U. S. Securities and Exchange Commission
Washington, D.C. 20549
Form 10-SB
File No.:
CIK: 0000908821
GENERAL FORM FOR REGISTRATION OF SECURITIES
OF SMALL BUSINESS ISSUERS
Under Section 12(b) or (g) of the Securities Exchange Act of 1934
BIO-AMERICAN CAPITAL CORPORATION
(Name of Small Business Issuer in its charter)
Nevada 93-1118938
State or other jurisdiction of IRS Employer ID Number
Incorporation or organization
462 Stevens Avenue, Suite #308, Solana Beach, CA 92075
(Address of principal executive offices) (Zip Code)
(858) 793-5900
(Issuer's Telephone Number)
Securities to be registered under Section 12(b) of the Act: None
Securities to be registered under Section 12(g) of the Act:
Common Stock, $0.001 par value
(Title of class)
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TABLE OF CONTENTS
PART I
Page
Item 1. Business........................................................3
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations..........................................22
Item 3. Properties.....................................................23
Item 4. Security Ownership of Certain Beneficial Owners and Management.24
Item 5. Directors and Executive Officers of the Registrant.............24
Item 6. Executive Compensation.........................................28
Item 7. Certain Relationships and Related Transactions.................29
Item 8. Description of Securities......................................30
PART II
Item 1. Market for Registrant's Common Stock and Security
Holder Matters.................................................32
Item 2. Legal Proceedings..............................................32
Item 3. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure...........................................32
Item 4. Recent Sales of Unregistered Securities........................33
Item 5. Indemnification of Directors and Officers......................34
PART F/S
Signature Page................................................................35
Financial Statements and Supplementary Data..................................F-1
Index to Exhibits.............................................................37
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PART I
ITEM 1. DESCRIPTION OF BUSINESS.
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This report on Form 10-SB (the "Report") contains forward-looking
statements within the definition of Section 27A of the Securities Act of 1933
and Section 21E of the Securities Exchange Act of 1934. All forward-looking
statements are inherently uncertain as they are based on current expectations
and assumptions concerning future events or future performance of the Company.
Readers are cautioned not to place undue reliance on these forward-looking
statements, which are only predictions and speak only as of the date hereof.
Forward-looking statements usually contain the words "estimate," "anticipate,"
"believe," "expect'" or similar expressions, and are subject to numerous known
and unknown risks and uncertainties. In evaluating such statements, readers
should carefully review risks and uncertainties identified in this Report,
including the matters set forth under the caption "Risk Factors" below. These
risks and uncertainties could cause the Company's actual results to differ
materially from those indicated in the forward-looking statements. The Company
undertakes no obligation to update or publicly announce revisions to any
forward-looking statements to reflect future events or developments.
General
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The Company was incorporated under the laws of the State of Nevada on May
5, 1992, and is in the early developmental and promotional stages. To date the
Company's activities have been organizational ones, directed at developing its
business plan and raising its initial capital.
Bio-American Capital Corporation ("Bio-American" or the "Company") was
incorporated under the laws of the State of Nevada on May 5, 1992 to raise
capital for a business venture. Minimal capital was raised and it engaged in no
business and remained dormant until November 1998. On November 25, 1998, Reliant
Securities, Ltd., a British Virgin Islands Corporation, purchased control of the
Company from the principal shareholder. During December 1998 the Company raised
$508,200 from an exempt offering under Regulation D, Rule 504 as adopted then by
the Securities and Exchange Commission to act as a merchant bank to organize,
capitalize, acquire and finance technology companies that are positioned to
effectively integrate and enhance the delivery of products and services to
consumers.
As a merchant bank service the only investment that the Company funded was
a loan to Universal Alliance, Inc. (UAI). UAI is a private holding company for
Remind America, Inc., Global Interlink Systems, Inc., thankyoustores.com Inc.
and NCSS America, Inc. UAI was engaged in proof of concept test marketing,
technology development, recruitment of management and staff and potential
acquisition of marketing companies. UAI derived its revenue from fulfillment
services and sales of custom-labeled gift products through the Remind America
loyalty system.
In December 1998, the Company entered into a Share Exchange Agreement with
UAI and certain shareholders of UAI (the "UAI Controlling Shareholders"). The
Share Exchange Agreement provided that the Company would acquire 81.5%
(9,600,000 shares) of the outstanding capital stock of UAI. In July 1999, the
Company, UAI and the UAI Controlling Shareholders terminated the Share Exchange
Agreement and entered into a Stock Option Agreement with UAI. The Stock Option
Agreement provided the Company with the option, based upon achieving specific
performance criteria, to acquire controlling interest in UAI. Effective March
31, 2000, the Stock Option Agreement expired and the Company and UAI have
mutually abandoned the transaction. The amount of the loan to UAI ($450,060) is
still unpaid, but has been written off. Collection efforts may be commenced.
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The Company intended to take senior debt and equity positions in
companies which it chooses to finance and will provide consulting services for
capital structuring, and reorganization of small technology companies to assist
in market share growth and the development of the capital structure to
facilitate an eventual public offering. The Company will also consider
acquisitions of operating technology companies for stock and debt. Once this
Report is filed, the Company will become a 12(g) registered company under the
Securities Exchange Act of 1934. The Company can continue to offer to private
acquisition targets the opportunity to become a public company and establish a
public trading market for its securities.
The Company is a "shell" company and its only current business plan is
to seek, investigate, and, if warranted, acquire one or more properties or
businesses, and to pursue other related activities intended to enhance
shareholder value. The acquisition of a business opportunity may be made by
purchase, merger, exchange of stock, or otherwise, and may encompass assets or a
business entity, such as a corporation, joint venture, or partnership. The
Company has no capital, and it is unlikely that the Company will be able to take
advantage of more than one such business opportunity. The Company intends to
seek opportunities demonstrating the potential of long-term growth as opposed to
short-term earnings.
At the present time the Company has not identified any business
opportunity that it plans to pursue, nor has the Company reached any agreement
or definitive understanding with any person concerning an acquisition. The
Company is filing Form 10-SB on a voluntary basis in order to become a 12(g)
registered company under the Securities Exchange Act of 1934. As a "reporting
company," the Company may be more attractive to a private acquisition target
because it may be listed to trade its shares on the OTCBB.
It is anticipated that the Company's officers and directors will contact
broker-dealers and other persons with whom they are acquainted who are involved
in corporate finance matters to advise them of the Company's existence and to
determine if any companies or businesses they represent have an interest in
considering a merger or acquisition with the Company. No assurance can be given
that the Company will be successful in finding or acquiring a desirable business
opportunity, given that no funds that are available for acquisitions, or that
any acquisition that occurs will be on terms that are favorable to the Company
or its stockholders.
The Company's search will be directed toward small and medium-sized
enterprises which have a desire to become public corporations and which are able
to satisfy, or anticipate in the reasonably near future being able to satisfy,
the minimum asset requirements in order to qualify shares for trading on NASDAQ
or a stock exchange (See "Investigation and Selection of Business
Opportunities"). The Company anticipates that the business opportunities
presented to it will (i) be recently organized with no operating history, or a
history of losses attributable to under-capitalization or other factors; (ii) be
experiencing financial or operating difficulties; (iii) be in need of funds to
develop a new product or service or to expand into a new market; (iv) be relying
upon an untested product or marketing concept; or (v) have a combination of the
characteristics mentioned in (i) through (iv). The Company intends to
concentrate its acquisition efforts on properties or businesses that it believes
to be undervalued. Given the above factors, investors should expect that any
acquisition candidate may have a history of losses or low profitability.
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The Company does not propose to restrict its search for investment
opportunities to any particular geographical area or industry, and may,
therefore, engage in essentially any business, to the extent of its limited
resources. This includes industries such as service, finance, natural resources,
manufacturing, high technology, product development, medical, communications and
others. The Company's discretion in the selection of business opportunities is
unrestricted, subject to the availability of such opportunities, economic
conditions, and other factors.
As a consequence of this registration of its securities, any entity which
has an interest in being acquired by, or merging into the Company, is expected
to be an entity that desires to become a public company and establish a public
trading market for its securities. In connection with such a merger or
acquisition, it is highly likely that an amount of stock constituting control of
the Company would be issued by the Company or purchased from the current
principal shareholders of the Company by the acquiring entity or its affiliates.
If stock is purchased from the current shareholders, the transaction is very
likely to result in substantial gains to them relative to their purchase price
for such stock. In the Company's judgment, none of its officers and directors
would thereby become an "underwriter" within the meaning of the Section 2(11) of
the Securities Act of 1933, as amended. The sale of a controlling interest by
certain principal shareholders of the Company could occur at a time when the
other shareholders of the Company remain subject to restrictions on the transfer
of their shares.
Depending upon the nature of the transaction, the current officers and
directors of the Company may resign management positions with the Company in
connection with the Company's acquisition of a business opportunity. See "Form
of Acquisition," below, and "Risk Factors - The Company - Lack of Continuity in
Management." In the event of such a resignation, the Company's current
management would not have any control over the conduct of the Company's business
following the Company's combination with a business opportunity.
It is anticipated that business opportunities will come to the Company's
attention from various sources, including its officer and director, its other
stockholders, professional advisors such as attorneys and accountants,
securities broker-dealers, venture capitalists, members of the financial
community, and others who may present unsolicited proposals. The Company has no
plans, understandings, agreements, or commitments with any individual for such
person to act as a finder of opportunities for the Company.
The Company does not foresee that it would enter into a merger or
acquisition transaction with any business with which its officers or directors
are currently affiliated. Should the Company determine in the future, contrary
to foregoing expectations, that a transaction with an affiliate would be in the
best interests of the Company and its stockholders, the Company is in general
permitted by Nevada law to enter into such a transaction if:
1. The material facts as to the relationship or interest of the affiliate and as
to the contract or transaction are disclosed or are known to the Board of
Directors, and the Board in good faith authorizes the contract or transaction by
the affirmative vote of a majority of the disinterested directors, even though
the disinterested directors constitute less than a quorum; or
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2. The material facts as to the relationship or interest of the affiliate and as
to the contract or transaction are disclosed or are known to the stockholders
entitled to vote thereon, and the contract or transaction is specifically
approved in good faith by vote of the stockholders; or
3. The contract or transaction is fair as to the Company as of the time it is
authorized, approved or ratified, by the Board of Directors or the stockholders.
Investigation and Selection of Business Opportunities
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To a large extent, a decision to participate in a specific business
opportunity may be made upon management's analysis of the quality of the other
company's management and personnel, the anticipated acceptability of new
products or marketing concepts, the merit of technological changes, the
perceived benefit the company will derive from becoming a publicly held entity,
and numerous other factors which are difficult, if not impossible, to analyze
through the application of any objective criteria. In many instances, it is
anticipated that the historical operations of a specific business opportunity
may not necessarily be indicative of the potential for the future because of the
possible need to shift marketing approaches substantially, expand significantly,
change product emphasis, change or substantially augment management, or make
other changes. The Company will be dependent upon the owners of a business
opportunity to identify any such problems which may exist and to implement, or
be primarily responsible for the implementation of, required changes. Because
the Company may participate in a business opportunity with a newly organized
firm or with a firm which is entering a new phase of growth, it should be
emphasized that the Company will incur further risks, because management in many
instances will not have proved its abilities or effectiveness, the eventual
market for such company's products or services will likely not be established,
and such company may not be profitable when acquired.
It is anticipated that the Company will not be able to diversify, but will
essentially be limited to one such venture because of the Company's limited
financing. This lack of diversification will not permit the Company to offset
potential losses from one business opportunity against profits from another, and
should be considered an adverse factor affecting any decision to purchase the
Company's securities.
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It is emphasized that management of the Company may effect transactions
having a potentially adverse impact upon the Company's shareholders pursuant to
the authority and discretion of the Company's management to complete
acquisitions without submitting any proposal to the stockholders for their
consideration. Holders of the Company's securities should not anticipate that
the Company necessarily will furnish such holders, prior to any merger or
acquisition, with financial statements, or any other documentation, concerning a
target company or its business. In some instances, however, the proposed
participation in a business opportunity may be submitted to the stockholders for
their consideration, either voluntarily by such directors to seek the
stockholders' advice and consent or because state law so requires.
The analysis of business opportunities will be undertaken by or under the
supervision of the Company's President, who is not a professional business
analyst. See "Management." Although there are no current plans to do so, Company
management might hire an outside consultant to assist in the investigation and
selection of business opportunities, and might pay a finder's fee. Since Company
management has no current plans to use any outside consultants or advisors to
assist in the investigation and selection of business opportunities, no policies
have been adopted regarding use of such consultants or advisors, the criteria to
be used in selecting such consultants or advisors, the services to be provided,
the term of service, or regarding the total amount of fees that may be paid.
However, because of the limited resources of the Company, it is likely that any
such fee the Company agrees to pay would be paid in stock and not in cash.
Otherwise, the Company anticipates that it will consider, among other things,
the following factors:
1. Potential for growth and profitability, indicated by new technology,
anticipated market expansion, or new products;
2. The Company's perception of how any particular business opportunity will be
received by the investment community and by the Company's stockholders;
3. Whether, following the business combination, the financial condition of
the business opportunity would be, or would have a significant prospect in the
foreseeable future of becoming sufficient to enable the securities of the
Company to qualify for listing on an exchange or on a national automated
securities quotation system, such as NASDAQ, so as to permit the trading of such
securities to be exempt from the requirements of Rule 15c2-6 recently adopted by
the Securities and Exchange Commission. See "Risk Factors - The Company -
Regulation of Penny Stocks."
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4. Capital requirements and anticipated availability of required funds, to be
provided by the Company or from operations, through the sale of additional
securities, through joint ventures or similar arrangements, or from other
sources;
5. The extent to which the business opportunity can be advanced;
6. Competitive position as compared to other companies of similar size and
experience within the industry segment as well as within the industry as a
whole;
7. Strength and diversity of existing management, or management prospects that
are scheduled for recruitment;
8. The cost of participation by the Company as compared to the perceived
tangible and intangible values and potential; and
9. The accessibility of required management expertise, personnel, raw materials,
services, professional assistance, and other required items.
