U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-KSB/A
Amendment No. 1
ANNUAL REPORT UNDER SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended June 30, 2000
Commission file number 033-25900
Virtual Academics.com, Inc.
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(Name of Small Business Issuer in its Charter)
Delaware 75-2228820
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(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
6421 Congress Ave, Suite 201, Boca Raton, Florida 33487
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(Address of Principal Executive Offices) (Zip Code)
(561) 994-4446
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(Issuer's Telephone Number)
Securities registered under Section 12(b)
of the Act:
Securities registered under Section 12(g) of the Exchange Act:
None
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15 (d) of the Exchange Act during the past 12 months (or for such shorter
period that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days.
Yes [ ] No [X]
Check if there is no disclosure of delinquent filers in response to Item 405 of
Regulation S-B contained in this form, and no disclosure will be contained, to
the best of the registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-KSB or any
amendment to this Form 10-KSB. [ ]
State issuer's revenues for its most recent fiscal year. $1,150,664.
State the aggregate market value of the voting stock held by non-affiliates
computed by reference to the price at which the stock was sold, or the average
bid and asked prices of such stock, as of a specified date within the past 60
days. $8,186,888.25 based on a price of $2.25 per share as of October 2, 2000.
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(APPLICABLE ONLY TO CORPORATE REGISTRANTS)
State the number of shares outstanding of each of the issuer's classes of common
equity, as of the latest practicable date: October 2, 2000: 7,578,617 shares of
common stock.
DOCUMENTS INCORPORATED BY REFERENCE
None
Transitional Small Business Disclosure Format (Check One)
Yes ____ No X
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PART I
ITEM 1. DESCRIPTION OF BUSINESS
BACKGROUND
Through its subsidiaries, Virtual Academics.com, Inc. (the "Company" or
"VADC") is engaged in the online distance learning industry with a focus on the
international, second-career adult and corporate training markets. Management of
VADC has been engaged in this business since 1993, through various predecessor
entities (the "Predecessors"). VADC owns and operates online distance learning
universities which offer more than 1,000 accredited and licensed degree programs
in a variety of concentrations to students from 43 countries worldwide. VADC is
licensed by the State Education Department of the State of Alabama and
recognized by the provincially-run education agencies of China, Canada and
Egypt. VADC operates one of the largest international educational portals
located at www.virtualacademics.com.
VADC was incorporated in the State of Delaware in 1988 but had no
significant business operations until December 1999, when Steven Bettinger and
Robert Bettinger, acquired approximately 66 2/3% of the outstanding common stock
of the Predecessors from a former principal stockholder. Messrs. Bettinger then
contributed their membership interests in the Predecessors to the Company, which
changed its name to Virtual Academics.com, Inc. in January 2000. VADC's
executive offices are located at 6421 Congress Ave, Suite 201, Boca Raton,
Florida 33487 and its telephone number is (561) 994-4446.
STRATEGY
VADC's goal is to strengthen its leadership position within the rapidly
growing online distance education industry, estimated at $5.5 billion by Piper
Jaffray, who is projecting a $50 billion industry by 2005. Key components of
VADC's strategy include:
Marketing Relationships with Business Entities. VADC has realized
growth from marketing relationships with businesses which reimburse employees to
take educational courses, including:
First Union Bank;
Prentice Hall;
Kaplan, Inc.;
The United Electrical Contractors; and
Citibank.
Typically, VADC provides customized distance learning educational
services through its partners or to the workforce of its partners. Frequently,
VADC's corporate partners sponsor students by paying directly or reimbursing
their employees' educational efforts.
Forge Strategic Alliances with State-owned Educational Institutions
Worldwide. Through alliances such as an agreement with Renmin University, a
government-sponsored group of 30 universities in the Peoples Republic of China,
VADC can offer dual-degree programs online throughout the world. VADC
anticipates growth in this and other initiatives in Asia, and has plans to
expand into Latin America.
