<PAGE>2
As filed with the Securities and Exchange Commission on April 29, 1999
Commission File Number
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM SB-2/A
REGISTRATION STATEMENT
Under The Securities Act of 1933
BioNet Technologies, Inc.
NEVADA 541990 84-1247085
(State or other (Primary Standard Industrial (I.R.S. Employer
jurisdictions Classification Code Number) Identification number)
of incorporation
or organization
3035 Staysail Lane
Jupiter, Florida 33477
Telephone: (561) 745-1949
(Address and telephone number of registrant's principal executive
offices and principal place of business.)
Laughlin & Associates, Inc.
2533 N. Carson St.
Carson City, NV 89706
(800) 648-09766
(Name, address and telephone number of agent for service.)
with copies to:
Jody M. Walker
Attorney At Law
7841 South Garfield Way
Littleton, Colorado 80122
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act
of 1933, check the following box: | x |
<TABLE>
CALCULATION OF REGISTRATION FEE
Title of each Proposed Proposed Amount of
class of Amount to be offering aggregate registration
securities registered price offering price fee
<S> <C> <C> <C> <C>
Common Stock(1)
$.001 par value 2,000,000 $.56(2) $1,120,000 $350.00
</TABLE>
(1)Represents Common Stock to be registered for distribution to
shareholders of Immune Technologies, Inc. as of May 30, 1998.
(2)Based on bid price of the Company's Common Stock solely for purposes of
computing the registration fee
The registrant hereby amends this registration statement on such date or
dates as may be necessary to delay its effective date until the registrant
shall file a further amendment which specifically states that this
registration statement shall thereafter become effective in accordance with
Section 8(a) of the Securities Act of 1933 or until the registration
statement shall become effective on such date as the Commission, acting
pursuant to said Section 8(a), may determine.
<PAGE>3
PRELIMINARY PROSPECTUS DATED ARIL 29, 1999
SUBJECT TO COMPLETION
2,000,000 Common Shares to be distributed to Shareholders of
Immune Technologies, Inc.
BioNet Technologies, Inc.
As more fully set forth herein, pursuant to arms length negotiations
relating to the purchase of the assets of Immune Technologies, Inc., Immune
Technologies, Inc., an unaffiliated Nevada corporation ("Immune") proposes
to distribute (the "Distribution") as soon as practicable after the
effective date of this registration statement as a dividend to its
shareholders of record at the close of business on May 30, 1998 (the
"Record Date"), two Common Share of the Company for each two shares of
Immune common stock, par value $.001 per share (the "Immune Common
Stock"), held by each Immune shareholder on the Record Date. This
distribution was agreed to based on arms length negotiations between the
principal shareholders of Immune and the Company regarding the purchase of
assets of the Immune. Immune will distribute 2,000,000 Common Shares
owned by Immune, which represents 19% of the Company's outstanding common
shares on the Record Date. The Distribution will be made by Immune
without the payment of any consideration by its shareholders. See "The
Distribution." The expenses of the Distribution (along with the
distribution below) are estimated to be $22,850 and are to be paid by the
Company.
Immune may be deemed to be an underwriter under the Securities Act of
1933.
Prior to the date hereof, there has been a only limited trading market for
the Common Stock of the Company. There can be no assurance, however, that
the Common Stock will be quoted, that an active trading and/or a liquid
market will develop or, if developed, that it will be maintained.
THERE ARE MATERIAL RISKS IN CONNECTION WITH THE PURCHASE OF THE SECURITIES.
SEE RISK FACTORS, PAGE 7. THESE SECURITIES HAVE NOT BEEN APPROVED OR
DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION NOR HAS THE
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with the
Securities and Exchange Commission. These securities may not be sold nor
may offers to buy be accepted prior to the time the registration statement
becomes effective. This prospectus shall not constitute an offer to sell
or the solicitation of an offer to buy nor shall there be any sales of
these securities in any State in which such offer, solicitation or sale
would be unlawful prior to registration or qualification under the
securities laws of any state.
The Company provides management control and oversight along with capital to
its division, Immune Technologies and its subsidiary, GreenGold
International. The Company coordinates the interrelationship between its
division and subsidiary.
The date of the Prospectus is April 29, 1999
<PAGE>4
REPORTS TO SECURITY HOLDERS
The Company shall become subject to the informational requirements of the
Securities Exchange Act of 1934, as amended, and in accordance therewith
will file reports and other information with the Securities and Exchange
Commission. The Company has not yet filed any reports with the Securities
and Exchange Commission. The reports and other information filed by the
Company can be inspected and copied at the public reference facilities
maintained by the Commission in Washington, D.C. and at the Chicago
Regional Office, Citicorp Center, 500 West Madison Street, Suite 1400,
Chicago, Illinois 60661-2511 and the New York Regional Office, 7 World
Trade Center, New York, New York 10048. Copies of such material can be
obtained from the Public Reference Section of the Commission, Washington,
D.C. 20549 at prescribed rates.
The Company will furnish to shareholders: (i) an annual report containing
financial information examined and reported upon by its certified public
accountants; (ii) unaudited financial statements for each of the first
three quarters of the fiscal year; and (iii) additional information
concerning the business and operations of the Company deemed appropriate by
the Board of Directors.
AVAILABLE INFORMATION
The Company has filed with the Securities and Exchange Commission (the
"Commission") a registration statement (together with all amendments and
exhibits thereto, the "Registration Statement") under the Act with respect
to the securities offered hereby. This Prospectus does not contain all of
the information set forth in the Registration Statement, certain parts of
which are omitted in accordance with the Rules and Regulations of the
Commission. For further information with respect to the Company and the
securities offered hereby, reference is made to the Registration Statement.
Copies of such materials may be examined without charge at, or obtained
upon payment of prescribed fees from, the Public Reference Section of the
Commission at Room 1024, Judiciary Plaza, 450 Fifth Street, N.W.,
Washington, DC 20549, at the Chicago Regional Office, Citicorp Center, 500
West Madison Street, Suite 1400, Chicago, Illinois 60661-2511 and the New
York Regional Office, 7 World Trade Center, New York, New York 10048.
The Company will voluntarily file periodic reports in the event its
obligation to file such reports is suspended under Section 15(d) of the
Exchange Act.
The Company will provide without charge to each person who receives a
prospectus, upon written or oral request of such person, a copy of any of
the information that was incorporated by reference in the prospectus (not
including exhibits to the information that is incorporated by reference
unless the exhibits are themselves specifically incorporated by reference).
Requests for copies of said documents should be directed to L. Alan
Schafler, President, BioNet Technologies, Inc., 3035 Staysail Lane,
Jupiter, Florida 33477
The Commission maintains a Web site -- //www.sec.gov -- that contains
reports, proxy and information statements and other information regarding
issuers that file electronically with the Commission.
UNTIL , 1999 (90 DAYS AFTER THE DATE OF THE PROSPECTUS), ALL
PERSONS EFFECTING TRANSACTIONS IN THE REGISTERED SECURITIES, WHETHER OR NOT
PARTICIPATING IN THE OFFERING, MAY BE REQUIRED TO DELIVER A PROSPECTUS.
THIS IS IN ADDITION TO THE OBLIGATION OF SUCH PERSONS TO DELIVER A
PROSPECTUS WHEN ACTING AS UNDERWRITERS AND WITH RESPECT TO THEIR UNSOLD
ALLOTMENTS OR SUBSCRIPTIONS.
NO DEALER, SALESMAN, AGENT OR ANY OTHER PERSON HAS BEEN AUTHORIZED TO GIVE
ANY INFORMATION OR TO MAKE ANY REPRESENTATION OTHER THAN THOSE CONTAINED IN
THIS PROSPECTUS. IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATION MUST
NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY, OR THE
UNDERWRITER, IF AN UNDERWRITER ASSISTS IN THE SALE OF THE SECURITIES.THIS
PROSPECTUS DOES NOT CONSTITUTE AN OFFER OR A SOLICITATION BY ANYONE TO
ANY PERSON IN ANY STATE, TERRITORY OR POSSESSION OF THE UNITED STATES IN
WHICH SUCH OFFER OR SOLICITATION IS NOT AUTHORIZED BY THE LAWS THEREOF, OR
TO ANY PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION.
NEITHER THE DELIVERY OF THIS PROSPECTUS OR ANY SALE MADE HEREUNDER SHALL,
UNDER ANY CIRCUMSTANCES, CREATE AN IMPLICATION THAT THERE HAS NOT BEEN ANY
CHANGE IN THE FACTS SET FORTH IN THIS PROSPECTUS OR IN THE AFFAIRS OF THE
COMPANY SINCE THE DATE HEREOF.
<PAGE>5
<TABLE>
TABLE OF CONTENTS
<S> <C>
PROSPECTUS SUMMARY 6
RISK FACTORS 7
THE DISTRIBUTIONS 10
DILUTION 11
THE COMPANY 11
BUSINESS ACTIVITIES 12
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION 12
Trends and Uncertainties
Capital and Source of Liquidity
Results of Operations
MANAGEMENT 13
Officers and Directors
Remuneration
Indemnification
CERTAIN TRANSACTIONS 14
PRINCIPAL SHAREHOLDERS 15
MARKET FOR REGISTRANT'S COMMON EQUITY 15
DESCRIPTION OF SECURITIES 16
LEGAL MATTERS 17
LEGAL PROCEEDINGS 17
EXPERTS 17
INTERESTS OF NAMED EXPERTS AND COUNSEL 17
</TABLE>
<PAGE>6
PROSPECTUS SUMMARY
The following summary is qualified in its entirety by the more detailed
information, financial statements and notes to the financial statements
including the notes thereto appearing elsewhere in this Prospectus.
The Company. The Company. was incorporated in the State of Florida on
May 22, 1986 using the name Global Wrestling Alliance, Inc. The Company
was authorized to issue 75,000,000 common shares at $.0001 par value.
The Company had limited operations from 1988 through 1990 and ceased
operations at that time. The Company experienced a change in control and
pursuant to a Board of Directors meeting and subsequent written consent of
a majority of its shareholders on May 31, 1993, the Company began
operations of its present business under the name Pratt, Wylce & Lords,
Ltd. and a One for One Hundred reverse stock split was effectuated. The
Company was reincorporated in the State of Nevada on August 18, 1993.
Pursuant to the Articles of Merger, the Company is authorized to issue
75,000,000 common shares at $.001 par value and as of December 31, 1998
there were 3,204,270 common shares outstanding. In 1998, the name of the
Company was changed to Bionet Technologies, Inc. to more accurately reflect
the nature of its proposed business.
The previous business objective of the Company was to provide consulting
services which assist the client-company in becoming a publicly traded
company. Since its cessation of financial consulting activities, the
Company has carried out administrative functions and has begun liquidating
its investment portfolio. The Company is currently seeking new business
activities unrelated to the provision of financial services.
During the years ended January 31, 1997 and 1998, the Company made working
capital advances to Immune Technologies, Inc. (Immune), a former client
company, amounting to $79,800. The business of Immune consists of research
and development and marketing of products based on new technology for the
prevention and related therapy of infectious diseases in animals.
Subsequent to January 31, 1998 the Company entered into a purchase and sale
agreement with Immune whereby the Company would purchase certain assets of
Immune consisting primarily of accounts receivable, furniture, equipment
and intangible assets. The purchase price paid consists of 2,000,000
shares of the Company's common stock and the cash advances made
During August 1998, the Company agreed to issued 1,900,000 shares of its
restricted common stock to the certain shareholders of Greengold
Corporation (Greengold) in exchange for 100% of the outstanding common
stock of Greengold. Greengold, to date, has been engaged in research and
development of technology that it hopes to utilize in the recycling and
disposal of animal waste with the first application being hog waste.
Additional applications of its technology are in the treatment of
industrial and municipal water and waste treatment facilities. The assets
and liabilities of Greengold consist of patent costs of $7,500 and accounts
payable of $28,649 at the acquisition date. The fair value of the stock
issued in the transaction amounted to $475,000. The excess of the fair
value of the purchase price over the assets acquired has been treated as
the purchase of research and development costs by the Company and has been
charged to expense during the current quarter.
The Company is authorized to issue a total of 75,000,000 shares of its
capital stock (Common Shares), par value per share of $.001,.
The Company's principal offices are located at 3035 Staysail Lane, Jupiter,
Florida 33477. Its telephone number at such address is (561) 745-1949.
<TABLE>
<S> <C>
IMMUNE DISTRIBUTION
Distributing Corporation Immune Technologies, Inc., a
Nevada corporation.
Securities Being Distributed 2,000,000 Common Shares
by Immune
Purpose of Immune Distribution Negotiated as part of the
acquisition of the assets of
Immune. To enhance the
Company's ability to raise
additional capital, if
necessary, in the future.
Immune Distribution Ratio Two Common Shares for
every five shares of Immune
Common Stock owned of record
on May 30, 1998, (the "Record
Date").
Use of Proceeds The securities to which this
from Immune distribution Prospectus relates are being
distributed to holders of
Immune Common Stock as a
Dividend and neither the
Company nor Immune will
receive any cash or other
proceeds in connection
with the Distribution.
MARKET FOR COMMON STOCK
. Prior to the date hereof,
there has been only a limited
trading market for the Common
Stock of the Company. The
Company Common Shares are
quoted on the NASD
Electronic Bulletin Board.
<PAGE>7
There can be no assurance that
an active trading and/or a
liquid market will develop or,
if developed, that it will be
maintained. See "Risk
Factors" and "Market
Listing."
RISK FACTORS There are material risks, such
as uncertainty of future
financial results, liquidity
dependent on additional
capital and debt
financing and risks related to
the Company's operations, in
connection with the purchase
of the securities. See "Risk
Factors."
Absence of Dividends; Dividend Policy The Company does not currently
intend to pay regular cash
dividends on its Common Stock;
such policy will be reviewed
by the Company's Board of
Directors from time to time in
Alight of, among other things,
The Company's earnings and
Financial position. The
Company does not anticipate
paying dividends on its Common
Stock in the foreseeable
future. See "Risk Factors."
Transfer Agent Florida Atlantic Stock
Transfer, Inc. is
the Transfer Agent for the
Company's securities.
</TABLE>
- ----------------------------------------------------------
RISK FACTORS
- ----------------------------------------------------------
In analyzing this offering, prospective investors should read this entire
Prospectus and carefully consider, among other things, the following Risk
Factors:
Risk Factors relating to the Company.
Conflicts of Interest. Some of the directors of the Company are currently
principals of other businesses. As a result, conflicts of interest may
arise. The directors shall immediately notify the other directors of any
possible conflict that may arise due to their involvement with other
businesses. The interested directors in any conflict shall refrain from
voting on any matter in which a conflict of interest has arisen. The
Company has adopted a policy that any transactions with directors, officers
or entities of which they are also officers or directors or in which they
have a financial interest, will only be on terms which are fair and
reasonable to the Company and approved by a majority of the disinterested
directors of the Company's Board of Directors. For further discussion see
"Management - Conflicts of Interest Policy." There can be no assurance that
such other activities will not interfere with the officers' and directors'
ability to discharge their obligation herein.
Benefit to Management. The Company may, in the future, compensate the
Company's management with substantial salaries and other benefits. The
payment of future larger salaries, commissions and the costs of these
benefits may be a burden on the Company and may be a factor in limiting or
preventing the Company from achieving profitable operations in the future.
However, the Company would not continue to compensate management with such
substantial salaries and other benefits under circumstances where to do so
would have a material negative effect on the Company's financial condition.
Although specific factors to be utilized in determining the increase in
compensation and benefits have been determined, management anticipates that
individual performance, liquidity of the Company and profitability will be
part of the determining factors. See "MANAGEMENT - Remuneration."
Dependence on Key Individuals. The future success of the Company is highly
dependent upon the management skills of its key individuals and the
Company's ability to attract and retain qualified key individuals. The
inability to obtain and employ these individuals would have a serious
effect upon the business of the Company.. Other than the employment
agreement with L. Alan Schafler, there are not any plans or proposals to
enter into employment contracts with any key individuals. There can be no
assurance that the Company will be successful in retaining its key
employees or that it can attract or retain additional skill personnel
required. The Company may, in the future, purchase key man life
insurance. "COMPANY - Employees" and "MANAGEMENT."
Vulnerability to Fluctuations in the Economy. Demand for the Company's
products is dependent on, among other things, general economic conditions
that are cyclical in nature. Prolonged recessionary periods may be
damaging to the Company.