In regard to the possibility that the shares of the Company would qualify
for listing on NASDAQ, the current standards include the requirements that the
issuer of the securities that are sought to be listed have total assets of at
least $4,000,000 and total capital and surplus of at least $2,000,000. Many, and
perhaps most, of the business opportunities that might be potential candidates
for a combination with the Company would not satisfy the NASDAQ listing
criteria.
No one of the factors described above will be controlling in the selection
of a business opportunity, and management will attempt to analyze all factors
appropriate to each opportunity and make a determination based upon reasonable
investigative measures and available data. Potentially available business
opportunities may occur in many different industries and at various stages of
development, all of which will make the task of comparative investigation and
analysis of such business opportunities extremely difficult and complex.
Potential investors must recognize that, because of the Company's limited
capital available for investigation and management's limited experience in
business analysis, the Company may not discover or adequately evaluate adverse
facts about the opportunity to be acquired.
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The Company is unable to predict when it may participate in a business
opportunity. It expects, however, that the analysis of specific proposals and
the selection of a business opportunity may take several months or more.
Prior to making a decision to participate in a business opportunity, the
Company will generally request that it be provided with written materials
regarding the business opportunity containing such items as a description of
products, services and company history; management resumes; financial
information; available projections, with related assumptions upon which they are
based; an explanation of proprietary products and services; evidence of existing
patents, trademarks, or services marks, or rights thereto; present and proposed
forms of compensation to management; a description of transactions between such
company and its affiliates during relevant periods; a description of present and
required facilities; an analysis of risks and competitive conditions; a
financial plan of operation and estimated capital requirements; audited
financial statements, or if they are not available, unaudited financial
statements, together with reasonable assurances that audited financial
statements would be able to be produced within a reasonable period of time not
to exceed 60 days following completion of a merger transaction; and other
information deemed relevant.
As part of the Company's investigation, the Company's executive officers
and directors may meet personally with management and key personnel, may visit
and inspect material facilities, obtain independent analysis or verification of
certain information provided, check references of management and key personnel,
and take other reasonable investigative measures, to the extent of the Company's
limited financial resources and management expertise.
It is possible that the range of business opportunities that might be
available for consideration by the Company could be limited by the impact of
Securities and Exchange Commission regulations regarding purchase and sale of
"penny stocks." The regulations would affect, and possibly impair, any market
that might develop in the Company's securities until such time as they qualify
for listing on NASDAQ or on another exchange which would make them exempt from
applicability of the "penny stock" regulations. See "Risk Factors - - Regulation
of Penny Stocks."
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Company management believes that various types of potential merger or
acquisition candidates might find a business combination with the Company to be
attractive. These include acquisition candidates desiring to create a public
market for their shares in order to enhance liquidity for current shareholders,
acquisition candidates which have long-term plans for raising capital through
the public sale of securities and believe that the possible prior existence of a
public market for their securities would be beneficial, and acquisition
candidates which plan to acquire additional assets through issuance of
securities rather than for cash, and believe that the possibility of development
of a public market for their securities will be of assistance in that process.
Acquisition candidates which have a need for an immediate cash infusion are not
likely to find a potential business combination with the Company to be an
attractive alternative.
There are no loan arrangements or arrangements for any financing
whatsoever relating to any business opportunities.
Form of Acquisition
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It is impossible to predict the manner in which the Company may
participate in a business opportunity. Specific business opportunities will be
reviewed as well as the respective needs and desires of the Company and the
promoters of the opportunity and, upon the basis of that review and the relative
negotiating strength of the Company and such promoters, the legal structure or
method deemed by management to be suitable will be selected. Such structure may
include, but is not limited to leases, purchase and sale agreements, licenses,
joint ventures and other contractual arrangements. The Company may act directly
or indirectly through an interest in a partnership, corporation or other form of
organization. Implementing such structure may require the merger, consolidation
or reorganization of the Company with other corporations or forms of business
organization, and although it is likely, there is no assurance that the Company
would be the surviving entity. In addition, the present management and
stockholders of the Company most likely will not have control of a majority of
the voting shares of the Company following a reorganization transaction. As part
of such a transaction, the Company's existing directors may resign and new
directors may be appointed without any vote by stockholders.
It is likely that the Company will acquire its participation in a
business opportunity through the issuance of common stock or other securities of
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the Company. Although the terms of any such transaction cannot be predicted, it
should be noted that in certain circumstances the criteria for determining
whether or not an acquisition is a so-called "tax free" reorganization under the
Internal Revenue Code of 1986, depends upon the issuance to the stockholders of
the acquired company of a controlling interest (i.e. 80% or more) of the common
stock of the combined entities immediately following the reorganization. If a
transaction were structured to take advantage of these provisions rather than
other "tax free" provisions provided under the Internal Revenue Code, the
Company's current stockholders would retain in the aggregate 20% or less of the
total issued and outstanding shares. This could result in substantial additional
dilution in the equity of those who were stockholders of the Company prior to
such reorganization. Any such issuance of additional shares might also be done
simultaneously with a sale or transfer of shares representing a controlling
interest in the Company by the current officers, directors and principal
shareholders. (See "Description of Business - General").
It is anticipated that any new securities issued in any reorganization
would be issued in reliance upon exemptions, if any are available, from
registration under applicable federal and state securities laws. In some
circumstances, however, as a negotiated element of the transaction, the Company
may agree to register such securities either at the time the transaction is
consummated, or under certain conditions or at specified times thereafter. The
issuance of substantial additional securities and their potential sale into any
trading market that might develop in the Company's securities may have a
depressive effect upon such market.
The Company will participate in a business opportunity only after the
negotiation and execution of a written agreement. Although the terms of such
agreement cannot be predicted, generally such an agreement would require
specific representations and warranties by all of the parties thereto, specify
certain events of default, detail the terms of closing and the conditions which
must be satisfied by each of the parties thereto prior to such closing, outline
the manner of bearing costs if the transaction is not closed, set forth remedies
upon default, and include miscellaneous other terms.
As a general matter, the Company anticipates that it, and/or its
officers and principal shareholders will enter into a letter of intent with the
management, principals or owners of a prospective business opportunity prior to
signing a binding agreement. Such a letter of intent will set forth the terms of
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the proposed acquisition but will not bind any of the parties to consummate the
transaction. Execution of a letter of intent will by no means indicate that
consummation of an acquisition is probable. Neither the Company nor any of the
other parties to the letter of intent will be bound to consummate the
acquisition unless and until a definitive agreement concerning the acquisition
as described in the preceding paragraph is executed. Even after a definitive
agreement is executed, it is possible that the acquisition would not be
consummated should any party elect to exercise any right provided in the
agreement to terminate it on specified grounds.
It is anticipated that the investigation of specific business
opportunities and the negotiation, drafting and execution of relevant
agreements, disclosure documents and other instruments will require substantial
management time and attention and substantial costs for accountants, attorneys
and others. If a decision is made not to participate in a specific business
opportunity, the costs theretofore incurred in the related investigation would
not be recoverable. Moreover, because many providers of goods and services
require compensation at the time or soon after the goods and services are
provided, the inability of the Company to pay until an indeterminate future time
may make it impossible to procure goods and services.
In all probability, upon completion of an acquisition or merger, there
will be a change in control through issuance of substantially more shares of
common stock. Further, in conjunction with an acquisition or merger, it is
likely that management may offer to sell a controlling interest at a price not
relative to or reflective of any value of the shares sold by management, and at
a price which could not be achieved by individual shareholders at the time.
Investment Company Act and Other Regulation
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The Company may participate in a business opportunity by purchasing,
trading or selling the securities of such business. The Company does not,
however, intend to engage primarily in such activities. Specifically, the
Company intends to conduct its activities so as to avoid being classified as an
"investment company" under the Investment Company Act of 1940 (the "Investment
Act"), and therefore to avoid application of the costly and restrictive
registration and other provisions of the Investment Act, and the regulations
promulgated thereunder.
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Section 3(a) of the Investment Act contains the definition of an
"investment company," and it excludes any entity that does not engage primarily
in the business of investing, reinvesting or trading in securities, or that does
not engage in the business of investing, owning, holding or trading "investment
securities" (defined as "all securities other than government securities or
securities of majority-owned subsidiaries") the value of which exceeds 40% of
the value of its total assets (excluding government securities, cash or cash
items). The Company intends to implement its business plan in a manner which
will result in the availability of this exception from the definition of
"investment company." Consequently, the Company's participation in a business or
opportunity through the purchase and sale of investment securities will be
limited.
The Company's plan of business may involve changes in its capital
structure, management, control and business, especially if it consummates a
reorganization as discussed above. Each of these areas is regulated by the
Investment Act, in order to protect purchasers of investment company securities.
Since the Company will not register as an investment company, stockholders will
not be afforded these protections.
Any securities which the Company might acquire in exchange for its
common stock are expected to be "restricted securities" within the meaning of
the Securities Act of 1933, as amended (the "Act"). If the Company elects to
resell such securities, such sale cannot proceed unless a registration statement
has been declared effective by the Securities and Exchange Commission or an
exemption from registration is available. Section 4(1) of the Act, which exempts
sales of securities not involving a distribution, would in all likelihood be
available to permit a private sale. Although the plan of operation does not
contemplate resale of securities acquired, if such a sale were to be necessary,
the Company would be required to comply with the provisions of the Act to effect
such resale.
An acquisition made by the Company may be in an industry which is
regulated or licensed by federal, state or local authorities. Compliance with
such regulations can be expected to be a time-consuming and expensive process.
Competition
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The Company expects to encounter substantial competition in its efforts
to locate attractive opportunities, primarily from business development
companies, venture capital partnerships and corporations, venture capital
affiliates of large industrial and financial companies, small investment
companies, and wealthy individuals. Many of these entities will have
significantly greater experience, resources and managerial capabilities than the
Company and will therefore be in a better position than the Company to obtain
access to attractive business opportunities. The Company also will possibly
experience competition from other public "blank check" companies, some of which
may have more funds available than does the Company.
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No Rights of Dissenting Shareholders
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The Company does not intend to provide Company shareholders with complete
disclosure documentation including audited financial statements, concerning a
possible target company prior to acquisition, because Nevada Revised Statutes
vest authority in the Board of Directors to decide and approve matters involving
acquisitions within certain restrictions. Any transaction would be structured as
an acquisition, not a merger, with the Registrant being the parent company and
the acquiree being merged into a wholly owned subsidiary. Therefore, a
shareholder will have no right of dissent under Nevada law for a merger under
most circumstances.
No Target Candidates for Acquisition
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None of the Company's officers, directors, promoters, affiliates, or
associates have had any preliminary contact or discussion with any specific
candidate for acquisition. There are no present plans, proposals, arrangements,
or understandings with any representatives of the owners of any business or
company regarding the possibility of an acquisition transaction.
Administrative Offices
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The Company currently maintains a business address at 462 Stevens Avenue,
Suite #308, Solana Beach, CA 92075 which is the office address of another
employer of its President, Leonard Viejo. The Company's telephone number is
(858) 793-5900. Other than this mailing address, the Company does not currently
maintain any other office facilities, and does not anticipate the need for
maintaining office facilities at any time in the foreseeable future. The Company
pays $750 rent for the use of this facility.
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Employees
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The Company is a development stage company and currently has no employees.
Management of the Company expects to use consultants, attorneys and accountants
as necessary, and does not anticipate a need to engage any full-time employees
so long as it is seeking and evaluating business opportunities. The need for
employees and their availability will be addressed in connection with the
decision whether or not to acquire or participate in specific business
opportunities. Under a month-to-month agreement the Company has agreed to pay
the president of the Company a management fee of $5,000 a month for services
rendered. See "Executive Compensation" and under "Certain Relationships and
Related Transactions."
Risk Factors
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1. CONFLICTS OF INTEREST WITH THE COMPANY AND ITS OFFICERS AND DIRECTORS.
They have other business interests to which they devote their attention, and may
be expected to continue to do so although management time should be devoted to
the business of the Company. As a result, conflicts of interest may arise that
can be resolved only through exercise of such judgment as is consistent with
fiduciary duties to the Company. See "Management," and "Conflicts of Interest."
It is anticipated that Company's officers and directors may actively
negotiate or otherwise consent to the purchase of a portion of his common stock
as a condition to, or in connection with, a proposed merger or acquisition
transaction. In this process, the Company's officers may consider his own
personal pecuniary benefit rather than the best interests of other Company
shareholders, and the other Company shareholders are not expected to be afforded
the opportunity to approve or consent to any particular stock buy-out
transaction. See "Conflicts of Interest."
2. NEED FOR ADDITIONAL FINANCING. The Company has very limited funds, and
such funds may not be adequate to take advantage of any available business
opportunities. Even if the Company's funds prove to be sufficient to acquire an
interest in, or complete a transaction with, a business opportunity, the Company
may not have enough capital to exploit the opportunity. The ultimate success of
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the Company may depend upon its ability to raise additional capital. The Company
has not investigated the availability, source, or terms that might govern the
acquisition of additional capital and will not do so until it determines a need
for additional financing. If additional capital is needed, there is no assurance
that funds will be available from any source or, if available, that they can be
obtained on terms acceptable to the Company. If not available, the Company's
operations will be limited to those that can be financed with its modest
capital.
3. REGULATION OF PENNY STOCKS. The Company's securities, when available for
trading, will be subject to a Securities and Exchange Commission rule that
imposes special sales practice requirements upon broker-dealers who sell such
securities to persons other than established customers or accredited investors.
For purposes of the rule, the phrase "accredited investors" means, in general
terms, institutions with assets in excess of $5,000,000, or individuals having a
net worth in excess of $1,000,000 or having an annual income that exceeds
$200,000 (or that, when combined with a spouse's income, exceeds $300,000). For
transactions covered by the rule, the broker-dealer must make a special
suitability determination for the purchaser and receive the purchaser's written
agreement to the transaction prior to the sale. 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 offering to sell their securities
in any market that might develop therefore.
In addition, the Securities and Exchange Commission has adopted a number
of rules to regulate "penny stocks." Such rules include Rules 3a51-1, 15g-1,
15g-2, 15g-3, 15g-4, 15g-5, 15g-6, 15g-7, and 15g-9 under the Securities
Exchange Act of 1934, as amended. Because the securities of the Company may
constitute "penny stocks" within the meaning of the rules, the rules would apply
to the Company and to its securities. The rules may further affect the ability
of owners of Shares to sell the securities of the Company in any market that
might develop for them.