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Expand Global Enrollment and Recruitment Program. VADC intends to
increase its enrollment through a team of recruiters. The recruiters are based
in areas characterized by a high population of students, including:
Canada;
Malaysia;
Argentina;
Spain;
China;
Japan;
Mexico;
Korea;
Brazil; and
Venezuela
VADC pays each recruiter a referral fee for every student enrolled in
one of its courses. VADC intends to continue to develop relationships with
additional recruiters in geographic areas where it is not currently represented.
Expand through Acquisition. VADC intends to acquire brick and mortar
educational institutions so that it may offer their traditional curricula
online. VADC also intends to acquire carefully selected Internet-based
educational institutions. While VADC is currently exploring certain
acquisitions, VADC is not party to any definitive agreements.
Provide Turnkey e-Business Solutions. Utilizing resources obtained
through its educational partnerships, such as linguistics experts and web design
professionals, VADC's Global e-Business division has the ability to provide
turnkey e-commerce services to American businesses which desire to expand their
presence abroad.
MARKET
The United States and international education market may be divided
into the following segments:
o kindergarten through twelfth grade (and overseas counterparts)
schools ("K-12");
o vocational and technical training schools;
o workplace and consumer training; and
o degree-granting colleges and universities ("Higher
Education").
VADC operates in the Higher Education and workplace and consumer
training segments. The U.S. Department of Education estimated that adults over
24 years of age comprised approximately 6.1 million, or 39.2%, of the 15.5
million students enrolled in Higher Education programs in 1998. Currently, the
U.S. Bureau of Census estimates that approximately 76% of students over the age
of 24 work while attending school. The Department of Education estimates that by
the year 2003, the number of adult students over the age of 24 will remain
approximately the same at 6.1 million, or 40.3%, of the 15.2 million students
projected to be enrolled in Higher Education programs.
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VADC serves the needs of mid-career, working adults, American and
foreign, including:
o Convenient access to a learning environment (primarily through
its Internet-based delivery system);
o Degree programs offered by accredited institutions that can be
completed in a reasonable amount of time for a reasonable
cost;
o Programs that provide knowledge and skills with immediate
practical value in the workplace;
o Education provided by qualified faculty members with current
practical experience in fields related to the subjects they
instruct; and
o Learning resources available electronically to all students in
many languages regardless of geographical location.
VADC believes that the requirements of the adult working population
represent a significant market opportunity to accredited Higher Education
institutions that can offer programs that meet these unique needs.
Most colleges and universities feature a more capital-intensive
teaching and learning model characterized by:
o dormitories, student unions and other significant plant assets
to support the needs of students;
o fully-configured library facilities and related full-time
staff;
o a high percentage of full-time tenured faculty with doctoral
degrees; and
o an emphasis on research and the related staff and facilities.
In addition, the majority of colleges and universities provide the bulk
of their educational programming from September to mid-December and from
mid-January to May. As a result, most full-time faculty members only teach
during that limited period of time. While this structure serves the needs of the
full-time 18 to 24 year old student, it limits the educational opportunity for
working adults who must delay their education for up to five months during these
spring, summer and winter breaks. In addition, this structure generally requires
working adults to attend one or more courses three times a week, commute to a
central site, take work time to complete administrative requirements and, in
undergraduate programs, participate passively in an almost exclusively
lecture-based learning format primarily focused on a theoretical presentation of
the subject matter. For the majority of working adults, earning an undergraduate
degree in this manner would take seven to ten years. In recent years, many
regionally accredited colleges and universities have begun offering more
flexible programs for working adults, although their focus appears to remain on
18 to 24-year old students.
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VADC EDUCATIONAL ENTITIES
VADC owns and operates several educational entities, including:
o Virtual Academics.com - www.virtualacademics.com is a portal
site that represents all of VADC's products, services and
alliances that offer corporate training and degree granting
institutions.
o Barrington University - Founded in 1991, Barrington is
licensed by the State of Alabama Department of Education and
accredited by the International Association of Universities
and Schools, a non-profit, independent accreditation
association. Barrington is a member of several international
educational organizations.
