UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-KSB/A
[X] Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934
For the Fiscal Year Ended June 30, 2004
[ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934
For the Transition Period from ____________ to ____________
Commission File Number 000-26887
BGR Corporation
(Name of small business issuer in its charter)
Nevada 98-0353403
(State or other jurisdiction of (I.R.S. employer identification number)
incorporation or organization)
5080 N. 40th Street, Suite 103 Phoenix, AZ 85018
(Address of principal executive offices) (Zip code)
Issuer's telephone number: (480) 596-4014
Securities Registered Pursuant to Section 12(b) of the Act: NONE
Title of each class Name of each exchange on which registered
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Securities Registered Pursuant to Section 12(g) of the Act:
COMMON
(Title of class)
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter
period that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days. [X] Yes [ ] No
Check if there is no disclosure of delinquent filers in response to Item 405 of
Regulation S-B is not contained in this form, and no disclosure will be
contained, to the best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form 10-KSB
or any amendment to this Form 10-KSB. [X]
State issuer's revenues for its most recent fiscal year. $108,974
State the aggregate market value of the voting and non-voting common equity held
by non-affiliates computed by reference to the price at which the common equity
was sold, or the average bid and asked price of such common equity, as of June
30, 2003. (See definition of affiliate in Rule 12b-2 of the Exchange Act.) $.08
NOTE: If determining whether a person is an affiliate will involve an
unreasonable effort and expense, the issuer may calculate the aggregate market
value of the common equity held by non-affiliates on the basis of reasonable
assumptions, if the assumptions are stated.
State the number of shares outstanding of each of the issuer's classes of common
equity, as of October 6, 2004. 38,958,351 shares.
DOCUMENTS INCORPORATED BY REFERENCE
If the following documents are incorporated by reference, briefly describe them
and identify the part of the Form 10-KSB (e.g., Part I, Part II, etc.) into
which the document is incorporated: (1) any annual report to security holders;
(2) any proxy or information statement; and (3) any prospectus filed pursuant to
Rule 424(b) or (c) of the Securities Act of 1933 ("Securities Act"). The listed
documents should be clearly described for identification purposes (e.g., annual
report to security holders for fiscal year ended December 24, 1990).
Transitional Small Business Disclosure Format (Check one): Yes [ ] No [X]
PART I.........................................................................1
ITEM 1. BUSINESS...........................................................1
ITEM 2. DESCRIPTION OF PROPERTY............................................4
ITEM 3. LEGAL PROCEEDINGS..................................................4
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS................4
PART II........................................................................5
ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS...........5
ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION..........5
ITEM 7. FINANCIAL STATEMENTS..............................................10
ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
AND FINANCIAL DISCLOSURE..........................................11
PART III......................................................................11
ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS;
COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT.................11
ITEM 10. EXECUTIVE COMPENSATION............................................12
ITEM 11. SECURITY OWNERSHIP OF MANAGEMENT AND CERTAIN SECURITY HOLDERS.....13
ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS....................14
ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K..................................14
SIGNATURES....................................................................15
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FORWARD LOOKING STATEMENTS
This portion of this Annual Report on Form 10-KSB, includes statements that
constitute "forward-looking statements." These forward-looking statements are
often characterized by the terms "may," "believes," "projects," "expects," or
"anticipates," and do not reflect historical facts.
Forward-looking statements involve risks, uncertainties and other factors,
which may cause our actual results, performance or achievements to be materially
different from those expressed or implied by such forward-looking statements.
Factors and risks that could affect our results and achievements and cause them
to materially differ from those contained in the forward-looking statements
include, without limitation, (i) the effectiveness of operating initiatives and
advertising and promotional efforts; (ii) the ongoing financial viability of our
franchisees and licensees; (iii) adoption of new or changes in accounting
policies and practices including pronouncements promulgated by standard setting
bodies; (iv) changes in legislation and governmental regulation; (v) new product
and concept development by us and/or our food industry competitors; (vi) changes
in commodity, labor, and other operating costs; (vii) changes in competition in
the food industry; (viii) publicity which may impact our business and/or
industry; (ix) volatility of commodity costs; (x) increases in minimum wage and
other operating costs; (xi) availability and cost of land and construction;
(xii) consumer preferences, spending patterns and demographic trends; (xiii)
political or economic instability in local markets and changes in currency
exchange and interest rates; (xiv) the impact that any widespread illness or
general health concern may have on our business and/or the economy of the
locations in which we operate; and (xv) the other risks and uncertainties set
forth below under "Certain Risk Factors Affecting Our Business," as well as
other factors that we are currently unable to identify or quantify, but may
exist in the future.
In addition, the foregoing factors may affect generally our business,
results of operations and financial position. Forward-looking statements speak
only as of the date the statement was made. We do not undertake and specifically
decline any obligation to update any forward-looking statements.
PART I
ITEM 1. BUSINESS
OVERVIEW AND HISTORY
The Company was formed as a Nevada corporation on July 6, 2001 under the
name Cortex Systems, Inc. They were originally a development stage company that
intended to establish memory clinics in several different locations in North
America. Unfortunately, the Company was unable to successfully execute its
business plan. In July of 2003, the Company changed its name to BGR Corporation.
Along with the name change came a new management and ownership team. The
intention of management is to acquire new innovative fast-casual restaurant
concepts, develop them into a profitable working design, and franchise them
across the country. The Corporation's partner, American Restaurant Development
Company, is a professional restaurant designer, franchiser, and restaurant
management company where principles have extensive experience in the industry.
American provides the following services:
a.) Complete Design and Lay-out of stores
b.) National rollout program
c.) National marketing and public relations program
d.) Franchise sales program
e.) Project management
f.) Real Estate
g.) Architecture
h.) Construction and Construction management
i.) New franchisee training program
j.) Complete operations department
k.) Website development
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The Company has developed relationships with several fast casual restaurant
concepts including KoKopelli's Mexican Grill, Pauli's "Home of the Steak
Burger," and Cousin Vinnie's Italian Diner. The Company has also acquired Fathom
Systems who specializes in "Point of Sales Equipment" (POS) and is continuing in
discussions with other companies operating in the fast casual food industry. It
is the Company's intention to continue to acquire other fast casual food
companies as subsidiaries and, with partner American Restaurant Development
Company, continue to aggressively rollout nationally the fast casual food
restaurant concepts within the coming year.
SUBSIDIARIES
The Company has two wholly owned subsidiaries, Fathom Systems, Inc. and
Iceberg Food Systems, Inc. Fathom is a company specializing in restaurant POS
equipment. Iceberg Food Systems currently has no business. The Company also
holds a 97.5% ownership in Kirby Foo's Asian Diner Franchise Company, LLC and a
72.5% ownership in Pauli's Franchise Company, LLC. Kirby Foo's currently has no
business. The Company holds a 50% ownership in KoKopelli's Mexican Grill
Franchise Company, LLC, and Cousin Vinnie's Franchise Company, LLC. The Company
is currently starting to franchise KoKopelli's, Pauli's and Cousin Vinnie's.
PROPRIETARY RIGHTS
The Company currently does not possess trademarks, patents, or copyrights,
in relation to their products and services. Although, KoKopelli's Mexican Grill
Franchise Company, LLC, Pauli's Franchise Company, LLC, and Cousin Vinnie's
Franchise Company, LLC currently do possess, or are in the process of
possessing, trademarks, patents, or copyrights which the Company holds 50%
ownership. Policing unauthorized use of the Company's proprietary and other
intellectual property rights could, while currently unlikely, entail significant
expenses. In addition, there can be no assurance that third parties will not
bring claims of copyright or trademark infringement against the Company and/or
Subsidiaries or claim that certain aspects of its processes or features violates
a patent they hold. There can be no assurance that third parties will not claim
that the Company and/or Subsidiaries has misappropriated their creative ideas or
formats or otherwise infringed upon their proprietary rights. Any claims of
infringement, with or without merit, could be time consuming to defend, result
in costly litigation, divert management attention, require the Company and/or
Subsidiaries to enter into costly royalty or licensing arrangements to prevent
the Company and/or Subsidiaries from using important technologies or methods,
any of which could have a material adverse effect on the Company's business,
financial condition or operating results.
EMPLOYEES
The Company currently has four employees in addition to its officers and
directors as of September 2004. The employees are currently not represented by a
collective bargaining agreement, and the Company believes that relations with
its employees are good. There are no known problems or issues regarding any
former employees, officers, or directors.
RISK FACTORS
The following discussion contains, in addition to historical information,
forward-looking statements that involve risks and uncertainties. The Company's
actual results could differ significantly from the results discussed in the
forward-looking statements. Factors that could cause or contribute to such
differences include, but are not limited to, those discussed below and in Item
6, "Management's Discussion and Analysis of Financial Condition or Plan of
Operation."
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LIMITED OPERATING HISTORY
The Company was incorporated on July 6, 2001, with a principal business
objective of developing the companies that it had interests in with a view
towards enhancing their value as potential take-over targets or through taking
them public. It had a limited operating history on which to base an evaluation
for businesses and prospects. The Company's prospects must be considered in
light of the risks, expenses and difficulties frequently encountered by
companies in their early stage of development, particularly companies in
evolving markets. These risks include, but are not limited to, an evolving and
unpredictable business model, dependence on the growth in use of the products
and services provided, the acceptance of the products and services, the ability
to attract and retain a suitable user base, rapid technological change and the
management of growth. In view of the Company's business model and its limited
operating history, it is believed that period-to-period comparisons of the
operating results are not necessarily meaningful and should not be relied upon
as an indication of future performance.