Shareholders should be aware that, according to Securities and Exchange
Commission, the market for penny stocks has suffered in recent years from
patterns of fraud and abuse. Such patterns include (i) control of the market for
the security by one or a few broker-dealers that are often related to the
promoter or issuer; (ii) manipulation of prices through prearranged matching of
purchases and sales and false and misleading press releases; (iii) "boiler room"
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practices involving high-pressure sales tactics and unrealistic price
projections by inexperienced sales persons; (iv) excessive and undisclosed
bid-ask differentials and markups by selling broker-dealers; and (v) the
wholesale dumping of the same securities by promoters and broker-dealers after
prices have been manipulated to a desired level, along with the resulting
inevitable collapse of those prices and with consequent investor losses. The
Company's management is aware of the abuses that have occurred historically in
the penny stock market. Although the Company does not expect to be in a position
to dictate the behavior of the market or of broker-dealers who participate in
the market, management will strive within the confines of practical limitations
to prevent the described patterns from being established with respect to the
Company's securities.
4.LACK OF OPERATING HISTORY. The Company was formed in May 1992 and
remained dormant until November 1998. Since November 1998 the Company: (i)
raised $508,200 in a private placement; (ii) entered into a Share Exchange
Agreement to acquire controlling interest of Universal Alliance, Inc. ("UAI");
(iii) provided $450,060 in unsecured bridge financing to UAI; (iv) terminated
the Share Exchange Agreement with UAI and entered into a Stock Option Agreement
to acquire controlling interest in UAI; (v) wrote-off the UAI Notes Receivable
of $450,060 and accrued interest of $3,372; and (vi) the Stock Option Agreement
expired and the Company and UAI have mutually abandoned the transaction
effective March 31, 2000. The Company is not profitable, and the only revenue
earned was the accrued interest in the notes receivable to UAI which was not
collected. The Company has no successful operating history. The Company faces
all of the risks of a new business and the special risks inherent in the
investigation, acquisition, or involvement in a new business opportunity. The
Company must be regarded as a new or "start-up" venture with all of the
unforeseen costs, expenses, problems, and difficulties to which such ventures
are subject.
5. NO ASSURANCE OF SUCCESS OR PROFITABILITY. There is no assurance that the
Company will acquire a favorable business opportunity. Even if the Company
should become involved in a business opportunity, there is no assurance that it
will generate revenues or profits, or that the market price of the Company's
common stock will be increased thereby.
6. POSSIBLE BUSINESS - NOT IDENTIFIED AND HIGHLY RISKY. The Company has not
identified and has no commitments to enter into or acquire a specific business
opportunity and therefore can disclose the risks and hazards of a business or
opportunity that it may enter into in only a general manner, and cannot disclose
the risks and hazards of any specific business or opportunity that it may enter
into. An investor can expect a potential business opportunity to be quite risky.
The Company's acquisition of or participation in a business opportunity will
likely be highly illiquid and could result in a total loss to the Company and
its stockholders if the business or opportunity proves to be unsuccessful. See
Item 1 "Description of Business."
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7. TYPE OF BUSINESS ACQUIRED. The type of business to be acquired may be
one that desires to avoid effecting its own public offering and the accompanying
expense, delays, uncertainties, and federal and state requirements which purport
to protect investors. Because of the Company's limited capital, it is more
likely than not that any acquisition by the Company will involve other parties
whose primary interest is the acquisition of control of a publicly traded
company. Moreover, any business opportunity acquired may be currently
unprofitable or present other negative factors.
8. IMPRACTICABILITY OF EXHAUSTIVE INVESTIGATION. The Company's limited
funds and the lack of full-time management will likely make it impracticable to
conduct a complete and exhaustive investigation and analysis of a business
opportunity before the Company commits its capital or other resources thereto.
Management decisions, therefore, will likely be made without detailed
feasibility studies, independent analysis, market surveys and the like which, if
the Company had more funds available to it, would be desirable. The Company will
be particularly dependent in making decisions upon information provided by the
promoter, owner, sponsor, or others associated with the business opportunity
seeking the Company's participation. A significant portion of the Company's
available funds may be expended for investigative expenses and other expenses
related to preliminary aspects of completing an acquisition transaction, whether
or not any business opportunity investigated is eventually acquired.
9. LACK OF DIVERSIFICATION. Because of the limited financial resources that
the Company has, it is unlikely that the Company will be able to diversify its
acquisitions or operations. The Company's probable inability to diversify its
activities into more than one area will subject the Company to economic
fluctuations within a particular business or industry and therefore increase the
risks associated with the Company's operations.
10. RELIANCE UPON FINANCIAL STATEMENTS. The Company generally will require
audited financial statements from companies that it proposes to acquire. Given
cases where audited financials are not available, the Company will have to rely
upon interim period unaudited information received from target companies'
management that has not been verified by outside auditors. The lack of the type
of independent verification which audited financial statements would provide,
increases the risk that the Company, in evaluating an acquisition with such a
target company, will not have the benefit of full and accurate information about
the financial condition and recent interim operating history of the target
company. This risk increases the prospect that the acquisition of such a company
might prove to be an unfavorable one for the Company or the holders of the
Company's securities.
Moreover, the Company will be subject to the reporting provisions of
the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and thus
will be required to furnish certain information about significant acquisitions,
including audited financial statements for any business that it acquires.
Consequently, acquisition prospects that do not have, or are unable to provide
reasonable assurances that they will be able to obtain, the required audited
statements would not be considered by the Company to be appropriate for
acquisition so long as the reporting requirements of the Exchange Act are
applicable. Should the Company, during the time it remains subject to the
reporting provisions of the Exchange Act, complete an acquisition of an entity
for which audited financial statements prove to be unobtainable, the Company
would be exposed to enforcement actions by the Securities and Exchange
Commission (the "Commission") and to corresponding administrative sanctions,
including permanent injunctions against the Company and its management. The
legal and other costs of defending a Commission enforcement action would have
material, adverse consequences for the Company and its business. The imposition
of administrative sanctions would subject the Company to further adverse
consequences.
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In addition, the lack of audited financial statements would prevent the
securities of the Company from becoming eligible for listing on NASDAQ, or on
any existing stock exchange. Moreover, the lack of such financial statements is
likely to discourage broker-dealers from becoming or continuing to serve as
market makers in the securities of the Company. Without audited financial
statements, the Company would almost certainly be unable to offer securities
under a registration statement pursuant to the Securities Act of 1933, and the
ability of the Company to raise capital would be significantly limited until
such financial statements were to become available.
11. OTHER REGULATION. An acquisition made by the Company may be of a
business that is subject to regulation or licensing by federal, state, or local
authorities. Compliance with such regulations and licensing can be expected to
be a time-consuming, expensive process and may limit other investment
opportunities of the Company.
12. DEPENDENCE UPON MANAGEMENT; LIMITED PARTICIPATION OF MANAGEMENT. The
Company currently has only three individuals who are serving as its officers and
directors on a part time basis. The Company will be heavily dependent upon their
skills, talents, and abilities to implement its business plan, and may, from
time to time, find that the inability of the officers and directors to devote
their full time attention to the business of the Company results in a delay in
progress toward implementing its business plan. See "Management." Because
investors will not be able to evaluate the merits of possible business
acquisitions by the Company, they should critically assess the information
concerning the Company's officers and directors.
13. LACK OF CONTINUITY IN MANAGEMENT. The Company does not have an
employment agreement with its officers and directors, and as a result, there is
no assurance they will continue to manage the Company in the future. In
connection with acquisition of a business opportunity, it is likely the current
officers and directors of the Company may resign subject to compliance with
Section 14f of the Securities Exchange Act of 1934. A decision to resign will be
based upon the identity of the business opportunity and the nature of the
transaction, and is likely to occur without the vote or consent of the
stockholders of the Company.
14. INDEMNIFICATION OF OFFICERS AND DIRECTORS. Nevada Revised Statutes
provide for the indemnification of its directors, officers, employees, and
agents, under certain circumstances, against attorney's fees and other expenses
incurred by them in any litigation to which they become a party arising from
their association with or activities on behalf of the Company. The Company will
also bear the expenses of such litigation for any of its directors, officers,
employees, or agents, upon such person's promise to repay the Company therefor
if it is ultimately determined that any such person shall not have been entitled
to indemnification. This indemnification policy could result in substantial
expenditures by the Company which it will be unable to recoup.
15. DIRECTOR'S LIABILITY LIMITED. Nevada Revised Statutes exclude personal
liability of its directors to the Company and its stockholders for monetary
damages for breach of fiduciary duty except in certain specified circumstances.
Accordingly, the Company will have a much more limited right of action against
its directors than otherwise would be the case. This provision does not affect
the liability of any director under federal or applicable state securities laws.
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16. DEPENDENCE UPON OUTSIDE ADVISORS. To supplement the business experience
of its officers and directors, the Company may be required to employ
accountants, technical experts, appraisers, attorneys, or other consultants or
advisors. The selection of any such advisors will be made by the Company's
President without any input from stockholders. Furthermore, it is anticipated
that such persons may be engaged on an "as needed" basis without a continuing
fiduciary or other obligation to the Company. In the event the President of the
Company considers it necessary to hire outside advisors, he may elect to hire
persons who are affiliates, if they are able to provide the required services.
17. LEVERAGED TRANSACTIONS. There is a possibility that any acquisition of
a business opportunity by the Company may be leveraged, i.e., the Company may
finance the acquisition of the business opportunity by borrowing against the
assets of the business opportunity to be acquired, or against the projected
future revenues or profits of the business opportunity. This could increase the
Company's exposure to larger losses. A business opportunity acquired through a
leveraged transaction is profitable only if it generates enough revenues to
cover the related debt and expenses. Failure to make payments on the debt
incurred to purchase the business opportunity could result in the loss of a
portion or all of the assets acquired. There is no assurance that any business
opportunity acquired through a leveraged transaction will generate sufficient
revenues to cover the related debt and expenses.
18. COMPETITION. The search for potentially profitable business
opportunities is intensely competitive. The Company expects to be at a
disadvantage when competing with many firms that have substantially greater
financial and management resources and capabilities than the Company. These
competitive conditions will exist in any industry in which the Company may
become interested.
19. NO FORESEEABLE DIVIDENDS. The Company has not paid dividends on its
common stock and does not anticipate paying such dividends in the foreseeable
future.
20. LOSS OF CONTROL BY PRESENT MANAGEMENT AND STOCKHOLDERS. The Company may
consider an acquisition in which the Company would issue as consideration for
the business opportunity to be acquired an amount of the Company's authorized
but unissued common stock that would, upon issuance, represent the great
majority of the voting power and equity of the Company. The result of such an
20
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acquisition would be that the acquired company's stockholders and management
would control the Company, and the Company's management could be replaced by
persons unknown at this time. Such a merger would result in a greatly reduced
percentage of ownership of the Company by its current shareholders. In addition,
the Company's major shareholders could sell control blocks of stock at a premium
price to the acquired company's stockholders.
21. LIMITED PUBLIC MARKET. There is a limited public market for the
Company's common stock in the "Pink Sheets" (BIAN), and no assurance can be
given that a viable market will develop or that a shareholder ever will be able
to liquidate his investment without considerable delay, if at all. If a market
should develop, the price may be highly volatile. Factors such as those
discussed in this "Risk Factors" section may have a significant impact upon the
market price of the securities offered hereby. Owing to the low price of the
securities, many brokerage firms may not be willing to effect transactions in
the securities. Even if a purchaser finds a broker willing to effect a
transaction in these securities, the combination of brokerage commissions, state
transfer taxes, if any, and any other selling costs may exceed the selling
price. Further, many lending institutions will not permit the use of such
securities as collateral for any loans.
22. RULE 144 SALES. Shares of common stock held by present officers,
directors, and some stockholders are "restricted securities" within the meaning
of Rule 144 under the Securities Act of 1933, as amended. As restricted shares,
these shares may be resold only pursuant to an effective registration statement
or under the requirements of Rule 144 or other applicable exemptions from
registration under the Act and as required under applicable state securities
laws. Rule 144 provides in essence that a person who has held restricted
securities for one year may, under certain conditions, sell every three months,
in brokerage transactions, a number of shares that does not exceed the greater
of 1.0% of a company's outstanding common stock or the average weekly trading
volume during the four calendar weeks prior to the sale. There is no limit on
the amount of restricted securities that may be sold by a nonaffiliate after the
restricted securities have been held by the owner for a period of two years.
Nonaffiliate shareholders holding common shares of the Company who have held
their shares for two years and under Rule 144(K) are eligible to have freely
tradable shares. A sale under Rule 144 or under any other exemption from the
Act, if available, or pursuant to subsequent registration of shares of Common
Stock of present stockholders, may have a depressive effect upon the price of
the common stock in any market that may develop. 1,830,250 shares outstanding
become available for resale (subject to volume limitations for affiliates) under
Rule 144, ninety (90) days after the Company registers its common stock under
Section 12(g) with the Securities and Exchange Commission, all of which will be
subject to applicable volume restrictions under the Rule.
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF OPERATIONS OR PLAN OF OPERATIONS
- -------------------------------------------------------------------------------
Liquidity and Capital Resources
The Company remains in the development stage. Since November 1998, the
Company has financed operations and financing through the issuance of an
offering that raised $508,200 in cash in December 1998. The Company has no
liquidity or liquid assets at this time.
The Company will carry out its plan of business as discussed above. The
Company cannot predict to what extent its liquidity and capital resources will
be diminished prior to the consummation of a business combination or whether its
capital will be further depleted by the operating losses (if any) of the
business entity which the Company may eventually acquire.
Results of Operations
During the period from March 1992 (inception) through October 1998, the
Company has engaged in no significant operations other than organizational
activities.
COMPARISON OF OPERATING RESULTS FOR THE YEAR 1999 AND 1998:
- --------------------------------------------------------------------------------
The Company had no revenues in 1999 and 1998. The Company established a
provision for bad debt of $453,432 from Universal Alliance, Inc. and incurred
$84,715 in expenses in 1999 as compared to $26,340 in expenses in 1998. In
December 1998, the Company provided $450,060 of unsecured bridge financing to
Universal Alliance, Inc. ("UAI"). Interest accrued at an annual rate of 12
percent. The principal and interest were to be paid the earlier of one-year from
the date of receipt of proceeds. No payments have been received from UAI.