"Penny" Stock Regulation of Broker-Dealer Sales of Company Securities. The
Company lists its Common Shares on the OTC Bulletin Board and then NASDAQ
upon meeting the requirements for a NASDAQ listing, if ever. Upon
completion of this offering, the Company will not meet the requirements for
a NASDAQ listing. Until the Company obtains a listing on NASDAQ, if ever,
the Company's securities will be covered by a Rule 15g-9 under the
Securities Exchange Act of 1934 that imposes additional sales practice
requirements on broker-dealers who sell such securities to persons other
than established customers and institutional accredited investors
(generally institutions with assets in excess of $5,000,000 or individuals
with net worth in excess of $1,000,000 or annual income exceeding $200,000
or $300,000 jointly with their spouse). For transactions covered by the
rule, the broker-dealer must furnish to all investors in penny stocks, a
<PAGE>8
risk disclosure document required by Rule 15g-9 of the Securities Exchange
Act of 1934, make a special suitability determination of the purchaser and
have received the purchaser's written agreement to the transaction prior to
the sale. In order to approve a person's account for transactions in penny
stock, the broker or dealer must (i) obtain information concerning the
person's financial situation, investment experience and investment
objectives; (ii) reasonably determine, based on the information required by
paragraph (i) that transactions in penny stock are suitable for the person
and that the person has sufficient knowledge and experience in financial
matters that the person reasonably may be expected to be capable of
evaluating the rights of transactions in penny stock; and (iii) deliver to
the person a written statement setting forth the basis on which the broker
or dealer made the determination required by paragraph (ii) in this
section, stating in a highlighted format that it is unlawful for the broker
or dealer to effect a transaction in a designated security subject to the
provisions of paragraph (ii) of this section unless the broker or dealer
has received, prior to the transaction, a written agreement to the
transaction from the person; and stating in a highlighted format
immediately preceding the customer signature line that the broker or dealer
is required to provide the person with the written statement and the person
should not sign and return the written statement to the broker or dealer if
it does not accurately reflect the person's financial situation, investment
experience and investment objectives and obtain from the person a manually
signed and dated copy of the written statement. A penny stock means any
equity security other than a security (i) registered, or approved for
registration upon notice of issuance on a national securities exchange that
makes transaction reports available pursuant to 17 CFR 11Aa3-1 (ii)
authorized or approved for authorization upon notice of issuance, for
quotation in the NASDAQ system; (iii) that has a price of five dollars or
more or . . . . (iv) whose issuer has net tangible assets in excess of
$2,000,000 demonstrated by financial statements dated less than fifteen
months previously that the broker or dealer has reviewed and has a
reasonable basis to believe are true and complete in relation to the date
of the transaction with the person. Consequently, the rule may affect
the ability of broker-dealers to sell the Company's securities and also may
affect the ability of Immune Technologies, Inc. shareholders in this
Distribution to sell their shares in the secondary market. See "Market
for Registrant's Common Equity and Related Stockholder Matters - Broker-
Dealer Sales of Company's Securities."
Limited Operating History; Operating Losses; Potential Fluctuations in
Operating Results. There can be no assurance that the Company will
generate significant revenues or that the Company will achieve
profitability or positive cash flow from operations. The Company will
incur losses in the near term. In addition, the Company may continue to
experience fluctuations in operating results in the future caused by
various factors, some of which are outside of the Company's control,
including general economic conditions, specific economic conditions in the
parking structure industry, capital expenditures and other costs related to
the expansion of operations, the timing of revenue, the introduction of
products by the Company or its competitors and the mix of products and
services sold. As a strategic response to a changing competitive
environment, the Company may elect, from time to time, to make certain
pricing, service or marketing decisions or acquisitions that could have an
adverse effect on the Company's business, results of operations and
financial condition from quarter to quarter.
Possible Need for Additional Financing. Based upon the Company's current
level of operations and anticipated growth, the Company believes that the
net proceeds from the offering will be sufficient to enable the Company to
satisfy anticipated cash flow requirements for operating, investing and
financing activities, including lease and other debt obligations.
However, if the Company is unable to satisfy such requirements from these
sources, the Company would be required to adopt one or more alternatives,
such as reducing or delaying acquisitions and capital expenditures,
refinancing or restructuring its indebtedness, or selling material assets
or operations. There can be no assurance that such alternatives would be
available to the Company at all or on terms reasonably acceptable to it.
While the Company has no plans for other acquisitions, it may be in the
best interest of the Company to acquire other companies or to develop new
businesses in the future that require the Company to raise additional
capital in the form of debt or equity to satisfy such need.
Limited Public Market. There is presently only a limited public market
for the Common Shares of the Company and no public market for the Common
Shares and there is no assurance that an active public market will ever
develop.
Financial Condition. Although the officers of the Company anticipate that
the Company will have adequate funds to pay all of its operating expenses,
there can be no assurance that this will in fact occur or that the Company
can be operated in a profitable manner. Profitability depends upon many
factors, including the success of the Company's operations.
Lack of Dividends. There can be no assurance that the operations of the
Company will become profitable. At the present time, the Company intends
to use any earnings that may be generated to finance the growth of the
Company's business and that of its division and subsidiary. See
"Description of Securities" and "Dividend Policy."
Risk Factors relating to the Company's division, Immune Technologies.
Government Regulation. Immune Technologies shall file for approval of its
products to be utilized on animals with the United States Department of
Agriculture ("USDA"). There can be no assurance that Immune Technologies
will be able to obtain the required approvals. For Immune Technologies'
products that will be utilized by humans, Immune Technologies shall not
pursue Food and Drug Administration ("FDA") approval. Any and all
approvals will be pursued and obtained by the licensees of Immune
Technologies' products.
No Diversification. Immune Technologies has been formed to research,
development and marketing of products for the prevention and adjuvant
therapy of infectious diseases in humans and animals. Therefore, Immune
Technologies' financial viability will depend almost exclusively on its
<PAGE>9
ability to generate revenues from its operation, and Immune Technologies
will not have the benefit of reducing its financial risks by relying on
revenues derived from other operations.
Dependence on Key Individuals. The future success of Immune Technologies
is highly dependent upon the management skills of its key employees.
Corporation's ability to attract and retain qualified key employees. The
inability to obtain and employ these individuals would have a serious
effect upon the business of Immune Technologies. There can be no assurance
that Immune Technologies will be successful in retaining its key employees
or that it can attract or retain additional skill personnel required.
Immune Technologies intends to enter into employment agreements for annual
terms with its senior management personnel upon successful commencement of
operations. See "CORPORATION - Employees" and "MANAGEMENT."
No Independent Market Research of Potential Demand for Current Operations.
No independent organization has conducted market research providing
management with independent assurance from which to estimate potential
demand for Immune Technologies' business operations. Even in the event
market demand is independently identified, there is no assurance Immune
Technologies will be successful. See "BUSINESS ACTIVITIES."
Risk Factors relating to the Company's subsidiary, GreenGold International.
Limited Operating History and Uncertainty of Future Operating Results.
Since its incorporation in 1995, GreenGold's activities have been
principally devoted to positioning itself to achieve its business
objectives. It has had no operating revenue to date and expects to incur
losses and administrative expenses until sales of its products commence
and/or revenues are received from any of its proposed operations.
GreenGold believes future operating results over both the short and long
term will be subject to annual and quarterly fluctuations due to several
factors, some of which are outside the control of GreenGold. These
factors include fluctuating market demand for GreenGold's products, the
quality of products, pricing, competitive products and general economic
conditions.
Creating an Efficient Distribution System. The Aquameal System is a new
technology with important differences from existing acquacultural
technologies. This puts a special burden on the distribution system that
GreenGold proposes to create in North Carolina.Soybean Price Fluctuations
in the Commodities Market. While the long-range trend for soybean prices
is expected to continue upward in the coming years, there is no guarantee
that prices will not continue to fluctuate significantly. A season or more
of lower-than-average prices may erode GreenGold's projected gross margin.
Technical Expectations Needing Further Verification.. A number of aspects
of the commercial Aquameal system remain to be proven in full-scale
operation. These include design of the specialized harvesting unit, system
robustness and ease of operation, large-scale field drying, routine
treatment efficacy, and efficiency of duckweed feed in commercial animal
husbandry.
Uncertainty of Product Revenue. No assurance can be given that GreenGold's
proposed products will be successfully developed, commercialized and
accepted by the marketplace or that sufficient revenues will be realized to
support operations or future research and development programs.
Risk That Proposed Products Will Never Be Successfully Developed. Certain
applications of GreenGold's technologies are in early or middle stages of
development and will require significant further research, development,
testing and regulatory clearances prior to commercialization. There can be
no assurance that any of such applications will be successfully developed,
prove to be safe and efficacious, receive requisite regulatory approvals,
be capable of being produced in commercial quantities at reasonable costs
or be successfully marketed and distributed.
Uncertainty of Market Acceptance of Proposed Products. GreenGold's future
growth and profitability will depend, in large part, on the success of its
personnel and others in fostering acceptance by the agricultural community.
Such acceptance will be substantially dependent on educating these
communities as to the distinctive characteristics and perceived treatment
and treatment cost benefits of GreenGold's proposed products. There can be
no assurance that GreenGold's efforts or those of others will be successful
or that any of its proposed products will receive the necessary acceptance
by these communities.
Lack of Marketing Experience; Dependence on Outside parties for Marketing
and Distribution of Products. If GreenGold's products are successfully
developed and/or approved by applicable regulatory agencies, GreenGold
intends to market and distribute some of its products through others
pursuant to contractual arrangements such as joint venture, licensing or
similar collaborative arrangements or distribution agreements. Any
contractual arrangements with others may result in a lack of some element
of control by GreenGold over any or all of the marketing and distribution
of such products. Although GreenGold is currently engaged in preliminary
efforts to establish marketing arrangements with respect to certain of its
proposed products, there can be no assurance that GreenGold will be able to
enter into any such arrangements on terms acceptable to GreenGold, or at
all.
Intense Competition and Possible Technological Obsolescence. GreenGold is
engaged in a rapidly evolving and highly competitive field. Competition
from others is at present minimal, but it is expected to increase rapidly
in the near future. Most of these companies have substantially greater
capital resources, research and development staffs, facilities and
experience in obtaining regulatory approvals, as well as in the
manufacturing, marketing and distribution of products, than GreenGold.
In addition, technologies that may be developed in the future are, or may
be, the basis for competitive products. There can be no assurance that
GreenGold's competitors will not succeed in developing technologies and
products that are more effective and/or less costly than any that are being
developed by GreenGold or which could render GreenGold's technologies
obsolete.
<PAGE>10
Patents and Proprietary Rights; No Assurance of Enforceability or
Significant Competitive Advantage. GreenGold holds a patent on its
AquamealTM System. There can be no assurance that the patent will
provide GreenGold with significant competitive advantages, or that
challenges will not be instituted against the validity or enforceability of
any patent owned by GreenGold or, if instituted, that such challenges will
not be successful. The cost of litigation to uphold the validity and
prevent infringement can be substantial. Furthermore, there can be no
assurance that others will not independently develop similar technologies
or duplicate GreenGold's technologies or design around the patented aspects
of GreenGold's technologies. However, if further patents are not issued on
innovations from present or future patent applications, GreenGold may be
subject to greater competition. In some cases, GreenGold may rely on trade
secrets to protect its innovations. There can be no assurance that trade
secrets will be established, that secrecy obligations will be honored, or
that others will not independently develop similar or superior technology.
Government Regulation. The Company's business is subject to various
federal, state and local government regulations, including those relating
to the quality of surface and ground water under state approved farm waste
management plans. Obtaining and maintaining licenses and permits is a
client obligation. The failure by clients to maintain current waste
management permits would have a material adverse effect on GreenGold's
operating results.
Trademarks. GreenGold's ability to successfully implement its concept
will depend in part upon its ability to protect its trademarks. GreenGold
has filed a trademark application with the United States Patent and
Trademark Office to register its mark and design. There can be no
assurance that it can protect such mark and design against prior users in
areas where GreenGold conducts operations. There is no assurance that
GreenGold will be able to prevent competitors from using the same or
similar marks, concepts or appearance.
No Diversification. GreenGold operates on the sale of its AquamealTM
System and sale of processed AquamealTM. Therefore, GreenGold's financial
viability will depend almost exclusively on GreenGold's ability to generate
revenues from its operations, and GreenGold will not have the benefit of
reducing its financial risks by relying on revenues derived from other
operations.
Dependence on Key Individuals. The future success of GreenGold is highly
dependent upon GreenGold's ability to attract and retain qualified key
employees. GreenGold has entered into definitive employment agreements
with three of the officers. The inability to attract and retain these
individuals for the long term would have a material impact upon the
business of GreenGold.
No Independent Market Research of Potential Demand for Current Operations.
No independent organization has conducted market research providing
management with independent assurance from which to estimate potential
demand for GreenGold's business operations. Even in the event market
demand is independently identified, there is no assurance GreenGold will be
successful.
- -------------------------------------------------------
THE DISTRIBUTION
- -------------------------------------------------------
Immune Technologies, Inc. Subsequent to January 31, 1998 the Company
entered into a purchase and sale agreement with Immune Technologies, Inc.
("Immune") whereby the Company would purchase certain assets of Immune
consisting primarily of accounts receivable, furniture, equipment and
intangible assets. The purchase price paid consisted of 2,000,000 shares
of the Company's common stock and the cash advances made.
After careful study and review and as part of the prior negotiations with
the Company, the Board of Directors of Immune determined that it would be
in the best interests of Immune and its shareholders to distribute all of
the Company's Common Shares held by Immune to its shareholders. In
addition, the Company and Immune determined that such a distribution would
be in the best interests of the Company. Immune shareholders may realize
economic benefits from the sale of any Common Shares distribution if a
market for the Company's Common Stock develops, although there can be no
assurances that any such market will result. Immune and the Company
believe that the distribution to Immune's shareholders, which will result
in an increased shareholder base of the Company, will be an advantage to
the Company at such time as the Company may require additional capital
and/or make application to NASDAQ. The increased shareholder base of
approximately 147 shareholders represents an increase in potential future
purchasers of additional stock in any subsequent offering or in the stock
market if these individuals are satisfied with the performance of the
Company's operations. The estimated cost of the distribution (along with
the distribution to Prepaid shareholders) is $22,850 that will be paid by
the Company
Accordingly, after obtaining the approval of the independent directors on
Immune's Board of Directors, the Board of Directors of Immune declared a
dividend pursuant to which, as soon as practicable after the effective
date of this registration statement 2,000,000, constituting all of the
Common Shares owned by Immune, will be distributed to the shareholders of
record of Immune as of May 30, 1998 on the basis of one Common Share for
each common share of Immune Common Stock held. The Common Shares are
being distributed by Immune as a dividend to holders of Immune Common Stock
and neither the Company nor Immune will receive any cash or other proceeds
in connection with the Distribution. No fractional Common Shares will be
issued. Immune had approximately 147 shareholders of record on the Record
Date.
In order to comply with certain provisions of Nevada corporate law, on
April 29, 1999 (the "Payment Date') Immune deposited the Common Shares to
be distributed with Florida Atlantic Stock Transfer, Inc. (the
"Depositary"). The Depositary will hold such Common Shares for the benefit
of Immune shareholders on the Record Date. The terms of the agreement
with the Depositary provides that the Common Shares will be released
<PAGE>11
promptly after the Registration Statement to which this Prospectus relates
is declared effective by the Commission. However, if the Registration
Statement is not declared effective prior to July 31, 2000, then, unless
such date is changed by notice to the Depositary from the Company, the
Depositary shall return all such Common Shares to Immune without effecting
the distribution.
- -------------------------------------------------------
DILUTION
- -------------------------------------------------------
Further Dilution. The Company may issue additional restricted Common
Shares pursuant to private business transactions. Any sales under Rule 144
after the applicable holding period may have a depressive effect upon the
market price of the Company's Common Shares. See "SALES OF STOCK PURSUANT
TO RULE 144."
- -------------------------------------------------------
THE COMPANY
- -------------------------------------------------------
Organizational History. The Company. was incorporated in the State of
Florida on May 22, 1986 using the name Global Wrestling Alliance, Inc.
The Company was authorized to issue 75,000,000 common shares at $.0001 par
value. The Company had limited operations from 1988 through 1990 and
ceased operations at that time. The Company experienced a change in
control and pursuant to a Board of Directors meeting and subsequent written
consent of a majority of its shareholders on May 31, 1993, the Company
began operations of its present business under the name Pratt, Wylce &
Lords, Ltd. and a One for One Hundred reverse stock split was effectuated.
The Company was reincorporated in the State of Nevada on August 18, 1993.
Pursuant to the Articles of Merger, the Company is authorized to issue
75,000,000 common shares at $.001 par value and as of December 31, 1998
there were 3,204,270 common shares outstanding. In 1998, the name of the
Company was changed to Bionet Technologies, Inc. to more accurately reflect
the nature of its proposed business.
The previous business objective of the Company was to provide consulting
services which assist the client-company in becoming a publicly traded
company. Since its cessation of financial consulting activities, the
Company has carried out administrative functions and has begun liquidating
its investment portfolio. The Company is currently seeking new business
activities unrelated to the provision of financial services.
During the years ended January 31, 1997 and 1998, the Company made working
capital advances to Immune Technologies, Inc. (Immune), a former client
company, amounting to $79,800. The business of Immune consists of research
and development and marketing of products based on new technology for the
prevention and related therapy of infectious diseases in animals.
Subsequent to January 31, 1998 the Company entered into a purchase and sale
agreement with Immune whereby the Company would purchase certain assets of
Immune consisting primarily of accounts receivable, furniture, equipment
and intangible assets. The purchase price paid consists of 2,000,000
shares of the Company's common stock and the cash advances made
.
During August 1998, the Company agreed to issued 1,900,000 shares of its
restricted common stock to the certain shareholders of Greengold
Corporation (Greengold) in exchange for 100% of the outstanding common
stock of Greengold. Greengold, to date, has been engaged in research and
development of technology that it hopes to utilize in the recycling and
disposal of animal waste with the first application being hog waste.
Additional applications of its technology are in the treatment of
industrial and municipal water and waste treatment facilities. The assets
and liabilities of Greengold consist of patent costs of $7,500 and accounts
payable of $28,649 at the acquisition date. The fair value of the
stock issued in the transaction amounted to $475,000. The excess of the
fair value of the purchase price over the assets acquired has been treated
as the purchase of research and development costs by the Company and has
been charged to expense during the current quarter.
