Bio-Response, Inc.
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-KSB
[X]ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 [Fee Required]
FOR THE YEAR ENDED DECEMBER 31, 1997
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 [No Fee Required]
Commission File Number 0-9201
BIO-RESPONSE, INC.
(Name of small business issuer in its charter)
Delaware 59-3453151
(state or other jurisdiction of incorporation or organization)
(IRS Employer identification No.)
1612 N. Osceola Avenue, Clearwater, Florida 33755
(Address of principal executive offices) (Zip Code)
Issuer's telephone number: (813) 443 3434
Securities Registered under Section 12(g) of the Exchange Act:
Common Stock, par value $.004 per share.
Check whether the Issuer (1) filed all reports required to be
filed by Section 13 or 15(d) of the Exchange Act during the
preceding 12 months (or for such shorter period that the Issuer
was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days.
Yes [X]No [ ]
Check if there is no disclosure of delinquent filers pursuant
to Item 405 of Regulation S-B contained in this form, and no
disclosure will be contained, to the best of Issuer'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.
[ ]
The issuer's revenues for its most recent fiscal year were
$0.
The aggregate market value of the 2,040,919 shares of Common
Stock, $.0004 par value per share, held by non-affiliates of the
Issuer, based on the closing sale price on December 27, 1997 of
$0.03 per share, was $61,228. However, since trading is sporadic
and rare, the non-affiliates holding cannot be reasonably
assessed and the audit financials reflect zero value. The number
of shares of the Common Stock, outstanding on December 31, 1997
was 9,176,554. This outstanding number is subject to a reverse
split of 30.5885 to 1,approved by a Special Meeting of the
Stockholders held on March 10, 1997, which results in
outstanding shares of 300,000. Further Ms. Fonner and Capston,
in the same Special Meeting, were approved for a compensation of
an additional 200,000 shares for their duties. To avoid
administrative complexity associated with effecting a reverse
split and requiring the stockholder to change certificates twice,
Management has elected to defer the issuance of stock to Capston,
Ms. Fonner or her designees along with effecting the reverse
split until an acquisition is completed
Check whether the issuer has filed all documents and reports
required to be filed by Sections 12, 13 or 15(d) of the Exchange
Act after the distribution of securities under a plan confirmed
by a court.
Yes [ ] No [X]
DOCUMENTS INCORPORATED BY REFERENCE
Not Applicable.
PART I
Item 1. Description of Business
Corporate Background Information
BIO-RESPONSE conducted an initial public offering of its
Common Stock in September, 1979 pursuant to a Form S-2
Registration Statement under the Securities Act of 1933 (the
"Securities Act"). In connection with an application to list its
Common Stock on the NASDAQ system, the Company also registered
its Common Stock pursuant to Section 12(g) of the Securities
Exchange Act of 1934 (the "Exchange Act"). The Company remained
current with respect to its reporting obligations under the
Exchange Act until 1990.
After pursuing its business for several years, BIO-RESPONSE
filed a voluntary petition under Chapter 11 of the Bankruptcy Act
on September 14, 1989. This proceeding was filed in with the U.S.
Bankruptcy Court for the Northern District of California and
designated as Case # 4-89-04159 N-3. On September 15, 1995 the
Company's case under Chapter 11 was closed by an order of the
Court. As a result of the Bankruptcy, the Company has no assets,
liabilities, management or ongoing operations and has not engaged
in any business activities for well over a half of a decade.
During the pendancy of the Bankruptcy, the Company did not
file franchise tax returns with and pay the required franchise
taxes to the State of Delaware. As a result, the Company's
corporate charter was revoked by order of the Secretary of State
of the State of Delaware on August 30, 1991. Similarly, the
Company did not file with the SEC either (a) the regular reports
that are required of all companies that have securities
registered under the Exchange Act, or (b) a certification on Form
15 terminating its registration under the Exchange Act. As a
result, the Company remained a Registrant under the Exchange Act
but was seriously delinquent in its SEC reporting obligations.
According to Bloomberg, the last published quotation for the
Company's Common Stock was posted by M. H. Meyerson & Co., Inc.,
one of the Company's market makers, on September 30, 1997. At
this time, the published quote was $0.03 bid and $0.10 asked.