UNPREDICTABILITY OF FUTURE REVENUES; POTENTIAL FLUCTUATIONS IN QUARTERLY
OPERATING RESULTS; SEASONALITY
As a result of the Company's limited operating history, it is unable to
accurately forecast future revenues, if any. The Company anticipates that it may
experience significant fluctuations in its future quarterly operating results
due to a variety of factors, many of which are outside its control. Factors that
may adversely affect the quarterly operating results include (i) the ability to
attract a new business model; (ii) the ability to upgrade and develop its
systems and infrastructure; and (iii) the amount and timing of operating costs
and capital expenditures relating to expansion of the Company's business,
operations and infrastructure.
Due to the foregoing factors, in one or more future quarters the Company's
operating results may fall below the expectations of securities analysts and
investors. In such event, the trading price of the Common Stock would likely be
materially adversely affected.
DEPENDENCE ON KEY PERSONNEL; NEED FOR ADDITIONAL PERSONNEL
The Company's performance is substantially dependent on the services and on
the performance of its officers and directors. The Company's performance also
depends on its ability to attract, hire, retain, and motivate its officers and
key employees. The loss of the services of any of the executive officers or
other key employees could have a material adverse effect on the Company's
business, prospects, financial condition, and results of operations. The Company
has entered into long-term employment agreements with several of its key
personnel, but currently has no "Key Man" life insurance policies. The Company's
future success may also depend on it ability to identify, attract, hire, train,
retain, and motivate other highly skilled technical, managerial, marketing, and
customer service personnel. Competition for such personnel is intense, and there
can be no assurance that the Company will be able to successfully attract,
assimilate, or retain sufficiently qualified personnel. The failure to attract
and retain the necessary technical, managerial, marketing, and customer service
personnel could have a material adverse effect on the Company's business,
prospects, financial condition, and results of operations.
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ESTABLISHMENT OF AN OPERATING ENTITY
The Company believes that establishing and maintaining an operating entity
is a critical aspect of the Company's business model. The Company has not yet
developed an operating entity and if it fails to do so it could have a material
adverse impact on its business. Promotion and enhancement of this entity will
depend largely on the success of this entity in providing high quality services
or products, which cannot be assured. If users do not perceive the Company's
future products or services to be comprehensive and of high quality, or if the
Company introduces new features, or enters into new business ventures that are
not favorably received by the public, the Company will risk diluting the value
of its operating entity. If the Company fails to provide high quality services
or product, or otherwise to promote and maintain a service or product, or if the
Company incurs excessive expenses in an attempt to improve services or product,
or promote and maintain a service or product, future results of operations and
financial condition could be materially and adversely affected.
GROWTH STRATEGY IMPLEMENTATION; ABILITY TO MANAGE GROWTH
The Company anticipates that significant expansion will be required to
address the Company's business plan and shareholder value. The Company's
expansion is expected to place a significant strain on its management,
operational and financial resources. To manage any material growth of the
Company's operations and personnel, the Company may be required to improve
existing operational and financial systems, procedures and controls and to
expand, train and manage its employee base. There can be no assurance that the
Company's planned personnel, financing, systems, procedures and controls will be
adequate to support its future operations, that management will be able to hire,
train, retain, motivate and manage required personnel or that its management
will be able to successfully identify, manage and exploit existing and potential
market opportunities. If the Company is unable to manage growth effectively, its
business, prospects, financial condition, and results of operations may be
materially adversely affected.
POSSIBLE FUTURE ISSUANCE OF COMMON STOCK
The Company is authorized to issue up to 100,000,000 Shares of Common
Stock. Presently, there are 38,958,351 shares of Common Stock issued and
outstanding. Additional issuances of Common Stock may be required to raise
capital, to acquire stock or assets of other companies, to compensate employees
or to undertake other activities without stockholder approval. These additional
issuances of Common Stock will increase outstanding shares and further dilute
stockholders' interests. Because the Company's Common Stock is currently subject
to the existing rules on penny stocks, the market liquidity for and value of its
securities can be severely adversely affected.
ITEM 2. PROPERTIES
Corporate headquarters are located at 5080 N. 40th Street, Suite 103
Phoenix, AZ, AZ 85018. The dimension of the new office space is approximately
1600 square feet. The space is at a charge of $2,800 per month to the Company
and is provided by a related party with no terms. The Company does not have any
additional facilities, nor are there proposed programs for the renovation,
improvement, or development of the properties currently being utilized.
ITEM 3. LEGAL PROCEEDINGS
The Company was not subject to, in the years 2003 and 2004, nor are we
currently subject to any legal proceedings.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
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PART II
ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
MARKET INFORMATION
The Company's common stock is currently traded on the OTC Bulletin Board
under the stock ticker symbol "BGRN." The following sets forth the high and low
bid quotations for the Common Stock for the year. These quotations reflect
prices between dealers, do not include retail mark-ups, markdowns, and
commissions and may not necessarily represent actual transactions.
2003 HIGH LOW
---- ---- ---
For the period (July 1, 2003 to June 30, 2004) $.677 $.045
During the year ended June 30, 2004, there were 10,000 shares of the
Company's Series B Preferred Stock issued. Each of these shares shall be
convertible into common stock of BGR Corporation when the company owns or
operates at least One Hundred (100) stores of all brands in its' system. The
conversion rate shall be equal to One Thousand (1,000) shares of the Company's
Common stock for each Preferred Share held. The Company did offer stock options
to its employees.
There are 23,546,461 shares of restricted common Stock of the Company of
which most of these restricted shares are less than two years old and can only
be sold under Rule 144 under the Securities Act of 1933, as amended.
There is currently a common equity that is being or is proposed to be
publicly offered by the Company with Golden Gate Investors, Inc., the offering
of which could have a material effect on the market price of the issuer's common
equity.
HOLDERS
As of October 6, 2004, the Company had 69 stockholders of record.
DIVIDEND POLICY
On May 17th, 2004 the Company paid a dividend of one additional share for
every three shares held to shareholders. It does not anticipate paying any more
dividends in the foreseeable future. The Board of Directors of the Company will
review its dividend policy from time to time to determine the desirability and
feasibility of paying dividends after giving consideration to the Company's
earnings, financial condition, capital requirements and such other factors as
the board may deem relevant.
ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
For a description of our significant accounting policies and an
understanding of the significant factors that influenced our performance during
the year ending June 30, 2004, this "Management's Discussion and Analysis"
should be read in conjunction with the Consolidated Financial Statements,
including the related notes, appearing in Item 7 of this Annual Report.
EXECUTIVE OVERVIEW
The Company was formed as a Nevada corporation on July 6, 2001 under the
name Cortex Systems, Inc. We were originally a development stage company that
intended to establish memory clinics in several different locations in North
America. We were unable to successfully execute this business plan. As a result,
in July of 2003, we changed the Company's name to BGR Corporation, replaced or
5
reconstituted the management and board of directors and changed our business
focus. The Company's focus is now on acquiring new innovative fast-casual
restaurant concepts, develop them into a profitable working design, and
franchise them across the United States. On January 20, 2003, we entered into an
agreement with American Restaurant Development Corporation, or ARDC, to grow
restaurant concepts into a fully viable franchise system and to expand each
restaurant concepts nationwide. The controlling shareholder of ARDC is our
largest shareholder. To date, we have formed four joint ventures with different
restaurant concepts under this model.
On November 4, 2003, we acquired Fathom Business Systems, or Fathom. Fathom
is a company specializing in restaurant point of sales equipment. Fathom
generates additional revenue by providing its customers with the supplies and
service needed for the equipment.
On February 2, 2004, we executed an agreement with AZTECA Wrap Foods, LLC,
or AZTECA. AZTECA is the owner and operator of KoKopelli's Mexican Grill.
KoKopelli's is a fast casual Mexican restaurant specializing in made-to-order
Mexican-style food. Per the agreement, we own 50% of the joint venture entity,
while the other 50% is owned by AZTECA. Additionally, we are required to provide
the funding to initiate the franchising of KoKopelli's through ARDC. AZTECA will
provide exclusive rights to the "KoKopelli" name, trade marks, trade dress,
operating system and recipes.
In April 2004, we entered into a shareholders agreement with Alexis Group,
LLC, or ALEXIS. ALEXIS is the owner and operator of Pauli's Home of the
SteakBurger. Per the agreement, we own 50% of the joint venture entity, while
the other 50% is owned by ALEXIS. Additionally, we are required to provide the
funding to initiate the franchising of Pauli's through ARDC. ALEXIS will provide
exclusive rights to the "Pauli's" name, trade marks, trade dress, operating
system and recipes.
In April 2004, we executed a shareholders agreement with Brian Ruggiero,
the owner and operator of Cousin Vinnie's Italian Diner. The Cousin Vinnie's
concept was brought to BGR Corporation by American Restaurant Development
Corporation ("ARDC"). Per the agreement, we own 50% of the joint venture entity,
while the other 50% is owned by Ruggiero. Additionally, we are required to
provide the funding to initiate the franchising of Cousin Vinnie's through ARDC.
Ruggiero will provide exclusive rights to the "Cousin Vinnie's" name, trade
marks, trade dress, operating system and recipes.
In April 2004, the purchase agreement for us to acquire Deville, Inc. was
mutually cancelled. The agreement called for us to pay $700,000 in stock and
cash for the exclusive rights to the Lucky Lou's fast casual restaurant concept.