Effective December 31, 1999 the Company wrote-off the principal sum of $450,060
and accrued interest of $3,372. The Company has issued a formal demand for
payment of all principal and interest and has retained legal counsel to begin
collection efforts. The Promissory Notes provide that UAI will pay all costs of
collection and reasonable attorney's fees. The $84,715 of expenses in 1999
included $60,000 as a management fee to the President, $9,000 for an office and
related expenses; $6,000 was paid to Standard Poor's for financial coverage, and
$6,824 for the legal and accounting services related to the preparation of the
Form 10-SB. The $26,340 of expenses in 1998 included $10,000 as a management fee
to the President; $10,000 for the legal and other professional services incurred
to execute the Share Exchange Agreement with UAI; $2,845 in costs of
presentations; $1,800 for the preparation of audited financial statements and
$1,500 for office expenses and related expenses. Expenses in 1998 were reduced
by the $3,372 of then accrued interest on the Notes Receivable from UAI.
The net operating loss in 1999 was ($538,147) as compared to ($22,968) in
1998 due to the write-off of loan balances due. The net loss per share each year
was ($0.29) in 1999 and ($0.07) in 1998.
COMPARISON OF OPERATING RESULTS FOR THE THREE MONTHS ENDED MARCH 31, 2000 AND
MARCH 31, 1999:
- --------------------------------------------------------------------------------
The Company had no revenues in the quarter 2000 or 1999. In 2000 the
Company incurred $17,775 in expenses compared to $24,281 in 1999. In 2000,
$15,000 was incurred as a management fee to the President of the Company and
$2,250 was paid for the office and related expenses. In 1999, $15,000 was
incurred as a management fee to the President of the Company, $6,000 was paid to
Standard Poor's for financial coverage and $2,250 was paid for the office and
related expenses. Expenses in 1999 were reduced by the $13,502 of accrued
interest on the Notes Receivable from UAI.
The net operating loss in the first quarter in 2000 was ($17,775) as
compared to ($10,779) in 1999. The net loss per share for the quarter each year
was ($0.01) in 2000 and ($0.01) in 1999.
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For the current fiscal year, the Company anticipates incurring a loss as a
result of legal and accounting expenses, expenses associated with registration
under the Securities Exchange Act of 1934, and expenses associated with locating
and evaluating acquisition candidates. The Company anticipates that until a
business combination is completed with an acquisition candidate, it will not
generate revenues, and may continue to operate at a loss after completing a
business combination, depending upon the performance of the acquired business.
Need for Additional Financing
- -----------------------------
The Company does not have capital sufficient to meet the Company's cash
needs, including the costs of compliance with the continuing reporting
requirements of the Securities Exchange Act of 1934. The Company will have to
seek loans or equity placements to cover such cash needs. In the event the
Company is able to complete a business combination during this period, lack of
its existing capital may be a sufficient impediment to prevent it from
accomplishing the goal of completing a business combination. There is no
assurance, however, that the available funds will ultimately prove to be
adequate to allow it to complete a business combination. And once a business
combination is completed, the Company's needs for additional financing is likely
to increase substantially.
No commitments to provide additional funds have been made by management
or other stockholders. Accordingly, there can be no assurance that any
additional funds will be available to the Company to allow it to cover its
expenses.
Irrespective of whether the Company's cash assets prove to be inadequate
to meet the Company's operational needs, the Company might seek to compensate
providers of services by issuances of stock in lieu of cash.
Year 2000 Issues
- ----------------
Year 2000 problems result primarily from the inability of some computer
software to properly store, recall, or use data after December 31, 1999. These
problems may affect many computers and other devices that contain embedded
computer chips. The Company's operations, however, do not rely on information
technology (IT) systems. Accordingly, the Company does not believe it will be
material affected by Year 2000 problems.
The Company relies on non-IT systems that may suffer from Year 2000
problems, including telephone systems and facsimile and other office machines.
Moreover, the Company relies on third-parties that may suffer from Year 2000
problems that could affect the Company's operations, including banks, oil field
operators, and utilities. In light of the Company's substantially reduced
operations, the Company does not believe that such non-IT systems or third-party
Year 2000 problems will affect the Company in a manner that is different or more
substantial than such problems affect other similarly situated companies or
industry generally. Consequently, the Company does not currently intend to
conduct a readiness assessment of Year 2000 problems or to develop a detailed
contingency plan with respect to Year 2000 problems that may affect the Company.
ITEM 3. DESCRIPTION OF PROPERTY.
- --------------------------------
The Company has no property. The Company currently maintains an office at
462 Stevens Avenue, Suite 308, Solana Beach, California 92075. The Company pays
$ 750 per month for an office and all related expenses including receptionist,
clerical and technical support, office supplies, telephone, computer, etc.
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ITEM 4. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
- ------------------------------------------------------------------------
The following table sets forth, as of the date of this Registration
Statement, the number of shares of common stock owned of record and beneficially
by executive officers, directors and persons who hold 5.0% or more of the
outstanding common stock of the Company. Also included are the shares held by
all executive officers and directors as a group.
NUMBER OF
SHAREHOLDERS BENEFICIAL OWNERS SHARES PERCENTAGE
- --------------------------------------------------------------------------------
Cede & Co. 806,180 20.5%
Box 20 Bowling Green Station
New York, New York 10004
Leonard Viejo, President, Secretary & Director 2,100,000 53.4%
462 Stevens Avenue, Suite 308
Solana Beach, CA 92075
John T. Bigley, Director 0 0%
9406 Ipswich Street
San Antonio, TX 78250
Steven H. Wilhelm, Director 0 0%
1620 Fifth Avenue, Suite 770
San Diego, CA 92101
All directors and executive 2,100,000 53.4%
officers as a group (3 persons)
Each principal shareholder has sole investment power and sole voting power over
the shares.
ITEM 5. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS.
- ----------------------------------------------------------------------
The directors and executive officers currently serving the Company are
as follows:
NAME POSITION HELD TENURE
Leonard Viejo President, Secretary Annual
and Director
John T. Bigley Director Annual
Steven H. Wilhelm Director Annual
The directors named above will serve until the next annual meeting of
the Company's stockholders. Thereafter, directors will be elected for one-year
terms at the annual stockholders' meeting. Officers will hold their positions at
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the pleasure of the board of directors, absent any employment agreement, of
which none currently exists or is contemplated. There is no arrangement or
understanding between the directors and officers of the Company and any other
person pursuant to which any director or officer was or is to be selected as a
director or officer.
The directors and officers of the Company will devote such time to the
Company's affairs on an "as needed" basis, but less than 20 hours per month. As
a result, the actual amount of time which they will devote to the Company's
affairs is unknown and is likely to vary substantially from month to month.
Biographical Information
LEONARD VIEJO, Director and President as of November 25, 1998, age 51, is
President of ASTRUM Utility Services, LLC ("ASTRUM") (1997-Present) and Vice
President and Chief Financial Officer in the investment banking firm of Kinsell,
Newcomb & De Dios, Inc. ("Kinsell") (1994-Present). ASTRUM is an energy services
company that partners with municipalities to offer their communities competitive
utility rates and improved service benefits. Mr. Viejo also leads the utility
financing and acquisition practice for Kinsell. The firm has designed and
marketed, as a lead and a participating underwriter, over $4 billion in
financings. Prior to joining Kinsell, Mr. Viejo was a financial executive
reporting to the Chairman/CEO and served on the executive council of Sempra, an
energy management company. During his tenure in the industry, he has structured
innovative and cost effective financing transactions; and successfully
negotiated strategic business alliances. Prior to joining the utility
profession, Mr. Viejo earned his CPA and worked as a manager with Ernst & Young.
He graduated with honors from the University of Pennsylvania, Wharton School of
Finance and Commerce and Northwestern University, Kellogg Graduate School of
Management.
JOHN T. BIGLEY, Director as of May 15, 2000, age 51, is a Business
Development Executive for Allstar Systems, Inc. ("Allstar") (1997-present).
Allstar is a major computer integrator of information technology equipment and
sells technology management services and solutions to Fortune 200 companies that
include training, procurement, staffing, technical support and consulting
services. Prior to joining Allstar, Mr. Bigley was Executive Vice President of
Urban Systems Associates. ("Urban Systems") (1996-1997). Urban Systems
successfully developed a software program that predicted the clinical outcomes
of patient care for heart attach victims. Prior to joining Urban Systems he was
the Vice President of National Sales for Achievement Resources International
("Achievement Resources") (1994-1996). Achievement Resources distributed
personal interest and self-help videos. Prior to joining Achievement Resources
Mr. Bigley was a principal in Strategic Sales & Marketing, a manufactures
representative firm that focused on placing consumer electronic and computer
equipment to electronic superstore and mass merchant channels. Prior to joining
Strategic Sales & Marketing, he was National Manager of Market Requirements for
Epson America, Inc. the world's leading printer manufacturer. (1988-1993). Mr.
Bigley graduated from Eastern New Mexico University where he majored in
marketing.
STEVEN H. WILHELM, Director as of May 15, 2000, age 50, has practiced law
for 26 years. He established Steven H. Wilhelm, A Professional Corporation in
1979. The firm specializes in business litigation, business transactions,
intellectual property, asset protection and international tax planning. Mr.
Wilhelm is a member of the California and Kansas Bar Association. He received
his Bachelor of Science Degree and Juris Doctorate Degree from the University of
Kansas. Steven H. Wilhelm, APC provides legal services to the Company.
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Management will devote minimal time to the operations of the Company, 5
hours or less per week, and any time spent will be devoted to screening and
assessing and, if warranted, negotiating to acquire business opportunities.
It is possible that, after the Company successfully consummates a merger
or acquisition with an unaffiliated entity, that entity may desire to employ or
retain one or a number of members of the Company's management for the purposes
of providing services to the surviving entity, or otherwise provide other
compensation to such persons. However, the Company has adopted a policy whereby
the offer of any post-transaction remuneration to members of management will not
be a consideration in the Company's decision to undertake any proposed
transaction. Each member of management has agreed to disclose to the Company's
Board of Directors any discussions concerning possible compensation to be paid
to them by any entity which proposes to undertake a transaction with the Company
and further, to abstain from voting on such transaction. Therefore, as a
practical matter, if each member of the Company's Board of Directors were
offered compensation in any form from any prospective merger or acquisition
candidate, the proposed transaction would not be approved by the Company's Board
of Directors as a result of the inability of the Board to affirmatively approve
such a transaction.
It is possible that persons associated with management may refer a
prospective merger or acquisition candidate to the Company. In the event the
Company consummates a transaction with any entity referred by associates of
management, it is possible that such an associate will be compensated for their
referral in the form of a finder's fee. It is anticipated that this fee will be
either in the form of restricted common stock issued by the Company as part of
the terms of the proposed transaction, or will be in the form of cash
consideration. However, if such compensation is in the form of cash, such
payment will be tendered by the acquisition or merger candidate, because the
Company has insufficient cash available. The amount of such finder's fee cannot
be determined as of the date of filing this report, but is expected to be
comparable to consideration normally paid in like transactions. No member of
management nor any principal shareholder, of the Company will receive any
finders fee, either directly or indirectly, as a result of their respective
efforts to implement the Company's business plan outlined herein.
The Company has adopted a policy that its affiliates, principal
shareholders, and management shall not be issued further common shares of the
Company, as finders fees or other compensation.
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Previous "Blank Check" Offerings
- --------------------------------
Management of the Company has not been involved in any prior public
"blank check" offerings. Management has no "blank check" offerings contemplated
or in registration for any other company. Management may however, be involved
with other companies in the future which seek mergers or acquisitions.
Indemnification of Officers and Directors
- -----------------------------------------
As permitted by Nevada Revised Statutes, the Company may indemnify its
directors and officers against expenses and liabilities they incur to defend,
settle, or satisfy any civil or criminal action brought against them on account
of their being or having been Company directors or officers unless, in any such
action, they are adjudged to have acted with gross negligence or willful
misconduct. Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers or persons
controlling the Company pursuant to the foregoing provisions, the Company has
been informed that, in the opinion of the Securities and Exchange Commission,
such indemnification is against public policy as expressed in that Act and is,
therefore, unenforceable.
Exclusion of Liability
- ----------------------
The Nevada Business Corporation Act excludes personal liability for its
directors for monetary damages based upon any violation of their fiduciary
duties as directors, except as to liability for any breach of the duty of
loyalty, acts or omissions not in good faith or which involve intentional
misconduct or a knowing violation of law, acts in violation of the Nevada
Revised Statutes, or any transaction from which a director receives an improper
personal benefit. This exclusion of liability does not limit any right which a
director may have to be indemnified and does not affect any director's liability
under federal or applicable state securities laws.
Conflicts of Interest
- ---------------------
The officers and directors of the Company will not devote more than a
portion of their time to the affairs of the Company. There will be occasions
when the time requirements of the Company's business conflict with the demands
of their other business and investment activities. Such conflicts may require
that the Company attempt to employ additional personnel. There is no assurance
that the services of such persons will be available or that they can be obtained
upon terms favorable to the Company.
Conflicts of Interest - General. Certain of the officers and directors of
the Company may be directors and/or principal shareholders of other companies
and, therefore, could face conflicts of interest with respect to potential
acquisitions. In addition, officers and directors of the Company may in the
future participate in business ventures which could be deemed to compete
directly with the Company. Additional conflicts of interest and non-arms length
transactions may also arise in the future in the event the Company's officers or
directors are involved in the management of any firm with which the Company
transacts business. In addition, if the Company and other companies with
which the Company's officers and directors are affiliated both desire to take
advantage of a potential business opportunity, then the Board of Directors has
agreed that said opportunity should be available to each such company in the
order in which such companies registered or became current in the filing of
annual reports under the Exchange Act subsequent to January 1, 1997.