In 1996, acting in its capacity as a Stockholder of the
Company, and without first receiving any consent, approval or
authorization of any officer, director or other Stockholder of
the Company, Capston effected a renewal, revival and restoration
of the Company's certificate of incorporation pursuant to Section
312 of the General Corporation Law of the State of Delaware. In
general, Section 312 provides that any corporation may "procure
an extension, restoration, renewal or revival of its certificate
of incorporation, together with all the rights, franchises,
privileges and immunities and subject to all of its duties, debts
and liabilities which had been secured or imposed by its original
certificate of incorporation" upon compliance with certain
procedural requirements.
After reviewing the applicable files, Capston determined that
the only debt of the Company that was "secured or imposed by its
original certificate" was the obligation of BIO-RESPONSE to pay
its Delaware taxes. Therefore, Capston paid all past due
franchise taxes on behalf of the Company and then filed a
Certificate of Renewal, Revival, Extension and Restoration of the
Company's Certificate of Incorporation on behalf of the Company
under the authority granted by Section 312(h). The total out-of-
pocket costs paid by Capston incurred in connection with the
restoration of the Company's charter was $450. This Certificate
was filed in the office of the Secretary of State of the State
of Delaware on December 26, 1996. and at the date of this report
the Company is lawfully incorporated, validly existing and in
good standing under the laws of the State of Delaware.
Operations
The Company has no assets, liabilities, management or ongoing
operations and has not engaged in any business activities. In
July of 1997, the Stockholders overwhelmingly voted for the
adoption and implementation of a Plan presented by Capston and
Ms. Fonner, (sole director) whereby the Company was
restructured as a "public shell" for the purpose of effecting a
business combination transaction with a suitable privately-held
company that has both business history and operating assets.
Capston and Ms. Fonner believes the Company offers owners of
a suitable privately-held company the opportunity to acquire a
controlling ownership interest in a public company at
substantially less cost than would otherwise be required to
conduct an initial public offering. Nevertheless, neither is
aware of any empirical statistical data that would independently
confirm or quantify their beliefs concerning the perceived value
of a merger or acquisition transaction for the owners of a
suitable privately-held company. The owners of any existing
business selected for a business combination with the Company
will incur significant costs and expenses, including the costs of
preparing the required business combination agreements and
related documents, the costs of preparing a Current Report on
Form 8-K describing the business combination transaction and the
costs of preparing the documentation associated with any future
reporting under the Exchange Act and registrations under the
Securities Act.
The Plan is approved by the Stockholders. The Company is
fully reactivated and ready to be used as a corporate vehicle to
seek, investigate and, if the results of such investigation
warrant, effect a business combination with a suitable privately-
held company or other business opportunity presented to it by
persons or firms that seek the perceived advantages of a publicly
held corporation. The business operations proposed in the Plan
are sometimes referred to as a "blind pool" because Stockholders
will not ordinarily have an opportunity to analyze the various
business opportunities presented to the Company, or to approve or
disapprove the terms of any business combination transaction that
may be negotiated by Capston and Ms. Fonner on behalf of the
Company. Consequently, the Company's potential success will be
heavily dependent on the efforts and abilities of Ms. Fonner,
Capston and its consultants and legal advisors, who have
virtually unlimited discretion in searching for, negotiating and
entering into a business combination transaction. Ms. Fonner and
Capston have had limited experience in the proposed business of
the Company. Although Ms. Fonner and Capston believes that the
Company will be able to enter into a business combination
transaction during 1998, there can be no assurance as to how much
time will elapse before a business combination is effected, if
ever. The Company is not restrict its search to any specific
business, industry or geographical location, and the Company may
participate in a business venture of virtually any kind or
nature.
Capston, Ms. Fonner, legal advisers and consultants
anticipate that the selection of a business opportunity for the
Company will be complex and extremely risky. Because of general
economic conditions, rapid technological advances being made in
some industries, and shortages of available capital, Capston
believes that there are numerous privately-held companies seeking
the perceived benefits of a publicly traded corporation. Such
perceived benefits may include facilitating debt financing or
improving the terms on which additional equity or may be sought,
providing liquidity for the principals of the business, creating
a means for providing incentive stock options or similar benefits
to key employees, providing liquidity for all stockholders and
other factors.