Stock that had been issued per the agreement has been returned to the Company's
treasury.
On April 15, 2004, our Board of Directors approved a stock dividend for all
shareholders of record as of May 15, 2004. Under he terms of the dividend
distribution, for every three shares held by a shareholder they will receive one
additional share. No fractional shares are to be issued.
RESULTS OF OPERATIONS
The Company had revenue of $108,974 for the year ending June 30, 2004. This
revenue relates to services provided by the new Fathom business unit.
Total general and administrative operating expenses for the year ending
June 30, 2004 were $5,374,114. This increase from the prior quarter was due to a
significant increase in consulting fees, which were primarily paid through the
issuance of the Company's common stock.
The Company recorded a net loss for the year ending June 30, 2004 of
$5,405,130. This loss was primarily due to the expense related to the issuance
of stock to various consultants. The consultants provide such services and
advice to the Company in business development, business strategy and corporate
image.
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The Company has allocated the excess of the purchase price of Fathom over
the amounts allocated to tangible assets acquired and liabilities assumed as
intangible assets. The Company is in the process of analyzing that amount to
determine what amounts are to be allocated to intangible assets that can be
identified and recognized as assets apart from goodwill. Consequently, there
will likely be a reallocation of the amount reported as intangible assets on the
accompanying balance sheet as of the year ending June 30, 2004.
LIQUIDITY AND CAPITAL RESOURCES
The Company experienced a cash outflow of $212,338 from continuing
operations during the twelve months ending June 30, 2004, as compared to a net
of $61,602 during the twelve months ending June 30, 2003.
CRITICAL ACCOUNTING ESTIMATES AND ASSUMPTIONS
The preparation of our financial statements in conformity with accounting
principles generally accepted in the United States of America requires our
management to make certain 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
revenues and expenses during the reporting period. As such, in accordance with
the use of accounting principles generally accepted in the United States of
America, our actual realized results may differ from management's initial
estimates as reported. A summary of our significant accounting policies are
detailed in the notes to the financial statements which are an integral
component of this filing.
The following summarizes critical estimates made by management in the
preparation of the financial statements:
Management evaluates the probability of the utilization of the deferred
income tax asset related to the net operating loss carry forwards. The Company
has estimated a $2,178,000 deferred income tax asset related to net operating
loss carry forwardsand other bokk tax differences at Jne 30, 2004. Management
determined that because the Company has yet to generate taxable income and that
the generation of taxable income in the short term is uncertain, it was
appropriate to provide a valuation allowance for the total deferred income tax
asset.
Goodwill was recognized in the Company's acquisition of Fathom. The Company
does not have much operating history but believes that Fathom will increase its
profitability and cash flow. Management believes that there is no impairment of
the carrying value of $270,545 at June 30, 2004.
CERTAIN RISK FACTORS AFFECTING OUR BUSINESS
Our business involves a high degree of risk. Potential investors should
carefully consider the risks and uncertainties described below and the other
information in this report before deciding whether to invest in shares of our
common stock. If any of the following risks actually occur, our business,
financial condition, and results of operations could be materially and adversely
affected. This could cause the trading price of our common stock to decline,
with the loss of part or all of an investment in the common stock.
WE HAVE A LIMITED OPERATING HISTORY AND THERE IS NO ASSURANCE THAT OUR COMPANY
WILL ACHIEVE PROFITABILITY. Until recently, we have had no significant
operations with which to generate profits or greater liquidity. Although we have
recently established joint ventures with various fast-casual dining restaurants
in keeping with our proposed business model, we have not generated a meaningful
amount of operating revenue and we have a very limited current operating history
on which investors can evaluate our potential for future success. Our ability to
7
generate revenue is uncertain and we may never achieve profitability. Potential
investors should evaluate our company in light of the expenses, delays,
uncertainties, and complications typically encountered by early-stage
businesses, many of which will be beyond our control. These risks include the
following:
* lack of sufficient capital,
* unanticipated problems, delays, and expenses relating to acquisitions
of other businesses, concepts, or product development and
implementation,
* licensing and marketing difficulties,
* competition, and
* uncertain market acceptance of our products and services.
As a result of our limited operating history, our plan for growth, and the
competitive nature of the markets in which we may compete, our company's
historical financial data are of limited value in anticipating future revenue,
capital requirements, and operating expenses. Our planned capital requirements
and expense levels will be based in part on our expectations concerning
potential acquisitions, capital investments, and future revenue, which are
difficult to forecast accurately due to our company's current stage of
development. We may be unable to adjust spending in a timely manner to
compensate for any unexpected shortfall in revenue. Once we acquire new
restaurant concepts, product development and marketing expenses may increase
significantly as we expand operations. To the extent that these expenses precede
or are not rapidly followed by a corresponding increase in revenue or additional
sources of financing, our business, operating results, and financial condition
may be materially and adversely affected.
WE MAY NEED SIGNIFICANT INFUSIONS OF ADDITIONAL CAPITAL. Based upon our current
cash reserves and forecasted operations, we believe that we will need to obtain
outside funding. We may require significant additional financing in the future
in order to further satisfy our cash requirements. Our need for additional
capital to finance our business strategy, operations, and growth will be greater
should, among other things, revenue or expense estimates prove to be incorrect.
If we fail to arrange for sufficient capital in the future, we may be required
to reduce the scope of our business activities until we can obtain adequate
financing. We cannot predict the timing or amount of our capital requirements at
this time. We may not be able to obtain additional financing in sufficient
amounts or on acceptable terms when needed, which could adversely affect our
operating results and prospects. Debt financing must be repaid regardless of
whether or not we generate profits or cash flows from our business activities.
Equity financing may result in dilution to existing shareholders and may involve
securities that have rights, preferences, or privileges that are senior to our
common stock.
WE WILL FACE A VARIETY OF RISKS ASSOCIATED WITH ESTABLISHING AND INTEGRATING NEW
JOINT VENTURES. The growth and success of our company's business will depend to
a great extent on our ability to find and attract appropriate restaurant
concepts with which to form joint ventures in the future. We cannot provide
assurance that we will be able to
* identity suitable restaurant concepts,
* form joint ventures on commercially acceptable terms,
* effectively integrate the operations of any joint ventures with our
existing operations,
* manage effectively the combined operations of the businesses,
* achieve our operating and growth strategies with respect to the new
joint ventures, or
* reduce our overall selling, general, and administrative expenses
associated with the new joint ventures.
The integration of the management, personnel, operations, products,
services, technologies, and facilities of any businesses that we associate
ourselves with in the future could involve unforeseen difficulties. These
difficulties could disrupt our ongoing businesses, distract our management and
employees, and increase our expenses, which could have a material adverse affect
on our company's business, financial condition, and operating results.
8
WE DEPEND ON OUR CURRENT MANAGEMENT TEAM. Our company's success will depend to a
large degree upon the skills of our current management team and advisors and
upon our ability to identify, hire, and retain additional senior management,
sales, marketing, technical, and financial personnel. We may not be able to
retain our existing key personnel or to attract and retain additional key
personnel. The loss of any of our current executives, employees, or advisors or
the failure to attract, integrate, motivate, and retain additional key employees
could have a material adverse effect on our company's business. We do not have
"key person" insurance on the lives of any of our management team.
OUR COMPANY MAY NOT BE ABLE TO MANAGE ITS GROWTH. We anticipate a period of
significant growth. This growth could cause significant strain on our company's
managerial, operational, financial, and other resources. Success in managing
this expansion and growth will depend, in part, upon the ability of our senior
management to manage effectively the growth of our company. Any failure to
manage the proposed growth and expansion of our company could have a material
adverse effect on our company's business.
THERE IS NO ASSURANCE THAT OUR FUTURE PRODUCTS AND SERVICES WILL BE ACCEPTED IN
THE MARKETPLACE. Our products and services may not experience broad market
acceptance. Any market acceptance for our company's products and services may
not develop in a timely manner or may not be sustainable. New or increased
competition may result in market saturation, more competitive pricing, or lower
margins. Further, overall performance and user satisfaction may be affected by a
variety of factors, many of which will be beyond our company's control. Our
company's business, operating results, and financial condition would be
materially and adversely affected if the market for our products and services
fails to develop or grow, develops or grows more slowly than anticipated, or
becomes more competitive or if our products and services are not accepted by
targeted customers even if a substantial market develops.
WE MAY FACE STIFF COMPETITION. There are existing companies that offer or have
the ability to develop products and services that will compete with those that
our company may offer in the future. These include large, well-recognized
companies with substantial resources and established relationships in their
respective industries. Their greater financial, technical, marketing, and sales
resources may permit them to react more quickly to emerging technologies and
changes in customer requirements or to devote greater resources to the
development, promotion, and sale of competing products and services. Emerging
companies also may develop and offer products and services that compete with
those offered by our company.
OUR COMMON STOCK MAY BE SUBJECT TO THE "PENNY STOCK" RULES AS PROMULGATED UNDER
THE EXCHANGE ACT. In the event that no exclusion from the definition of "penny
stock" under the Securities Exchange Act of 1934, as amended (the "Exchange
Act") is available, then any broker engaging in a transaction in our company's
common stock will be required to provide its customers with a risk disclosure
document, disclosure of market quotations, if any, disclosure of the
compensation of the broker-dealer and its sales person in the transaction, and
monthly account statements showing the market values of our company's securities
held in the customer's accounts. The bid and offer quotation and compensation
information must be provided prior to effecting the transaction and must be
contained on the customer's confirmation of sale. Certain brokers are less
willing to engage in transactions involving "penny stocks" as a result of the
additional disclosure requirements described above, which may make it more
difficult for holders of our company's common stock to dispose of their shares.