Barrington operates a traditional bricks and mortar college in
Vancouver, British Columbia, Canada. Barrington offers the following
programs:
School of Business:
Business Administration;
E-Commerce MBA;
Business Accounting;
Business Law;
Management;
Entrepreneurship;
Finance;
Marketing;
Hospitality/Hotel & Restaurant Management;
International Business Law;
Human Resource Management; and
Business Communications
School of Arts and Sciences:
Computer Science;
Management Information Systems; and
Health Science.
Barrington has an international presence because of its Internet
locations, including:
www.barrington.edu, an educational portal that offers Bachelor's and
Master's degrees through virtual online distance learning.
www.barrington.gr.jp/home.htm, a Japanese language web site that offers
Barrington degrees and training in Japan and for Japanese speaking people
worldwide.
www.barrington.edu/china, a Chinese language web site that offers
Chinese-speaking people access to the Barrington programs.
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www.barrington.edu/espanol, a complete Spanish language duplication of
our Barrington English language web site.
www.barrington-arabic.net, an Arabic language web site that offers
Barrington courses and business training programs to 22 countries in the Middle
East. Its distance learning programs are the only recognized and approved
distance learning programs in the Arab League of Nations.
Spanish University of America ("SUA"), located at
www.spanishuniversity.edu, a complete Spanish language distance learning
institution offered over the Internet to Spanish language speaking countries, or
approximately 25 percent of the world's population. SUA was the first Hispanic
Internet university. SUA offers degrees such as:
Business;
Psychology;
Sociology;
Political Science; and
Health Science.
CyberUniversity, located at www.cyberuniversity.edu, is the world's
first cyber university offering programs to students all over the world in
multiple languages. Courses are offered through Alston University, and are given
in the following concentrations:
Business School;
Health Care;
Engineering;
Behavioral Sciences; and
Education.
ACADEMIC PROGRAMS
VADC offers several academic programs, including:
Chinese MBA. Offered in conjunction with Renmin University, the third
largest university in the People's Republic of China, the programs are offered
as dual degrees for Business School Graduate Students who desire degrees from an
American university to complement their degrees from Chinese universities.
Spanish MBA. Offered in Spanish through Barrington University, the
program awards a degree to Spanish-speaking students who desire a degree from an
American university to complement their degrees from Spanish universities.
E-Commerce MBA. VADC recently commenced offering this program, which
curricula are designed to explore non-traditional subjects such as e-commerce
and information technology. These programs are offered in English, Chinese,
Spanish and Arabic.
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www.kaplan.com. VADC recently entered into an agreement with Kaplan,
Inc. to offer Kaplan's test preparatory courses online, including courses
designed to prepare for the following tests:
AP;
SAT;
GRE;
GMAT;
LSAT;
MCAT; and
TOEFL
Certification Programs. VADC offers the complete Microsoft training
library, which offer certification in the following areas, among others:
Windows 98;
HTML 4;
Java;
Windows NT 4;
Windows NT MCSE;
Microsoft Exchange Server;
Visual C++; and
Visual Basic.
In addition, VADC offers certification in several other areas,
including:
Bookkeeping;
Restaurants;
Paralegal; and
Nutrition.
TEACHING MODEL
VADC's teaching/learning model has the following major characteristics:
Tuition. All VADC students must pay a registration fee to cover the
costs of books, study manuals and other materials necessary for their studies.
Generally, registration fees are approximately $450 and tuition fees range from
$3,300 to $6,500. Scholarships and discounts are available to certain students.
Frequently, tuition qualifies as a tax-deductible expense incurred as part of an
effort to maintain or improve job-related skills.