Potential business opportunities may occur in many different
industries and at various stages of development, all of which
will make the task of comparative investigation and analysis of
such business opportunities extremely difficult and complex.
Capston, Ms. Fonner, legal advisers and consultants anticipate
that the Company will be able to participate in only one business
venture. This lack of diversification should be considered a
substantial risk inherent in the Plan because it will not permit
the Company to offset potential losses from one venture against
gains from another. Moreover, due to the Company's lack of any
meaningful financial, managerial or other resources, Capston. Ms.
Fonner, legal advisers and consultants believe the Company will
not be viewed as a suitable business combination partner for
either developing companies or established business that are in
need of substantial additional capital.
Acquisition of Opportunities
In implementing a particular business combination
transaction, the Registrant may become a party to a merger,
consolidation, reorganization, joint venture, franchise or
licensing agreement with another corporation or entity. It may
also purchase stock or assets of an existing business. After the
consummation of a business combination transaction, it is likely
that the present Stockholders of the Registrant will only own a
small minority interest in the combined companies. In addition,
as part of the terms of the acquisition transaction, all of the
Registrant's officers and directors will ordinarily resign and be
replaced by new officers and directors without a vote of the
Stockholders. Capston does not intend to obtain the approval of
the Stockholders prior to consummating any acquisition other than
a statutory merger that requires a Stockholder vote. Capston and
its officers, directors and consultants do not intend to sell any
shares held by them in connection with a business acquisition
until after the completion of the acquisition occurs, and then,
only in an orderly manner.
It is anticipated that any securities issued in a business
combination transaction will be issued in reliance on exemptions
from registration under applicable Federal and state securities
laws. In some circumstances, however, as a negotiated element of
a business combination, the Registrant may agree to register such
securities either at the time the transaction is consummated or
at some specified time thereafter. The issuance of substantial
additional securities and their potential sale into any trading
market that may develop may have a depressive effect on such
market. While the actual terms of a transaction to which the
Registrant may be a party cannot be predicted, it may be expected
that the parties to the business transaction will find it
desirable to avoid the creation of a taxable event and thereby
structure the acquisition in a so called "tax free"
reorganization under Sections 368(a)(1) or 351 of the Internal
Revenue Code of 1986, as amended (the "Code") In order to obtain
tax free treatment under the Code, it may be necessary for the
owners of the acquired business to own 80% or more of the voting
stock of the surviving entity. In such event, the stockholders of
the Registrant would retain less than 20% of the issued and
outstanding shares of the combined companies, which could result
in significant dilution in the equity of such stockholders. The
Registrant intends to structure any business combination in such
manner as to minimize Federal and state tax consequences to the
Registrant and any target company.
As part of the Registrant's investigation of potential
business opportunities, Capston and its officers, directors and
consultants will ordinarily meet personally with management and
key personnel, may visit and inspect material facilities, obtain
independent analysis or verification of certain information
provided, check reference of management and key personnel, and
take other reasonable investigative measures, to the extent of
the Registrant's limited resources and Capston's limited
expertise. The manner in which the Registrant participates in an
opportunity will depend on the nature of the opportunity, the
respective needs and desires of the Registrant and other parties
and the relative negotiating strength of the Registrant and such
other management.
With respect to any business combination negotiations,
Capston will ordinarily focus on the percentage of the Registrant
which target company stockholders would acquire in exchange for
their ownership interest in the target company. Depending upon,
among other things, the target company's assets and liabilities,
the Registrant's stockholders will in all likelihood only own a
small minority interest in the combined companies upon completion
of the business combination transaction. Any business combination
effected by the Registrant can be expected to have a significant
dilutive effect on the percentage of shares held by the
Registrant's current Stockholders.