9
ITEM 7. FINANCIAL STATEMENTS
The following documents (pages F-1 to F-16) form part of the report on the
Financial Statements
Page
----
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM F-1
CONSOLIDATED FINANCIAL STATEMENTS:
Balance Sheet as of June 30, 2004 F-2
Statements of Operations for the years ended June 30, 2004
and June 30, 2003 F-3
Statements of Stockholders' Equity for the years ended June 30, 2004
and June 30, 2003 F-4
Statements of Cash Flows for the years ended June 30, 2004
and June 30, 2003 F-5
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS F-7
10
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Stockholders and Board of Directors of BGR Corporation
We have audited the consolidated balance sheet of BGR Corporation (the Company),
as of June 30, 2004, and the related statements of operations, stockholders'
deficit and cash flows for each of the two years in the periods then ended.
These consolidated financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these consolidated
financial statements based on our audits.
We conducted our audits in accordance with the standards of the Public Company
Accounting Standards Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, based on our audits, the consolidated financial statements
referred to above present fairly, in all material respects, the consolidated
financial position of BGR Corporation as of June 30, 2004, and the consolidated
results of its operations and cash flows for each of the two years in the period
then ended, in conformity with accounting principles generally accepted in the
United States of America.
The accompanying consolidated financial statements have been prepared assuming
that the Company will continue as a going concern. As discussed in Note 1 to the
consolidated financial statements, the Company has not yet raised adequate
capital to implement its plan of operations, nor has the Company generated
adequate sales volume and cash flow to support its operations. These matters
raise substantial doubt about the Company's ability to continue as a going
concern. The consolidated financial statements do not include any adjustments
that might result from the outcome of this uncertainty.
/s/ EPSTEIN, WEBER & CONOVER, P.L.C.
Scottsdale, Arizona
October 12, 2004
F-1
BGR CORPORATION
CONSOLIDATED BALANCE SHEET AS OF JUNE 30, 2004
--------------------------------------------------------------------------------
CURRENT ASSETS
Cash and equivalents $ 46,001
Accounts receivable 10,826
Interest receivable 1,414
-----------
Total current assets 58,241
-----------
PROPERTY AND EQUIPMENT
Computers and equipment, net 8,376
-----------
OTHER ASSETS
Franchise rights 18,037
Goodwill 270,545
-----------
288,582
-----------
Total assets $ 355,199
===========
LIABILITIES AND STOCKHOLDERS' EQUITY:
CURRENT LIABILITIES
Accounts payable and accrued expenses $ 281,332
Due to shareholders 6,058
Debenture payable 127,500
-----------
Total current liabilities 414,890
-----------
NONCURRENT LIABILITIES
Notes payable 100,000
Minority interest 2,510
-----------
Total noncurrent liabilities 102,510
-----------
TOTAL LIABILITIES 517,400
-----------
STOCKHOLDERS' DEFICIT:
Convertible preferred stock, Series A, $10.00 par value,
125,000 authorized, 0 shares issued and outstanding --
Convertible preferred stock, Series B, $.001 par value,
1,000,000 shares authorized, 10,000 shares issued and outstanding 3,800,000
Common stock, $0.0001 par value, 100,000,000 shares
authorized, 34,652,400 shares issued and outstanding 3,465
Additional paid-in capital 1,724,339
Deferred compensation (208,000)
Accumulated deficit (5,482,005)
-----------
Total stockholders' deficit (162,201)
-----------
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT $ 355,199
===========
The accompanying notes are an integral part of these financial statements.
F-2
BGR CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED JUNE 30, 2004 AND JUNE 30, 2003
--------------------------------------------------------------------------------
2004 2003
------------ ------------
REVENUE $ 108,974 $ 2,625
------------ ------------
COST OF REVENUE 76,626 --
------------ ------------
Gross profit 32,348 2,625
------------ ------------
COSTS AND EXPENSES:
General and administrative expenses 5,374,114 41,978
------------ ------------
Total costs and expenses 5,374,114 41,978
------------ ------------
INCOME (LOSS) FROM OPERATIONS (5,341,766) (39,353)
OTHER INCOME (EXPENSE)
Interest income 1,414 --
Financial and interest expense (65,305) --
Minority interest 527 --
------------ ------------
Total other expense (63,364) --
------------ ------------
INCOME TAXES -- --
------------ ------------
NET (LOSS) $ (5,405,130) $ (39,353)
============ ============
NET INCOME (LOSS) PER COMMON SHARE
Total basic and diluted $ (0.20) $ *
============ ============
WEIGHTED AVERAGE COMMON SHARES
OUTSTANDING (BASIC AND DILUTED) 27,114,639 34,573,800
============ ============
* - less than $0.01 per share
The accompanying notes are an integral part of these financial statements.
F-3
BGR CORPORATION
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
FOR THE YEARS ENDED JUNE 30, 2004 AND JUNE 30, 2003
--------------------------------------------------------------------------------
Convertible
Common Stock Preferred Stock
----------------------- -----------------------
Shares Amount Shares Amount
------ ------ ------ ------
BALANCE JUNE 30, 2002 34,573,800 $ 3,457 -- $ --
Net Loss
----------- ------- ------- ----------
BALANCE JUNE 30, 2003 34,573,800 3,457 -- --
----------- ------- ------- ----------
Cancellation of shares previously issued (16,660,000) (1,666)
Shares issued for cash 429,000 43 -- --
Shares issued for services 5,500,000 550
Shares issued for business acquisitions 850,000 85
Preferred Class B issued for services 10,000 3,800,000
Value of beneficial conversion feature
Shares issued for deferred compensation 2,000,000 200
Amortization of deferred compensation
Shares issued for stock dividend 7,959,600 796
Net Loss -- -- -- --
----------- ------- ------- ----------
BALANCE JUNE 30, 2004 34,652,400 $ 3,465 10,000 $3,800,000
=========== ======= ======= ==========
Additional
Deferred Paid-in Accumulated
Compensation Capital Deficit Total
------------ ------- ------- -----
BALANCE JUNE 30, 2002 $ -- $ 73,393 $ (37,522) $ 39,328
Net Loss (39,353) (39,353)
--------- ----------- ----------- ---------
BALANCE JUNE 30, 2003 -- 73,393 (76,875) (25)
--------- ----------- ----------- ---------
Cancellation of shares previously issued 1,666 --
Shares issued for cash 89,957 90,000
Shares issued for services 1,059,192 1,059,742
Shares issued for business acquisitions 239,915 240,000
Preferred Class B issued for services 3,800,000
Value of beneficial conversion feature 21,212 21,212
Shares issued for deferred compensation (240,000) 239,800 --
Amortization of deferred compensation 32,000 32,000
Shares issued for stock dividend (796) --
Net Loss -- -- (5,405,130) (5,405,130)
--------- ----------- ----------- ----------
BALANCE JUNE 30, 2004 $(208,000) $ 1,724,339 $(5,82,005) $ (162,201)
========= =========== =========== ==========
The accompanying notes are an integral part of these financial statements.
F-4
BGR CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED JUNE 30, 2004 AND JUNE 30, 2003
--------------------------------------------------------------------------------
2004 2003
----------- -----------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net (loss) $(5,405,130) $ (39,353)
Adjustments to reconcile net income to net cash
used in operating activities:
Depreciation 7,962 --
Amortization of deferred compensation 32,000 --
Amortization of beneficial conversion feature 21,212 --
Minority interest (527) --
Accrual of penalty interest 42,500
Common stock issued as consideration for services 1,059,742 --
Preferred stock issued as consideration for services 3,800,000 --
Write-off loan from shareholder -- (2,330)
Changes in assets and liabilities (net of business acquisition):
Accounts receivable (594) --
Inventory 13,567 --
Interest receivable (1,414) --
Accounts payable and accrued liabilities 218,344 (19,919)
----------- -----------
Net cash used in operating activities (212,338) (61,602)
----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Cash acquired in business combination 3,619 --
Purchase of computer equipment (16,338) --
----------- -----------
Net cash used in investing activities (12,719) --
----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Repayment of advances from shareholder -- (12,170)
Proceeds from advances from shareholder 6,058 --
Proceeds from notes payable and convertible debenture 175,000 --
Common stock issued for cash 90,000 --
----------- -----------
Net cash provided from financing activities 271,058 (12,170)
----------- -----------
INCREASE IN CASH AND EQUIVALENTS 46,001 (73,772)
CASH AND EQUIVALENTS, BEGINNING OF PERIOD -- 73,772
----------- -----------
CASH AND EQUIVALENTS, END OF PERIOD $ 46,001 $ --
=========== ===========
The accompanying notes are an integral part of these financial statements.
F-5
BGR CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED JUNE 30, 2004 AND JUNE 30, 2003
--------------------------------------------------------------------------------
2004 2003
--------- ---------
SUPPLEMENTAL CASH FLOW INFORMATION:
Interest paid $ -- $ --
========= =========
SUPPLEMENTAL DISCLOSURE OF NON-CASH
INVESTING AND FINANCING ACTIVITIES:
Common stock issued for business acquisitions
and franchise rights $ 255,000 $ --
========= =========
F-6
BGR CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED JUNE 30, 2004
--------------------------------------------------------------------------------
1. ORGANIZATION AND BASIS OF PRESENTATION
BGR Corporation (the "Company") a Nevada corporation, was incorporated on
July 6, 2001. The Company was formerly named Cortex Systems, Inc. The
Company intends to develop and franchise casual dining restaurants. The
Company is seeking to acquire assets within this industry, has entered into
agreements with and acquired the rights to several casual dining concepts.