27
<PAGE>
The Company's officers and directors may actively negotiate or otherwise
consent to the purchase of a portion of their common stock as a condition to, or
in connection with, a proposed merger or acquisition transaction. It is
anticipated that a substantial premium over the initial cost of such shares may
be paid by the purchaser in conjunction with any sale of shares by the Company's
officers and directors which is made as a condition to, or in connection with, a
proposed merger or acquisition transaction. The fact that a substantial premium
may be paid to the Company's officers and directors to acquire their shares
creates a potential conflict of interest for them in satisfying their fiduciary
duties to the Company and its other shareholders. Even though such a sale could
result in a substantial profit to them, they would be legally required to make
the decision based upon the best interests of the Company and the Company's
other shareholders, rather than their own personal pecuniary benefit.
ITEM 6. EXECUTIVE COMPENSATION.
- --------------------------------
SUMMARY COMPENSATION TABLE OF EXECUTIVES
----------------------------------------
Annual Compensation Awards
Name and Year Salary Bonus Other Annual Restricted Securities
Principal ($) ($) Compensation Stock Underlying
Position ($) Award(s) Options/
($) SARs (#)
============== --------- ------------ --------- ------------------- ------------
Leonard Viejo, 1998 0 0 10,000 0 0
President --------- ------------ --------- ------------------- ------------
1999 0 0 60,000 0 0
============== --------- ------------ --------- ------------------- ------------
Kurt Wright 1999 0 0 0 0 0
Chairman (resigned 1999)
============== --------- ------------ --------- ------------------- ------------
Roger C. Davey, 1998 0 0 0 0 0
Secretary --------- ------------ --------- ------------------- ------------
1999 0 0 0 0 0
(resigned 2000)
============== --------- ------------ --------- ------------------- ------------
Directors' Compensation
-----------------------
Name Annual Meeting Consulting Number Number of
Retainer Fees Fees/Other of Securities
Fee ($) ($) Fees ($) Shares Underlying
(#) Options
SARs(#)
- --------------------------------------------------------------------------------
A. Director 0 0 0 0 0
Leonard Viejo
B. Director
John T. Bigley 0 0 0 0 0
C. Director
Steven H. Wilhelm 0 0 0 0 0
D. Director
Kurt Wright 0 0 0 0 0
(resigned 1999)
E. Director
Roger C. Davey 0 0 0 0 0
(resigned 2000)
Option/SAR Grants Table (None)
Aggregated Option/SAR Exercises in Last Fiscal Year an FY-End Option/SAR value
(None)
Long Term Incentive Plans - Awards in Last Fiscal Year (None)
28
<PAGE>
The Company has no stock option, retirement, pension, or profit-sharing programs
for the benefit of directors, officers or other employees, but the Board of
Directors may recommend adoption of one or more such programs in the future.
ITEM 7. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
- -------------------------------------------------------
Prior to the date of this Registration Statement, the Company issued to its
founders, officers, and directors, and to other shareholders, a total of 40,000
shares of common stock for a total of $13,200. Certificates evidencing the
common stock issued by the Company to these persons have all been stamped with a
restrictive legend, and are subject to stop transfer orders by the Company. For
additional information concerning restrictions that are imposed upon the
securities held by current stockholders, and the responsibilities of such
stockholders to comply with federal securities laws in the disposition of such
common stock, see "Risk Factors - Rule 144 Sales."
In March 1998, Jay Geier was issued 5 million shares of common stock @
$.001 per share for cash. Mr. Geier owned 247,150 of the 290,250 shares (post
reverse split of one for twenty) issued and outstanding. On November 25, 1998,
Reliant Securities, Ltd., a British Virgin Island Corporation, purchased 157,150
shares (post-reverse split of one for twenty) from Mr. Geier and as of that date
he resigned as President and Director of the Company.
Leonard Viejo, President, was issued 2,100,000 shares of common stock on or
about May 16, 2000 as the forgiveness of $42,000 of indebtedness for accrued
salaries and expenses.
No officer, director, or affiliate of the Company has or proposes to have
any direct or indirect material interest in any asset proposed to be acquired by
the Company through security holdings, contracts, options, or otherwise.
The Company has adopted a policy under which any consulting or finder's fee
that may be paid to a third party or affiliate for consulting services to assist
management in evaluating a prospective business opportunity would be paid in
stock or in cash. Any such issuance of stock would be made on an ad hoc basis.
Accordingly, the Company is unable to predict whether or in what amount such a
stock issuance might be made.
29
<PAGE>
The Company's current business address is at the office of the President of
the Company. The Company has agreed to pay $750 per month for an office and all
related expenses to a non-affiliate. It is likely that the Company will
establish and maintain a different office after completion of a business
combination.
Although management has no current plans to cause the Company to do so, it
is possible that the Company may enter into an agreement with an acquisition
candidate requiring the sale of all or a portion of the common stock held by the
Company's current stockholders to the acquisition candidate or principals
thereof, or to other individuals or business entities, or requiring some other
form of payment to the Company's current stockholders, or requiring the future
employment of specified officers and payment of salaries to them. It is more
likely than not that any sale of securities by the Company's current
stockholders to an acquisition candidate would be at a price substantially
higher than that originally paid by such stockholders. Any payment to current
stockholders in the context of an acquisition involving the Company would be
determined entirely by the largely unforeseeable terms of a future agreement
with an unidentified business entity.
Repayment of the outstanding debts of the company will undoubtedly be a
criteria which will be required to be satisfied by any target company. This of
course will require cash to be provided for such repayment of debts. The cash
would have to be provided either by the target company, or by a private
placement to new investors concurrent with the target company transaction. The
requirement of cash availability to pay old debt can be, and often is, a factor
which discourages, impairs, or precludes the Company from either negotiations
with a target company, or completion of a transaction with a target company.
ITEM 8. DESCRIPTION OF SECURITIES.
- -----------------------------------
Common Stock
The Company's Articles of Incorporation authorize the issuance of
100,000,000 shares of common stock $0.001 par value. Each record holder of
common stock is entitled to one vote for each share held on all matters properly
submitted to the stockholders for their vote. The Articles of Incorporation do
not permit cumulative voting for the election of directors. As of the date of
this Registration Statement a total of 3,930,250 common shares are issued and
outstanding.
Holders of outstanding shares of Common Stock are entitled to such
dividends as may be declared from time to time by the Board of Directors out of
legally available funds; and, in the event of liquidation, dissolution or
winding up of the affairs of the Company, holders are entitled to receive,
ratably, the net assets of the Company available to stockholders after
distribution is made to the preferred stockholders, if any, who are given
preferred rights upon liquidation. Holders of outstanding shares of common stock
have no preemptive, conversion or redemptive rights. All of the issued and
outstanding shares of common stock are, and all unissued shares when offered and
30
<PAGE>
sold will be, duly authorized, validly issued, fully paid, and nonassessable. To
the extent that additional shares of the Company's common stock are issued, the
relative interests of then existing stockholders may be diluted.
Shareholders
- ------------
Each shareholder has sole investment power and sole voting power over
the shares owned by such shareholder.
No shareholder has entered into or delivered any lock up agreement or
letter agreement regarding their shares or options thereon.
Transfer Agent
- --------------
The Company's transfer agent is Atlas Stock Transfer Corporation, 5899
South State Street, Salt Lake City, Utah 84107 as its transfer agent.
Reports to Stockholders
- -----------------------
The Company plans to furnish its stockholders with an annual report for
each fiscal year containing financial statements audited by its independent
certified public accountants. In the event the Company enters into a business
combination with another company, it is the present intention of management to
continue furnishing annual reports to stockholders. The Company intends to
comply with the periodic reporting requirements of the Securities Exchange Act
of 1934 for so long as it is subject to those requirements, and to file
unaudited quarterly reports and annual reports with audited financial statements
as required by the Securities Exchange Act of 1934.
31
<PAGE>
PART II
-------
ITEM 1. MARKET PRICE AND DIVIDENDS ON THE REGISTRANT'S COMMON EQUITY AND OTHER
SHAREHOLDER MATTERS
- --------------------------------------------------------------------------------
The Company's shares of common stock began trading on the Over-the-Counter
Bulletin Board on December 8, 1998 under the symbol "BIAN". In October 1999, due
to the change in Rule 15c2-11, the Company was reduced to trading in the "Pink
Sheets" because it did not have an effective Form 10SB. The prices set forth
below represent closing prices for 1998, 1999 and first quarter 2000.
High Low
---- ---
1998
----
Fourth Quarter $6.00 $5.25
1999
----
First Quarter $5.50 $1.00
Second Quarter $4.25 $0.75
Third Quarter $1.125 $0.125
Fourth Quarter $1.125 $0.012
2000
----
First Quarter $ 0.10 $ 0.02
December 28, 1998 and December 31, 1999 were the last dates the stock was traded
in 1998 and 1999, and the closing price was $6.00 and $0.02 respectively. The
most recent trade in the Company's common stock was @ $0.02 on April 14, 2000.
At December 31, 1998; December 31, 1999 and April 30, 2000 there were 62; 61,
and 61 holders of records of the Company's stock, respectively. No dividends
have been paid to date and the Company's Board of Directors does not anticipate
paying dividends in the foreseeable future.
ITEM 2. LEGAL PROCEEDINGS
- --------------------------
The Company is not a party to any pending legal proceedings, and no such
proceedings are known to be contemplated.
No director, officer or affiliate of the Company, and no owner of record
or beneficial owner of more than 5.0% of the securities of the Company, or any
associate of any such director, officer or security holder is a party adverse to
the Company or has a material interest adverse to the Company in reference to
any litigation.
ITEM 3. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS.
- -------------------------------------------------------
In prior audits, no disagreements exist with any former Accountant on any
matter of accounting principles or practices, financial statements disclosure,
or auditing scope of procedure, which disagreement if not resolved to the
satisfaction of the former Accountant would have caused the Accountant to make
reference in connection with his report to the subject matter of the
disagreement(s).
32
<PAGE>
ITEM 4. RECENT SALES OF UNREGISTERED SECURITIES.
- -------------------------------------------------
In the prior three years the Company has sold its Common Stock to the
persons listed in the table below in transactions summarized as follows:
CONSID-
AMOUNT OF ERATION
NAME & ADDRESS PURCHASE DATE SHARES PER SHARE
- --------------- ------------- ------ ---------
Jay A. Geier March 1998 5,000,000 $0.001
5234 Michelson Drive, #23D cash
Irvine, CA 92612
Booker Finance Ltd. December 7, 1998 300,000 $0.33
Suite 26-00, Level 26, Menara IMC cash
Jalan Sultan Ismail
50250, Kuala Lumpur
Britannia Securities Ltd. December 7, 1998 300,000 $0.33
North Town Mills, Level 4 cash
PO Box 370
Trinity Square
St. Peter Port
Guernsey GYI 3NY
Holder Row Ltd. December 9, 1998 300,000 $0.33
Level 9, 575 Bourke Street cash
Melbourne 3000
Victoria Austrailia
Normandy Investmentts, Inc. December 11, 1998 300,000 $0.33
111 Bayside Drive, Suite 200 cash
Corona Del Mar, CA 92625
Salamander Group Investments, Ltd. December 11, 1998 300,000 $0.33
North Town Mills, Level 4 cash
PO Box 370
Trinity Square
St. Peter Port
Guernsey GYI
Leonard and Amber Viejo January 29, 1999 30,000 $0.33
462 Stevens Ave., Suite 308 cash
Solana Beach, CA 92075
Anthony D. Robinson February 2, 1999 10,000 $0.33
7 Airedale Avenue cash
Hawthorn East 3123
Victoria Australia
Leonard Viejo, President May 16, 2000 2,100,000 $0.02
462 Stevens Ave., Suite #308 debt
Solana Beach, CA 92075 forgiveness
of $42,000
Each of the sales listed above was made for cash or services as listed. All
of the listed sales were made in reliance upon the exemption from registration
offered by Section 4(2) of the Securities Act of 1933, as amended and all sales
except to Jay A. Geier and Leonard Viejo were made in reliance upon Rule 504 of
Regulation D. The shares issued to Jay A. Geier and Leonard Viejo were made in
reliance upon the exemption from registration offered by Section 4(2) of the
Securities Act of 1933, as amended.
33
<PAGE>
ITEM 5. INDEMNIFICATION OF DIRECTORS AND OFFICERS
- --------------------------------------------------
The Nevada Revised Statutes provide that the Company may indemnify its
officers and directors for costs and expenses incurred in connection with the
defense of actions, suits, or proceedings where the officer or director acted in
good faith and in a manner he reasonably believed to be in the Company's best
interest and is a party by reason of his status as an officer or director,
absent a finding of negligence or misconduct in the performance of duty.
34
<PAGE>
SIGNATURES:
-----------
Pursuant to the requirements of Section 12 of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on its behalf by
the undersigned, thereunto duly authorized.
DATED: May 22, 2000
BIO-AMERICAN CAPITAL CORPORATION
--------------------------------
by:/s/Leonard Viejo
_____________________
Leonard Viejo
President/Secretary
Directors:
by:/s/Leonard Viejo
_____________________________
Leonard Viejo
Director
by:/s/John T. Bigley
_____________________________
John T. Bigley
Director
by:/s/Steven H. Wilhelm
_____________________________
Steven H. Wilhelm
Director
35
<PAGE>
BIO-AMERICAN CAPITAL CORPORATION
(A Development Stage Company)
Index to Financial Statements
FINANCIAL STATEMENTS FOR THE PERIOD MAY 5, 1992 (INCEPTION) TO DECEMBER 31, 1999
Auditors Report F-1
Balance Sheet F-2
Statement of Operations F-3
Statement of Cash Flows F-4
Statement of Stockholders' Equity F-5
Notes to Financial Statements F-6-F-10
INTERIM FINANCIAL STATEMENTS - MARCH 31, 2000 (UNAUDITED)
Cover Page F-11
Balance Sheet F-12
Statement of Operations F-13
Statement of Cash Flows F-14
Statement of Stockholders' Equity F-15
Notes to Financial Statements F-16
36
<PAGE>
BIO-AMERICAN CAPITAL CORPORATION
(A Development Stage Company)
Financial Statements
For the Period May 5, 1992 (Inception) to December 31, 1999
<PAGE>
Michael Johnson & Co., LLC
Certified Public Accountants
9175 East Kenyon Ave., Suite 100
Denver, Colorado 80237
Michael B. Johnson C.P.A. Telephone: (303) 796-0099
Member: A.I.C.P.A. Fax:(303) 796-0137
Colorado Society of C.P.A.s
INDEPENDENT AUDITOR'S REPORT
To the Board of Directors of
Bio-American Capital Corporation
We have audited the accompanying balance sheet of Bio-American Capital
Corporation as of December 31, 1999 and December 31, 1998, and the related
statements of operations, changes in stockholders' equity, and cash flows for
the period May 5, 1992 (inception) through December 31, 1999, and for the years
ended December 31 1999 and 1998. 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 statement is 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 Bio-American Capital Corp., as
of December 31, 1999 and 1998 and the results of their operations and their cash
flows for the period May 5, 1992 (inception) through December 31, 1999, and for
the years ended December 31, 1999 and 1998 in conformity with generally accepted
accounting principles.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As described in Note 9 to the
financial statements, conditions exist which raise substantial doubt about the
Company's ability to continue as a going concern unless it is able to generate
sufficient cash flows to meet its obligations and sustain its operations. The
financial statements do not include any adjustments that might result from the
outcome of this uncertainty.