Upon completion of a business combination transaction, there
can be no assurance that the combined companies will have
sufficient funds to undertake any significant development,
marketing and manufacturing activities. Accordingly, the combined
companies may be required to either seek additional debt or
equity financing or obtain funding from third parties, in
exchange for which the combined companies might be required to
issue a substantial equity position. There is no assurance that
the combined companies will be able to obtain additional
financing on terms acceptable to the combined companies.
It is anticipated that the investigation of specific business
opportunities and the negotiation, drafting and execution of
relevant agreements, disclosure documents and other instruments
will require substantial management time and attention and
substantial costs for accountants, attorneys and others. If a
decision is made not to participate in a specific business
opportunity the costs incurred in the related investigation would
not be recoverable. Furthermore, even if an agreement is reached
for the participation in a specific business opportunity, the
failure to consummate that transaction may result in the loss of
the Registrant of the related costs incurred.
Item 2. Description of Property
As a result of its 1989 Bankruptcy, the Company has no
assets, liabilities, or ongoing operations. The Company had no
operations during the year ended December 31, 1997 and no
material assets or liabilities as of December 31, 1997.
Item 3. Legal Proceedings
Not Applicable
Item 4. Submission of matters to a vote of Security Holders
Not Applicable
PART II
Item 5. Market for Registrant's Common Equity
There has been no active trading in the Issuer's common stock
for over five years. The Issuer does have six (6) market makers.
It does not , however, have any active trading. The highest bid
was $.02 with the highest ask being $.07. The Company's trading
symbol is BRSP and trades on the OTC.
Item 6. Management Discussion and Analysis of Financial Condition
and Results of Operations.
Results of Operations
For the past nine months, the Company has been actively
seeking an acquisition of assets, property or business that may
benefit the Company and its stockholders. While these efforts
have not resulted in a suitable business combination transaction,
the Company's experience during this period confirms that demand
for well structured public shells is strong. Over the last eight
months, the Company has evaluated a number of potential
acquisition candidates. In each case, however, the Company has
rejected as unsuitable because of several reasons. The most
predominant ones were capital structure, lack of audited
statements and inadequate working capital. In some cases, the
Company was rejected for unknown reasons. However, Capston
continues to seek for a qualified candidate.
Financial Condition
As a result of its 1989 Bankruptcy, the Company has no
assets, liabilities, or ongoing operations and has not engaged in
any business activities since September 1989. The Company had no
operations during the year ended December 31, 1997 and no
material assets or liabilities as of December 31, 1997.
Stockholder approved the Plan whereby the Company will be
restructured as a "public shell" for the purpose of effecting a
business combination transaction with a suitable privately-held
company that has both business history and operating assets,
although there can be no assurance that management will be
successful in its efforts to negotiate such a transaction.
Plan of Operation.
The Company has not engaged in any material operations or had
any revenues from operations since its bankruptcy. The Company's
plan of operation for the next twelve months is to continue to
seek the acquisition of assets, property or business that may
benefit the Company and its stockholders. Because the Company has
no resources, management anticipates that to achieve any such
acquisition, the Company will be required to issue shares of its
common stock as the sole consideration for such acquisition.
During the next twelve months, the Company's only foreseeable
cash requirements will relate to maintaining the Company in good
standing or the payment of expenses associated with reviewing or
investigating any potential business venture, which are
anticipated to be advanced by Capston as loans to the Company.
Because the Company has not identified any such venture as of the
date of this Registration Statement, it is impossible to predict
the amount of any such loans. However, any loans from Capston
will be on terms no less favorable to the Company than would be
available from a commercial lender in an arm's length
transaction. As of the date of this Annual Report on Form 10-K,
the Company has not found any acquisition to date.
Management anticipates that Capston, will advance minor
administrative expenses up to approximately $50,000. In the event
that additional funding is required in order to keep the Company
in good standing and/or to review or investigate any potential
merger or acquisition candidate, the Company may attempt to raise
such funding through a private placement of its common stock to
accredited investors.
At the present time, management has no plans to offer or sell
any securities of the Company. However, at such time as the
Company may decide to engage in such activities, management may
use any legal means of conducting such offer or sale, including
registration with the appropriate federal and state regulatory
agencies and any registration exemptions that may be available to
the Company under applicable federal and state laws.