During the year ended June 30, 2004, the Company ceased to be a development
stage enterprise coinciding with its acquisition of Fathom Business
Systems, Inc., an enterprise in the business of selling and installing
point-of-sale equipment and systems for restaurants.
The Company serves as a holding company for its wholly and majority owned
operating subsidiaries; Fathom Business Systems, Inc. ("Fathom"), Iceberg
Food Systems, Inc. ("IFS"), Pauli's Franchise Corporation, ("Pauli's"),
Kokopelli Mexican Grill Franchise Corporation, ("Kokopelli"), Cousin
Vinnie's Franchise Corporation ("CV"), and Kirby Foo's Asian Grill
Franchise Corporation ("Kirby"). The Company owns 100% of Fathom and IFS
and has ownership interests in Kirby of approximately 97.5%, 87% of IFS,
72.5% of Pauli's, 50% of Kokopelli and 50% of CV.
The Company faces many operating and industry challenges. There is no
meaningful operating history to evaluate the Company's prospects for
successful operations. Future losses for the Company are anticipated. The
proposed plan of operations would include seeking an operating entity with
which to merge. Even if successful, a merger may not result in cash flow
sufficient to finance the continued expansion of a business.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. The Company has incurred material
operating losses, has continued operating cash flow deficiencies and has
working capital deficit at June 30, 2004. These factors raise substantial
doubt about the Company's ability to continue as a going concern. The
Company believes that it will be successful in franchising its restaurant
concepts which will result in up front franchise fees and ongoing monthly
royalties. However, the Company will likely require additional debt or
equity capital in order to implement its business plan. The accompanying
consolidated financial statements do not include any adjustments that might
result from this uncertainty.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Principles of consolidation - The accompanying consolidated financial
statements contain the accounts of the Company and its wholly and majority
owned subsidiaries, Fathom, IFS, Pauli's, Kokopelli, CV and Kirby. All
material inter-company balances and transactions have been eliminated in
consolidation. The accompanying consolidated statement of operations
includes the operating activity of the subsidiaries from the respective
dates of acquisition through June 30, 2004. As noted above, minority
interest exists for five such subsidiaries.
Cash and Cash Equivalents - Cash and cash equivalents include all
short-term liquid investments that are readily convertible to known amounts
of cash and have original maturities of three months or less.
F-7
Accounts Receivable - Consists primarily of amounts due from customers of
Fathom's Point of Sale systems and implementation projects.
Revenue Recognition - Revenue is recognized on hardware and installation of
point-of-sale systems when the system has been installed and the Company
has received customer acceptance and there is no material ongoing
commitment on the part of the Company. Cost of revenues includes the cost
of hardware items and labor.
Property and Equipment - Is stated at cost less accumulated depreciation.
Depreciation is recorded on a straight-line basis over the estimated useful
lives of the assets ranging from 3 to 5 years.
Income taxes - The Company provides for income taxes based on the
provisions of Statement of Financial Accounting Standards No. 109,
ACCOUNTING FOR INCOME TAXES, which among other things, requires that
recognition of deferred income taxes be measured by the provisions of
enacted tax laws in effect at the date of financial statements.
Income (Loss) Per Common Share - Net loss per share is calculated using the
weighted average number of shares of common stock outstanding during the
year.
Warrants to purchase 2,777,500 shares of common stock were excluded from
the calculation for the year ended June 30, 2004, because inclusion of such
would be anti-dilutive. Also excluded from the calculation were 10,000
shares of Series B Convertible Preferred Stock issued during the year ended
June 30, 2004. These shares are convertible into 10,000,000 shares of
common stock. However, the Series B Convertible Preferred Stock is only
convertible upon the Company attaining certain operating milestones, none
of which were met at June 30, 2004.
The following presents the computation of basic and diluted loss per share
from continuing operations:
2004 2003
------------------------------- ---------------------------------
Per Per
Income Shares Share Income Shares share
------ ------ ----- ------ ------ -----
Net Loss $(5,405,130) $ (39,353)
Preferred stock dividends (0) (0)
----------- ------------
Loss available to common
stockholders $(5,405,130) $ (39,353)
=========== ============
BASIC EARNINGS PER SHARE:
Income available to common
stockholders $(5,405,130) 27,114,639 $ (0.20) $ (39,353) 34,573,800 *
=========== ======= ============ ======
Effect of dilutive securities N/A N/A N/A N/A
DILUTED EARNINGS PER SHARE $(5,405,130) 27,114,639 $ (0.20) $ (39,353) 34,573,800 *
=========== ======= ============ ======
* - less than $0.01 per share
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 revenues and
expenses during the reporting period. Actual results could differ from
those estimates.
F-8
Impairment of long-lived assets is assessed by the Company whenever there
is an indication that the carrying amount of the asset may not be
recoverable. Recoverability of these assets is determined by comparing the
forecasted undiscounted cash flows generated by those assets to the assets'
net carrying value. The amount of impairment loss, if any, is measured as
the difference between the net book value of the assets and the estimated
fair value of the related assets.
Intangible assets at June 30, 2004 consist of goodwill associated with the
Company's acquisition of Fathom for the difference between the purchase
price of the acquired business and the fair value of the identifiable net
assets. The Company adopted Statement of Financial Accounting Standard
("SFAS") No. 142, GOODWILL AND OTHER INTANGIBLE ASSETS, effective July 1,
2002. As a result, the Company does not amortize goodwill, and instead
annually evaluates the carrying value of goodwill for impairment, in
accordance with the provisions of SFAS No. 142. The Company believes that
there has been no impairment of the carrying value of goodwill of $270,545
as of June 30, 2004.
Additionally, the Company acquired the franchise rights of Pauli's and
Kirby during the year ended June 30, 2004. These franchise rights are
recorded at cost and are being amortized on a straight-line basis over the
estimated useful life of 10 years. Amortization expense for these assets
was not material during the year ended June 30, 2004.
Recently Issued Accounting Pronouncements -
In December 2002, the FASB issued SFAS No. 148, Accounting for Stock-Based
Compensation - Transaction and Disclosure, which provides alternative
methods of transition for a voluntary change to fair value based method of
accounting for stock-based employee compensation as prescribed in SFAS 123,
Accounting for Stock-Based Compensation. Additionally, SFAS No. 148
requires more prominent and more frequent disclosures in financial
statements about the effects of stock-based compensation. The provisions of
this statement are effective for fiscal years ending after December 15,
2002, with early application permitted in certain circumstances. The
Company presently does not intend to adopt the fair value based method of
accounting for its stock based compensation.
In June 2003 the FASB issued Statement No. 150, "Accounting for Certain
Financial Instruments with Characteristics of both Liabilities and Equity"
SFAS No. 150 requires certain instruments, including mandatorily redeemable
shares, to be classified as liabilities, not as part of shareholders'
equity or redeemable equity. For instruments that are entered into or
modified after May 31, 2003, SFAS No. 150 is effective immediately upon
entering the transaction or modifying the terms. For other instruments
covered by Statement 150 that were entered into before June 1, 2003,
Statement 150 is effective for the first interim period beginning after
June 15, 2003. The Company has evaluated the provisions of SFAS No. 150 and
implementation of such was not material.
In November 2002, the FASB issued Interpretation No. 45 ("FIN 45"),
Guarantor's Accounting and Disclosure Requirements for Guarantees,
including Indirect Guarantees of Indebtedness of Others. FIN 45 requires a
company, at the time it issues a guarantee, to recognize an initial
liability for the fair value of obligations assumed under the guarantees
and elaborates on existing disclosure requirements related to guarantees
and warranties. The initial recognition requirements are effective for the
Company during the third quarter ending March 31, 2003. The adoption of FIN
45 did not have an impact on the Company's financial position or results of
operations.
In January 2003, the FASB issued FASB Interpretation No. 46 ("FIN 46"),
Consolidation of Variable Interest Entities, an Interpretation of ARB No.
51. FIN 46 requires certain variable interest entities to be consolidated
by the primary beneficiary of the entity if the equity investors in the
entity do not have the characteristics of a controlling financial interest
or do not have sufficient equity at risk for the entity to finance its
F-9
activities without additional subordinated financial support from other
parties. FIN 46 is effective for all new variable interest entities created
or acquired after January 31, 2003. For variable interest entities created
or acquired prior to February 1, 2003, the provisions of FIN 46 must be
applied for the first interim or annual period beginning after June 15,
2003. The adoption of FIN 46 did not have an impact on the Company's
financial position or results of operations.
3. PROPERTY AND EQUIPMENT
Property and equipment consisted of the following at June 30, 2004:
Computer equipment $ 16,338
Less accumulated depreciation (7,962)
--------
Property and equipment, net $ (8,376)
========
Depreciation expense was $7,962 and $-0- for the years ended June 30, 2004
and 2003, respectively.