Curriculum. The standardized curriculum for each degree program is
designed to provide students with specified levels of knowledge and skills
regardless of delivery method or location. The curriculum provides for the
achievement of specific educational outcomes and is designed to integrate
academic theory and professional practice with a focus on application to the
workplace. Although VADC is responsible for degree requirements and educational
outcomes, students and their employers often provide input to our faculty in
designing curriculum, and class projects are
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typically based on issues relevant to the companies and the human resources
departments of companies that employ our students.
Faculty. Faculty applicants must possess an earned master's or doctoral
degree from an accredited institution and have a minimum of five years recent
professional experience in a field related to the subject matter in which they
seek to mentor. To help promote quality delivery of the curriculum, faculty
members are required to:
o complete an initial assessment conducted by staff and faculty;
o complete a series of certification workshops related to
grading, facilitation of the teaching/learning model,
oversight of study group activities, adult learning theory,
and use of the Internet;
o participate in ongoing development activities; and
o receive ongoing performance evaluations by students, peer
faculty and staff.
The results of these evaluations are used to establish developmental
plans to improve individual faculty performance and to determine continued
eligibility of faculty members to instruction.
VADC's mentor/faculty is comprised of approximately 16 full-time
faculty and 22 part-time mentor/faculty. Most mentor/faculty members are
recruited as the result of referrals from faculty, students and corporate
contacts. All part-time faculty are contracted on a course-by-course basis.
Online Chat. VADC students are encouraged to participate in an
interactive live-chat email center which provides a forum for potential
candidates or students to discuss any aspect of the educational process. This
feature is available 24-hours a day, seven days a week.
Interactive Learning. Courses are designed to combine individual and
group activity with interaction between and among students and the instructor.
The curriculum requires a high level of student participation for purposes of
increasing the student's ability to work as part of a team.
Learning Resources. Students and faculty members are provided with
electronic and other learning resources for their information needs. These
extensive electronic resources minimize VADC's need for capital-intensive
library facilities and holdings.
Low Attrition Rate. The VADC schools have less than a 15% student
dropout rate, compared to a rate of more than 35% compared to traditional brick
and mortar universities. VADC feels that its customer service and its targeted
client, the mid-career adult, is responsible for this success.
Academic Quality. Any student having earned a high school diploma,
General Equivalency Diploma ("GED") or international equivalent may apply to any
VADC bachelor's degree program. Any student having earned a Bachelor's degree or
international equivalent, or registered in one of the VADC universities'
combination Bachelor's/Master's degree program may apply to any VADC master's
degree program. As is the case with traditional colleges and universities, VADC
purchases
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the GED course content from major educational publishers. By having access to
quality curricula, VADC may maintain high academic standards.
OTHER OPERATIONS
The Global-E-BusinessGroup - www.global-e-businessgroup.com is a
turnkey business-to-business marketing web site and program that is being
developed and offers American businesses the opportunity to create an
e-marketing presence in the emerging market of China. Its services are
duplicated in Arabic and Spanish.
This program is ideally suited for the small to medium/medium-large
company who has little or no experience with global trade. By utilizing VADC's
resources and personnel who have a command of the international markets,
language and culture, participating businesses can utilize the Global-E-Business
Group for:
o Language translation of their existing web site;
o Maintaining, servicing and hosting of their foreign (and
English) language web site;
o Translation of customer inquiries;
o Assistance with foreign trade issues such as customs, shipping
and governmental regulations;
o Travel arrangements; and
o Protocol aid and preparedness on cultural affairs and customs.
COMPETITION
General. The market for online distance learning services is relatively
new, intensely competitive, rapidly evolving and subject to rapid technological
change as the market is characterized by an increasing number of entrants that
have introduced or developed products and services similar to those offered by
VADC. VADC expects competition not only to persist, but to increase. Increased
competition may result in course price reductions, reduced margins and loss of
market share. Competitors fall into several categories, including other online
distance learning providers, traditional "snail mail" correspondence courses and
traditional universities and colleges expanding their course offerings online.
Several current and potential competitors have longer operating histories,
larger installed student bases, greater name recognition, longer relationships
with students and the public and significantly greater financial, technical,
marketing and public relations resources.