Because the Company is not currently making any offering of
its securities, and does not anticipate making any such offering
in the foreseeable future, management does not believe that Rule
419 promulgated by the Securities and Exchange Commission under
the Securities Act of 1933, as amended, concerning offerings by
blank check companies, will have any effect on the Company or any
activities in which it may engage in the foreseeable future.
Item 7. Financial Statements.
For the information called for by this Item, see the
Financial Statements attached.
Item 8. Changes in and Disagreements With Accountants on
Accounting and Financial Disclosure.
The Registrant's financial statements for the years ended
December 31, 1989 were audited by the firm of TOUCHE ROSS & Co.,
Certified Public Accountants. As a result of the bankruptcy
proceedings discussed elsewhere herein, the Registrant did not
prepare financial statements for the years ended December 31,1990
through December 31, 1996. In connection with the revival and
restoration of the Company's certificate of incorporation, the
firm of Want & Ender, Certified Public Accountants was retained
to audit the Registrant's balance sheet for the year ended
December 31, 1996 and to serve as the Registrant's auditor in the
future. During the fiscal year ended 1990, and the subsequent
periods preceding the appointment of Want & Ender, CPAs, there
were no known reportable disagreements between the Registrant and
the firm of TOUCHE ROSS & Co., Certified Public Accountants, on
any matter of accounting principles or practices, financial
statement disclosure, or auditing scope or procedure.
PART III
Item 9. Directors and Executive Officers of the Registrant
Ms. Sally Fonner, age 48, the president and sole stockholder
of Capston, performs the duties of President, Secretary,
Treasurer and Sole Director of the Registrant. Ms. Fonner term of
office is anticipated be no more than two years or until
permanent management can be located, whichever should occur first
in time. Ms. Fonner's sole purpose is to seek out qualified new
operations and management. Ms. Fonner shall seek re-election at
the annual meeting in 1998 if a business combination has not been
completed.
Item 10. Executive Compensation.
Ms. Fonner is the sole officer and director of the Registrant
and has received no monetary compensation for services performed
during her tenure. Further, no future monetary compensation
agreement between Ms. Fonner and the Registrant is contemplated.
Notwithstanding the foregoing, the Ms. Fonner was approved by the
stockholders in a Special Meeting, to have compensation of
200,000 shares of stock, not subject to the reverse split
approved by stockholders in the same meeting. To avoid
administrative complexity associated with effecting a reverse
split and requiring the stockholder to change certificates twice,
Management has elected to defer the issuance of stock to Capston,
Ms. Fonner or her designees until an acquisition is completed.
Item 11. Security Ownership of Certain Beneficial Owners and
Management
The following table presents certain information regarding
the beneficial ownership of the Company's equity securities at
February 28, 1997 by (i) each person known by the Company to own
beneficially more than 5% of the outstanding shares of Common
Stock, (ii) each of the Company's directors and officers, and
(iii) all directors and officers as a group.
Number of SharesPercent of
Name Beneficially Owned (1) Class
Eli S. Jacobs 2,975,218 32.4%
375 Park Avenue
New York, New York
10022
Executive Life
Insurance Co 3,157,891 12.5%
11444 West Olympic Boulevard
Los Angeles, California
90064
Elliott Associates,
L.P. 1,000,526 9.8%
110 E. 59th Street
New York, New York
10022
Capston Network Company 2,000 .0002%
1612 N. Osceola Avenue
Clearwater, Florida 34615
All directors and officers
as a group. 2,000 .0002%
The above information, with the exception of Capston Network
Company, is taken from the last filed 10-K dated June 30, 1989.
Capston has no information which would lead them to change the
above data.
(1)Unless otherwise indicated, each person or group has sole
voting and investment power with respect to all listed
shares.
The Company knows of no arrangements that will result in a
change in control at a date after this Annual Report on Form 10-
KSB, however, the Issuer's proposed Proxy Statement will provide
for significant stock compensation to certain individuals
selected by Capston in the event that the plan of reorganization
described therein is approved by the Stockholders.