4. BUSINESS ACQUISITIONS
In the year ended June 30, 2004, the Company entered into an agreement to
acquire all of the outstanding voting shares of Fathom Business Systems,
Inc. ("Fathom"). Fathom specializes in the sale, installation and service
of restaurant `Point-of-Sale' equipment. Fathom was a single employee
business. The Company issued 750,000 shares of its common stock to acquire
all of the outstanding shares of Fathom. On the basis of the trading price
of the Company's common stock at the time of the acquisition, the purchase
price was $225,000. The purchase price was allocated as follows:
Cash $ 3,619
Accounts receivable 10,232
Inventory 13,567
Accounts payable (72,963)
Intangible assets 270,545
---------
$ 225,000
=========
All revenue recognized in the accompanying statement of operations for the
year ended June 30, 2004, relates to sales and services provided by the
Fathom subsidiary. In connection with this acquisition, the Company
allocated the purchase price in excess of the tangible assets and
liabilities acquired as goodwill. The Company determined that the excess
purchase price was not specifically connected with such things as
tradenames, customer lists or existing contracts. If the acquisition of
Fathom had occurred on July 1, 2003, the consolidated revenues and net loss
of the Company for the year ended June 30, 2004 would have been
approximately $126,000 and $5,118,000 respectively (unaudited).
F-10
In the year ended June 30, 2004, the Company entered into an agreement to
acquire all of the outstanding voting shares of Deville, Inc., a developer
of "LUCKY LOU'S" restaurants. The terms of the purchase agreement, required
the issuance of 1,000,000 of the Company's common shares and a note payable
with a face amount of $400,000. The note was discounted at 8% on the basis
of its repayment terms resulting in a principal amount of $349,805. The
terms also called for an ongoing payment to the seller based on royalty
revenues generated from "LUCKY LOU'S" restaurants. The total purchase price
of Deville was $649,805. There were no tangible assets or liabilities
acquired in the purchase. In March, 2004, the Company and Deville, Inc.,
agreed to rescind the transaction. Accordingly, the shares were returned to
the Company, the note payable and the net assets of Deville were reversed
and removed from the balance sheet at June 30, 2004.
In the year ended June 30, 2004, the Company entered into various
agreements with American Restaurant Development Corp. ("ARDC"), an entity
controlled by a significant shareholder of the Company. As of June 30, 2004
the shareholder held a beneficial interest in the Company totaling 11%. The
Company contracted with ARDC to provide restaurant concepts for
franchising. For each concept introduced to the Company, ARDC is to receive
500,000 shares of the Company's common stock and $125,000, $75,000 of which
is paid immediately and the $50,000 balance as cash is received by the
Company for franchise fees realized by the Company on such concepts. In
addition, ARDC is to receive 50% of all non-refundable payments received by
the Company for new franchise and area developer agreements. Additionally,
ARDC will receive royalties equal 1% of the system wide revenues of each
concept. During the year ended June 30, 2004, a total of 2,000,000 shares
of the Company's common stock was issued to ARDC and the Company incurred
$300,000 in fees for the four franchise concepts brought to the Company by
ARDC.
In the year ended June 30, 2004, the Company entered into operating
agreements for three of the concepts (Pauli's, Kokopelli, and CV) with the
owners of the exclusive rights to the names, trademarks, menus, operating
systems and recipes for the concepts. The Company will provide the monies
needed to start the sale of the franchises and other operating services for
its 72.5% interest in Pauli's, 50% interest in Kokopelli and 50% interest
in CV. As of the date of this report, no monies had been contributed by the
Company to the operations of these three limited liability franchise
companies.
5. INTANGIBLE ASSETS
In connection with the Company's acquisition of Fathom and sale of
franchise rights to the Pauli's and Kirby franchises, intangible assets
were recorded.
The Company allocated $270,545 of its purchase price of Fathom to goodwill.
The Company does not amortize goodwill, and instead annually evaluates the
carrying value of goodwill for impairment. The Company believes that there
has been no impairment of the carrying value of goodwill of $270,545 as of
June 30, 2004.
F-11
The Company acquired its interests in Pauli's and Kirby through the
issuance of 100,000 shares valued at approximately $15,000. As a result of
these transactions, Pauli's and Kirby have capitalized the $18,037 cost of
intangible assets such as tradenames, franchise rights, menus, etc. The
Company is amortizing these assets on a straight line basis over the
estimated useful lives of ten years. Amortization expense for these assets
was not material during the year ended June 30, 2004.
The aggregate amortization expense for the five years succeeding June 30,
2004, is estimated to be approximately:
2005 $ 1,804
2006 1,804
2007 1,804
2008 1,804
2009 1,804
Thereafter 9,017
---------
$ 18,037
=========
6. NOTES PAYABLE
Notes payable as of June 30, 2004 was comprised of the following:
Loan from an individual maturing June 30, 2007
Note payable $50,000, interest at 12% per annum,
Interest due quarterly. $ 50,000
Loan from an individual maturing June 30, 2007
Note payable $50,000, interest at 12% per annum,
Interest due quarterly. 50,000
---------
Total 100,000
Less Current portion --
---------
Long-term portion $ 100,000
=========
Principal payaments due as follows:
Years ended June 30: 2005 $ --
2006 --
2007 100,000
2008 --
2009 --
Thereafter --
---------
$ 100,000
=========
F-12
7. CONVERTIBLE DEBENTURE
During the year ended June 30, 2004, the Company issued a 2-year 7.5%
convertible debenture amounting to $85,000 with interest payable monthly
and due June 9, 2006. The debenture also included non-detachable warrants
for 2,500,000 shares of common stock.
The debenture may be converted at the option of the holder into common
shares of the Company. The conversion price is the lesser of $0.25 or 80%
of the average of the five lowest volume weighted average price during the
20 trading days prior to the election to convert. Upon conversion, the
holder must simultaneously purchase shares of the Company's common stock in
a dollar amount equal to 10 times the dollar amount of the debenture
converted. The purchase price for such shares shall be the same as the
debenture conversion price. The value of the beneficial conversion feature
of $21,212 was recorded as a discount to the principal balance of the
debenture and amortized immediately as interest expense because the
debenture is convertible at any time at the option of the holder.
The Company defaulted on the interest payment provisions in the debenture.
Consequently, the principal amount due under the debenture of $85,000
became immediately due and payable in cash plus a default penalty of
$42,500 (150% of the principal amount) resulting in a total obligation of
$127,500 plus any and all accrued interest. The per diem interest is
$26.04. The default penalty of $42,500 was expensed as interest and
financing costs in the accompanying statement of operations for the year
ended June 30, 2004.
The effective annual interest rate on the debenture is approximately 24%
when the beneficial conversion feature is considered and approximately 48%
when the beneficial conversion feature and the penalty interest are
considered.
8. INCOME TAXES
The Company recognizes deferred income taxes for the differences between
financial accounting and tax bases of assets and liabilities. Income taxes
for the years ended June 30, 2004 and 2003 consist of the following:
Current tax provision (benefit) $(2,166,000) $ (5,900)
Deferred tax provision (benefit) 2,166,000 5,900
----------- -----------
Total income tax provision (benefit) $ 0 $ 0
=========== ===========
There were no material temporary book/tax differences for the period ended
June 30, 2003. There was a deferred tax asset of $2,178,000 at June 30,
2004, relating to net operating loss carryforwards of approximately
$223,000, differences in the income tax treatment of certain stock based
compensation of $1,953,000 and book/tax differences in the bases of
property and equipment of $2,000. The deferred income tax asset is fully
offset by a valuation allowance of $2,178,000. The valuation allowance was
increased by $2,166,000 in the year ended June 30, 2004. At June 30, 2004,
there were federal and state net operating loss carryforwards of $606,000
which begin to expire in 2021 and 2008 respectively.
F-13
A reconciliation of the differences between the effective and statutory
income tax rates for years ended September 30, is as follows:
2004 2003
--------------------- ----------------
Federal statutory rates $(1,738,866) (34)% $(5,902) (15)%
State income taxes (306,859) (6)% 0 -- %
Increase in valuation allowance 2,044,682 40% 5,902 15%
Other 1,043 -- 0 -- %
----------- ---- ------- ----
Effective rate $ 0 0% $ 0 0%
=========== ==== ======= ====
9. STOCKHOLDERS' EQUITY
The Company declared a 6 for 1 stock split during the year ended June 30,
2003. The number of shares presented in these financial statements has been
retroactively restated for all periods to reflect this reverse stock split.
In July 2003, the Company amended it Articles of Incorporation to reflect
100,000,000 authorized shares of Common Stock having a par value of $0.001
and 1,125,000 shares of Preferred Stock having a $10.00 par value for
Preferred A and $0.001 par value for Preferred B. The authorized number of
Class A Preferred Stock authorized to be issued is 125,000 shares with
voting rights equivalent to five votes per share of Class A Preferred
Stock. The Class A Preferred Stock is cumulative, with an annual dividend
of 6%. Additionally, Class A Preferred Stock shall be convertible into five
shares of common stock of the Company for every one Class A Preferred
share. The authorized number of Class B Preferred Stock authorized to be
issued is 1,000,000 shares. Each share of Class B Preferred Stock shall be
entitled to voting rights equivalent to one vote. Additionally, 50% of the
Class B Preferred Stock may be converted after 50 franchise units are sold
and the remaining 50% may be converted after 50 additional franchise units
are sold.
In August 2003, the Company sold 275,000 common shares, plus warrants to
purchase 137,500 shares at a price of $0.50 per share for a total price of
$55,000.
In September 2003, the Company approved a 2003 Stock Compensation Plan for
1,000,000 shares to compensate employees and consultants. In addition, the
Company entered into an agreement with a consultant whereby the consultant
received 350,000 shares of the Company's common stock for services
rendered.