Competition. Any proposed business of the Company could be very
competitive. The Company will encounter competition in its chosen
business who are already offering, or will in the future offer, the same
or similar products services as those which may be offered by the Company.
Entities with greater established financial resources and contacts than the
Company may be competitors in the Company's chosen business industries.
They may develop marketing strategies that are competitive with or superior
to the Company's products and/or services or which can be marketed more
effectively.
Federal and/or State Regulation. The Company is not subject to any
federal or state regulations regarding its services or proposed activities.
However, the Company files required reports under Section 12g of the
Securities Act of 1934.
Employees. The Company has two full time employees and no part time
employees. The Company shall employ additional individuals as required.
Seasonal Nature of Business Activities. The Company's business activities
are not seasonal. The business activities of the Company's subsidiary may
be seasonal in the future.
- -------------------------------------------------
BUSINESS ACTIVITIES
- -------------------------------------------------
The Company provides the management control and oversight, maintains
operating systems and provides the capital necessary to operate each
division and subsidiary. The Company also coordinates the
interrelationship between the various divisions and subsidiaries. The
<PAGE>12
Company provides management oversight, establishes controls and maintains
operating systems. Immune Technologies is a division of the Company and
GreenGold International is a subsidiary of the Company. Immune
Technologies and GreenGold each have their own executive structure but the
management of all divisions and subsidiaries is responsible to the
president of Company.
- ----------------------------------------------------------------
MANAGEMENT'S DISCUSSION OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
- ----------------------------------------------------------------
Trends and Uncertainties. Due to its change in business, the Company can
no longer operate on revenues from its consulting fee income. During June,
1998, the Company issued 2,000,000 restricted Common Shares to Immune
Technologies, Inc. (Immune) in exchange for certain assets of Immune.
Immune had been a client of the Company and the Company had advanced an
aggregate of $79,800 to Immune during 1997 and 1998 to assist in meeting
that company's working capital requirements. Immune, to date, had been
engaged in research and development of technology that it hopes to utilize
in the diagnosis and treatment of animal diseases. The assets acquired
from Immune consist of cash, inventory and fixed assets aggregating
$100,972 at the purchase date.
During August 1998, the Company issued 1,900,000 of its restricted common
stock to the certain shareholders of Greengold Corporation (Greengold) in
exchange for 80% of the outstanding common stock of Greengold. Greengold,
to date, has been engaged in research and development of technology that it
hopes to utilize in the recycling and disposal of animal waste with the
first application being hog waste. Additionally applications of its
technology are in the treatment of industrial and municipal water and waste
treatment facilities. The assets and liabilities of Greengold consist of
patent costs of $7,500 and accounts payable of $28,649 at the acquisition
date.
The Company will have to seek equity or debt financing to continue
operations regarding its new acquisitions.
Capital Resources and Source of Liquidity. The Company currently has no
material commitments for capital expenditures. The Company can meet its
short term cash flow needs from the sale of investment securities ($123,935
for the nine months ended October 31, 1998), the proceeds from stock
subscriptions of $160,965 and advances from stock holders of $147,151. In
the long term, the Company shall utilize the sale of its investment
securities to meet its cash flow needs until the Company can implement it s
new business plan.
Going Concern. The Company is not currently delinquent on any of its
obligations even though the Company has ceased to generate revenue from its
consulting services.
For the nine months ended October 31, 1998, the Company received proceeds
from the sale of investments of $71,220 and purchased fixed assets of
$18,812. This resulted in net cash provided by investing activities of
$52,408 for the nine months ended October 31, 1998.
For the nine months ended October 31, 1997, the Company received the
proceeds from the sale of investment securities of $165,954 and purchased
fixed assets of $1,000 resulting in net cash provided by investing
activities of $164,954.
For the nine months ended October 31, 1998, the Company received from the
sale of common stock of $1,550 and proceeds from stock subscriptions of
$160,965. Additionally, the Company received advances of $147,151 from
stockholders for the nine months ended October 31, 1998. This resulted in
net cash provided by financing activities of $309,666 for the nine months
ended October 31, 1998.
Net cash provided by financing activities for the nine months ended July
31, 1997 was $62,000 from the sale of its common stock.
Results of Operations:
For the nine months ended October 31, 1998, the Company did not receive any
revenue due to the cessation of operations. The Company had general and
administrative expenses of $392,716 for the nine months ended October 31,
1998 which consisted primarily of salaries and wages of $181,727, legal of
$2,423, accounting of $10,975, travel of $16,130, advertising of $890,
telephone of $4,545, printing of $1,341, insurance of $29,928, consulting
of $67,900, moving expense of $18,489, rent of $6,133 and other expenses of
$52,235.
For the nine months ended October 31, 1997, the Company did not receive any
revenue due to the cessation of operations compared to revenues of
$3,155,616 for the nine months ended October 31, 1996. The Company had
general and administrative expenses of $425,960 for the nine months ended
October 31, 1997 which consisted primarily of contract losses of $220,968,
salaries and wages of $118,003, legal of $15,700, accounting of $4,571,
travel of $15,062, advertising of $3,085, telephone of $8,317, printing of
$3,387, interest of $6,600 and other expenses of $30,170.
Plan of Operation. During January 1997, the Company determined that it
was unable to complete certain of its consulting projects and would be
unable to accept new consulting clients in the future. The Company
negotiated contract termination agreements with all of its active clients
that provide for the immediate discontinuance of consulting services. The
termination contracts provided that the Company retain as revenue all cash
paid to date and that the Company return all or a major portion of common
stock issued to it by client companies.
<PAGE>13
The Company currently intends to acquire businesses and assets as may
provide gain for the shareholders. The Company has acquired certain
assets of Immune Technologies, Inc. and intends to continue to pursue
Immune's business plan. Additionally, the Company acquired all of the
outstanding common stock of Greengold Corporation and is continuing
Greengold's business plan. The Company may also choose to form
corporations for the purpose of pursuing such business ventures as are
deemed potentially profitable by the Board of Directors.
Year 2000 Compliance. The Company has established a plan to address Year
2000 issues. Successful implementation of this plan will eliminate any
extraordinary expenses related to the Year 2000 issue. The Company has a
reasonable basis to conclude that the Year 2000 issue will not materially
affect future financial results, or cause reported financial information
not to be necessarily indicative of future operating results or future
financial condition.
- ---------------------------------------------------------
MANAGEMENT
- ---------------------------------------------------------
Officers and Directors. Pursuant to the Articles of Incorporation, each
Director shall serve until the annual meeting of the stockholders, or until
his successor is elected and qualified. The Company's basic philosophy
mandates the inclusion of directors who will be representative of
management, employees and the minority shareholders of the Company.
Directors may only be removed for "cause". The term of office of each
officer of the Company is at the pleasure of the Company's Board.
The Executive Officers and Directors are:
<TABLE>
<S> <C> <C>
L. Alan Schafler, age 63 President/Secretary/Treasurer June 1997
Treasurer Director to present
Erich Schmid, age 52 Director November, 1997
to present
James Yanai, age 59 Director November, 1997
to present
</TABLE>
Resumes:
L. Alan Schafler. Mr. Schafler has been President, Treasurer and a
Director of the Company since June 1997. Mr. Schafler has been the
president of L. Alan Schafler & Associates for the last five years. From
1974 to present, Mr. Schafler has been a management consultant providing
strategic planning and problem solving resource in a wide range of
corporate disciplines. Mr. Schafler's specialty is the review and
appropriate realignment of integrated corporate functions to maximize the
growth and profitability of the business enterprise. Mr. Schafler
obtained a B.B.A. degree in accounting from Hofstra University in 1957 and
an MBA in Finance/Management from New York University Graduate School of
Business in 1959. Mr. Schafler has attended continuing
financial/management post MBA studies and seminars at New York University
Graduate School of Business. Mr. Schafler has been an instructor and
advisor for Management Decision Laboratory at the NYU Graduate School of
Business. and attended and instructed programming and systems courses at
the Systems Research Institute.
James Yanai. Mr. Yanai is currently a Director of the Company. He has
worked as a buyer for Delta Floral Distributors, a flower distributor since
1993.
Erich K. Schmid. From 1994 to present, Mr. Schmid has been President of
Business Intermediary Services, Ltd., a business brokerage firm he co-
founded specializing in middle-market transactions. Mr. Schmid has also
been a Director of Redneck Foods, Inc., a restaurant company from January
31, 1997. From 1985 to 1994, Mr. Schmid was a Vice President with New
South Business Ventures, Inc. and its predecessor T.C. Wilkinson, Jr. &
Associates, Inc., general business brokerage firms. He is a member of the
International Business Brokers Association, Inc. and is a Certified
Business Intermediary. Mr. Schmid earned a Bachelor of Science in
industrial management and a Master of Science in management from the
University of Akron in 1971 and 1996, respectively.
Indemnification. The Company shall indemnify to the fullest extent
permitted by, and in the manner permissible under the laws of the State of
Nevada, any person made, or threatened to be made, a party to an action or
proceeding, whether criminal, civil, administrative or investigative, by
reason of the fact that he is or was a director or officer of the Company,
or served any other enterprise as director, officer or employee at the
request of the Company. The Board of Directors, in its discretion, shall
have the power on behalf of the Company to indemnify any person, other than
a director or officer, made a party to any action, suit or proceeding by
reason of the fact that he/she is or was an employee of the Company.
Pursuant to the Company's bylaws, the Company shall have the right to
indemnify , to purchase indemnity insurance for, and to pay and advance
expenses to, Directors, Officers and other persons who are eligible for, or
entitled to, such indemnification, payments or advances, in accordance with
and subject to the provisions of The Nevada Revised Statutes and any
amendments thereto, to the extent such indemnification, payments or
advances are either expressly required by such provisions or are expressly
authorized by the Board of Directors within the scope of such provisions.
The right of the Company to indemnify such persons shall include, but not
be limited to, the authority of the Company to enter into written
agreements for indemnification with such persons.
Insofar as indemnification for liabilities arising under the Act may be
permitted to directors, officers and controlling persons of the Company,
the Company has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as
<PAGE>14
expressed in the Act and is, therefore, unenforceable. In the event that a
claim for indemnification against such liabilities (other than the payment
by the Company of expenses incurred or paid by a director, officer or
controlling person of the Company in the successful defense of any action,
suit or proceedings) is asserted by such director, officer, or controlling
person in connection with any securities being registered, the Company
will, unless in the opinion of its counsel the matter has been settled by
controlling precedent, submit to a court of appropriate jurisdiction the
question whether such indemnification by it is against public policy as
expressed in the Act and will be governed by the final adjudication of such
issues.
INDEMNIFICATION OF OFFICERS OR PERSONS CONTROLLING THE COMPANY FOR
LIABILITIES ARISING UNDER THE SECURITIES ACT OF 1933, IS HELD TO BE AGAINST
PUBLIC POLICY BY THE SECURITIES AND EXCHANGE COMMISSION AND IS THEREFORE
UNENFORCEABLE.
Conflicts of Interest Policy. The Corporation has adopted a policy that
any transactions with directors, officers or entities of which they are
also officers or directors or in which they have a financial interest, will
only be on terms consistent with industry standards and approved by a
majority of the disinterested directors of the Corporation's Board of
Directors. No such transactions by the Corporation shall be either void
or voidable solely because of such relationship or interest of directors or
officers or solely because such directors are present at the meeting of the
Board of Directors of the Corporation or a committee thereof which approves
such transactions, or solely because their votes are counted for such
purpose if: (i) the fact of such common directorship or financial interest
is disclosed or known by the Board of Directors or committee and noted in
the minutes, and the Board or committee authorizes, approves or ratifies
the contract or transaction in good faith by a vote for that purpose
without counting the vote or votes of such interested directors; or (ii)
the fact of such common directorship or financial interest is disclosed to
or known by the shareholders entitled to vote and they approve or ratify
the contract or transaction in good faith by a majority vote or written
consent of shareholders holding a majority of the Common Shares entitled to
vote (the votes of the common or interested directors or officers shall be
counted in any such vote of shareholders), or (iii) the contract or
transaction is fair and reasonable to the Corporation based on the material
similarity of terms to recent consulting agreements not involving
interested parties, or in all other agreements by competitive bids, at the
time it is authorized or approved. In addition, interested directors may
be counted in determining the presence of a quorum at a meeting of the
Board of Directors of the Corporation or a committee thereof which approves
such transactions.
Non-Qualified and Incentive Stock Option Plans. During 1995, the Company
adopted the 1995 Non-Statutory Stock Option Plan that provides for granting
to the Company's officers, directors, employees and certain other
individuals who consult with or advise the Company, options to acquire
750,000 shares of the Company's common stock. The shares issuable under
the 1995 plan are at a price not less than 85% of the fair market value of
the stock on the date of grant. The exercise periods of the options are
not to exceed ten years.
The Board of Directors suspended the Plan on June 12, 1996 and any options
granted in 1996 were suspended. The Board of Directors reinstated the
Plan after the Company removed itself from the Investment Act of 1940.
However, the Board of Directors did not reinstate any of the suspended
options.
Executive Compensation. The following table sets forth certain summary
information concerning the total remuneration paid or accrued by the
Company, to or on behalf of the Company's Chief Executive Officer and the
Company's executive officers determined as of the end of last year.
<TABLE>
<CAPTION>
Long Term Compensation
Annual Compensation Awards
Payouts
<S> <C> <C> <C> <C> <C> <C> <C> <C>
(a) (b) (c) (d) (e) (f) (g) (h) (i)
Other All
Name Annual Restricted LTIP Other
and Compen- Stock Options/ Pay- Compen-
Principal Salary Bonus sation Awards SARs Outs sation
Position Year ($) ($) ($) ($) ($) ($) ($)
Alan Schafler 1998 $52,500 - - - $7,500(2) - -
President,
Treasurer
Chief Financial
Officer
Timothy
President,
Treasurer
Chief Financial
Officer 1997 $17,500 - - - - - -
1996 $ 177,000 - - - - - -
</TABLE>
No other officer has received compensation in the last three years. In
June 1997, Mr. Schafler received options Valued at $.01 per option to
purchase 750,000 Common Shares of the Company exercisable at $.19 per
Common Share for a period of three years.
- ------------------------------------------------------
CERTAIN TRANSACTIONS
- ------------------------------------------------------
For the nine months ended October 31, 1998, Timothy Miles, an affiliate of
the Company advanced the Company $147,151.
<PAGE>15
- ----------------------------------------------------------------
PRINCIPAL SHAREHOLDERS
- ----------------------------------------------------------------
There are currently 10,897,263 Common Shares outstanding. The following
tabulates holdings of shares of the Company by each person who, subject to
the above, at the date of this Memorandum, holds of record or is known by
Management to own beneficially more than 5.0% of the Common Shares and, in
addition, by all directors and officers of the Company individually and as
a group.
- ---------------------
Shareholdings at Date of
This Memorandum
<TABLE>
<CAPTION>
Number & Class
Name and Address of Shares(1) Percentage
<S> <C> <C>
L. Alan Schafler
2035 Staysail Lane
Jupiter, Florida 33477 500,000 4.59%
Erich K. Schmid
40 Spring Hollow Lane
Fairview, NC 28730 0 0%
James Yanai
17600 Van Ness
Torrence, CA 90504 0 0%
Timothy Miles and MaryEllen Miles
#9 Niblick
Hilton Head Island, SC 29938 1,918,604 17.61%
Paul Skillicorn
Rt. 1, Box 440
Snow Hill, NC 28580 760,608 6.98%
William Spira
14221 Park Avenue South
Burnsville, MN 55337 760,608 6.98%
Immune Technologies, Inc.
6400 Bradley Park Drive
Suite A-4
Columbus, Georgia 31904 2,000,000 18.37%
All Directors & Officers
as a group (3 persons) 500,000 4.59%
</TABLE>
(1) Pursuant to Rule 13d-3 under the Securities Exchange Act of 1934, as
amended, beneficial ownership of a security consists of sole or shared
voting power (including the power to vote or direct the voting) and/or sole
or shared investment power (including the power to dispose or direct the
disposition) with respect to a security whether through a contract,
arrangement, understanding, relationship or otherwise. Unless otherwise
indicated, each person indicated above has sole power to vote, or dispose
or direct the disposition of all shares beneficially owned, subject to
applicable community property laws.
Options. The Company has issued Dexter Thompson, a non-affiliate an
option to purchase 9,000 Common Shares at $.437 per Common Share. The
option vests in three equal installments annually beginning April 5, 2000.
The Company has issued Anthony Bertrami, a non-affiliate, an option to
purchase 20,000 Common Shares at $.25 per Common Shares. The option period
is for three years from December, 1998.
The Company has issued Clint Clark, a non-affiliate an option to purchase
10,000 Common Shares at $.25 per Common Shares. The option period is for
two years from May 30, 1997.
The Company has issued to each Erich Schmidt and James Yanai, Directors, an
option to purchase 10,000 Common Shares at $.25 per Common Shares. The
option period is for three years from December, 1998.
- ----------------------------------------------------------
MARKET FOR REGISTRANT'S COMMON EQUITY AND
RELATED STOCKHOLDER MATTERS
- ----------------------------------------------------------
The Company's Common Stock is traded on the OTC Bulletin Board under the
symbol "BNTK". The following table sets forth the range of high and low
bid quotations for the Company's Common Stock for each quarter of the last
two fiscal years, as reported by the OTC Bulletin Board. The Company's
market makers are Paragon Capital Corp., Olsen Payne Company, Sharpe
Capital, Inc., Wien Securities Corp. and North American Institutional
Brokers. The quotations represent inter-dealer prices without retail
markup, markdown or commission, and may not necessarily represent actual
transactions.