/s/Michael B. Johnson & Co., LLC
Denver, Colorado
April 28, 2000
F-1
<PAGE>
<TABLE>
<CAPTION>
BIO-AMERICAN CAPITAL CORP.
(A Development Stage Company)
BALANCE SHEET
<S> <C> <C>
December 31, December 31,
1999 1998
---------------- -----------------
ASSETS:
Current Assets:
Cash $589 $29,820
Interest Receivable 0 3,372
Notes Receivable 0 450,060
---------------- -----------------
TOTAL ASSETS $589 $483,252
================ =================
LIABILITIES & STOCKHOLDERS' EQUITY (DEFICIT):
Current Liabilities:
Accounts Payable $47,074 $22,377
Accrued Liabilities 1,087 0
Notes Payable 16,500 0
---------------- -----------------
Total Current Liabilities 64,661 22,377
---------------- -----------------
Stockholders' Equity (Deficit):
Common Stock, par value $0.001; 100,000,000
shares authorized; 1,830,250 shares issued and
outstanding in 1999, and 1,830,250 shares issued
and outstanding in 1998. 1,830 1,830
Additional Paid-in Capital 503,183 503,183
Stock Subscription Receivable 0 (13,200)
Accumulated Deficit during the Development Stage (569,085) (30,938)
---------------- -----------------
Total Stockholders' Equity (Deficit) (64,072) 460,875
---------------- -----------------
TOTAL LIABILITIES & STOCKHOLDERS' EQUITY (DEFICIT) $589 $483,252
================ =================
The accompanying notes are an integral part of these financial statements.
F-2
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
BIO-AMERICAN CAPITAL CORP.
(A Development Stage Company)
STATEMENT OF OPERATIONS
<S> <C> <C> <C>
For the Period
For the For the May 5, 1992
Year Ended Year Ended (Inception) to
December 31, December 31, December 31,
1999 1998 1999
--------------- ------------------- --------------------
REVENUE: $0 $0 $0
EXPENSES:
Provision for Bad Debt 453,432 0 453,432
Amortization 0 0 500
Professional Expenses 14,500 14,840 34,813
Management Fees 60,000 10,000 70,000
Travel 128 0 2,125
Office Expenses 9,000 1,500 10,500
Interest Expense 1,087 0 1,087
--------------- ------------------- --------------------
TOTAL EXPENSES 538,147 26,340 572,457
--------------- ------------------- --------------------
OTHER INCOME 0 3,372 3,372
--------------- ------------------- --------------------
NET LOSS $(538,147) $(22,968) $(569,085)
=============== =================== ====================
NET LOSS PER SHARE $(0.29) $(0.07)
=============== ===================
WEIGHTED AVERAGE SHARES OUTSTANDING 1,830,250 313,062
=============== ===================
The accompanying notes are an integral part of these financial statements.
F-3
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
BIO-AMERICAN CAPITAL CORP.
(A Development Stage Company)
STATEMENT OF CASH FLOWS
<S> <C> <C> <C>
For the
Period
For the For the May 5, 1992)
Year Ended Year Ended (Inception) to
December 31, December 31, December 31,
1999 1998 1999
---------------- --------------- -----------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Loss $(538,147) $(22,968) $(569,085)
Adjustments to reconcile net loss to net cash
used in operating activities;
Amortization 0 0 500
Changes in assets and liabilities:
Increase in Accounts Payable 24,697 22,207 47,074
Increase in Accrued Liabilities 1,087 0 1,087
Decrease (Increase) in Interest Receivable 3,372 (3,372) 0
Decrease (Increase) in Notes Receivable 450,060 (450,060) 0
---------------- --------------- -----------------
Net Cash Used in Operating Activities (58,931) (454,193) (520,424)
---------------- --------------- -----------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Incorporation Costs 0 0 (500)
---------------- --------------- -----------------
Net Cash Used in Investing Activities 0 0 (500)
---------------- --------------- -----------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from Sale of Common Stock 13,200 484,013 505,013
Proceeds from Notes Payable 16,500 0 16,500
---------------- --------------- -----------------
Net Cash Provided by Financing Activities 29,700 484,013 521,513
---------------- --------------- -----------------
(Decrease) Increase in Cash (29,231) 29,820 589
CASH - BEGINNING OF PERIOD 29,820 0 0
---------------- --------------- -----------------
CASH - END OF PERIOD $589 $29,820 $589
================ =============== =================
Supplemental Disclosures of Cash Flow Information
Cash paid during the year for:
Interest $1,087 $0 $1,087
---------------- --------------- -----------------
Income taxes $0 $0 $0
---------------- --------------- -----------------
The accompanying notes are an integral part of these financial statements.
F-4
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
BIO-AMERICAN CAPITAL CORP.
(A Development Stage Company)
STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIT)
<S> <C> <C> <C> <C> <C> <C>
Deficit
Accumulated
Common Stocks Additional Stock During the
---------------------------- Paid-In Subscription Development
Shares Amount Capital Receivable Stage Total
-------------- ------------- ---------------- -------------- ----------------- ----------------
Balance - May 5, 1992 (Inception) 0 $0 $0 $0 $0 $0
-------------- ------------- ---------------- ------------- ----------------- -----------------
Balance - December 31, 1992 0 0 0 0 0 0
-------------- ------------- ---------------- -------------- ----------------- -----------------
Issuance to Founders for Cash 39,000 39 7,761 0 7,800
Net Loss 0 0 0 (1,285) (1,285)
-------------- ------------- ---------------- --------------- ----------------- -----------------
Balance - December 31, 1993 39,000 39 7,761 0 (1,285) 6,515
-------------- ------------- ---------------- -------------- ----------------- -----------------
Net Loss 0 0 0 (2,732) (2,732)
-------------- ------------- ---------------- ----------------- -----------------
Balance - December 31, 1994 39,000 39 7,761 0 (4,017) 3,783
-------------- ------------- ---------------- -------------- ----------------- -----------------
Net Loss 0 0 0 (3,583) (3,583)
-------------- ------------- ---------------- ----------------- -----------------
Balance - December 31, 1995 39,000 39 7,761 0 (7,600) 200
-------------- ------------- ---------------- -------------- ----------------- -----------------
Net Loss 0 0 0 (185) (185)
-------------- ------------- ---------------- ----------------- -----------------
Balance - December 31, 1996 39,000 39 7,761 0 (7,785) 15
-------------- ------------- ---------------- -------------- ----------------- -----------------
Net Loss 0 0 0 (185) (185)
-------------- ------------- ---------------- ----------------- -----------------
Balance - December 31, 1997 39,000 39 7,761 0 (7,970) (170)
-------------- ------------- ---------------- -------------- ----------------- -----------------
Issuance of Stock for cash
- January 5, 1998 251,250 251 4,749 0 0 5,000
Issuance of Stock for cash
- December 11, 1998 1,500,000 1,500 477,513 0 0 479,013
Issuance of Stock for subscription
agreement - December 31, 1998 40,000 40 13,160 (13,200) 0 0
Net Loss 0 0 0 0 (22,968) (22,968)
-------------- ------------- ---------------- -------------- ----------------- -----------------
Balance - December 31, 1998 1,830,250 1,830 503,183 (13,200) (30,938) 460,875
-------------- ------------- ---------------- -------------- ----------------- -----------------
Cash payment for subscription agreement
- January and February 1999 0 0 0 13,200 0 13,200
Net Loss 0 0 0 0 (538,147) (538,147)
-------------- ------------- ---------------- -------------- ----------------- -----------------
Balance - December 31, 1999 1,830,250 $1,830 $503,183 $0 $(569,085) $(64,072)
============== ============= ================ ============== ================= =================
The accompanying notes are an integral part of these financial statements.
F-5
</TABLE>
<PAGE>
BIO-AMERICAN CAPITAL CORP.
(A Development Stage Company)
Notes to Financial Statements
December 31, 1999
NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
ORGANIZATION:
Bio-American Capital Corporation (a Development Stage Company) was
incorporated in May 1992 in the state of Nevada to raise capital for a
business venture. The Company now acts as a merchant bank to organize,
capitalize, acquire and finance technology companies in the electronic
communications and commerce industry.
The Company fiscal year end is December 31.
BASIS OF PRESENTATION - DEVELOPMENT STAGE COMPANY
The Company has not earned significant revenue from planned principal
operations. Accordingly, the Company's activities have been accounted
for as those of a "Development Stage Enterprise" as set forth in
Financial Accounting Standards Board Statement No. 7 ("SFAS 7"). Among
the disclosures required by SFAS 7 are that the Company's financial
statements be identified as those of a development stage company, and
that the statements of operations, stockholders' equity (deficit) and
cash flows disclose activity since the date of the Company's inception.
BASIS OF ACCOUNTING:
The accompanying financial statements have been prepared on the accrual
basis of accounting in accordance with generally accepted accounting
principles.
CASH AND CASH EQUIVALENTS:
The Company considers all highly-liquid debt instruments, purchased
with an original maturity of three months, to be cash equivalents.
REVENUE RECOGNITION:
The Company sells merchant banking services and intends to take senior
debt and equity positions in companies which it chooses to finance and
will provide consulting services for capital structuring, and
reorganization of small technology companies to assist in market share
growth and the development of the capital structure to facilitate an
eventual public offering. Revenue consist of fees for services and an
interest earned on monies advanced and the gain from the sale of equity
positions.
F-6
<PAGE>
BIO-AMERICAN CAPITAL CORP.
(A Development Stage Company)
Notes to Financial Statements
December 31, 1999
USE OF ESTIMATES:
The preparation of financial statements, in conformity with generally
accepted accounting principles, requires management to make estimates
and assumptions that affect the reported amounts of assets and
liabilities, and disclosure of contingent assets and liabilities at the
date of the financial statements and the reported amounts of revenue
and expenses during the reporting period. Actual results could differ
from those estimates.
NET LOSS PER SHARE:
Basic and diluted net loss per share information is presented under the
requirements of SFAS No. 128, EARNINGS PER SHARE. Basic net loss per
share is computed by dividing net loss by the weighted average number
of shares of common stock outstanding for the period, less shares
subject to repurchase. Diluted net loss per share reflects the
potential dilution of securities by adding other common stock
equivalents, including stock options, shares subject to repurchase,
warrants and convertible preferred stock, in the weighted-average
number of common shares outstanding for a period, if dilutive. All
potentially dilutive securities have been excluded from the
computation, as their effect is anti-dilutive.
INCOME TAXES:
The Company accounts for income taxes under SFAS No. 109, which
requires the asset and liability approach to accounting for income
taxes. Under this approach, deferred income taxes are determined based
upon differences between the financial statement and tax bases of the
Company's assets and liabilities and operating loss carryforwards using
enacted tax rates in effect for the years in which the differences are
expected to reverse. Deferred tax assets are recognized if it is more
likely than not that the future tax benefit will be realized.
FAIR VALUE OF FINANCIAL INSTRUMENTS
The carrying amount of cash, notes receivable, accounts payable and
accrued expenses are considered to be representative of their
respective fair values because of the short-term nature of these
financial instruments. The carrying amount of the notes payable are
reasonable estimates of fair value as the loans bear interest based on
market rates currently available for debt with similar terms.
NOTE 2 - STOCK SUBSCRIPTION:
During November 1998 the Company accepted the Subscription Agreements
to purchase 3,000,000 shares of common stock for $990,000 pursuant to
an exempt Offering Circular under Regulation D, Rule 504 of the
Securities and Exchange Commission. The Company received $495,000 to
purchase 1,500,000 shares in December 1998, $9,900 to purchase 30,000
shares in January 1999, and $3,300 to purchase 10,000 shares in
February 1999. Total monies received were $508,200, less offering costs
of $15,987, for 1,540,000 shares. Funds for the remaining 1,460,000
shares were not received and the remaining subscription agreements were
cancelled.
F-7
<PAGE>
BIO-AMERICAN CAPITAL CORP.
(A Development Stage Company)
Notes to Financial Statements
December 31, 1999
NOTE 3 - NOTES PAYABLE
Following is a summary of notes payable at December 31, 1999
AMOUNT
Note Payable to shareholder, 12%, unsecured,
matures on March 31, 2000 $ 8,250
Note Payable to shareholder, 12%, unsecured,
MATURES ON MARCH 31, 2000 8,250
---------
TOTAL $16,500
=======
The president of the Company provided services and advanced cash to the
Company for operations. Certain of these transactions resulted in notes
being issued to the president, which were still outstanding at December
31, 1999.
NOTE 4 -BAD DEBTS
NOTES RECEIVABLE
In December 1998, the Company provided $450,060 of unsecured bridge
notes to finance Universal Alliance, Inc. ("UAI"). The principal and
interest of these notes were to be paid the earlier of one year from
the date of issue or from the proceeds raised from the UAI Confidential
Offering Memorandum that was issued in December 1998. These notes also
grant the Company the option to purchase 90,000 shares of UAI common
stock at a price of $5.00 per share.