In October 2003, the Company entered into an agreement to acquire all of
the outstanding shares of "ICEBERG FOOD SYSTEMS,CORP." ("IFSC"). IFSC was
owned by a former officer and director of the Company. The only holdings of
IFSC were 30,000,000 shares of the Company's common stock. As part of the
agreement, IFSC distributed 14,465,000 shares of the Company's common stock
to its shareholder. IFSC then became a wholly owned subsidiary of the
Company with its only holdings being the remaining 15,535,000 shares of the
Company's common stock. Effectively, the transaction was an acquisition of
treasury stock by the Company. In exchange, the Company assumed a
commitment to raise capital and develop the Iceberg Drive-In concept. The
rights to develop that concept were previously held by IFSC. The Company
was to assist IFSC in providing up to $1,130,000. The Company accounted for
this transaction as an acquisition of treasury stock through the issuance
of a note payable of $1,130,000. Subsequently, the note payable and an
additional 1,125,000 shares were cancelled for a total of 16,660,000 shares
of common stock returned to the Company.
F-14
In November 2003, the Company acquired Fathom Business Systems in exchange
for 750,000 shares of the Company's restricted common stock valued at
$225,000. Other stock transactions in November 2003 included the issuance
of 10,000 shares of Class B Convertible Preferred stock valued at
$3,800,000 to 18 of the Company's existing shareholders, employees and
consultants for services rendered; an agreement with a non-affiliate to
acquire rights to a restaurant concept in return for 1,000,000 shares of
the Company's common stock and a note payable for $400,000; and agreements
with consultants whereby the consultants were issued 600,000 shares
(100,000 and 500,000 respectively) of the Company's common stock for
services to be rendered. The agreement for the rights to the restaurant
concept and the agreement with the consultant for 500,000 shares was later
rescinded, the shares were returned and the note payable was cancelled.
In January 2004, the Company approved a Company Qualified Stock Option Plan
for 4,000,000 shares of common stock to compensate employees. As of the
year ended June 30, 2004 no stock options had been granted under the Plan.
Subsequent to June 30, 2004, the Company approved increasing the total
number of shares of common stock under the Plan to 15,000,000 with
5,000,000 of those shares to be registered immediately. Other stock
transactions in January 2004 included an agreement with a consultant
whereby the consultant received 650,000 shares of the Company's common
stock for services rendered and a consulting agreement with a related party
whereby the Company will receive six restaurant concepts in exchange for
500,000 shares of the Company's common stock for each concept. As of June
30, 2004 four concepts had been delivered to the Company and the Company
had issued 2,000,000 shares of common stock to the related party valued at
$375,000.
In February 2004, the Company sold 140,000 common shares, plus warrants to
purchase 140,000 shares at a price of $0.50 per share for a total price of
$35,000 and the Company entered into an agreement with a consultant to
assist in raising capital for the Company. The Company will pay the
consultant 10% of all funds raised, in cash, and 10% of all stock issued to
investors. As of June 30, 2004 the Company had issued 14,000 shares of
common stock to the consultant and owed finder's fees totaling $3,500.
In March 2004, the Company entered into consulting agreements in exchange
for a total of 900,000 shares of common stock. Additionally, the Company
entered into an employment agreement in which part of the compensation was
paid in stock. The employee received 1,000,000 shares of common stock. The
1,000,000 shares must be returned if the employee leaves within 90 days or
800,000 shares must be returned if the employee leaves within one year of
the date of the agreement.
In April 2004, the Company approved the issuance of a stock dividend to
shareholders of record on May 15, 2004. The stock dividend provided the
Common Stock shareholders with one share for every three shares held. Other
stock transactions in April 2004 included the issuance of 200,000 shares of
common stock in exchange for advisory services rendered; the issuance of
100,000 shares of common stock valued at $15,000 for additional interests
in Pauli's and Kirby; and an agreement with a related party for consulting
services. As part of the related party agreement the affiliate would
receive 30,000 shares of the Company's Series B Convertible Preferred
Stock. The agreement for the issuance of the Series B stock was rescinded
subsequent to June 30, 2004. The 30,000 shares were never issued.
F-15
In June 2004, the Company entered into an employment agreement in which
part of the compensation is paid in stock. The employee received 1,000,000
shares of common stock. The 1,000,000 shares must be returned if the
employee leaves within 90 days or 800,000 shares must be returned if the
employee leaves within one year of the date of the agreement. Additionally,
a second employee received 500,000 shares of common stock for their
services to the Company. There were no restrictions on these shares. Other
stock transactions in June 2004 included an agreement with an attorney for
legal services in exchange for 800,000 shares of the common stock.
As of June 30, 2004 the Company was in default on a convertible debenture.
In accordance with the default remedies the convertible debenture was
accelerated. The fair value of the beneficial conversion feature is
reflected in Additional Paid-in Capital in the amount of $21,212.
Warrants - During the year ended June 30, 2004, the Company granted
warrants to purchase 2,777,500 shares of common stock (275,000 granted at a
price of $0.50 per share, expiring 2 years after issuance and 2,500,000
granted June 9, 2004 at a price of $1.00 per share, expiring June 9, 2007).
10. RELATED PARTY TRANSACTIONS
The Company's former officers, directors and majority shareholders made
advances to the Company in order for the Company to pay its operating
expenses. Advances from shareholders were $6,058 and $14,500 for the years
ended June 30, 2004 and June 30, 2003, respectively. Repayments of advances
were $0 and $12,170 for the years ended June 30, 2004 and June 30, 2003,
respectively. In addition, a shareholder forgave the balance due to him of
$2,330 during the year ended June 30, 2003.
In the year ended June 30, 2004, the Company entered into various
agreements with American Restaurant Development Corp. ("ARDC"), an entity
controlled by a significant shareholder of the Company. As of June 30, 2004
the shareholder held a beneficial interest in the Company totaling 11%. The
Company contracted with ARDC to provide restaurant concepts for
franchising. For each concept introduced to the Company, ARDC is to receive
500,000 shares of the Company's common stock and $125,000, $75,000 of which
is paid immediately and the $50,000 balance as cash is received by the
Company for franchise fees realized by the Company on such concepts. In
addition, ARDC is to receive 50% of all non-refundable payments received by
the Company for new franchise and area developer agreements. Additionally,
ARDC will receive royalties equal 1% of the system wide revenues of each
concept. During the year ended June 30, 2004, a total of 2,000,000 shares
of the Company's common stock was issued to ARDC and the Company incurred
$300,000 in fees for the four franchise concepts brought to the Company by
ARDC.
In addition, the Company reimburses ARDC for monthly rent expense of $1,374
incurred for office rent and $850 for housing provided to the Company's
President. The office lease agreement is on a month-to-month basis. The
lease term for the employee housing is one year expiring June 30, 2005.
Total rent expense was $12,588 and $0 for the years ended June 30, 2004 and
June 30, 2003, respectively.
During the year ended June 30, 2004, the Company entered into an operating
agreement with ALEXIS GROUP, LLC "ALEXIS" to operate a franchise company.
ALEXIS is owned by the Company's Chairman of the Board. Pauli's Franchise
Company, LLC was formed to provide an entity that is equally controlled by
ALEXIS and the Company. ALEXIS will provide the exclusive rights of the
Pauli's name, trademarks, menu, and recipes. The Company will provide the
funds for start-up and operating services. At June 30, 2004 the Chairman of
the Board held a 25% interest in Pauli's Franchise Company, LLC, the
Company held a 72.5% interest and an unrelated party held the remaining
2.5% interest.
F-16
11. SUBSEQUENT EVENTS
Subsequent to June 30, 2004 the Company approved increasing the total
number of shares under the Company Qualified Stock Option Plan to
15,000,000 with 5,000,000 of those to be registered immediately.
On July 20, 2004 the Company borrowed $50,000 from the Chairman of the
Board. The note bears interest at 8%. The note and accrued interest are due
and payable on January 21, 2005.
In April 2004, the Company entered into an agreement with a related party
for consulting services. As part of the agreement the related party would
receive 30,000 shares of the Company's Series B Preferred. On July 28,
2004, management rescinded the agreement.
* * * * * * *
F-17
ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
On August 22, 2003 the Company filed a Change in Registrant's Certifying
Account with the SEC. The Company has no disagreements with its accountants on
accounting and financial disclosure.
PART III
ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS; COMPLIANCE
WITH SECTION 16(a) OF THE EXCHANGE ACT
The names, ages and positions of the Company's directors and executive
officers are as follows:
Name Age Position
---- --- --------
Jerry Brown 67 Chairman
Bradford Miller 46 President
James Medeiros 40 Secretary
Janet Crance 48 Treasurer
Alan Smith 53 Director
Gordon J. Sales 67 Director
FAMILY RELATIONSHIPS
There are no family relationships between the Company's directors and
executive officers.
WORK EXPERIENCE
JERRY BROWN, CHAIRMAN, Mr. Brown is a CPA with over 30 years of financial and
administrative management experience with a large law firm in Salt Lake City,
Utah, where he held the position of Director of Finance and Administration. He
has experience in banking relations, property management and employee benefits
in addition to his extensive experience in accounting, business management and
taxation.
BRANFORD MILLER, PRESIDENT, Mr. Miller has over twenty years experience in the
food franchising industry. He was President and Owner of a McDonald's
Multi-Restaurant Franchise. He purchased the Franchise after working up to Store
Manager, Multi-Unit Supervisor, Human Resources/Training Manager, and V. P. In
1981 he was even named "Outstanding Store Manager" in Washington, D.C. region.
