liabilities, the disclosure of contingent assets and liabilities, and
the reported revenue and expenses. Actual results could vary from the estimates
that management uses.
F-6
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SIGNATURES
In accordance with Section 13 or 15(d) of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
CENTURY LABORATORIES, INC.
By: /s/Edwin Mendlinger
------------------------------------
Edwin Mendlinger
President
August 10, 2000
In accordance with the Exchange Act, this report has been signed below by
the following persons on behalf of the registrant and in the capacities and on
the dates indicated:
Signature Title Date
--------- ----- ----
/s/ Edwin Mendlinger President (principal executive August 10, 2000
--------------------- Officer and principal financial
Edwin Mendlinger and accounting officer) and
Director
/s/ Louis Birner Director August 10, 2000
---------------------
Louis Birner
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