Following is a summary of notes receivable at December 31, 1998
AMOUNT
12% Note Receivable from Universal Alliance, Inc. dated 12/4/98,
matures on 12/4/99, unsecured $ 250,030
12% Note Receivable from Universal Alliance, Inc. dated 12/12/98,
matures on 12/12/99, unsecured 50.000
12% Note Receivable from Universal Alliance, Inc. dated 12/17/98,
MATURES ON 12/17/99, UNSECURED 150,030
----------
TOTAL $ 450,060
=========
Effective December 31, 1999, the Company wrote-off the principal sum of
$450,060 and accrued interest of $3,372. No payments have been received
from UAI. The Company has issued a formal demand for payment of all
principal and interest and retained counsel to begin collection
efforts. The Promissory Notes provide UAI will pay all costs of
collection and reasonable attorney's fees. The Company did not execute
its options to purchase the UAI common stock.
NOTE 5 -COMMITMENT AND CONTINGENCIES:
MANAGEMENT FEE AND RENTAL LEASE
Under a month-to-month agreement the Company has agreed to pay the
president of the Company a management fee of $5,000 a month for
services rendered. The Company also pays $750 a month for an office
suite and all related expenses including receptionist, clerical and
technical support, office supplies, postage, telephone and computer
equipment under a month-to-month agreement.
F-8
<PAGE>
BIO-AMERICAN CAPITAL CORP.
(A Development Stage Company)
Notes to Financial Statements
December 31, 1999
NOTE 6 - RELATED PARTY TRANSACTIONS
The officers and directors of this company are also officers and
directors of other companies.
NOTE 7 - CAPITAL STOCK TRANSACTIONS
During November 1998 the Company raised $508,200 from an exempt
Offering Circular under Regulation D, Rule 504 of the Securities and
Exchange Commission.
REVERSE STOCK SPLIT:
On November 10, 1998, the Company's Articles of Incorporation were
amended to reduce the number of shares issued and outstanding on a
basis of one new share for each twenty of such issued and outstanding,
provided that no stockholder shall be reduced thereby to less than 100
shares. The reverse stock split was effective on November 25, 1998. All
per share disclosures have been restated to reflect the reverse split.
NOTE 8 - INCOME TAXES
There has been no provision for U.S. federal, state, or foreign income
taxes for any period because the Company has incurred losses in all
periods and for all jurisdictions.
Deferred income taxes reflect the net tax effects of temporary
differences between the carrying amounts of assets and liabilities for
financial reporting purposes and the amounts used for income tax
purposes. Significant components of deferred tax assets are as follows:
Deferred tax assets
Net operating loss carryforwards $569,085
VALUATION ALLOWANCE FOR DEFERRED TAX ASSETS (569,085)
--------
NET DEFERRED TAX ASSETS $ -
========
Realization of deferred tax assets is dependent upon future earnings,
if any, the timing and amount of which are uncertain. Accordingly, the
net deferred tax assets have been fully offset by a valuation
allowance. As of December 31, 1999, the Company had net operating loss
carryforwards of approximately $569,085 for federal income tax
purposes. These carryforwards, if not utilized to offset taxable income
begin to expire in 2113. Utilization of the net operating loss may be
subject to substantial annual limitation due to the ownership change
limitations provided by the Internal Revenue Code and similar state
provisions. The annual limitation could result in the expiration of the
net operating loss before utilization.
F-9
<PAGE>
BIO-AMERICAN CAPITAL CORP.
(A Development Stage Company)
Notes to Financial Statements
December 31, 1999
NOTE 9 -GOING CONCERN:
The accompanying financial statements have been prepared in conformity
with generally accepted accounting principles, which contemplates
continuation of the Company as a going concern. The Company operations
are in the development stage and the Company has experienced
significant losses from limited operations. As shown in the financial
statements, the Company incurred a net loss of $538,147 in 1999.
The future success of the Company is likely dependent on its ability
to attain additional capital to develop its proposed objectives and
ultimately, upon its ability to attain future profitable operations.
There can be no assurance that the Company will be successful in
obtaining such financing, or that it will attain positive cash flow
from operations.
F-10
<PAGE>
BIO-AMERICAN CAPITAL CORPORATION
(A Development Stage Company)
UNAUDITED INTERIM FINANCIAL STATEMENTS
For the Period March 31, 2000 and March 31, 1999
F-11
<PAGE>
<TABLE>
<CAPTION>
BIO-AMERICAN CAPITAL CORPORATION
BALANCE SHEET
(Unaudited)
<S> <C> <C>
March 31, December 31,
2000 1999
---------------- ----------------
(Unaudited)
ASSETS:
Current Assets:
Cash $559 $589
Interest Receivable 0 0
Notes Receivable 0 0
---------------- ----------------
TOTAL ASSETS $559 $589
================ ================
LIABILITIES & STOCKHOLDERS' EQUITY (DEFICIT):
Current Liabilities:
Accounts Payable $64,324 $47,074
Accrued Liabilities 1,582 1,087
Notes Payable 16,500 16,500
---------------- ----------------
Total Current Liabilities 82,406 64,661
---------------- ----------------
Stockholders' Equity (Deficit):
Common Stock, par value $0.001; 100,000,000
shares authorized; 1,830,250 shares issued and
outstanding in 1999, and 1,830,250 shares issued
and outstanding in 1998. 1,830 1,830
Additional Paid-in Capital 503,183 503,183
Accumulated Deficit during the Development Stage (586,860) (569,085)
---------------- ----------------
Total Stockholders' Equity (Deficit) (81,847) (64,072)
---------------- ----------------
TOTAL LIABILITIES & STOCKHOLDERS' EQUITY (DEFICIT) $559 $589
================ ================
F-12
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
BIO-AMERICAN CAPITAL CORPORATION
STATEMENT OF OPERATIONS
(Unaudited)
<S> <C> <C> <C>
For the For the For the Period
Three Months Three Months May 5, 1992
Ended Ended (Inception) to
March 31, March 31, March 31,
2000 1999 2000
---------------- ------------------ ------------------
(Unaudited) (Unaudited) (Unaudited)
REVENUE: $0 $0 $0
EXPENSES:
Provision for Bad Debt 0 0 453,432
Amortization 0 0 500
Professional Expenses 0 6,993 34,813
Management Fees 15,000 15,000 85,000
Travel 30 38 2,155
Office Expenses 2,250 2,250 12,750
Interest Expense 495 0 1,582
---------------- ------------------ ------------------
TOTAL EXPENSES 17,775 24,281 590,232
---------------- ------------------ ------------------
OTHER INCOME 0 13,502 3,372
---------------- ------------------ ------------------
NET LOSS $(17,775) $(10,779) $(586,860)
================ ================== ==================
NET LOSS PER SHARE $(0.01) $(0.01)
================ ==================
WEIGHTED AVERAGE SHARES OUTSTANDING 1,830,250 1,830,250
================ ==================
F-13
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
BIO-AMERICAN CAPITAL CORPORATION
STATEMENT OF CASH FLOWS
(Unaudited)
<S> <C> <C> <C>
For the
For the For the Period
Three Months Three Months May 5, 1992
Ended Ended (Inception) to
March 31, March 31, March 31,
2000 1999 2000
-------------------- --------------- -----------------
(Unaudited) (Unaudited) (Unaudited)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Loss $(17,775) $(10,779) $(586,860)
Adjustments to reconcile net loss to net cash
used in operating activities;
Amortization 0 0 500
Changes in assets and liabilities:
Increase (Decrease) in Accounts Payable 17,250 (11,323) 64,324
Increase in Accrued Liabilities 495 0 1,582
Increase in Interest Receivable 0 (13,502) 0
------------------- ------------------ -----------------
Net Cash Used in Operating Activities (30) (35,604) (520,454)
-------------------- ------------------ -----------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Incorporation Costs 0 0 (500)
-------------------- ------------------ -----------------
Net Cash Used in Investing Activities 0 0 (500)
-------------------- ------------------ -----------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from Sale of Common Stock 0 13,200 505,013
Proceeds from Notes Payable 0 0 16,500
-------------------- ------------------ -----------------
Net Cash Provided by Financing Activities 0 13,200 521,513
-------------------- ------------------ -----------------
(Decrease) Increase in Cash (30) (22,404) 559
CASH - BEGINNING OF PERIOD 589 29,820 0
-------------------- ----------------- -----------------
CASH - END OF PERIOD $559 $7,416 $559
==================== ================= =================
Supplemental Disclosures of Cash Flow
Information Cash paid during the year for:
Interest $495 $0 $1,087
-------------------- ------------------- -----------------
Income taxes $0 $0 $0
-------------------- ------------------- -----------------
F-14
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
BIO-AMERICAN CAPITAL CORPORATION
STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIT)
(Unaudited)
<S> <C> <C> <C> <C> <C> <C>
Deficit
Accumulated
Additional Stock During the
Common Stocks Paid-In Subscription Development
Shares Amount Capital Receivable Stage Total
------------- ----------- --------------- ----------- -------------- ----------
Balance - May 5, 1992 (Inception) 0 $0 $0 $0 $0 $0
------------- ----------- -------------- ----------- ------------- -----------
Balance - December 31, 1992 0 0 0 0 0 0
------------- ----------- --------------- ----------- ------------- ------------
Issuance to Founders for Cash 39,000 39 7,761 0 7,800
Net Loss 0 0 0 (1,285) (1,285)
------------- ----------- --------------- ----------- ------------- ------------
Balance - December 31, 1993 39,000 39 7,761 0 (1,285) 6,515
------------- ----------- --------------- ----------- ------------- ------------
Net Loss 0 0 0 (2,732) (2,732)
------------- ----------- --------------- ----------- ------------- ------------
Balance - December 31, 1994 39,000 39 7,761 0 (4,017) 3,783
------------- ----------- --------------- ----------- ------------- ------------
Net Loss 0 0 0 (3,583) (3,583)
------------- ----------- --------------- ----------- ------------- ------------
Balance - December 31, 1995 39,000 39 7,761 0 (7,600) 200
------------- ----------- --------------- ----------- ------------- ------------
Net Loss 0 0 0 (185) (185)
------------- ----------- --------------- ----------- ------------- ------------
Balance - December 31, 1996 39,000 39 7,761 0 (7,785) 15
-------------- ----------- --------------- ----------- ------------- ------------
Net Loss 0 0 0 (185) (185)
-------------- ------------ -------------- ----------- ------------ ------------
Balance - December 31, 1997 39,000 39 7,761 0 (7,970) (170)
-------------- ------------ -------------- ----------- ------------ ------------
Issuance of Stock for cash -
January 5, 1998 251,250 251 4,749 0 0 5,000
Issuance of Stock for cash -
December 11, 1998 1,500,000 1,500 477,513 0 0 479,013
Issuance of stock for
subscription agreement -
December 31, 1998 40,000 40 13,160 (13,200) 0 0
Net Loss 0 0 0 0 (22,968) (22,968)
-------------- ------------ -------------- ----------- ------------ ------------
Balance - December 31, 1998 1,830,250 1,830 503,183 (13,200) (30,938) 460,875
-------------- ------------ -------------- ------------ ------------ ------------
Cash payment for subscription agreement
- January and February 1999 0 0 0 13,200 0 13,200
Net Loss 0 0 0 0 (538,147) (538,147)
-------------- ------------ -------------- ----------- ------------ ------------
Balance - December 31, 1999 1,830,250 1,830 503,183 0 (569,085) (64,072)
Net Loss 0 0 0 0 (17,775) (17,775)
Balance - March 31, 2000 1,830,250 $1,830 $503,183 $0 $(586,860) $(81,847)
============== ============ ============== =========== ============ ============
F-15
</TABLE>
<PAGE>
BIO-AMERICAN CAPITAL CORP.
(A Development Stage Company)
Notes to Financial Statements
March 31, 2000
NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
ORGANIZATION:
Bio-American Capital Corporation (a Development Stage Company) was
incorporated in May 1992 in the state of Nevada to raise capital for a
business venture. The Company now acts as a merchant bank to organize,
capitalize, acquire and finance technology companies in the electronic
communications and commerce industry.
The accompanying unaudited financial statements have been prepared in
accordance with the instructions to Form 10-QSB and do not include all
of the information and notes required by generally accepted accounting
principles for complete financial statements. In the opinion of
management, all material adjustments, consisting of only normal
recurring adjustments considered necessary for a fair presentation,
have been included. These statements should be read in conjunction with
the financial statements and notes thereto included in the Company's
Form 10-SB.
The results of operations for the three months ended March 31, 2000,
are not necessarily indicative of the results for the reminder of the
fiscal year ending December 31, 2000.
NET LOSS PER SHARE:
Basic and diluted net loss per share information is presented under the
requirements of SFAS No. 128, Earnings per Share. Basic net loss per
share is computed by dividing net loss by the weighted average number
of shares of common stock outstanding for the period; less shares
subject to repurchase. Diluted net loss per share reflects the
potential dilution of securities by adding other common stock
equivalents, including stock options, shares subject to repurchase,
warrants and convertible preferred stock, in the weighted-average
number of common shares outstanding for a period, if dilutive. All
potentially dilutive securities have been excluded from the
computation, as their effect is anti-dilutive.
F-16
<PAGE>
INDEX TO EXHIBITS
SK#
3.1 Articles of Incorporation
3.2 Certificate of Amendment
3.3 Bylaws
27.1 Financial Data Schedule
37
ARTICLES OF INCORPORATION
OF
BIO-AMERICAN CAPITAL CORPORATION
ARTICLE ONE
The name of the corporation is BIO-AMERICAN CAPITAL CORPORATION.
ARTICLE TWO
The Resident Agent for this corporation is Marilyn K. Radloff, 115 Taurus
Circle, Reno, Nevada 89511.
ARTICLE THREE
The purpose or purposes for which this corporation is organized are:
To engage, without qualification, in any lawful act or activity for which
corporations may be organized under the laws of the State of Nevada.
ARTICLE FOUR
The amount of the total authorized capital stock the corporation shall have the
authority to issue is One Hundred Million (100,000,000) shares of common stock,
each having a par value of $0.001.
Each share of common stock issued and outstanding, shall he entitled to one vote
on all matters. Dividends shall be declared and paid only out of funds legally
available therefor. Shares of such stock may he issued for such consideration
and for such corporate purposes as the Board of Directors may from time to time
determine. Fully paid stock of this corporation shall not be liable to any
further call or assessment.
