-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, OPNrCduK38Xilek1DWsIq9Dr0BhzDpFhXZjYtAw88StSDNaL3s8OSzLc4ChkzA1i xg09Oajg/NiaPhhG+Jgflg== 0001094328-03-000103.txt : 20030415 0001094328-03-000103.hdr.sgml : 20030415 20030415141235 ACCESSION NUMBER: 0001094328-03-000103 CONFORMED SUBMISSION TYPE: 10KSB PUBLIC DOCUMENT COUNT: 10 CONFORMED PERIOD OF REPORT: 20021231 FILED AS OF DATE: 20030415 FILER: COMPANY DATA: COMPANY CONFORMED NAME: POINT GROUP HOLDINGS INCORP CENTRAL INDEX KEY: 0001099234 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-MOTION PICTURE & VIDEO TAPE PRODUCTION [7812] IRS NUMBER: 541838089 STATE OF INCORPORATION: NV FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10KSB SEC ACT: 1934 Act SEC FILE NUMBER: 000-29113 FILM NUMBER: 03650226 BUSINESS ADDRESS: STREET 1: 2240 SHELTER ISLAND DRIVE #202 CITY: SAN DIEGO STATE: CA ZIP: 92106 BUSINESS PHONE: 6192263536 FORMER COMPANY: FORMER CONFORMED NAME: SYCONET COM INC DATE OF NAME CHANGE: 20000119 10KSB 1 point10ksb041503woex.txt U.S. SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-KSB (Mark One) [X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE FISCAL YEAR ENDED DECEMBER 31, 2002 OR [ ] 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: 0-29113 POINT GROUP HOLDINGS, INCORPORATED (Exact name of registrant as specified in its charter) Nevada 54-1838089 (State or jurisdiction of incorporation (I.R.S. Employer or organization) Identification No.) 2240 Shelter Island Drive, Suite 202 San Diego, California 92106 (Address of principal executive offices) (Zip Code) Registrant's telephone number: (619) 269-8692 Securities registered pursuant to Section 12(b) of the Act: None Securities registered pursuant to Section 12(g) of the Act: Common Stock, $0.001 Par Value Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) been subject to such filing requirements for the past 90 days. Yes No X . Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not 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 [ ]. The Registrant had revenues of $202,234 for the fiscal year ended on December 31, 2002. The aggregate market value of the voting stock held by non-affiliates of the Registrant as of March 10, 2003: $11,918. As of March 10, 2003, the Registrant had 283,571,449 shares of common stock issued and outstanding. Transitional Small Business Disclosure Format (check one): Yes No X. TABLE OF CONTENTS PART I PAGE ITEM 1. BUSINESS 3 ITEM 2. PROPERTIES 19 ITEM 3. LEGAL PROCEEDINGS 19 ITEM 4. SUBMISSION OF MATTERS TO VOTE OF SECURITY HOLDERS 19 PART II ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS 20 ITEM 6. PLAN OF OPERATION 22 ITEM 7. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA 31 ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE 32 PART III ITEM 9. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT 33 ITEM 10. EXECUTIVE COMPENSATION 34 ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT 36 ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS 37 ITEM 13. CONTROLS AND PROCEDURES 38 ITEM 14. EXHIBITS, REPORTS ON FORM 8-K, AND INDEX TO FINANCIAL STATEMENTS 39 SIGNATURES 41 CERTIFICATION 41 PART I. ITEM 1. BUSINESS. Business Development. Point Group Holdings, Incorporated ("Registrant") was formed in Delaware in June 1997 under the name SyCo Comics and Distribution Inc. and is the successor to a limited partnership named SyCo Comics and Distribution formed under the laws of the Commonwealth of Virginia on January 15, 1997, by Sy Robert Picon and William Spears, the co-founders and principal shareholders of the Registrant. On February 17, 1999, SyCo Comics and Distribution Inc. changed its name to Syconet.com, Inc. With the filing of Articles of Merger with the Nevada Secretary of State on April 12, 2002, the Registrant was redomiciled from Delaware to Nevada, and its number of authorized common shares was increased to 500,000,000. On November 21, 2002, the Registrant amended its articles of incorporation changing its name to Point Group Holdings, Incorporated. On March 5, 2003, the Registrant again amended its articles of incorporation so that (a) an increase in the authorized capital stock of the Registrant can be approved by the Board of Directors without shareholder consent; and (b) a decrease in the issued and outstanding common stock of the Registrant (a reverse split) can be approved by the Board of Directors without shareholder consent. Business of the Registrant. (a) General The Registrant is a holding company that through its subsidiaries provides management services to businesses that have an operating history and can substantiate future performance in their respective industries. The Registrant participates in companies in various field of business by providing executive level management assistance as well as arranging for and contributing capital investment. Potential ventures are evaluated based on the ability of the business to be viable and reach significant milestones set forth in their business plans through strong intellectual property rights and experienced management. The Registrant also continually seeks out and evaluates investment opportunities that have the potential of earning reasonable returns. The Registrant also plans to raise capital for the purposes of permitting it to state new ventures and make investments in