Quarter Ended Bid Price
1/31/99 .875
10/31/98 .25
7/31/98 .375
4/30/98 .375
1/31/98 .312
10/31/97 .437
7/31/97 .375
4/39/97 .25
<PAGE>16
The Company's common stock commenced trading on the over-the-counter market
in October, 1996. Prior to that time, there was no market for the
securities of the Company.
Holders. The approximate number of holders of record of the Company's
$.001 par value Common Stock, as of December 31, 1999, was 500. Currently,
as of April 26, 1999, there are 635 holders of record.
Dividends. Holders of the Company's Common Stock are entitled to receive
such dividends as may be declared by its Board of Directors. Since
inception no dividends on the Company's Common Stock have ever been paid,
and the Company does not anticipate that dividends will be paid on its
Common Stock in the foreseeable future.
Broker-Dealer Sales of Company Securities. Until the Company
successfully obtains a listing on the NASDAQ quotation system, if ever, the
Company's securities may be covered by Rule 15g-2 under the Securities
Exchange Act of 1934 that imposes additional sales practice requirements on
broker-dealers who sell such securities to persons other than established
customers and accredited investors (generally institutions with assets in
excess of $5,000,000 or individuals with net worth in excess of $1,000,000
or annual income exceeding $200,000 or $300,000 jointly with their spouse).
For transactions covered by the rule, the broker-dealer must make a special
suitability determination of the purchaser and have received the
purchaser's written agreement to the transaction prior to the sale. In
order to approve a person's account for transactions in designated
securities, the broker or dealer must (i) obtain information concerning the
person's financial situation, investment experience and investment
objectives; (ii) reasonably determine, based on the information required by
paragraph (i) that transactions in designated securities are suitable for
the person and that the person has sufficient knowledge and experience in
financial matters that the person reasonably may be expected to be capable
of evaluating the rights of transactions in designated securities; and
(iii) deliver to the person a written statement setting forth the basis on
which the broker or dealer made the determination required by paragraph
(ii) in this section, stating in a highlighted format that it is unlawful
for the broker or dealer to effect a transaction in a designated security
subject to the provisions of paragraph (ii) of this section unless the
broker or dealer has received, prior to the transaction, a written
agreement to the transaction from the person; and stating in a highlighted
format immediately preceding the customer signature line that the broker or
dealer is required to provide the person with the written statement and the
person should not sign and return the written statement to the broker or
dealer if it does not accurately reflect the person's financial situation,
investment experience and investment objectives and obtain from the person
a manually signed and dated copy of the written statement. A designated
security means any equity security other than a security (i) registered, or
approved for registration upon notice of issuance on a national securities
exchange that makes transaction reports available pursuant to 17 CFR 11Aa3-
1 (ii) authorized or approved for authorization upon notice of issuance,
for quotation in the NASDAQ system; (iii) that has a price of five dollars
or more or . . . (iv) whose issuer has net tangible assets in excess of
$2,000,000 demonstrated by financial statements dated less than fifteen
months previously that the broker or dealer has reviewed and has a
reasonable basis to believe are true and complete in relation to the date
of the transaction with the person. Consequently, the rule may affect
the ability of broker-dealers to sell the Company's securities and also may
affect the ability of purchasers in this Distribution to sell their shares
in the secondary market.
The Company's securities will likely continue to trade below $5.00 and such
securities is subject to the penny stock rules discussed above.
- --------------------------------------------------------------
DESCRIPTION OF SECURITIES
- ---------------------------------------------------------------
Qualification. The following statements constitute brief summaries of the
Company's Certificate of Incorporation and Bylaws, as amended. Such
summaries do not purport to be complete and are qualified in their entirety
by reference to the full text of the Certificate of Incorporation and
Bylaws.
The Company's articles of incorporation authorize it to issue up to
75,000,000 Common Shares. Shares of common stock purchased in this
offering will be fully paid and non-assessable.
Common Stock. There are presently outstanding 10,897,263 Common Shares.
Holders of Common Shares of the Company are entitled to cast one vote for
each share held at all shareholders meetings for all purposes. There are
no cumulative voting rights. Upon liquidation or dissolution, each
outstanding Common Share will be entitled to share equally in the assets of
the Company legally available for distribution to shareholders after the
payment of all debts and other liabilities. Common Shares are not
redeemable, have no conversion rights and carry no preemptive or other
rights to subscribe to or purchase additional Common Shares in the event of
a subsequent offering. All outstanding Common Shares are, and the shares
offered hereby will be when issued, fully paid and non-assessable.
There are no limitations or restrictions upon the rights of the Board of
Directors to declare dividends out of any funds legally available therefor.
The Company has not paid dividends to date and it is not anticipated that
any dividends will be paid in the foreseeable future. The Board of
Directors initially may follow a policy of retaining earnings, if any, to
finance the future growth of the Company. Accordingly, future dividends,
if any, will depend upon, among other considerations, the Company's need
for working capital and its financial conditions at the time.
Board of Directors, and shares so issued, the consideration for which have
been paid or delivered, shall be deemed fully paid stock and the holder of
such shares shall not be liable for any further payment thereon.
<PAGE>17
The capital stock of the Company, after the amount of the subscription
price or par value has been paid in full, shall not be subject to
assessment to pay debts of the Company and no paid up stock and no stock
issued as fully paid shall ever be accessible or assessed and the Articles
of Incorporation shall not be amended in this particular.
Transfer Agent. Florida Atlantic Stock Transfer, Inc. acts as transfer
agent for the Company.
- -----------------------------------------------------------
LEGAL MATTERS
- -----------------------------------------------------------
The due issuance of the Common Shares offered hereby will be opined upon
for the Company by J. M. Walker, Attorney-At-Law, in which opinion Counsel
will rely on the validity of the Certificate and Articles of Incorporation
issued by the State of Colorado, as amended and the representations by the
management of the Company that appropriate action under Nevada law has been
taken by the Company.
- --------------------------------------------------------
LEGAL PROCEEDINGS
- --------------------------------------------------------
The Company is not involved in any legal proceedings as of the date of this
Prospectus.
- --------------------------------------------------------
EXPERTS
- --------------------------------------------------------
The audited financial statements included in this Prospectus have been so
included in reliance on the report of James E. Scheifley and Associates,
P.C., Certified Public Accountants, on the authority of such firm as
experts in auditing and accounting.
- --------------------------------------------------------
INTERESTS OF NAMED
EXPERTS AND COUNSEL
- --------------------------------------------------------
None of the experts or counsel named in the Prospectus are affiliated with
the Company.
<PAGE>18
- --------------------------------------------------------
FINANCIAL STATEMENTS
- --------------------------------------------------------
INDEPENDENT AUDITOR'S REPORT
Board of Directors and Shareholders
Pratt, Wylce & Lords, Ltd.
We have audited the balance sheet of Pratt, Wylce & Lords, Ltd. as of
January 31, 1998, and the related statements of operations, changes in net
assets, and cash flows for each of the two 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 audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those 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 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 that our audits
provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above, present fairly,
in all material respects, the financial position of Pratt, Wylce & Lords,
Ltd. as of January 31, 1998, and the results of its operations, changes in
net assets and cash flows for each of the two years then ended, in
conformity with generally accepted accounting principles.
As discussed in Note 1 to the financial statements, investment securities
not readily marketable amounting to $1,988,815 as of January 31, 1997, have
been valued at fair value as determined by the Board of Directors. We have
reviewed the procedures applied by the directors in valuing such securities
and investments and have inspected underlying documentation, and in the
circumstances, we believe the procedures are reasonable and the
documentation appropriate. However, because of the inherent uncertainty of
valuation, the Board of Directors' estimate of fair values may differ
significantly from the values that would have been used had a ready market
existed for the securities, and the difference could be material.
James E. Scheifley & Associates, P.C.
Certified Public Accountants
Denver, Colorado
June 19, 1998
<PAGE>19
Pratt, Wylce & Lords, Ltd.
Balance Sheet
January 31, 1998
<TABLE>
<CAPTION>
ASSETS
<S> <C>
Investments at market or fair value:
Investments in common stocks $ 279,238
Cash 1,528
Advances to affiliate 54,100
Property and equipment, at cost, net of
accumulated depreciation of $3,212 3,946
----------
338,812
LIABILITIES
Accounts payable 21,657
Accrued expenses 1,749
Payroll taxes payable 40,900
Advances from shareholder 86,819
----------
151,125
----------
$ 187,687
===========
NET ASSETS
Common stock, $.001 par value,
75,000,000 shares authorized,
3,204,270 shares issued and outstanding $ 3,255
Additional paid-in capital 555,041
Undistributed operating income and investment
gains (losses):
Accumulated operating losses (400,532)
Unrealized accumulated appreciation
of investments 29,923
----------
(370,609)
----------
Net assets applicable to outstanding common
shares (equivalent to $.06 per share, based
on outstanding common shares of 3,204,270) $ 187,687
===========
</TABLE>
See accompanying notes to financial statements.
<PAGE>20
Pratt, Wylce & Lords, Ltd.
Statements of Operations
Years Ended January 31, 1998 and 1997
<TABLE>
<CAPTION>
1998 1997
<S> <C> <C>
Revenues:
Fee income $ - $ 679,955
Interest and dividend income - 5,557
----------- -----------
- 685,512
Costs and expenses:
General and administrative 217,052 1,486,122
Losses on contract cancellations 307,250
Interest expense 6,600
----------- -----------
217,052 1,799,972
----------- -----------
Income from operations before
before income taxes (217,052) (1,114,460)
Income (taxes) benefit (76,050) 335,191
----------- -----------
Income from operations (293,102) (779,269)
Realized gain (loss) on investments 20,797 540,221
Income (taxes) (7,071) (183,675)
----------- -----------
13,726 356,546
Increase (decrease) in unrealized
appreciation of investments (244,474) 445,636
Income (taxes) benefit 83,121 (151,516)
----------- -----------
(161,353) 294,120
Net increase (decrease) in net assets
resulting from operations $ (440,729) $ (128,603)
=========== ===========
Basic (loss) per share:
Net (loss) from operations $ (0.11) $ (0.28)
Net realized gains on investments 0.0 0.13
Net unrealized gains (losses) on investments (0.0) 0.11
----------- -----------
Net (loss) $ (0.16) $ (0.05)
=========== ===========
Weighted average shares outstanding 2,777,904 2,777,904
=========== ===========
</TABLE>
See accompanying notes to financial statements.
<PAGE>21
Pratt, Wylce & Lords, Ltd.
Statements of Changes in Net Assets
Years Ended January 31, 1998 and 1997
<TABLE>
<CAPTION>
1998 1997
<S> <C> <C>
Net income from operations $ (293,102) $ (779,269)
Realized gain (loss) from investment 13,726 356,546
Net increase (decrease) in unrealized
appreciation of investments (161,353) 294,120
------------ ------------
Net increase in net assets
resulting from operations (440,729) (128,603)
------------ ------------
Capital share transactions:
Private sales of common stock 85,961 223,250
Common stock issued for services 14,000
Unpaid stock subscription (31,500)
Payment of stock subscription 31,500
Cancellation of dividends 452,161
------------ ------------
Total capital share transactions 131,461 643,911
------------ ------------
Increase (decrease) in net assets (309,268) 515,308
Net assets at beginning of period 496,955 (18,353)
------------ ------------
Net assets end of period $ 187,687 $ 496,955
============ ============
</TABLE>
See accompanying notes to financial statements.
<PAGE>22
Pratt, Wylce & Lords, Ltd.
Statements of Cash Flows
Years Ended January 31, 1998 and 1997
<TABLE>
<CAPTION>
1998 1997
<S> <C> <C>
Cash flows from operating activities:
Net income (loss) $ (440,729) $ (128,603)
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation 1,343 3,699
Investment stock received for services (421,825)
Unrealized (appreciation) depreciation on investments 244,474 (445,636)
Gain from sale of investments (20,797) (540,221)
Abandonment of fixed assets 6,868
Common stock issued for services 14,000
Investment stock paid for services 395,156
Changes in assets and liabilities:
(Increase) decrease in:
Accounts and notes receivable 1,100 3,900
(Decrease) increase in:
Accounts payable (97,600) 156,215
Accrued expenses 1,778,634
Deferred revenue (1,180,058)
Dividends payable (243,839)
Deferred income taxes (212,270)
----------- -----------
Total adjustments 142,520 (699,377)
----------- -----------
Net cash provided by (used in)
operating activities (298,209) (827,980)
----------- -----------
Cash flows from investing activities:
Proceeds from sale of investments 173,114 563,646
Advances to affiliate (56,100)
Purchase of fixed assets (1,000) (875)
----------- -----------
Net cash provided by (used in) investing activities 116,014 562,771
----------- -----------
Cash flows from financing activities:
Common stock sold for cash 85,961 185,750
Advances from shareholder 86,819 -
----------- -----------
Net cash provided by (used in)
financing activities 172,780 185,750
----------- -----------
Increase (decrease) in cash (9,415) (79,459)
Cash, beginning of period 10,943 90,402
----------- -----------
Cash, end of period $ 1,528 $ 10,943
=========== ===========
</TABLE>
See accompanying notes to financial statements.
<PAGE>23
Pratt, Wylce & Lords, Ltd.
Statements of Cash Flows
Years Ended January 31, 1998 and 1997
<TABLE>
<CAPTION>
1998 1997
<S> <C> <C>
Amounts paid for:
Income taxes $ - $ -
Interest $ - $ 6,600
Supplemental disclosure of non-cash investing
and financing:
Investment in common stocks received for
services provided $ - $ 1,821,316
Dividend in kind to stockholders $ - $ 243,839
Investment stock paid for services $ - $ 395,156
Payment of stock subscription with securities $ 31,500 $ -
Return of equity securities to issuers $1,868,816 $ -
</TABLE>
See accompanying notes to financial statements.
<PAGE>24
Pratt, Wylce & Lords, Ltd.
Notes to Financial Statements
Note 1. Summary of significant accounting policies.
Organization
The Company was incorporated in the State of Florida on May 22, 1986. The
Company had limited operations from 1988 through 1990 and ceased operations
at that time. The Company experienced a change in control and began
operations of its present business as of May 31, 1993. The Company was
reincorporated in the State of Nevada on August 18, 1993.
The Company was in the business of providing financial consulting services
for corporate clients. As compensation for these services, the Company
received both cash and common stock of the companies to which it provided
its services. The Company had elected to be treated as a Business
Development Company pursuant to Section 54 of the Investment Company Act of
1940.
During January 1997, the Company determined that it was unable to complete
certain of its consulting projects and would be unable to accept new
consulting clients in the future. The Company has negotiated contract
termination agreements with all of its active clients which provide for the
immediate discontinuance of consulting services. The termination contracts
provide that the Company retain as revenue all cash paid to date and that
the Company return all or a major portion on common stock issued to it by
client companies. Since its cessation of financial consulting activities
during January 1997 the Company has carried out administrative functions
and has begun liquidating its investment portfolio. The Company is
currently seeking new business activities unrelated to the provision of
financial services.
Securities valuation
Investments in unrestricted securities that are traded in the over-the-
counter market are generally valued at the closing bid price on the last
day of the year. Restricted securities and securities for which no public
market exist are valued at fair value as determined by the Board of
Directors. These securities are initially valued at the price per share
provided for in the client company's private sale of its securities.
Periodic adjustments to the initial fair value are made when deemed
appropriate by the directors based upon intervening events or circumstances
that would have a material effect on the Company's ability liquidate the
securities. Such intervening events and circumstances would include among
others material changes in the client's financial position and results of
operations, doubts about the client's ability to continue as a going
concern, a petition in bankruptcy, the discovery of a material legal or
environmental claim, more recent sales of non-trading securities or the
abandonment of plans to complete a registration of the securities for
public sale.
Cash and cash equivalents
For purposes of the statement of cash flows, the Company considers all
highly liquid debt instruments purchased with a maturity of three months or
less to be cash equivalents. The Company had no cash equivalents during
the periods presented.
Furniture and equipment
Furniture and equipment are stated at cost. Depreciation is provided for
by the straight-line method over estimated useful lives as follows:
Equipment 5 years
Revenue
Revenue from the sale of investments is recorded on settlement dates as
determined by independent brokers and dealers in securities. The use of
trade dates for determination of such revenue would not have a material
effect on reported amounts.
Income taxes
Deferred taxes are provided to reflect the income tax effects of amounts
included for financial statement purposes in different periods than for tax
purposes, principally unrealized appreciation of investments and the
valuation of securities received as revenue, the constructive receipt of
which for income tax purposes precedes the establishment of fair value
under generally accepted accounting principles. Valuation of the securities
for income tax purposes is based on fair value at the date the shares are
issued to the Company, which is generally one to three months prior to the
private sale of stock by the client company.
Per share amounts
In February 1997, the Financial Accounting Standards Board ("FASB")
issued SFAS No. 128, "Earnings Per Share." SFAS No. 128 supersedes and
simplifies the existing computational guidelines under Accounting
Principles Board ("APB") Opinion No. 15, "Earnings Per Share."