ARTICLE FIVE
The governing board of this corporation shall he known as directors, and the
number of directors may from time to time be increased or decreased in such
manner as shall be provided by the bylaws of this corporation, provided that the
number of directors shall not be reduced to less than three (3), except that in
cases where all the shares of the corporation are owned beneficially and of
record by either one or two stockholders, the number of directors may he less
than three (3), but not less than the number of stockholders.
The names and post office addresses of the first Board of Directors, which shall
be three (3) in number are as follows:
NAME ADDRESS
1. Frank J. Greene 112 W. Hollywood
San Antonio, Texas 78212
2. C. M. Dyal 434 Adrian Drive
San Antonio, Texas 78213
3. James D. McNeese 9151 Sherri Ann Drive
San Antonio, Texas 78233
<PAGE>
The Board of Directors shall be limited in number to no fewer than three (3) nor
more than nine (9).
Directors of the corporation need not be residents of the State of Nevada and
need not own shares of the corporation's stock
ARTICLE SIX
The capital stock of the corporation, after the amount. of the subscription
price has been paid in money, property. or services, as the directors shall
determine, shall not be subject. to assessment to pay the debts of the
corporation, nor for any other purpose, and no stock issued as fully paid up
shall ever be assessable or assessed, and the Articles of Incorporation shall
not be amended in this particular.
ARTICLE SEVEN
The name and post office address of each of the incorporators signing the
Articles of Incorporation are as follows:
NAME ADDRESS
1. Frank J. Greene 112 W. Hollywood
San Antonio, Texas 78212
2. C. M. Dyal 434 Adrian Drive
San Antonio, Texas 78213
3. James D. McNeese 5151 Sherri Ann Drive
San Antonio, Texas 78233
ARTICLE EIGHT
The corporation is to have perpetual existence.
ARTICLE NINE
In furtherance and not in limitation of the powers conferred by statute, the
Board of Directors is expressly authorized:
Subject to the bylaws, if any, adopted by the stockholders, to make, alter or
amend the bylaws of the corporation.
To fix the amount to be reserved as working capital over and above its capital
stock paid In, to authorize and to cause to he executed mortgages and liens upon
the real and personal property of this corporation.
By resolution passed by a majority of the whole board, to designate one or more
committees, each committee to consist of one or more of the directors of the
corporation, which, to the extent provided in the resolution or in the bylaws of
the corporation, shall have and may exercise the powers of the Board of
Directors in the management of the business and affairs of the corporation, and
may authorize the seal of the corporation to he affixed to all papers which may
require it. Such committee or committees shall have such name or names as may he
stated in the bylaws of the corporation or as may he determined from time to
time by resolution adopted by the Board of Directors.
<PAGE>
When and as authorized by the affirmative vote of stock-holders holding stock
entitling them to exercise at least a majority of the voting power given at a
stockholder's meeting called for that purpose, or when authorized by the written
consent of the holders of at least a majority of the voting stock issued and
outstanding, the Board of Directors shall have power and authority at any
meeting to sell, lease or exchange all of the property and assets of the
corporation, Including its good will and its corporate franchises, upon such
terms and conditions as its Board of Directors deem expedient and for the best
interests of the corporation.
ARTICLE TEN
Meetings of the stockholders may be held at such place within or without the
State of Nevada, if the bylaws so provide. The books of the corporation may be
kept (subject to any provision contained in the statutes) outside the State of
Nevada at such place or places as may be designated from time to time by the
Board of Directors or in the bylaws of the corporation.
ARTICLE ELEVEN
This corporation reserves the right to amend, alter, change, or repeal any
provision contained in the Articles of Incorporation, in the manner now or
hereafter prescribed by statute, or by the Articles of Incorporation, and all
rights conferred upon stockholders herein are granted subject to this
reservation.
ARTICLE TWELVE
No shareholder shall be entitled as a matter of right to subscribe for or
receive additional shares of any class of stock of the corporation, whether now
or hereafter authorized, or any bonds, debentures or other securities
convertible into stock, but such additional shares of stock or other securities
convertible into stock may be issued or disposed of by the Board of Directors to
such persons and on such terms as in its discretion it shall deem advisable.
WE, THE UNDERSIGNED, being each of the incorporators, herein-before named for
the purpose of forming a corporation pursuant to the General Corporation Law of
the State of Nevada, do make and file these Articles of Incorporation, hereby
declaring and certifying that the facts herein stated are true, and accordingly
have hereunto set our hands this ____ day of
- ----------
1992.
--------------------
FRANK GREENE
--------------------
M. DYAL
--------------------
JAMES D. McNEESE
<PAGE>
STATE OF TEXAS )
) ss.
COUNTY OF BEXAR )
On this the 20th day of April 1992, before me, the undersigned Notary Public,
personally appeared FRANK J. GREENE, C. M. DYAL, and JAMES D. McNEESE,
personally known to me, or proved to me on the basis of satisfactory evidence,
to be the persons whose names are subscribed to the within instrument, and they
acknowledged that they executed it.
WITNESS my hand and official seal.
----------------------
NOTARY PUBLIC
CERTIFICATE OF AMENDMENT
OF
ARTICLES OF INCORPORATION
OF
BIO-AMERICAN CAPITAL CORPORATION
Bio-American Capital Corporation, a Nevada corporation (the
"Corporation") does hereby certify that:
1. The Articles of Incorporation of the Corporation shall be amended by:
The following Article is added to the Articles of Incorporation:
ARTICLE X:
The Corporation hereby waives and precludes the application of the
anti-takeover provisions of Nevada Revised Statutes 78.378 to 78.3793.
2. The foregoing amendment has been duly authorized and approved
by the Board of Directors of the Corporation.
3. The foregoing amendment has been duly adopted and approved by
the written consent of the stockholders holding no less than a majority of the
Corporation's outstanding stock entitled to vote thereon.
Dated: November ___, 1998
BIO-AMERICAN CAPITAL CORPORATION
by:_________________________________
Jay Geier, President
by:_________________________________
David Archer, Secretary
BIO-AMERICAN CAPITAL CORPORATION
BYLAWS
ARTICLE I MEETING OF STOCKHOLDERS
- --------- -----------------------
1. Stockholders' Meetings shall be held in the office of the corporation, at
Reno, Nevada, or at such other place or places as the Directors shall from time
to time determine.
2. The annual meeting of the stockholders of this corporation shall be held at
11:00 a.m. on the 10th day of December each year beginning in 1992, at which
time there shall be elected by the stockholders of the corporation a Board of
Directors for the ensuing year, and the stockholders shall transact such other
business as shall properly come before them.
3. A notice setting out the time and place of such annual meeting shall be
mailed postage prepaid to each of the stockholders of record, at his address and
as the same appears on the stock book of the Company, or if no such address
appears, at his last known place of business, at least ten (10) days prior to
the annual meeting.
4. If a quorum not he present at the annual meeting the stockholders present in
person or by proxy may adjourn to such future time as shall be agreed upon by
them, and notice of such adjournment shall be mailed, postage prepaid, to each
stockholder at least ten (10) days before such adjourned meeting; but if a
quorum be present, they may adjourn from day to day as they see fit, and no
notice of such adjournment need be given.
5. Special meetings of the stockholders may be called at any time by the
President, any three (3) Directors, or by the holder of a majority share of the
capital stock of the corporation. The Secretary shall mail a notice of such
meeting called to each stockholder of the company at least ten (10) days before
such meeting, and such notice shall state the time and place of the meeting, and
the object thereof. No business shall be transacted at a special meeting except
as stated In the notice sent to the stockholders, unless by unanimous consent of
all stockholders present, either In person or by proxy, all such stock being
represented at the meeting.
6. A majority of the stock issued and outstanding, either in person or by proxy,
shall constitute a quorum for the transaction of business at any meeting of the
stockholders.
7. Each stockholder shall he entitled to one vote for each share of stock in his
own name on the books of the company, whether represented in person or by proxy.
8. All proxies shall be in writing and signed.
9. The following order of business shall be observed at all meetings of the
stockholders so far as is practicable:
a. Call the roll;
b. Reading, correcting, and approving of the minutes of the previous meeting;
C. Reports of Officers;
<PAGE>
d. Reports of Directors;
e. Election of Directors;
f. Unfinished Business; and
g. New Business.
ARTICLE II STOCK
- ---------- -----
1. Certificates of stock shall be in a form adopted by the Board of Directors
and shall he signed by the President and Secretary of the Corporation.
2. All certificates shall he consecutively numbered; the name of the person
owning the shares represented thereby, with the number of such shares and the
date of issue shall be entered on the company's books.
3. All certificates of stock transferred by endorsement thereon shall be
surrendered by cancellation and new certificates issued to the purchaser or
assignee.
ARTICLE III DIRECTORS
- ----------- ---------
1. A Board of Directors, consisting of at least three (3) and no more than nine
(9) persons shall be chosen annually by the stockholders at their annual meeting
to manage the affairs of the company except that in case all the shares of the
Corporation are owned beneficially and of record by either one or two
stockholders, the number of Directors may be less than three (3), but not less
than the number of stockholders. The Directors' term of office shall be one (1)
year, and Directors may be reelected for successive annual terms.
2. Vacancies on the Board of Directors by reason of death, resignation or causes
shall be filled by the remaining Director or Directors choosing a Director or
Directors to fill the unexpired term.
3. Regular meetings of the Board of Directors shall he held at 11:00 a.m. on the
10th day of December, March, June, and September, beginning in March, 1993, at
the office of the company at Reno, Nevada, or at such other time or place as the
Board of Directors shall by resolution appoint; special meetings may be called
by the President, or any Director giving ten (10) days, notice to each Director.
Special meetings may also be called by execution of the appropriate waiver of
notice and call when executed by a majority of the Directors of the company. A
majority of the Directors shall constitute a quorum.
4. The Directors shall have the general management and control of the business
and affairs of the company and shall exercise all the powers that may be
exercised or performed by the corporation, under the statutes, the certificates
of incorporation, and the Bylaws. Such management will be by equal vote of each
member of the Board of Directors with each board member having an equal vote.
5. A resolution, In writing, signed by all the members of the Board of
Directors, shall constitute action by the Board of Directors to the effect
therein expressed, with the same force and effect as though such resolution had
been passed at a duly convened meeting; and It shall be the duty of the
Secretary to record every such resolution in the Minute Book of the corporation
under its proper date.
<PAGE>
ARTICLE IV OFFICERS
- ---------- --------
1. The officers of this company shall consist of a President, one or more Vice
Presidents, Secretary-Treasurer, Resident Agent and such other officers as shall
from time to time be elected or appointed by the Board of Directors.
2. The PRESIDENT shall preside at all meetings of the Directors and the
Stockholders. He shall sign or countersign all stock certificates, contracts and
other Instruments of the corporation as authorized by the Board of Directors and
shall perform all such other duties as are Incident to his office or are
required by him by the Board of Directors.
3. The VICE PRESIDENT shall exercise the functions of the President during the
absence or disability of the President and shall have such powers and such
duties as may be assigned to him from time to time by the Board of Directors.
4. The SECRETARY shall issue notices for all meetings as required by the Bylaws,
shall keep a record of the minutes of the proceedings of the meetings of the
Stockholders and Directors, shall have charge of the Corporate books, and shall
make such reports and perform such other duties as are Incident to his office or
properly required of him by the Board of Directors. He shall be responsible that
the corporation complies with Section 78.109 of the Nevada Corporation laws and
supplies to the Nevada Resident Agent or Principal Office in Nevada, any and all
amendments to the Corporation's Articles of Incorporation and any and all
amendments or changes to the Bylaws of the Corporation. In compliance with
Section 78.105, he will also supply to the Nevada Resident Agent or Principal
Office in Nevada, and maintain, a current statement setting out the name of the
custodian of the stock ledger or duplicate stock ledger, and the present and
complete Post Office address, including street and number, if any, where such
stock ledger or duplicate stock ledger specified in the section is kept.
5. The TREASURER shall have the custody of all monies and securities of the
corporation and shall keep regular books of account. He shall disburse the funds
of the corporation in payment of the just demands against the Corporation, or as
may be ordered by the Board of Directors, making proper vouchers for such
disbursements and shall render to the Board of Directors from time to time, as
may be required of him, an account of all his transactions as Treasurer and of
the financial condition of the Corporation. He shall perform all duties Incident
to his office or which are properly required of him by the Board of Directors.
6. The RESIDENT AGENT shall be In charge of the corporation's registered office
in the State of Nevada, upon whom process against the Corporation may be served
and shall perform all duties required of him by statute.
7. The salaries of all officers shall be fixed by the Board of Directors and may
be changed from time to time by a majority vote of the Board.
8. Each of such officers shall serve for a term of one (1) year or until their
successors are chosen and qualified. Officers may be re-elected or appointed for
successive annual terms.
9. The Board of Directors may appoint such other officers and agents as it shall
deem necessary or expedient, who shall hold their offices for such terms and
shall exercise such powers and perform such duties as shall he determined from
time to time by the Board of Directors.
<PAGE>
ARTICLE V INDEMNIFICATION OF OFFICERS AND DIRECTORS
- --------- -----------------------------------------
1. The Corporation shall indemnify any and all of its Directors or Officers or
former Directors or Officers or any person who may have served at its request as
a Director or Officer of another corporation in which it owns shares of capital
stock or of which it Is a creditor against expenses actually and necessarily
incurred by them in connection with the defense of any action, suit or
proceeding In which they, or any of them, are made parties, or a party, by
reason of being or having been Directors or Officers or a Director or Officer of
the Corporation or of such other Corporation, except, in relation to matters as
to which any such Director or Officer or former Director or Officer or person
shall be adjudged in such action, suits or proceedings to be liable for
negligence or misconduct, In the performance of duty. Such Indemnification shall
not be deemed exclusive or any others' rights to which those Indemnified may be
entitled, under Bylaw agreement, vote of stockholders or otherwise.
ARTICLE VI AMENDMENTS
- ---------- ----------
I. Any of these Bylaws may be amended by a majority vote of the stockholders at
any annual meeting or at any special meeting called for that purpose.
2. The Board of Directors may amend the Bylaws or adopt additional Bylaws, but.
shall not alter or repeal any Bylaws adopted by the stockholders of the company.
CERTIFIED TO BE THE BYLAWS OF
BIO-AMERICAN CAPITAL, INC.
BY____________________________
SECRETARY
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