Admissions Standards. To gain admission to the undergraduate programs,
applicants must have a high school diploma or GED and satisfy certain minimum
grade point average, employment and age requirements. Additional requirements
may apply to individual programs. Students already in undergraduate programs
elsewhere may petition to be admitted on provisional status if they do not meet
certain admission requirements.
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To gain admission to the graduate programs, students must have an
undergraduate degree from an accredited college or university and satisfy
minimum grade point average, work experience and employment requirements.
Additional requirements may apply to individual programs. Students in graduate
programs may petition to be admitted on provisional status if they do not meet
certain admission requirements.
Academic Accountability. VADC utilizes an institution-wide system for
the assessment of the educational outcomes of its students. The information
generated is employed to improve the quality of the curriculum, the instruction
and the teaching/learning model. VADC's undergraduate and graduate students
complete a comprehensive cognitive (core degree subject matter) and affective
(educational, personal and professional values) assessment prior to and upon the
completion of their core degree requirements.
Students in VADC programs evaluate both academic and administrative
quality. This evaluation begins with a registration survey and continues with
the evaluation of the curriculum, faculty, delivery method, instruction and
administrative services upon the conclusion of each course. The evaluation also
includes a survey of a random selection of graduates 2-3 years following their
graduation. The results provide an ongoing basis for improving the
teaching/learning model, selection of educational programs and instructional
quality.
CUSTOMERS
VADC's customers consist of working adult students, colleges and
universities, governmental agencies and employers. Following is an approximate
breakdown of students by the level of program they are seeking, as of September
25, 2000.
Programs
Master's Degree 42%
Bachelor's Degree 55
Certificate Level 3
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Total programs 100%
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Based on surveys, the average age of a VADC student is 33 years old,
approximately 72% of VADC students are male and 28% female, the average annual
household income of a VADC student is $56,000. Additionally, the average VADC
student has some college experience and averages approximately seven years of
work experience.
MARKETING
To date, the bulk of VADC's marketing efforts have revolved around word
of mouth efforts. Recently, VADC began experimenting with traditional print
advertisements in USA Today, Business Week and other traditional print
publications. In addition, VADC markets itself over the Internet through
search engine optimization techniques.
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EMPLOYEES
As of October 2, 2000, VADC had approximately 12 full-time employees.
None of the VADC's employees are represented by a labor union. VADC has not
experienced any work stoppages and generally believes that its relationship with
its employees is good.
GOVERNMENT REGULATION
General. With the exception of state licensing regulation described
below, VADC is subject to little governmental regulation other than the
securities laws and regulations applicable to all publicly owned companies and
laws and regulations applicable to businesses generally. Few laws or regulations
are directly applicable to access to, or commerce on, the Internet. Due to the
increasing popularity and use of the Internet, it is likely that a number of
laws and regulations may be adopted at the local, state, national or
international levels with respect to the Internet. Any new legislation could
inhibit the growth in use of the Internet and decrease the acceptance of the
Internet as a communications and commercial medium, which could in turn decrease
the demand for its services or otherwise have a material adverse effect on
VADC's future operating performance.
Licensing. Barrington University is licensed by the State Education
Department of Alabama, which provides the basis for recognition and acceptance
by employers, other higher education institutions and governmental entities of
the degrees and credits earned by students. Barrinton will come up for
re-licensing in June 2001.
Accreditation. Accreditation is a system for recognizing educational
institutions and their programs for performance, integrity and quality. In the
United States, this recognition comes primarily from regional associations.
Colleges and universities depend on accreditation in evaluating transfers of
credit and applications to graduate schools. Also, certain scholarship grants
are restricted to students attending institutions accredited by certain
associations.
VADC is not accredited by any of the recognized regional associations.
VADC's member schools are accredited by the International Association
of Universities and Schools, a non-profit independent accreditation organization
founded by a group of schools, including VADC.