The statement is effective for financial statements issued for periods
ending after December 15, 1997. Among other changes, SFAS No. 128
eliminates the presentation of primary earnings per share and replaces it
with basic earnings per share for which common stock equivalents are not
considered in the computation. It also revises the computation of
diluted earnings per share. The Company has adopted SFAS No. 128 and
there is no material impact to the Company's earnings per share,
financial condition, or results of operations. The Company's earnings
per share have been restated for all periods presented to be consistent
with SFAS No. 128.
The basic loss per share is computed by dividing the net loss for the
period by the weighted average number of common shares outstanding for
the period. Loss per share is unchanged on a diluted basis since the
assumed exercise of common stock equivalents would have an anti-dilutive
effect.
Concentration of credit risk
Financial instruments that potentially subject the Company to a
concentration of credit risk consist principally of cash and investments in
client company common stocks. During the year the Company did not maintain
cash deposits at financial institutions in excess of the $100,000 limit
<PAGE>25
covered by the Federal Deposit Insurance Corporation. Client company common
stocks are generally thinly traded new issues traded in the over-the-
counter market or securities for which no market exists.
Attempts by the Company or others to sell substantial positions in these
securities could have material negative effects on quoted market prices and
the resulting fair value of the securities.
Estimates
The preparation of the Company's financial statements requires management
to make estimates and assumptions that affect the amounts reported in the
financial statements and accompanying notes. Actual results could differ
from these estimates. Management estimates the fair value of its
investments in securities for which no public market exists based on the
factors mentioned above. It is reasonably possible that changes may occur
in the near future with respect to client company activities that would
require adjustment of the fair value of these securities.
Note 2. Investments
Common stock of client companies is issued to the Company as payment for
its services and is recorded as revenue ratably over the term of the
consulting contract. As indicated in Note 1, the Company has completed
termination agreements with all of its consulting clients.
At January 31, 1998 the Company had investments in listed common equity
securities as follows:
Historical Fair
Shares Cost Value
Free trading shares:
Level Best Golf, Inc. 3,500 $ 5,250 $ -
National Sorbents, Inc. 176,000 264,000 33,088
First Nordic (formerly Sherman Goelz) 55,000 5,000 -
-------- --------
$274,250 $ 33,088
Restricted shares:
Coronado Industries, Inc. 100,000 $ 60,000 $ 87,500
Fair value of securities as of January 31, 1998 was determined by reference
to prices quoted on the NASDAQ OTC Bulletin Board.
The shares of National Sorbents, Inc. were issued to the Company during
November 1995. At January 31, 1997, the Board of Directors determined that
intervening events and circumstances had arisen that would require
adjustment of the fair value of these securities as of January 31, 1997 to
zero value. Specifically, the company has suffered significant
deterioration of financial position and results of operations and has
halted its efforts to register its securities for public sale. During the
year ended January 31, 1998, this client company was able to establish
limited trading of its securities in the over the counter market.
At January 31, 1998 the Company had investments in common equity
securities for which no public market exists as follows:
Historical Fair
Shares Cost Value
Rubicon Sports, Inc. 25,000 $ 37,500 $ 62,500
Immune Technologies, Inc. 10,000 15,000 15,000
Players Network 25,000 37,500 37,500
Casinovations Incorporated 29,100 43,650 43,650
---------- ----------
$ 133,650 $ 158,650
Other securities for which no public market exists as of January 31, 1998
were valued at their initial fair value, which in all cases amounted to
$1.50 per share except for Rubicon Sports, Inc which has commenced a
private offering of its securities at $2.50 per share. No intervening
events or circumstances occurred subject to the initial valuation of these
securities that would require an adjustment to their valuation as of
January 31, 1997.
The Company owns less than 15% of outstanding common stock of its client
companies.
During the year ended January 31, 1997, the Company completed the following
transactions with respect to its portfolio of listed securities:
Sales for cash
Shares Proceeds Gain
Applied Cellular Technologies 11,502 $ 52,674 $ 5,516
Gaming Ventures, Inc. 45,500 $158,290 $ 90,040
Level Best Golf 95,500 $352,682 $209,432
Distribution for services
Shares Proceeds Gain
Applied Cellular Technologies 5,843 $ 23,919 $ -
Gaming Ventures, Inc. 62,500 $248,437 $155,777
Level Best Golf 28,896 $122,800 $ 79,456
Distribution as dividends
Shares Cost
Gaming Ventures, Inc. 63,556 $ 95,334
Level Best Golf 99,003 $148,505
During the year ended January 31, 1998, the Company completed the following
transactions with respect to its portfolio of listed securities:
Sales for cash
Shares Proceeds Gain (Loss)
National Sorbents, Inc. 40,000 $ 7,520 $(52,480)
Gaming Ventures, Inc. 13,444 $ 32,988 $ 12,822
Level Best Golf 48,101 $132,606 $ 60,455
<PAGE>26
Note 3. Furniture and equipment
Furniture and equipment consists of the following at January 31, 1998:
Office equipment $ 7,158
Less accumulated depreciation (3,212)
--------
$ 3,946
Depreciation expense charged to operations was $1,343 and $3,699 during the
years ended January 31, 1998 and 1997 respectively.
In connection with the termination of its consulting contracts at January
31, 1997 as discussed in Note 1, the Company ceased operations in its
Denver, CO office and transferred $12,773 (net book value of $6,867) of
office equipment to a former employee in exchange for cash of $1,100. The
Company recorded $5,767 of compensation expense in connection with the
transfer of assets.
Note 4. Capital share transactions
During the period covered by these financial statements the Company issued
shares of common stock without registration under the Securities Act of
1933. Although the Company believes that the sales did not involve a public
offering of its securities and that the Company did comply with the "safe
harbor" exceptions from registration under section 4(2), it could still be
liable for recession of the sales if such exceptions were found not to
apply. The Company has not received a request for rescission of shares
nor does it believe that it is probable that its shareholders would
pursue rescission nor prevail if such action were undertaken
During the year ended January 31, 1997 the Company issued 161,950 shares of
its common stock to a limited investor group for cash aggregating $185,750
and issued 150,000 shares of common stock for the exercise of common stock
options valued at $39,000 of which $31,500 remained unpaid at January 31,
1997
During the year ended January 31, 1998 the Company issued 329,674 shares of
its common stock to a limited investor group for cash aggregating $85,961.
Additionally, the Company issued 50,000 shares of its common stock valued
at $.25 per share for services provided to the Company.
Note 5. Commitments
During the year ended January 31, 1996, the Company negotiated an
operating lease for executive office space. The initial term of the
lease has expired and the Company occupies the offices on a month to
month basis.
Rent expense amounted to $5,590 and $14,338 for the years ended January
31, 1998 and 1997, respectively.
Note 6. Income taxes
Deferred income taxes may arise from temporary differences resulting from
income and expense items reported for financial accounting and tax
purposes in different periods. Deferred taxes are classified as current
or non-current, depending on the classification of assets and liabilities
to which they relate. Deferred taxes arising from temporary differences
that are not related to an asset or liability are classified as current
or non-current depending on the periods in which the temporary
differences are expected to reverse. The deferred tax asset resulting
from the operating loss carryforward described below has been fully
reserved.
The Company currently has net tax operating loss carryforwards
aggregating approximately $698,000 which expire beginning in 2008. The
principal difference between the Company's book operating losses and
income tax operating losses results from recognition of unrealized gains
or losses on securities owned for financial statement purposes.
Note 7. Sales to major customers
During the year ended January 31, 1997, the Company recorded revenue for
services provided to client companies that comprise greater than 10% of
total revenues as follows:
Level Best Golf, Inc. $ 68,642
Trinity Works, Inc. $ 73,252
Casinovations, Inc. $ 82,500
Immune Technologies, Inc. $ 90,000
Note 8. Stock option plan
During 1995, the Company adopted the 1995 Non-Statutory Stock Option Plan
which provides for granting to the Company's officers, directors,
employees and certain other individuals who consult with or advise the
Company, options to acquire up to 750,000 shares of the Company's common
stock. The shares issuable under the 1995 plan are at a price not less
than 85% of the fair market value of the stock on the date of grant. The
exercise periods of the options are not to exceed ten years. No options
have been granted pursuant to the plan as of January 31, 1998.
Note 9. Related Party Transactions
During the year ended January 31, 1998, the Company's former president who
is currently a major shareholder of the Company madee working capital
advances tothe Company of $86,819.
<PAGE>27
Note 10. Subsequent event
During the year ended January 31, 1998, the Company made working capital
advances to Immune Technologies, Inc. (Immune), a former client company,
amounting to $54,100. The business of Immune consists of research and
development and marketing of products based on new technology for the
prevention and related therapy of infectious diseases in animals.
Subsequent to January 31, 1998 the Company entered into a purchase and sale
agreement with Immune whereby the Company would purchase certain assets of
Immune consisting primarily of accounts receivable, furniture, equipment
and intangible assets. The purchase price paid consists of 2,000,000
shares of the Company's common stock and the cash advances made.
<PAGE>28
BioNet Technologies, Inc.
Consolidated Balance Sheet
October 31, 1998
(Unaudited)
ASSETS
<TABLE>
<APTION>
Current assets:
<S> <C>
Cash and cash equivalents $ 60,202
Trading securities 175,838
Accounts receivable - other 700
Inventory 11,890
------------
Total current assets 248,630
Property and equipment, at cost, net of
accumulated depreciation of $9,562 98,465
Other assets 11,326
------------
$ 358,421
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 56,159
Accrued expenses 27,667
------------
Total current liabilities 83,826
Loans from shareholder 233,970
Stockholders' equity:
Common stock, no par value,
20,000,000 shares authorized,
7,246,606 shares issued and outstanding 7,247
Additional paid in capital 2,045,911
Subscriptions to common stock 160,965
Accumulated deficit (2,173,498)
-----------
40,625
$ 358,421
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE>29
BioNet Technologies, Inc.
Consolidated Statements of Operations
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended October 31, Nine
Months Ended October 31,
1998 1997 1998 1997
<S> <c <C> <C> <C>
Revenues $ - $ - $ - $ -
Costs and expenses
General and administrative 196,776 24,952 392,716 425,960
Charge off of acquired research and development 476,358 - 1,455,186 -
----------- ---------- ----------- -----------
(Loss) from operations (673,134) (24,952) (1,847,902) (425,960)
Other income and (expense):
Gain (loss) realized from sale of investments (1,517) (4,300) 35,435 63,727
Unrealized gain (loss) on investments 7,593 (46,878) 9,578 174,758
----------- ---------- ----------- -----------
6,076 (51,178) 45,013 238,485
(Loss) before income taxes (667,058) (76,130) (1,802,889) (187,475)
Provision for income taxes - - - -
----------- ---------- ----------- -----------
Net (loss) $ (667,058) $ (76,130) $(1,802,889) $ (187,475)
Basic earnings (loss) per share:
Net income (loss) $ (0.09) $ (0.03) $ (0.34) $ (0.06)
Weighted average shares outstanding 7,208,949 2,964,485 5,301,824 2,914,559
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE>30
BioNet Technologies, Inc.
Consolidated Statements of Cash Flows
(Unaudited)
<TABLE>
<CAPTION>
Nine Months Ended October 31,
1998 1997
<S> <C> <C>
Net cash provided by (used in)
operating activities $ (303,400) $ (237,523)
Cash flows from investing activities:
Proceeds from sale of investments 71,220 165,954
Purchase of fixed assets (18,812) (1,000)
----------- ----------
Net cash provided by (used in) investing activities 52,408 164,954
Cash flows from financing activities:
Proceeds from sale of common stock 1,550 62,000
Proceeds from stock subscriptions 160,965 -
Advances from stockholders 147,151 -
----------- ----------
Net cash provided by (used in) financing activities 309,666 62,000
Increase (decrease) in cash 58,674 (10,569
Cash and cash equivalents,
beginning of period 1,528 10,943
----------- ----------
Cash and cash equivalents,
end of period $ 60,202 $ 374
</TABLE>
<PAGE>31
Bio Net Technologies, Inc.
(formerly Pratt Wylce & Lords, Ltd.)
Notes to Unaudited Financial Statements
October 31, 1998
The accompanying unaudited financial statements have been prepared in
accordance with generally accepted accounting principles for interim
financial information and with the provisions of Regulation SB.
Accordingly, they do not include all of the information and footnotes
required by generally accepted accounting principles for complete
financial statements. In the opinion of management, all adjustments
(consisting of normal recurring adjustments) considered necessary for a
fair presentation have been included. These financial statements should
be read in conjunction with information provided in the Company's report
on Form 10-K for the year ended January 31, 1998.
The results of operations for the periods presented are not necessarily
indicative of the results to be expected for the full year.
Income (loss) per share was computed using the weighted average number of
common shares outstanding.
Investments
At October 31, 1998 the Company had investments in common equity
securities as follows:
Historical Fair
Shares Cost Value
Level Best Golf, Inc. 3,500 5,250 -
Immune Technologies, Inc. 10,000 15,000 -
National Sorbents, Inc. 176,000 - 33,088
Advanced Sterilizer Technology 10,000 15,000 -
Casionvations, Inc. 29,100 43,650 72,750
Grand Slam Licensing, Inc. 10,000 15,000 -
Rubicon Sports, Inc. 25,000 37,500 62,500
Coronado Industries 15,000 9,000 7,500
First Nordic 55,000 5,000 -
--------- ---------
$145,400 $175,838
Fair value of National Sorbents Inc. and Coronado Industries as of April
30, 1998 was determined by reference to price quoted on the NASDAQ OTC
Bulletin Board. No public market exists for the other securities listed.
Fair value of these securities are based on the price paid by qualified
investors in recent private placements of the securities as adjusted by
management to reflect significant changes in investee company financial
conditions.
During the nine months ended October 31, 1998, the Company received net
proceeds from the sale of investment securities aggregating $123,935 and
recorded gains from the transactions aggregating $35,435. During the nine
months ended October 31, 1998, the Company issued 6,200 shares of its
restricted common stock to an investor for cash aggregating $1,550. The
price paid per share by the investors approximated the bid value of the
stock at the issue dates. Additionally, during the period, the Company
issued an aggregate of 85,136 shares of restricted common stock to two
individuals as reimbursement for expenses paid by the individuals in
behalf of the Company. The value of the services provided amounted to
$18,312.
Additionally, during June 1998, the Company issued 2,000,000 shares of
its restricted common stock to the shareholders of Immune Technologies,
Inc. (Immune) in exchange for certain assets of Immune. Immune had been
a client of the Company and the Company had advanced an aggregate of
$79,800 to Immune during 1997 and 1998 to assist in meeting that
company's working capital requirements. Immune, to date, has been
engaged in research and development of technology that it hopes to
utilize in the diagnosis and treatment of animal diseases. The assets
acquired from Immune consist of cash, inventory and fixed assets
aggregating $100,972 at the purchase date. The fair value of the stock
issued in the transaction amounted to $1,000,000. The excess of the fair
value of the purchase price over the assets acquired has been treated as
the purchase of research and development costs by the Company and has
been charged to expense during the current quarter.
During August 1998, the Company agreed to issued 1,900,000 shares of its
restricted common stock to the certain shareholders of Greengold
Corporation (Greengold) in exchange for 80% of the outstanding common
stock of Greengold. Greengold, to date, has been engaged in research and
development of technology that it hopes to utilize in the recycling and
disposal of animal waste with the first application being hog waste.
Additional applications of its technology are in the treatment of
industrial and municipal water and waste treatment facilities. The
assets and liabilities of Greengold consist of patent costs of $7,500 and
accounts payable of $28,649 at the acquisition date. The fair value of
the stock issued in the transaction amounted to $475,000. The excess of
the fair value of the purchase price over the assets acquired has been
treated as the purchase of research and development costs by the Company
and has been charged to expense during the current quarter.
<PAGE>32
PART II
INFORMATION NOT REQUIRED BY PROSPECTUS
Item 24. Indemnification of Officers and Directors.
The By-Laws of the Company provides that a director of the registrant shall
have no personal liability to the Registrant or its stockholders for
monetary damages for breach of a fiduciary duty as a director, except for
liability (a) for any breach of the director's duty of loyalty to the
Registrant or its stockholders, (b) for acts and omissions not in good
faith or which involve intentional misconduct or a knowing violation of
law, and (c) pursuant to Texas law for any transaction from which the
director derived an improper personal benefit. Registrant's By-Laws
exculpates and indemnifies the directors, officers, employees, and agents
of the registrant from and against certain liabilities. Further the By-
Laws also provides that the Registrant shall indemnify to the full extent
permitted under Nevada law any director, officer employee or agent of
Registrant who has served as a director, officer, employee or agent or the
Registrant or, at the Registrant's request,has served as a director,
officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise.
INDEMNIFICATION OF OFFICERS OR PERSONS CONTROLLING THE COMPANY FOR
LIABILITIES ARISING UNDER THE SECURITIES ACT OF 1933, IS HELD TO BE AGAINST
PUBLIC POLICY BY THE SECURITIES AND EXCHANGE COMMISSION AND IS THEREFORE
UNENFORCEABLE.
Item 25. Other Expenses of Issuance and Distribution.
Other expenses in connection with this offering which will be paid
by Immune Technologies, Inc. (hereinafter in this Part II referred to as
the "Company") are estimated to be substantially as follows:
<TABLE>
Amount
Payable
Item By Company
<S> <C>
S.E.C. Registration Fees 350.00
State Securities Laws (Blue Sky) Fees and Expenses .00
Printing and Engraving Fees 1,500.00
Legal Fees 15,000.00
Accounting Fees and Expenses 5,000.00
Transfer Agent's Fees 500.00
Miscellaneous 500.00
Total $22,850.00
</TABLE>
Item 26. Recent Sales of Unregistered Securities.