Item 12. Certain Relationships and Related Transactions
No officer, director or family member of an officer or
director has engaged in any material transaction with the issuer
since the beginning of the Issuer's most recent fiscal year..
Item 13. Exhibits and Reports on Form 8-K.
Financial statements filed with this report:
Independent Auditor's report for December 31, 1996 and
December 31, 1997.
Balance Sheet of December 31, 1996 and December 31, 1997.
Statements of Income for December 31, 1996 and December 31,
1997.
Shareholders Equity for December 31, 1996 and December 31,
1997.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the
Exchange Act of 1934, the Registrant has duly caused this report
to be signed on its behalf by the undersigned, thereunto duly
authorized.
Bio-Response, Inc.
Date:April 15, 1998 By_____/s/_______________
Sally Fonner,
Director
President
and Chief Financial Officer
Pursuant to the requirements of the Securities Exchange Act of
1934 this report has been signed below by the following person on
behalf of the Registrant and in the capacities and on the date
indicated.
Date : _4/15/98 By______/s/_______________
Sally Fonner,
Director
President
and Chief Financial Officer
WANT &: ENDER, CPA, P.C.
CERTIFIED PUBLIC ACCOUNTANTS 37 East 28th Street, 8th Floor
New York, NY 10016
MARTIN UNDER, CPA Telephone (212) 684-2414
STANLEY Z. WANT, CPA, CFP Fax (212) 684-5433
Independent Auditor's Report
To the Shareholders and Board of Directors
BIO-RESPONSE, INC.
We have audited the accompanying consolidated balance sheet of
BIO-RESPONSE, INC. (A Dormant State Company) at December 31, 1997
and December 31, 1996 and the related consolidated statements of
operations, shareholders' equity/(deficit), and cash flows for
the years then ended. These financial statements are the
responsibility of the Company's management. Our responsibility is
to express an opinion on these financial statements based on our
audit.
We have conducted our audit in accordance with generally accepted
auditing standards. These standards require that we plan and
perform the audit to obtain reasonable assurance about whether
the financial statements are free of material misstatement. An
audit also includes examining on a test basis, evidence
supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as
well as evaluating the overall financial statement presentation.
We believe our audit provides a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to
above present fairly, in all material respects, the financial
position of BIO-RESPONSE, INC. (A Dormant State Company) at
December 31, 1997 and the results of its operations and its cash
flows for the years then ended in conformity with generally
accepted accounting principles.
/s/
Martin Ender
Want & Ender CPA, P.C.
Certified Public Accountants
New York, NY
March 17, 1998
BIO-RESPONSE, INC.
( A Dormant State Company)
Consolidated Balance Sheets
December 31, 1997 and 1996
1997 1996
ASSETS
Organization Cost 0 0
_______ _______
Total Assets 0 0
_______ _______
LIABILITIES AND STOCKHOLDERS' EQUITY
STOCKHOLDERS' EQUITY
Common Stock, par value $.004 per share;
20,000,000 shares authorized;
9,176,554 shares issued and outstanding 0 0
Additional Paid in Capital 41,945 350
Net Profit/(Loss) (41,945) (350)
Total Stockholders' Equity 0 0
Total Liabilities and
Stockholders' Equity 0 0
See accompanying notes to financial statements
BIO-RESPONSE, INC.
(A Dormant State Company)
Consolidated Statements of Operations
For the Year Ended December 31, 1997 and 1996
1997 1996
Revenues $ 0 $ 0
Expenses
Administrative Expenses (41,945) 0
Filing Fees (350)
Net Income/Loss for the year$(41,945) $ (350)
See accompanying notes to financial statements
!
BIO-RESPONSE, INC.
(A Dormant State Company)
Consolidated Statement of Changes in Shareholders'
Equity/(Deficit)
For the years ended December 31, 1997 and 1996
1997 1996
Common Stock
(9,176,554 SHARES ISSUED & OUTSTANDING) $ 0 $ 0
Additional Paid in Capital 42,255 350
Balance January (350) 0
Net Income/(Loss) for the year (41,945) (350)
Balance December 31 0 0
See accompanying notes to financial statements
BIO-RESPONSE, INC.