He has attended the Hamburger University in 1981 and 1987.
JAMES MEDEIROS, SECRETARY, Mr. Medeiros has over twenty-five years experience in
the restaurant industry. He has worked in many capacities including general
manager, bar manager, assistant manager, and corporate trainer for restaurant
chains Pizza Hut, Roy's Restaurants, and Huggo's Restaurant to name a few. Mr.
Medeiros is the founder and president of Fathom Business Systems. Fathom
Business Systems sells equipment for the restaurant industry.
JANET CRANCE, TREASURER, Ms. Crance, who holds a Bachelor's Degree in Business
Administration, has over 27 years experience in the accounting profession. She
is a Certified Public Accountant and is President of Janet L. Crance, PC, a
public accounting firm specializing in small business accounting, tax compliance
and business consulting.
ALAN SMITH, OUTSIDE DIRECTOR, Mr. Smith, who holds both a Bachelor and Masters
Degrees and has served as an officer and director for many public companies, has
provided audit, accounting, finance and administrative consulting services to a
wide range of privately owned and public companies through his wholly-owned
company Avid Management Corporation.
GORDON J. SALES, OUTSIDE DIRECTOR, is the president and CEO of Crystal Graphite
Corporation. In addition, his past experiences have included several executive
positions with various public companies. Mr. Sales brings a high level of
11
operating management and marketing skills, and will provide BGR Corporation with
a wealth of experience as an outside director.
INVOLVEMENT ON CERTAIN MATERIAL LEGAL PROCEEDINGS DURING THE LAST FIVE YEARS
(1) No director, officer, significant employee or consultant has been convicted
in a criminal proceeding, exclusive of traffic violations.
(2) No bankruptcy petitions have been filed by or against any business or
property of any director, officer, significant employee or consultant of the
Company nor has any bankruptcy petition been filed against a partnership or
business association where these persons were general partners or executive
officers.
(3) No director, officer, significant employee or consultant has been
permanently or temporarily enjoined, barred, suspended or otherwise limited from
involvement in any type of business, securities or banking activities.
(4) No director, officer or significant employee has been convicted of violating
a federal or state securities or commodities law.
ITEM 10. EXECUTIVE COMPENSATION
REMUNERATION OF DIRECTORS, EXECUTIVE OFFICERS AND SIGNIFICANT EMPLOYEES
The Company does have an employment agreement with Mr. Bradford Miller. As
per the agreement Mr. Miller does receive an annual salary and stock rewards.
The Company does not have employment agreements with any of its other executive
officers. They have yet to determine the appropriate terms needed for the
creation of employment agreements for those officers. There has been no
discussion with any of the other officers regarding any potential terms of these
agreements, nor have such terms been determined with any specificity. They have
no proposal, understanding or arrangement concerning accrued earnings to be paid
in the future. In the meanwhile, none of the other executive officers have been
drawing salaries since they were appointed to their positions.
Summary Compensation Table
Annual Compensation Long-Term Compensation
---------------------------- ----------------------------------
Other
Annual Restricted Securities All Other
Name and Compensa Stock Underlying LTIP Compensa
Principal Position Year Salary($) Bonus($) tion($) Awards($) Options(#) Payouts($) tion($)
------------------ ---- --------- -------- ------- --------- ---------- ---------- -------
Bradford Miller 2004 $100,000 0 0 $160,000 0 0 0
President
James Medeiros 2004 0 0 0 0 0 0 0
Secretary
Janet Crance 2004 0 0 0 $17,500 0 0 0
Treasurer
DIRECTORS' COMPENSATION
The Company has no formal or informal arrangements or agreements to
compensate its directors for services they provide as directors of the Company.
12
EMPLOYMENT CONTRACTS AND OFFICERS' COMPENSATION
The Company does have an employment agreement with Bradford Miller. The
Company does not have an employment agreement with any of its other officers,
directors of employees. Any future compensation to be paid to these individuals
will be determined by the Board of Directors, and employment agreements will be
executed.
STOCK OPTION PLAN AND OTHER LONG-TERM INCENTIVE PLAN
In September of 2003 the Company offered stock options to its employees
through a Qualified Stock Option Plan that reserved 1,000,000 shares for the
plan. The Company did issue 825,000 shares to consultants under the plan. In
February of 2004 the Company offered another stock option plan to its employees
through a Qualified Stock Option Plan that reserved 4,000,000 shares for the
plan. The Company did issue 3,175,000 shares to consultants under this plan. In
September of 2004 the Company has offered stock options again to its employees
through a Stock Compensation Plan that reserved 5,000,000 shares for the plan.
The Company has issue 825,000 shares to consultants under the plan.
ITEM 11. SECURITY OWNERSHIP OF MANAGEMENT AND CERTAIN SECURITY HOLDERS
SECURITY OWNERSHIP OF MANAGEMENT AND CERTAIN BENEFICIAL OWNERS
The following table sets forth as of June 30, 2004 certain information
regarding the beneficial ownership of our common stock by:
1. Each person who is known by us to be the beneficial owner of more than
5% of the common stock,
2. Each of our directors and executive officers and
3. All of our directors and executive officers as a group.
Except as otherwise indicated, the persons or entities listed below have
sole voting and investment power with respect to all shares of common stock
beneficially owned by them, except to the extent such power may be shared with a
spouse. No change in control is currently being contemplated.
Name and Address Amount and Nature of
Title of Class of Beneficial Owner Beneficial Owner %of Class
-------------- ------------------- ---------------- ---------
Common Stock Jeffery W. Flannery 2,000,000
San Diego, CA > 5% 5.1%
Common Stock Penson Financial Services, Inc. 2,000,000
Dallas, TX > 5% 5.1%
Common Stock ALEXIS GROUP LLC (Jerry Brown) 1,800,000
Scottsdale, AZ Officer 4.6%
Common Stock Bradford Miller 1,333,333
Phoenix, AZ Officer 3.4%
Common Stock Janet Crance 500,000
Phoenix, AZ Officer 1.3%
Common Stock James Medeiros 1,000,000
Tempe, AZ Officer 2.6%
Common Stock Alan Smith 666,666
Edinburgh, Scotland Director 1.7%
Common Stock Gordon Sales 666,666
Vancouver, B.C. Director 1.7%
Common Stock All Directors and Officers 5,966,665 15.3%
13
NON-VOTING SECURITIES AND PRINCIPAL HOLDERS THEREOF
The Company has not issued any non-voting securities.
OPTIONS, WARRANTS AND RIGHTS
The Company has issued warrants as part of an offering through the sales of
equities in February of this year.
ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The Company's currently has no certain relationships and related
transactions with any of its current and former officers, directors and majority
shareholders during the year ended June 30, 2004.
ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K
Exhibit Number Name and/or Identification of Exhibit
-------------- -------------------------------------
31.1 Certification of Chief Executive Officer pursuant to Section 302
of The Sarbanes-Oxley Act Of 2002 Exhibit
31.2 Certification of Chief Financial Officer pursuant to Section 302
of The Sarbanes-Oxley Act Of 2002
32.1 Certification of Chief Executive Officer pursuant to Section 906
of The Sarbanes-Oxley Act Of 2002
32.2 Certification of Chief Financial Officer pursuant to Section 906
of The Sarbanes-Oxley Act Of 2002
Date Filed Items Disclosed in Report on Form 8-K and 8-K/A
---------- -----------------------------------------------
07/02/2003 Item 1 - Changes in Control of Registrant
Item 5 - Other Events and Regulation FD Disclosure
08/22/2003 Item 4 - Change in Registrant's Certifying Account
Item 5 - Other Events and Regulation FD Disclosure
09/10/2003 Item 5 - Other Events and Regulation FD Disclosure
09/12/2003 Item 4 - Change in Registrant's Certifying Account
11/05/2004 Item 2 - Acquisition or Disposition of Assets
Item 5 - Other Events and Regulation FD Disclosure
Item 6 - Resignations of Registrant's Directors
Item 7 - Financial Statements and Exhibits
11/14/2004 Item 2 - Acquisition or Disposition of Assets
Item 5 - Other Events and Regulation FD Disclosure
Item 7 - Financial Statements and Exhibits
01/06/2004 Item 5 - Other Events and Regulation FD Disclosure
Item 6 - Resignations of Registrant's Directors
02/05/2004 Item 5 - Other Events and Regulation FD Disclosure
Item 7 - Financial Statements and Exhibits
04/06/2004 Item 5 - Other Events and Regulation FD Disclosure
Item 6 - Resignations of Registrant's Directors
04/13/2004 Item 5 - Other Events and Regulation FD Disclosure
Item 7 - Financial Statements and Exhibits
04/20/2004 Item 5 - Other Events and Regulation FD Disclosure
Item 7 - Financial Statements and Exhibits
05/04/2004 Item 5 - Other Events and Regulation FD Disclosure
14
SIGNATURES
In accordance with Section 13 or 15(d) of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
BGR Corporation
(Registrant)
Signature Title Date
--------- ----- ----
/s/ Janet Crance Chief Financial Officer October 25, 2004
----------------------------
Janet Crance
In accordance with the Exchange Act, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.
Signature Title Date
--------- ----- ----
/s/ Bradford Miller President October 25, 2004
----------------------------
Bradford Miller
/s/ James Medeiros Secretary October 25, 2004
----------------------------
James Medeiros
/s/ Janet Crance Treasurer October 25, 2004
----------------------------
Janet Crance
15