During the last three years, the Company issued the following Common Shares
pursuant to an exemption from registration under Section 4(2). The
issuances were made to sophisticated investors. The Company determined
the sophistication of the investors based on the Company's knowledge and
experience with the investors.
<TABLE>
<CAPTION>
Name Total Number cash
Date Issued of Common Shares payment
<S> <C> <C> <C>
Wilhelm Schleidt 5/20/96 1,000 2.75
Johnny Wong 7/19/96 3,000 2.625
Jared Mcgowan 8/29/96 1,000 2.812
Mark Mcalister 9/4/97 40,000 0.25 - reimbursed expenses
Mark Schklar 9/4/97 20,000 0.25 - reimbursed expenses
Michael Schklar 9/4/97 20,000 0.25 - reimbursed expenses
Johnny and Barbara Wong TTEES 9/4/97 20,000 0.25 - reimbursed expenses
Paul Spiegler and Renee
Spiegler JT TN 9/4/97 40,000 0.25
James Yanai 9/4/97 16,000 0.25
Kazu Fujita 9/4/97 20,000 0.25
John Polli 9/4/97 25,000 0.25
Mark Schklar 10/9/97 20,000 0.25
Michael Schklar 10/9/97 15,000 0.25
Mark Mcalister 12/8/97 60,000 0.25
Itsuo Shiotani 12/8/97 8,000 0.25
Elizabeth Gheen 1/23/98 48,000 0.3125
Mitsuo Tatsugawa Defined
Benefit 2/25/98 28,674 0.3125
James Yanai 2/25/98 15,000 0.3125
Johnny and Barbara
Wong TTEES 2/25/98 15,000 0.3125
Johnny and Barbara Wong
Immune Technologies 5/8/98 2,000,000 acquisition
Marcorp, Inc. 6/26/98 6,200 0.25
Larry Zonner 9/24/98 1,500 0.156
Parool A Vyas 9/24/98 2,000 0.156
Larry Zonner 10/16/98 4,500 0.16
Kieth Gold 10/21/98 40,936 0.187
Peter Polakoff 11/4/98 10,000 0.25
Nick Davidge 11/4/98 40,000 0.25
Tomas and Susan Lanzaro
JT TEN 4/28/98 40,000 0.375
Ronald Conklin 4/28/98 60,000 0.375
Anthony Bertrami 4/28/98 40,000 0.375
Harvey Brice 4/28/98 60,000 0.375
Leon Ruchlamer 4/28/98 100,000 0.375
Harvey Brice 11/18/98 66,666 0.375
Nick Davidge 11/20/98 20,000 0.5
Cynthia Levine 11/23/98 40,000 0.5
Anthony Bertrami 11/23/98 20,000 0.5
Lionel Nakisher 11/23/98 20,000 0.5
Yochanan Ben-Ner 12/15/98 60,000 0.468
Ralph and Carol Lynn
Kingrey 12/28/98 20,000 0.218
Kingrey JT TEN
Theodore Kolbert 12/28/98 6,000 0.218
<PAGE>33
Peter Polakoff 12/28/98 10,000 0.218
Ronald Conklin 12/28/98 20,000 0.218
Timothy Miles 12/28/98 1,731,421 0.19
L. Alan Schafler 12/28/98 500,000 0.16 - for services
Ann B Anderson 12/29/98 12,500 0.218
Jarrod Ray Kingrey 1/13/99 2,850 0.937
Bruce E Winter DTD 3-20-92 3/30/99 27,778 0.687
Bruce E Winter TTEE
Elizabeth Gheen 3/29/99 275,000 0.45 - reimbursed expenses
Alan Filson 3/29/99 132,000 0.45 - reimbursed expenses
Mitsuo Tatsugawa 3/29/99 250,000 0.45 - reimbursed expenses
Timothy Miles 3/29/99 125,000 0.45 - reimbursed expenses
Kevin Tatsugawa 3/29/99 11,250 0.45 - reimbursed expenses
Laurie Tatsugawa 3/29/99 17,500 0.45 - reimbursed expenses
</TABLE>
Item 27. Exhibit Index.
<TABLE>
<S> <C>
The following of exhibits are filed with this report:
(1) Not Applicable
(2) Articles of Incorporation incorporated by reference to Form 10SB
File Number 0-25792
(2.1) Articles of Merger incorporated by reference to Form 10SB,
File Number 0-25792
(2.2) Bylaws incorporated by reference to Form 10SB, File
Number 0-25792
(3) Common Stock Certificate incorporated by reference to Form
10SB, File Number 0-25792
(4) Not Applicable
(5) Not Applicable
(6) Consulting Agreement with Applied Cellular Technology
(formerly Axcom Information Technology, Inc.) incorporated
by reference to Form 10SB, File Number 0-25792
(6.1) Consulting Agreement with Level Best Golf, Inc. incorporated
by reference to Form 10SB, File Number 0-25792
(6.2) Consulting Agreement with Sports Legends, Inc. incorporated
by reference to Form 10SB, File Number 0-25792
(6.3) Consulting Agreement with Gaming Venture Corp. USA
incorporated by reference to Amendment 1 to Form 10SB,
File Number 0-25792
(6.4) Consulting Agreement with Grand Slam Licensing, Inc.
incorporated by reference to Form 10SB, File Number 0-25792
(6.5) Consulting Agreement with Trinity Works, Inc. incorporated
by reference to Amendment 1 to Form 10SB, File Number
0-25792
(6.6) Consulting Agreement with Players Network incorporated by
reference to Amendment 2 to Form 10SB, File Number 0-25792
(6.7) Consulting Agreement with National Sorbents, Inc. incorporated
by reference to Amendment 2 to Form 10SB, File Number 0-25792
(6.8) Consulting Agreement with Federated Financial Services, Inc.
incorporated by reference to Amendment 2 to Form 10SB, File
Number 0-25792
(7) Not Applicable
(8) Not Applicable
(9) Not Applicable
(10.1) Purchase and Sale Agreement dated May, 1998 between the Company
and Immune
Technologies, Inc.
(11) Not Applicable
(12) 1995 Non-Statutory Stock Option Plan incorporated by reference to
Amendment 3 to Form 10SB, File Number 0-25792
(13) Not Applicable
(14) Not Applicable
(15) Not Applicable
(16) Not Applicable
(17) Not Applicable
(18) Not Applicable
(19) Not Applicable
(20) Not Applicable
(21) Not Applicable
(22) Not Applicable
(23) Not Applicable
(24) Consent of James E. Scheifley & Associates, P.C.
(25) Not Applicable
(26) Not Applicable
(27) Financial Data Schedule
(28) Not Applicable
</TABLE>
Item 28. Undertaking.
The undersigned registrant hereby undertakes:
(a)(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this Registration Statement:
(I) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising after the
effective date of the Registration Statement (or the most recent post-
effective amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the formation set forth in the
Registration Statement.
(iii) To include any additional or changed material information on the
plan of distribution.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed
to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed
to be the initial bona fide offering thereof.
<PAGE>34
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.
(b) Delivery of Certificates. The undersigned registrant hereby undertakes
to provide to the Transfer Agent at the closing, certificates in such
denominations and registered in such names as are required by the Transfer
Agent to permit prompt delivery to each purchaser.
(c) Indemnification. Insofar as indemnification for liabilities arising
under the Securities Act of 1933 may be permitted to directors, officers
and controlling persons of the registrant pursuant to the provisions set
forth in the Company's Articles of Incorporation or otherwise, the
registrant has been advised that in the opinion of the Securities and
Exchange Commission, such indemnification is against public policy as
expressed in the Act and is, therefore, unenforceable. In the event that a
claim for indemnification against such liabilities (other than the payment
by the registrant of expenses incurred or paid by a director, officer or
controlling person of the registrant in the successful defense of any
action, suit or proceeding) is asserted by such director, officer or
controlling person in connection with the securities being registered, the
registrant will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against
public policy as expressed in the Act and will be governed by the final
adjudication of such issue.
<PAGE>35
SIGNATURES
In accordance with the requirements of the Securities Act of 1933, the
registrant certifies that it has reasonable grounds to believe that it
meets all of the requirements of filing on Form SB-2 and authorized this
registration statement to be signed on its behalf by the undersigned, in
the City of Jupiter, State of Florida on the 29th day of May, 1999.
BioNet Technologies, Inc.
/s/ L. Alan Schafler
--------------------------------
By: L. Alan Schafler, President
In accordance with the requirements of the Securities Act of 1933, this
registration statement was signed by the following persons in the
capacities and on the dates stated.
<TABLE>
Signature Capacity Date
<S> <C> <C>
/s/L. Alan Schafler Principal Executive Officer April 29, 1999
- ------------------- Principal Financial Officer
L. Alan Schafler Controller/Director
/s/Erich Schmid Director April 29, 1999
- -------------------
Eerich Schmid
/s/James Yanai Director April 29, 1999
- -------------------
James Yanai
</TABLE>
<PAGE>36
Jody M. Walker
7841 South Garfield Way
Littleton, Colorado 80122
Telephone (303) 850-7637
Facsimile (303) 220-9902
April 29, 1999
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Dear Sirs:
Re: OPINION RE: LEGALITY AND CONSENT OF COUNSEL TO USE OF NAME IN THE
REGISTRATION STATEMENT ON FORM SB-2 OF BIONET TECHNOLOGIES, INC..
I am securities counsel for the above mentioned Company and I have prepared
the amendment to the registration statement on Form SB-2. I hereby consent
to the inclusion and reference to my name in the Registration Statement on
Form SB-2 for BioNet Technologies, Inc..
It is my opinion that the securities of BioNet Technologies, Inc. and those
which are registered with the Securities and Exchange Commission pursuant
to Form SB-2 Registration Statement of BioNet Technologies. have been
legally issued and will be, when sold, legally issued, fully paid and non-
assessable.
Yours very truly,
/s/ Jody M. Walker
---------------------
Jody M. Walker
<PAGE>37
PURCHASE AND SALE AGREEMENT
This Agreement is entered into this day of May, 1998 by and between
Pratt, Wylce & Lords, Ltd., a Nevada corporation ("Pratt") and Immune
Technologies, Inc., a Nevada corporation ("Seller")
Whereas, Seller's business consists of the research, development and
marketing of products based on a new technology for the prevention and
adjuvant therapy of infectious diseases in animals with possible
applications to humans; and
Whereas, Buyer desires to purchase and Seller desires to sell certain
assets relating to its business which include but are not limited to:
a. An agreement between the Company and Lea Dowd dated October 3, 1994
pertaining to the exclusive right to manufacture and sell the "Dowd"
technology;
b. All rights currently owned by the Company regarding existing
testing, registration and future sale of products resulting from the "Dowd"
technology;
c. An employment agreement between the Company and Lea Dowd subject to
modifications which are mutually acceptable to Lea Dowd and Pratt;
d. All fixtures and equipment owned by the Company; and
e. Accounts receivable and other receivables.
(hereunder the "Sale Assets") upon the terms and conditions hereafter set
forth.
Now, Therefore, for the mutual consideration set out herein, the parties
agree as follows:
1. Transfer of Sale Assets. Subject to the terms and conditions hereof,
the Seller shall sell, assign and deliver to the Buyer, and the Buyer shall
purchase and accept from the Seller, on the closing date, all of the Sale
Assets as specifically set forth in Exhibit 1. Accounts receivable and
payable prior to closing date will be the responsibility of Seller.
2. Consideration. In consideration of the Sale Assets to be purchased
under this Agreement and all other things done and agreed to be done by the
Seller hereunder, the Buyer shall provide, on the Closing Date, 2,000,000
restricted voting common stock of Buyer.
3. Representations of Seller. Seller hereby represents and warrants, to
the extent of the facts known to Seller, that, effective this date and the
Closing Date, the representations listed below are true and correct.
3.1 Seller is the sole owner of the Sale Assets; such Sale Assets are
free from claims, liens or other encumbrances; and Seller has the
unqualified right to transfer and dispose of such Sale Assets.
3.2 To the best of Seller's knowledge, there are no actions, suits,
proceedings or investigations (whether or not purportedly on behalf of
Seller) pending or, threatened against or affecting Seller, at law, or in
equity or admiralty, or before or by any federal, state, municipal or other
governmental department, commission, board, bureau agency or
instrumentality, domestic or foreign, which involve the likelihood of any
adverse judgment of liability, not fully covered by insurance, in excess of
$5,000 in any one case or $10,000 in the aggregate, or which may result in
any material adverse change aside from a monetary adverse judgment or
liability) in the business, operations, properties or assets or in the
condition, financial or otherwise, of Seller, except in each as listed and
described in Exhibit 3.2 annexed hereto. To the best of Seller's
knowledge, Seller is not in default with respect to any order, writ,
injunction or decree of any court or federal, state, municipal or other
governmental department, commission, board, bureau, agency or
instrumentality, domestic or foreign.
3.3 Seller has, to its best knowledge, complied in all material
respects with all laws, regulations and judicial or administrative tribunal
orders applicable to its business of which it is aware.
3.4 All federal, state and local tax returns required to be filed by
Seller have been duly filed. Federal income tax returns of Seller have
been submitted to the Internal Revenue Service ("IRS") for all past fiscal
years through the calendar year ended in 1994. All deficiencies by any
taxing authority have either been paid or settled or are included in the
amounts for accrued taxes disclosed by Seller.
<PAGE>38
3.5 Since the date of this agreement there has not occurred:
(i) any material and adverse change in the financial condition or
operations of Seller;
(ii) any damage, destruction or loss to or of any of the material
assets or properties owned or leased by Seller;
(iii) any waiver, release, discharge, transfer, or cancellation by
Seller of any rights or claims of material value;
(iv) any issuance by Seller of any securities, or any merger or
consolidation of Seller with any other person, or any acquisition by
Seller of the business of any other person;
(v) any incurrence, assumption or guarantee by Seller of any
indebtedness or liability other than in the ordinary course of
business;
(vi) any declaration, setting aside or payment by Seller of any
dividends on, or any other distribution with respect to, any capital
stock of Seller or any repurchase, redemption, or other acquisition of
any capital stock of Seller;
(vii) (A) any payment of any bonus, profit sharing, pension or
similar payment or arrangement or special compensation to any employee
of Seller, except in the ordinary course of the business of Seller, or
(B) any increase in the compensation payable or to become payable to
any employee of Seller; or
3.6 Except as set forth in the documents listed or referred to in
Exhibits hereto, the execution and carrying out of this Agreement will not
conflict with, or result in any breach of any of the terms, or create a
charge or encumbrance upon any of the Sale Assets pursuant to any corporate
charter, by-law, indenture, mortgage or lease to which Seller or any of its
stockholders is a party or by which it is bound. The execution and
carrying out of this Agreement will not violate any provision of law.
3.7 Seller represents that none of the written information and
documents which have been or will be furnished by Seller or by any
representatives of Seller to Buyer or any of the representatives of Buyer
in connection with the transactions contemplated by this Agreement contains
or will contain, as the case may be, any untrue statement of a material
fact, or omits or will omit to state a material fact necessary in order to
make the statementstherein not misleading in light of the circumstances in
which made. To the knowledge of Seller, Seller has disclosed to Buyer as
the purchaser of the Sale Assets all material information relating to
Seller and its activities as currently conducted.
3.8 The representations and warranties made hereinabove in this Section 3
will be correct in all material respects on and as of the Closing Date with
thesame force and effect as though such representations and warranties had
been made on the Closing Date.
4. Representations by Buyer and Parent.
Buyer warrants and represents, to the extent of the facts known to Buyer
and Parent, that, effective this date and the Closing Date, the
representations listed below are true and correct.
4.1 Buyer is a corporation duly organized, validly existing and in
good standing under the laws of the State of Nevada. Buyer has no
subsidiaries:
4.2 The Board of Directors of Buyer have duly approved this Agreement.
4.3 Buyer's restricted common shares deliverable pursuant to this
Agreement shall be validly issued and outstanding, fully paid and
nonassessable.
4.4 The authorized capital stock of Buyer consists of 75,000,000
shares of Common Stock, $.001 par value, of which have been validly issued
and are outstanding as of January 31, 1998.
4.5 Annexed hereto as Exhibit 4.5 is the audited financial statements
dated January 31, 1998. The financial statements in Exhibit 4.5 are
substantially correct and complete and have been prepared in conformity
with generally accepted accounting principles applied on a consistent
basis. The financial statements present fairly the financial condition of
Parent and Buyer on a consolidated basis as of the respective dates of said
balance sheets and the results of operations for the respective periods
indicated in said statements of income and retained earnings and, in the
case of each such interim statement, is subject to year-end adjustments
consistent with past practice.
4.6 To the best of Buyer's knowledge, there are no actions, suits,
proceedings or investigations (whether or not purportedly on behalf of
Buyer) pending or, threatened against or affecting Buyer, at law, or in
equity or admiralty, or before or by any federal, state, municipal or other
governmental department, commission, board, bureau agency or
instrumentality, domestic or foreign, which involve the likelihood of any
adverse judgment of liability, not fully covered by insurance, in excess of
$5,000 in any one case or $10,000 in the aggregate, or which may result in
any material adverse change aside from a monetary adverse judgment or
liability) in the business, operations, properties or assets or in the
condition, financial or otherwise, of Buyer, except in each as listed and
described in Exhibit 4.6 annexed hereto. To the best of Buyer's knowledge,
Buyer is not in default with respect to any order, writ, injunction or
decree of any court or federal, state, municipal or other governmental
department, commission, board, bureau, agency or instrumentality, domestic
or foreign.