Statement of Cash Flows
For the Period Ended December 31, 1997
Current Year Prior Year
12-31-97 12-31-96
Cash Flows from Operating Activities
Net Income $(41,945) $ (350)
Net Cash Provided (Used)
By Operating Activities $ 41,945 350
Cash Flows from Financing
Activities 0 0
Proceeds from Capston-Paid in
Capital 41,945 350
Net Cash Provided (Used)
By Financing Activities 0 0
Net Increase (Decrease) in Cash 0 0
Cash at Beginning of Period 0 0
Cash at End of Period S 0 S 0
BIO-RESPONSE, INC.
(A Dormant State Company)
December 31, 1997
Note 1. HISTORY OF THE COMPANY
BIO-RESPONSE, Inc., (A Dormant State Company), was incorporated
on 1972, under the laws of the State of Delaware. The Company
conducted an initial public offering of its Common Stock in
January, 1979 and in connection with an application to list its
Common Stock on the NASDAQ system, the Company also registered
its Common Stock pursuant to Section 12(g) of the Securities
Exchange Act of 1934.
On September 14, 1989, the Company filed a voluntary petition
under Chapter 11 of the Bankruptcy Act (Case No. 4-89-04159 N-3)
in the U.S. Bankruptcy Court for the Northern District of
California. On September 15, 1995, the Company's case under
Chapter 11 was closed under court order. As a result of the
bankruptcy case, all assets of the Company were overseen by the
Trustee in Bankruptcy. The assets were sold and the Company
ceased all operations. The Trustee in Bankruptcy effected an
orderly liquidation of corporate assets and used the proceeds to
repay the Company's creditors. On September 15, 1995 the
Company's case under Chapter 11 was closed by an order of the
Court and the Trustee in Bankruptcy was discharged. As a result
of the Bankruptcy, the Company has no assets, liabilities,
management or ongoing operations and has not engaged in any
business activities for well over a half of a decade.
Note 2. RESTORATION OF CORPORATE STATUS
On June 10, 1996, acting in its capacity as the holder of 2000
shares (0.0002%) of the Company's common stock, and without
first receiving the consent, approval or authorization of any
other person associated with the Company, Capston Network Company
effected a renewal, revival and restoration of the Company's
certificate of incorporation pursuant to Section 312 of the
General Corporation Law of Delaware. Thereafter, Capston filed a
10-K for the years ending December 31, 1990-1996, and a Proxy
Statement seeking approval and ratification of its actions, along
with authorization to seek a suitable business combination
transaction. This proxy statement was ultimately distributed to
the Company's stockholders and the proposals therein were
approved by the holders of a majority of the Company's issued and
outstanding shares.
Under the terms of the original Proxy Statement, Capston was
authorized to seek a suitable business combination transaction on
behalf of the Company and to submit the terms of any proposed
business combination transaction to the Company's stockholders
for their approval. Capston did not receive and was not entitled
to receive any equity interest in the Company as a result of it's
actions prior to the date of the Proxy Statement. Moreover,
Capston was not entitled to reimbursement for any expenses
incurred by it on behalf of the Company except to the extent
that the terms of a business combination transaction provided for
the reimbursement of such expenses. However, because Sally Fonner
is both the President of BIO-RESPONSE and Capston, prior Staff
Accounting Bulletins require under generally accepted accounting
principles the treatment of debiting the expenses with
corresponding credit to paid-in capital. Future expenses of
Capston or others will be treated this way. These expenses are
actual cash expenditures and do not reflect any costs associated
with the operation of Capston nor any personnel time or cost.
Note 3. FUTURE EXPENSES
Capston will continue to extend administrative expenses to keep
BIO-RESPONSE current with its reporting requirements, keeping the
Corporation in good standing, any required proxy solicitation or
acquisition efforts. These amounts should not exceed $50,000 in
out-of-pockets costs. In addition, as approved, and as a result
of a suitable acquisition, additional fees paid for by issuance
of equity position would be for: (i) Capston of 200,000 shares,
(ii)up to 4,500,000 shares for an acquisition(s) and (iii) up to
5% of the acquisition for a finder's fee .
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