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PART III
ITEM 9. MANAGEMENT
The following individuals comprise our management team:
Steven M. Bettinger, 29 years old, has served as VADC's Chief Executive
Officer, President and Director since 1993, when he founded the Company. Mr.
Bettinger also founded Barrington University, Spanish University of America and
Cyber University. Mr. Bettinger also founded in 1999 and serves as an executive
officer and director of Continuing Care.com, a web portal developer for senior
living and the senior service industry. In addition, Mr. Bettinger founded and
later sold taxreturnsusa.com, one of the first online tax preparation companies.
Mr. Bettinger received his B.S. in Business Administration (honors) from
Syracuse University.
Robert K. Bettinger, 63 years old, has served as the Chairman of the
Board of Directors of VADC since 1993. Mr. Bettinger is also the President of
Barrington University, VADC's primary Internet school. Mr. Bettinger graduated
with an education degree from Long Island University. Mr. Bettinger was a
teacher, counselor and administrator in the New York public school system from
1960 to 1977.
Dr. Mahmoud Hassan, 49 years old, has served as Executive Vice
President and director since 1997. From 1991 to the present, Dr. Hassan has
served as a Lecturer in Mathematics and Computer Design and Freelance Graphics
at Kingsborough Community College in New York. From 1993 to 1987, Dr. Hassan
served as a Lecturer for Save the Children Adult Education Program in Egypt,
where he taught courses in Space Planning and Interior Design. Dr. Hassan has
served in managerial positions for projects undertaken by several Middle Eastern
construction companies, mostly related to hotel design. Dr. Hassan received his
Ph.D. (Interior Design) and MFA (Interior Design) from Pacific Western
University, and his BAA (Interior Design) from the Faculty of Applied Arts,
Kelwan University, Egypt.
Andrew Lockwood, 32 years old, has served as a director since April
2000. Since April 2000, Mr. Lockwood has served as Executive Vice
President--Business Development and General Counsel of Shochet Holding Corp. a
publicly-traded financial services company based in South Florida. From April
1999 to April 2000, Mr. Lockwood was employed as an attorney in the corporate
and securities department of Atlas Pearlman, P.A., a law firm located in Fort
Lauderdale, Florida. From 1996 to March 1999, Mr. Lockwood was employed as an
attorney in the corporate securities department of Graubard, Mollen & Miller, a
law firm located in New York City. Mr.
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Lockwood received his J.D. from St. John's University School of Law and his B.A.
from Wesleyan University. Mr. Lockwood is a member in good standing of each of
the New York and Florida Bar Associations.
Jack P. Phelan, 51 years old, has served as a director since March
2000. Since June 1998, Mr. Phelan served as President of Helios International
Asset Management, a registered investment advisor located in Boca Raton,
Florida. From January 1995 to June 1998, Mr. Phelan served as President of
Nicholson/Kenny Capital Management, a investment management firm located in Boca
Raton, Florida. Mr. Phelan is a member of the Association of Investment
Management Research, the New York Society of Security Analysis, the Financial
Analysts Society of South Florida, the International Society of Financial
Analysts and the International Association for Financial Planning. Mr. Phelan is
also a member of MENSA and the International Society of Philosophical Enquiry.
Directors are elected at each annual meeting of stockholders. Directors
hold office until the next annual meeting of stockholders. Executive officers
are elected by and serve at the discretion of the Board of Directors. The Board
of Directors held approximately six meetings during Fiscal 2000 and consented to
approximately 20 corporate resolutions. There are no committees of the Board of
Directors.
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SIGNATURES
In accordance with Section 13 or 15(d) of the Securities Exchange Act
of 1934, as amended, the registrant caused this Amendment No. 1 to this report
to be signed on its behalf by the undersigned and duly authorized on November
13, 2000.
Virtual Academics.com, Inc.
By: /s/ Steven M. Bettinger
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Steven M. Bettinger
Chief Executive Officer and President
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