4.7 Buyer has complied in all material respects with all laws,
regulations and judicial or administrative tribunal orders applicable to
its business of which it is aware.
<PAGE>39
4.8 All federal, state and local tax returns required to be filed by
Buyer have been duly filed. Federal income tax returns of Buyer have been
submitted to the IRS for all past fiscal years through the fiscal year
ended in 1994. All deficiencies proposed by any taxing authority have
either been paid or settled or are included in the amounts for accrued
taxes shown on the respective balance (part of Exhibit 4.5 annexed hereto).
4.9 Since the date of the balance sheet there has not occurred:
(i) any material and adverse change in the financial condition or
operations of Buyer;
(ii) any damage, destruction or loss to or of any of the material
assets or properties owned or leased by Buyer;
(iii) the creation or attachment of any lien against the issued and
outstanding common stock of Buyer;
(iv) any waiver, release, discharge, transfer, or cancellation by
Buyer of any rights or claims of material value;
4.10 Except as set forth in the documents listed or referred to in
Exhibits hereto, the execution and carrying out of this Agreement will not
conflict with, or result in any breach of any of the terms, charge or
encumbrance upon any of the properties or assets, or outstanding stock of
Buyer pursuant to any corporate charter, by-law, indenture, mortgage or
lease to which Buyer or any of its stockholders is a party or by which it
is bound. The execution and carrying out of this Agreement will not
violate any provision of law.
4.11 None of the written information and documents which have been or
will be furnished by Buyer or any representatives of Buyer to Seller or any
of the representatives of Buyer in connection with the transactions
contemplated by this Agreement contains or will contain, as the case may
be, any untrue statement of a material fact, or omits or will omit to state
a material fact necessary in order to make the statements therein not
misleading in light of the circumstances in which made. To the knowledge
of Buyer, Buyer has disclosed to Seller as the purchaser of the Sale Assets
of Buyer all material information relating to Buyer and its activities as
currently conducted.
4.12 The representations and warranties made hereinabove in this
Section 4 will be correct in all material respects on and as of the Closing
Date with the same force and effect as though such representations and
warranties had been made on the Closing Date.
4.13 Buyer is fully aware of the condition and prospects, financial
and otherwise, of the Sale Assets of the Seller, having been supplied with
such financial and other data relating to the Seller as Buyer considered
necessary and advisable to enable it to form a decision concerning the
purchase herein provided.
4.14 Buyer has the full right, power and authority to purchase the
Sale Assets in accordance with the terms of this agreement and otherwise to
consummate and close the transaction provided for in this agreement in the
manner and upon the terms herein
specified.
4.15 Buyer represents that copies of all documents filed with the
Securities and Exchange Commission by Buyer for the past one year period
have been provided to Seller and that all representations contained therein
remain true and complete.
5. Closing Date.
The Closing Date herein referred to shall be upon such date as the parties
hereto may mutually agree upon but is expected to be during May, 1998. At
the Closing, Buyer will be provided with and accept delivery of the Sale
Assets, and in connection therewith, and will make payment of all sums due
to Seller. Certain closing documents may be delivered subsequent to the
Closing Date upon the mutual agreement of the parties hereto.
6. Conditions Precedent To the Obligations of Seller.
All obligations of Seller under this Agreement are subject to the
fulfillment, prior to or as of the Closing Date, of each of the following
conditions:
6.1 The negotiation and execution of employment agreements with a
principal of Seller on terms and conditions agreeable to the parties
thereto providing for a base salary, benefits and mutually agreed incentive
compensation based on performance measures.
6.2 The representations and warranties by Buyer contained in this
Agreement or in any certificate or document delivered to Seller pursuant to
the provisions hereof shall be true in all material respects at and as of
the time of Closing as though such representations and warranties were made
at and as of such time.
6.3 Buyer shall have performed and complied with all covenants,
agreements, and conditions required by this Agreement to be performed or
complied with by him prior to or at the Closing including the payment of
the Price in accordance with the terms hereof.
6.4 All instruments and documents delivered to Seller pursuant to the
provisions hereof shall be reasonably satisfactory to legal counsel for
Seller.
7. Conditions Precedent To The Obligations Of Parent and Buyer.
All obligations of Buyer under this Agreement are subject to the
fulfillment, prior to the or at the Closing on the Closing Date, of each of
the following conditions:
<PAGE>40
7.1 Buyer shall have received a duly executed Bill of Sale, free and
clear of all liens, pledges, charges, security interests, contractual
restrictions or encumbrances of any kind or character except as disclosed
herein.
7.2 Discussions acceptable to Buyer shall have been had with suppliers
and customers of the Seller, with the understanding that all discussions
and communications with such suppliers and customers will be with the
consent and cooperation of the Seller.
7.3 A financial review of Seller's books and records.
7.4 The representations and warranties by Seller contained in this
Agreement or in any certificate or document delivered to Buyer pursuant to
the provisions hereof shall be true at and as of the time of Closing as
though such representations and warranties were made at and as of such
time.
7.5 Seller shall have prepared and filed all governmental, tax or
related returns and reports due or required to be filed and have arranged
for payment of all taxes or assessments on the Sale Assets which have
become due as of Closing.
7.6 Seller shall have performed and complied with all other covenants,
agreement and conditions required by this Agreement to be performed or
complied with by it prior to or at the Closing.
8. Documents At Closing.
At the Closing, the following transactions shall occur, all of such
transaction being deemed to occur simultaneously:
8.1 Seller, as the case may be, will deliver, or cause to be
delivered, to Buyer the following:
a. a duly executed Bill of Sale, free and clear of all liens, pledges,
charges, security interests, contractual restrictions or encumbrances of
any kind or character except as disclosed herein.
b. certified copies of resolutions by Seller's board of directors or
executive committees thereof, thereunto duly authorized, authorizing this
transaction.
c. current financial statements showing no debts regarding the Sale
Assets of any substance not otherwise disclosed.
d. such other instruments, documents and certificates, if any, as are
required to be delivered pursuant to the provisions of this Agreement or
which may be reasonably requested in furtherance of the provisions of this
Agreement;
8.2 Buyer will deliver or cause to be delivered to Seller such other
instruments and documents as are required to be delivered pursuant to the
provisions of this Agreement or which may be reasonably requested in
furtherance of the provisions of this Agreement.
9. Miscellaneous
9.1 The respective representations of Seller and Buyer contained
herein or in any certificates delivered prior to or at Closing shall
survive for a period of three years from the Closing Date.
9.2 Further Assurances. At any time, and from time to time, after
the effective date, each party will execute such additional instruments and
take such action as may be reasonably requested by the other party to
confirm or perfect title to any property transferred hereunder or otherwise
to carry out the intent and purposes of this Agreement.
9.3 Waiver. Any failure on the part of any party hereto to comply
with any of its obligations, agreements or conditions hereunder may be
waived in writing by the party to whom such compliance is owed.
9.4 Arbitration. Any and all disputes and differences between or
among the parties with respect to the construction or performance of the
terms of this Agreement which cannot be resolved amicably shall be resolved
by arbitration before the American Arbitration Association in accordance
with its rules then obtaining sitting in Nevada.
9.5 Notices. All notices and other communications hereunder shall be
in writing and shall be deemed to have been given if delivered in person or
if sent by prepaid first class registered or certified mail, return receipt
requested, fax or recognized courier then upon receipt thereof to the
following addresses:
To Buyer:
Pratt, Wylce & Lords, Ltd.
Carolina Building #222
10 Office Park Road
Hilton Head Island, SC 29938
To Seller:
Immune Technologies, Inc.
6400 Bradley Park Drive
Suite A-4
Columbus, Georgia 31904
<PAGE>40
with copies to:
Jody M. Walker
Attorney At Law
7841 South Garfield Way
Littleton, Colorado 80122
9.6 Headings. The section and subsection headings in this Agreement
are inserted for convenience only and shall not affect in any way the
meaning or interpretation of this Agreement.
<PAGE>41
9.7 Counterparts. This Agreement may be executed simultaneously in
two or more counterparts, each of which shall be deemed an original, but
all of which together shall constitute one and the same instrument.
9.8 Governing Law. This Agreement shall be governed by the laws of
the State of South Carolina.
9.9 Binding Effect. This Agreement shall be binding upon the parties
hereto and inure to the benefit of the parties, their respective heirs,
administrators, executors, successors and assigns.
9.10 Entire Agreement. This Agreement is the entire agreement of
the parties covering everything agreed upon or understood in the
transaction. There are no oral promises, conditions, representations,
understandings, interpretations or terms of any kind as conditions or
inducements to the execution hereof.
9.11 Severability. If any part of this Agreement is deemed to be
unenforceable the balance of this Agreement shall remain in full force and
effect.
IN WITNESS WHEREOF, the parties have executed this Agreement the day and
year first above written.
SELLER:
Immune Technologies, Inc.
By:
BUYER:
Pratt, Wylce & Lords, Ltd.
By:L. Alan Schafler, President
<PAGE>42
AGREEMENT OF SALE/EXCHANGE
This Agreement is entered into this 18th day of August, by and between
Pratt, Wylce & Lords, Ltd., a Nevada corporation ("Buyer"), Paul
Skillicorn, William Spira, Bruce Hildebrand, David Smyth, General Alfred
Grey and Cecil Maynor (collectively, the "Sellers", or individually, a
"Seller") and The Greengold Corporation, a Minnesota corporation
("Acquiree").
Whereas, Sellers own Four Million (4,000,000) shares, $.001 par value (the
"Acquiree Shares"), of the issued and outstanding common stock of Acquiree
(representing 80% of the currently issued and outstanding common stock of
Acquiree). Sellers desire to sell and Buyer desires to purchase all of
the Acquiree Shares (the "Sale Shares").
Now, Therefore, for the mutual consideration set out herein, the parties
agree as follows:
1. Purchase and Sale of Acquiree Shares.
1.1 Sellers shall sell to Buyer and Buyer shall purchase from Sellers
the Sale Shares at a closing of such sale (the "Closing") to be held at the
place and on the date hereinafter provided (the "Closing Date").
1.2 The aggregate purchase price (the "Price") for the Sale Shares
shall be in the form of 1,900,000 restricted common shares of Buyer, each
Seller to receive a pro-rata number of shares based upon the number of
Greengold shares owned. This exchange of shares is intended to be a tax-
deferred exchange pursuant to Section 1031 of the IRS Tax Code. This
represents approximately 1 share of buyer's shares for each 2.105263
Greengold shares owned.
The undersigned agrees that if Acquiree fails to achieve a minimum of
$500,000 in earnings before taxes by the end of the fiscal year following
a period of 36 months from the Closing Dates, Sellers agree to surrender a
total of 950,000 Common Shares back to Buyer. If, however, Buyer fails to
facilitate the raising of $500,000 through an offering pursuant to
Regulation D, Rule 504 within six months of the Closing Date, the surrender
to Buyer shall be reduced by 50% to a total of 475,000 Common Shares.
Additionally, the Common Shares of Buyer issued in exchange for the Sale
Shares will be subject to the resale limitations of Rule 144. Once the
Common Shares become salable without limitation under Rule 144K, Sellers
agree that the Common Shares will be further restricted to a rate of
liquidation not to exceed the greater of 5,000 shares per month or 2 1/2%
of the previous month's total trading volume, whichever is greater without
prior approval of the Buyer.
1.3 At the Closing Date, each Seller will deliver a certificate
representing the Sale Shares duly endorsed so as to make Buyer the sole
holder thereof, free and clear of all claims and encumbrances. The Sale
Shares are not registered under the Securities Act of 1933 as amended (the
"Act"). The Sale Shares will be subject to a usual and appropriate stop
transfer order on the books and records of Acquiree's transfer agent
pertaining to securities not registered under the Act. The certificate
for the Sale Shares delivered shall bear on its face the following
restrictive legend:
"No sale, offer to sell or transfer of the shares represented by this
certificate shall be made unless a registration statement under the
Securities Act of 1933, as amended, with respect to such shares is then in
effect or an exemption from the registration requirements of such Act is
then in fact applicable to such shares."
5. Representations of Sellers.
Sellers hereby represents and warrants, to the extent of the facts known to
Sellers and Acquiree, that, effective this date and the Closing Date, the
representations listed below are true and correct.
Sellers are the sole owners of 80% of the issued and outstanding shares of
The
Greengold Corporation. Share ownership is as follows:
Name and Address Cert. No. Issue Date No. of Shares
William M. Spira
14221 Park Ave. S. 05 5/15/97 1,498,500
Burnsville, MN 55337 01 8/20/95 1,500
Ttl: 1,500,000
New 1,601,281
Paul W. Skillicorn
13012 Herald Circle 02 8/20/95 1,500
Apple Valley, MN 55124 06 5/15/97 1,498,500
Ttl: 1,500,000
New 1,601,281
J. Bruce Hildebrand
8634 Vernon Avenue 03 4/17/97 300
Alexandria, VA 22309 07 5/15/97 299,700
Ttl: 300,000
New 320,257
David D. Smyth II 04 4/17/97 300
535 Seventh St. SE 08 5/15/97 299,700
Washington, DC 20003 10(1) 2/7/98 34,500
Ttl:: 357,085
New 83,267
Cecil H. Maynor, Jr.
229 Kenway Loop
Mooresville, NC 28115 09 11/8/97 78,000
Ttl: 78,000
New 36,829
<PAGE>43
General Alfred M. Gray
6317 Chaucer View Circle Landmark Mews
Alexandria, VA 22304 11 4/30/98 34,500
Ttl: 34,500
New 36,829
Outstanding: 4,000,000
5.1 These Acquiree Shares are free from claims, liens or other
encumbrances; and Sellers have the unqualified right to transfer and
dispose of such shares.
5.2 The Sale Shares constitute validly issued shares of Acquiree fully
paid and nonassessable.
5.3 Annexed hereto as Exhibit 5.3 are the unaudited financial statements
dated June 30, 1998 of the Acquiree. The financial statements in Exhibit
5.3 are substantially correct and complete and have been prepared in
conformity with generally accepted accounting principles applied on a
consistent basis. The financial statements present fairly the financial
condition of Acquiree of the respective dates of said balance sheets and
the results of operations for the respective periods indicated in said
statements of income and retained earnings and, in the case of each such
interim statement, is subject to year-end adjustments consistent with past
practice.
5.4 To the best of Acquiree's knowledge, there are no actions, suits,
proceedings or investigations (whether or not purportedly on behalf of
Acquiree) pending or, threatened against or affecting Acquiree, at law, or
in equity or admiralty, or before or by any federal, state, municipal or
other governmental department, commission, board, bureau agency or
instrumentality, domestic or foreign, which involve the likelihood of any
adverse judgment of liability, not fully covered by insurance, in excess of
$5,000 in any one case or $10,000 in the aggregate, or which may result in
any material adverse change aside from a monetary adverse judgment or
liability) in the business, operations, properties or assets or in the
condition, financial or otherwise, of Acquiree, except in each as listed
and described in Exhibit 5.4 annexed hereto. To the best of Acquiree's
knowledge, Acquiree is not in default with respect to any order, writ,
injunction or decree of any court or federal, state, municipal or other
governmental department, commission, board, bureau, agency or
instrumentality, domestic or foreign.
5.5 Acquiree has, to its best knowledge, complied in all material
respects with all laws, regulations and judicial or administrative tribunal
orders applicable to its business of which it is aware except as described
in Exhibit 5.5.
5.6 All federal, state and local tax returns required to be filed by
Acquiree have been duly filed. Federal income tax returns of Acquiree have
been submitted to the Internal Revenue Service ("IRS") for all past fiscal
years through the calendar year ended in 1997. All deficiencies by any
taxing authority have either been paid or settled or are included in the
amounts for accrued taxes shown on the respective balance sheet (part of
Exhibit 5.6 annexed hereto).
5.7 Acquiree and Sellers agree that any and all tax deficiencies
disclosed on the balance sheet will be paid or settled prior to Closing.
5.8 Since the date of the balance sheet there has not occurred:
(i) any material and adverse change in the financial condition or
operations of Acquiree;
(ii) any damage, destruction or loss to or of any of the material
assets or properties owned or leased by Acquiree;
(iii) the creation or attachment of any lien against any of the
currently issued and distributed common stock Acquiree;
(iv) any waiver, release, discharge, transfer, or cancellation by
Acquiree of any rights or claims of material value;
(v) any issuance by Acquiree of any securities, or any merger or
consolidation of Acquiree with any other person, or any acquisition by
Acquiree of the business of any other person;
(vi) any incurrence, assumption or guarantee by Acquiree of any
indebtedness or liability other than in the ordinary course of
business;
(vii) any declaration, setting aside or payment by Acquiree of any
dividends on, or any other distribution with respect to, any capital
stock of Acquiree or any repurchase, redemption, or other acquisition
of any capital stock of Acquiree;
(viii) (A) any payment of any bonus, profit sharing, pension or
similar payment or arrangement or special compensation to any employee
of Acquiree, except in the ordinary course of the business of Acquiree,
or (B) any increase in the compensation payable or to become payable to
any employee of Acquiree; or
5.9 Except as set forth in the documents listed or referred to in
Exhibits hereto, the execution and carrying out of this Agreement will not
conflict with, or result in any breach of any of the terms, or create a
charge or encumbrance upon any of the properties or assets, or outstanding
stock of Acquiree pursuant to any corporate charter, by-law, indenture,
mortgage or lease to which Acquiree or any of its stockholders is a party
or by which it is bound. The execution and carrying out of this Agreement
will not violate any provision of law.
<PAGE>44
5.10 To the best knowledge of Sellers and Acquiree, none of the written
information and documents which have been or will be furnished by Acquiree
or by any representatives of Acquiree to Buyer or any of the
representatives of Buyer in connection with the transactions contemplated
by this Agreement contains or will contain, as the case may be, any untrue
statement of a material fact, or omits or will omit to state a material
fact necessary in order to make the statements therein not misleading in
light of the circumstances in which made. To the knowledge of Acquiree,
Acquiree has disclosed to Buyer as the purchaser of the Sale Shares all
material information relating to Acquiree and its activities as currently
conducted.
5.11 The representations and warranties made hereinabove in this Section
5 will be correct in all material respects on and as of the Closing Date
with the same force and effect as though such representations and
warranties had been made on the Closing Date.
5.12 The Acquiree is authorized to issue 10,000,000 shares of common
stock, no par value, of which 5,000,000 shares are issued and outstanding.
Acquiree has only one class of capital stock and all outstanding shares
have been duly authorized, validly issued and are fully paid and
nonassessable with no personal liability attaching to the ownership
thereof.
There are no outstanding convertible securities, warrants, options or
commitments of any nature which may cause authorized but unissued shares to
be issued to any person.
<PAGE>45
5.13 Seller represents that the technology known as Aquatic Macrophyte
Cultivation Apparatus, Patent # 5,636,472 has been assigned to Greengold
and is free of any leins or encumbrances.
6. Representations by Buyer.
Buyer warrants and represents, to the extent of the facts known to Buyer,
that, effective this date and the Closing Date, the representations listed
below are true and correct.
6.1 Buyer is a corporation duly organized, validly existing and in
good standing under the laws of the State of Nevada. Buyer has no
subsidiaries.
6.2 The Board of Directors of Buyer have duly approved this Agreement.
6.3 The Buyer's restricted common shares deliverable pursuant to this
Agreement shall be validly issued and outstanding, fully paid and
nonassessable.
6.4 The authorized capital stock of Buyer consists of 75,000,000
shares of Common Stock, $.001 par value, 5,243,470 of which have been
validly issued and are outstanding and 1,696,330 of those are freely
tradable without restriction or further registration under the Securities
Act of 1933.
6.5 Annexed hereto as Exhibit 6.5 is the audited financial statements
dated January 31, 1998.
6.6 To the best of Buyer's knowledge, there are no actions, suits,
proceedings or investigations (whether or not purportedly on behalf of
Buyer) pending or, threatened against or affecting Buyer, at law, or in
equity or admiralty, or before or by any federal, state, municipal or other
governmental department, commission, board, bureau agency or
instrumentality, domestic or foreign, which involve the likelihood of any
adverse judgment of liability, not fully covered by insurance, in excess of
$5,000 in any one case or $10,000 in the aggregate, or which may result in
any material adverse change aside from a monetary adverse judgment or
liability) in the business, operations, properties or assets or in the
condition, financial or otherwise, of Buyer, except in each as listed and
described in Exhibit 6.6 annexed hereto. To the best of Buyer's knowledge,
Buyer is not in default with respect to any order, writ, injunction or
decree of any court or federal, state, municipal or other governmental
department, commission, board, bureau, agency or instrumentality, domestic
or foreign.
6.7 Buyer has complied in all material respects with all laws,
regulations and judicial or administrative tribunal orders applicable to
its business of which it is aware.
6.8 All federal, state and local tax returns required to be filed by
Buyer have been duly filed. Federal income tax returns of Buyer have been
submitted to the IRS for all past fiscal years through the fiscal year
ended in 1997. All deficiencies proposed by any taxing authority have
either been paid or settled or are included in the amounts for accrued
taxes shown on the respective balance (part of Exhibit 6.5 annexed hereto).
6.9 Since the date of the balance sheet there has not occurred:
(i) any material and adverse change in the financial condition or
operations of Buyer;
(ii) any damage, destruction or loss to or of any of the material assets
or properties owned or leased by Buyer;
(iii) the creation or attachment of any lien against the issued and
outstanding common stock of Buyer;
(iv) any waiver, release, discharge, transfer, or cancellation by Buyer
of any rights or claims of material value;
(v) any issuance by Buyer of any securities, or any merger or
consolidation of Buyer with any other person, or any acquisition by Buyer
of the business of any other person;
(vi) any incurrence, assumption or guarantee by Buyer of any indebtedness
or liability, except in the ordinary course of business;
<PAGE>45
(vii) any declaration, setting aside or payment by Buyer of any dividends
on, or any other distribution with respect to, any capital stock of Buyer
or any repurchase, redemption, or other acquisition of any capital stock of
Buyer;
(viii) (A) any payment of any bonus, profit sharing, pension or
similar payment or arrangement or special compensation to any employee
of Buyer, except in the ordinary course of the administration of Buyer,
or (B) any increase in the compensation payable or to become payable to
any employee of Buyer; or
6.10 Except as set forth in the documents listed or referred to in
Exhibits hereto, the execution and carrying out of this Agreement will not
conflict with, or result in any breach of any of the terms, charge or
encumbrance upon any of the properties or assets, or outstanding stock of
Buyer pursuant to any corporate charter, by-law, indenture, mortgage or
lease to which Buyer or any of its stockholders is a party or by which it
is bound. The execution and carrying out of this Agreement will not
violate any provision of law.
6.11 None of the written information and documents which have been or
will be furnished by Buyer or any representatives of Buyer to Seller or any
of the representatives of Buyer in connection with the transactions
contemplated by this Agreement contains or will contain, as the case may
be, any untrue statement of a material fact, or omits or will omit to state
a material fact necessary in order to make the statements therein not
misleading in light of the circumstances in which made. To the knowledge
of Buyer, Buyer has disclosed to Sellers as the purchaser of the common
stock of Buyer all material information relating to Buyer and its
activities as currently conducted.
6.12 The representations and warranties made hereinabove in this
Section 6 will be correct in all material respects on and as of the Closing
Date with the same force and effect as though such representations and
warranties had been made on the Closing Date.
6.13 Buyer is fully aware of the condition and prospects, financial
and otherwise, of the Acquiree, having been supplied with such financial
and other data relating to the Acquiree as Buyer considered necessary and
advisable to enable it to form a decision concerning the purchase herein
provided.
6.14 Buyer is fully aware that the Sale Shares, when delivered, will
not have been registered under the Act; that accordingly no sale, offer to
sell or transfer of the Sale Shares shall be made unless a registration
statement under the Act with respect to the Sale Shares is then in effect
or an exemption from the registration requirements of the Act is then in
fact applicable to the Sale Shares or, in the opinion of Acquiree's
counsel, registration is not required.
6.15 Buyer has been fully advised by Sellers that Sellers will sell
the Sale Shares to Buyer without registration under the Act on the basis of
the statutory exemption in Section 4(2) of the Act relating to transactions
not involving a public offering and that Seller's reliance upon the
statutory exemption is based in large part upon Buyer's representations
made in this Agreement.
6.16 Buyer is acquiring the Sale Shares for investment for its own
account and not with a view to resell or otherwise distribute the Sale
Shares. In making the foregoing representations, Buyer understands that,
in the view of the Securities and Exchange Commission, the statutory
exemption under Section 4(2) would not be available if, notwithstanding
Buyer's representations, it had in mind merely acquiring the Sale Shares
for resale upon the occurrence or nonoccurrence of some predetermined
event.
6.17 Buyer has the full right, power and authority to purchase the
Sale Shares in accordance with the terms of this agreement and otherwise to
consummate and close the transaction provided for in this agreement in the
manner and upon the terms herein specified.
6.18 Buyer is acquiring the Sale Shares for the purpose of controlling
Acquiree.
6.19 Buyer represents that copies of all documents filed with the
Securities and Exchange Commission for the past one year period have been
provided to Sellers and that all representations contained therein remain
true and complete.
6.20 Buyer represents that all documents filed with the Securities and
Exchange Commission and the representations of Buyer in this Agreement do
not contain a material misstatement of fact or omission of fact..
7. Closing Date.
The Closing Date herein referred to shall be upon such date as the
parties hereto may mutually agree upon but is expected to be during August,
1998. At the Closing, Buyer will be provided with and accept delivery of
the Sale Shares, and in connection therewith, and will make payment of all
sums due to Sellers. Certain closing documents may be delivered
subsequent to the Closing Date upon the mutual agreement of the parties
hereto.
8. Conditions Precedent To the Obligations of Sellers.
All obligations of Sellers under this Agreement are subject to the
fulfillment, prior to or as of the Closing Date, of each of the following
conditions:
8.1 The negotiation and execution of employment agreement between Buyer,
Acquiree and Paul Skillicorn (a Seller) on terms and conditions agreeable
to the parties thereto providing for a term of three years with a mutually
acceptable salary plus a series of convertible preferred shares which will
convert into unregistered common shares in Buyer upon reaching certain
agreed upon profit levels. Additionally, the employment agreement will
call for a 15-year royalty of 1.5% of gross revenues generated as a direct
<PAGE>46
result of any patents which Mr. Skillicorn has or will develop. The
agreement will also state that any future patents which Mr. Skillicorn
files while employed by Acquiree will become property of Acquiree. Said
employment agreement is attached as Exhibit 8.1.
8.2 The representations and warranties by Buyer contained in this
Agreement or in any certificate or document delivered to Sellers pursuant
to the provisions hereof shall be true in all material respects at and as
of the time of Closing as though such representations and warranties were
made at and as of such time.
8.3 Buyer shall have performed and complied with all covenants,
agreements, and conditions required by this Agreement to be performed or
complied with by him prior to or at the Closing including the payment of
the Price in accordance with the terms hereof.
8.5 Sellers shall nominate one individual to serve on the Board of
Directors of Buyer upon filing of the form N-54C until the next election of
Directors by the shareholders.
8.6 Buyer has prepared and filed a Proxy statement with the Securities
and Exchange Commission pursuant to Regulation 14D. The proxy carries a
vote to change the business of Buyer so as to no longer be an Investment
Company as defined in the Investment Company Act of 1940.
8.7 Subsequent to the approval of the Proxy, Buyer shall file a form
N-54C to withdraw its election to act as a Business Development Company.
8.8 All instruments and documents delivered to Sellers pursuant to the
provisions hereof shall be reasonably satisfactory to legal counsel for
Sellers.
9. Conditions Precedent To The Obligations Of Buyer.
All obligations of Buyer under this Agreement are subject to the
fulfillment, prior to the or at the Closing on the Closing Date, of each of
the following conditions:
9.1 A financial review of Acquiree's books and records to confirm that
two years of audited financials can be obtained.
9.2 The representations and warranties by Sellers contained in this
Agreement or in any certificate or document delivered to Buyer pursuant to
the provisions hereof shall be true at and as of the time of Closing as
though such representations and warranties were made at and as of such
time.
9.3 Acquiree and Sellers shall have performed and complied with all
other covenants, agreement and conditions required by this Agreement to be
performed or complied with by them prior to or at the Closing.
10. Documents At Closing.
At the Closing, the following transactions shall occur, all of such
transaction being deemed to occur simultaneously:
10.1 Sellers and Acquiree, as the case may be, will deliver, or cause
to be delivered, to Buyer the following:
a. stock certificates for the Sale Shares, duly endorsed in blank with
appropriate signature guarantees.
b. all records of Acquiree, including without limitation such books
and records, charter documents and Minnesota certificate of good standing,
as may reasonably be available to Sellers and requested by Buyer.
c. certified copies of resolutions by Seller's and Acquiree's boards
of directors or executive committees thereof, thereunto duly authorized,
authorizing this transaction.
d. a copy of a reasonably current shareholder list of Acquiree
certifying the number of shares outstanding.
e. current financial statements as of June 30, 1998, in addition to
those provided by Exhibit 5.3 of Acquiree showing no assets or debts of any
substance not otherwise disclosed, except for such sums as may be owed to
Acquiree's transfer agent and certain nominal state taxes.
f. such other instruments, documents and certificates, if any, as are
required to be delivered pursuant to the provisions of this Agreement or
which may be reasonably requested in furtherance of the provisions of this
Agreement;
10.2 Buyer will deliver or cause to be delivered to Sellers such other
instruments and documents as are required to be delivered pursuant to the
provisions of this Agreement or which may be reasonably requested in
furtherance of the provisions of this Agreement.
11. Miscellaneous
11.1 Prior to Closing, Paul Skillicorn shall enter into an employment
agreement with Acquiree under the terms outlined in Exhibit 8.1.
11.2 The respective representation of Sellers and Buyer contained
herein or in any certificates delivered prior to or at Closing shall
survive for a period of eighteen months from the Closing Date.
11.3 Further Assurances. At any time, and from time to time, after
the effective date, each party will execute such additional instruments and
take such action as may be reasonably requested by the other party to
confirm or perfect title to any property transferred hereunder or otherwise
to carry out the intent and purposes of this Agreement.
11.4 Waiver. Any failure on the part of any party hereto to comply
with any of its obligations, agreements or conditions hereunder may be
waived in writing by the party to whom such compliance is owed.
<PAGE>47
11.5 Arbitration. Any and all disputes and differences between or
among the parties with respect to the construction or performance of the
terms of this Agreement which cannot be resolved amicably shall be resolved
by arbitration before the American Arbitration Association in accordance
with its rules then obtaining sitting in Florida
11.6 Notices. All notices and other communications hereunder shall
be in writing and shall be deemed to have been given if delivered in person
or if sent by prepaid first class registered or certified mail, return
receipt requested, fax or recognized courier then upon receipt thereof to
the following addresses:
To Sellers:
Paul Skillicorn
13012 Herald Circle
Apple Valley, MN 55124
William Spria
13012 Herald Circle
Apple Valley, MN 55124
J. Bruce Hildebrand
8634 Vernon Avenue
Alexandria, VA 22309
David D. Smyth II
535 Seventh St. SE
Washington, DC 20003
Cecil H. Maynor, Jr.
229 Kenway Loop
Mooresville, NC 28115
General Alfred M. Gray
6317 Chaucer View Circle
Landmark Mews
Alexandria, VA 22304
with copies to:
To Acquiree: Minnesota Corporation
13012 Herald Circle
Apple Valley, MN 55124
To Buyer: Pratt, Wylce & Lords, Ltd.
2035 Staysail Lane
Jupiter, FL 33477
with copies to:
Jody M. Walker
Attorney At Law
7841 South Garfield Way
Littleton, Colorado 80122
11.7 Headings. The section and subsection headings in this Agreement
are inserted for convenience only and shall not affect in any way the
meaning or interpretation of this Agreement.
11.8 Counterparts. This Agreement may be executed simultaneously in
two or more counterparts, each of which shall be deemed an original, but
all of which together shall constitute one and the same instrument.
11.9 Governing Law. The laws of the State of Florida shall govern
this Agreement.
11.10 Binding Effect. This Agreement shall be binding upon the
parties hereto and inure to the benefit of the parties, their respective
heirs, administrators, executors, successors and assigns.
11.11 Entire Agreement. This Agreement is the entire agreement of
the parties covering everything agreed upon or understood in the
transaction. There are no oral promises, conditions, representations,
understandings, interpretations or terms of any kind as conditions or
inducements to the execution hereof.
11.12 Severability. If any part of this Agreement is deemed to be
unenforceable the balance of this Agreement shall remain in full force and
effect.
IN WITNESS WHEREOF, the parties have executed this Agreement the day and
year first above written.
SELLERS:
- ---------------------------------- --------------------------
William Spira Paul Skillicorn
- ---------------------------------- --------------------------
Bruce Hildebrand David Smyth
- ---------------------------------- --------------------------
General Alfred Grey Cecil Maynor
ACQUIREE:
Minnesota Corporation
- --------------------------------- ------------------------
By: Paul Skillicorn, President William Spria, President
BUYER:
Pratt, Wylce & Lords, Ltd.
- --------------------------------
By: L. Alan Schafler, President
<PAGE>48
INDEPENDENT AUDITOR'S CONSENT
We do hereby consent to the use of our report dated August 28, 1998 on the
financial statements of BioNet Technologies, Inc. included in and made part
of the registration statement of BioNet Technologies, Inc. dated April 29,
1999.
April 29, 1999
/s/ James E. Scheifley & Associates, P.C.
Certified Public Accountant
<TABLE> <S> <C>
<ARTICLE> 5
<CAPTION>
<S> <C>
<PERIOD-TYPE> 9-MOs
<FISCAL-YEAR-END> JAN-31-1999
<PERIOD-END> OCT-31-1998
<CASH> 60,202
<SECURITIES> 175,838
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 11,890
<CURRENT-ASSETS> 248,630
<PP&E> 98,465
<DEPRECIATION> (9,562)
<TOTAL-ASSETS> 358,421
<CURRENT-LIABILITIES> 83,826
<BONDS> 0
<COMMON> 7,247
0
0
<OTHER-SE> 33,378
<TOTAL-LIABILITY-AND-EQUITY> 358,421
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 673,134
<OTHER-EXPENSES> 1,517
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (667,058)
<INCOME-TAX> 0
<INCOME-CONTINUING> (667,058)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (667,058)
<EPS-PRIMARY> (.09)
<EPS-DILUTED> (.09)
</TABLE>