portfolio companies that it believes are attractive based upon its investment criterion. The Registrant consults in ventures that have at least a two operating history or can substantiate future performance and a need for experienced managerial assistance. Identifying and developing each new business opportunity may require the Registrant to dedicate certain amounts of financial resources, management attention, and personnel, with no assurance that these expenditures will be recouped. Similarly, the selection of companies and the determination of whether a company offers a viable business plan, an acceptable likelihood of success and future profitability involves inherent risk and uncertainty. The three subsidiaries, AmCorp Group, Inc., Naturally Safe Technologies, Inc. and Prima International, LLC (itself a subsidiary of Naturally Safe) have been fully integrated into the Registrant's existing business and the company now provides consulting services, develops, markets and distributes numerous consumer products. These products range from pet-care aids to plant supplements and nutriceuticals. (b) Products The Registrant develops and manufactures a variety of consumer products that range from plant preservatives to deodorizers to nutritional supplements and exercise equipment. The products have wide spread applications and have proven to be effective. Season's Greenings The Registrant developed and manufactures a patented product called Season's Greenings Christmas Tree Preservative (see Exhibit 99.2 of this Form 10-KSB). Season's Greenings is not a conventional fire retardant, fire proofing, or flame resistant chemical. Instead, the product assists trees to naturally absorb and retain water. The Registrant's focus is on treating trees after they are cut, although the product will also work when applied to the ground around planted trees. The Registrant expects trees to be treated at the time of cutting or at a later period, such as the point of sale or before set-up in the end consumer's home or business. All Christmas trees require water. An average Christmas tree will absorb a gallon of water or more in the first 24 hours and approximately a quart a day thereafter. Water is necessary to prevent the tree from dehydrating and the needles from falling. A dry tree is a fire hazard. Once a consumer erects the tree, he or she must provide an ample water supply. Season's Greenings is a powder additive that is designed to be dissolved in the water provided to the erected tree. The dissolved ingredients in our product are drawn into the Christmas tree's vascular system, which channels water and nutrients within the plant. This process rehydrates the tree and helps maintain proper moisture levels. The result is a tree that holds its needles, remains fragrant, and retains its natural fire resistance. Company management is unaware of any other Christmas tree preservative whose formula, mode of action, and/or efficiency is comparable Season's Greenings. The principal active ingredient in the product is cross- linked polyacrylamide. This chemical is widely used in industry and agriculture as a soil amendment, for erosion control, and in biological and chemical research in polyacrylamide gel electrophoresis. Polyacrylamide is manufactured and sold in very large quantities for use in agriculture and erosion control. Production is measured in hundreds of thousands of tons (see www.watersorb.com). The Registrant's consumption is very small by comparison (less than one ton per 100,000 units sold). In addition to our principal supplier, JRM Chemical in Cincinnati, Ohio (www.soilmoist.com), this material is available from a number of U.S.-based suppliers, including Polymers, Inc. of Hot Springs, Arkansas (watersorb.com) and Castle International Resources of Sedona, Arizona (www.hydrosource.com). The patent describes and protects a process for the perfusion of the tissues of a Christmas tree (or other cut plant part) with a chemical substance that enhances the water-retention capabilities of plant parts so treated. Further, the process prevents the formation of a "sap seal" over the exposed cut surface of the base of the tree, thereby tending to keep the vascular system open for active transport of water into the tree. Treated cut Christmas trees demonstrate an extended useful service life, remaining green, fresh smelling, and pliant typically well into late January, if given a continuous supply of water. Because of increased hydration, treated trees exhibit an enhanced degree of fire resistance. This patented technology gives Season's Greenings Christmas Tree Preservative a very considerable competitive advantage over other products in the market, none of which can demonstrate comparable results. The patent was issued on October 17, 2000 for the standard term of 17 years. Odora Odora is an odor controller designed to eliminate the unpleasant smells associated with any part of a consumer's life ranging from pet smells and skunks to boat bilges and sewage holding tanks in recreational vehicles and motor homes. The liquid solution is directly applied to the affected area and eliminates the offensive odors on contact. The product works by breaking down certain components and by stimulating the growth of naturally occurring bacteria that accelerate the aerobic breakdown of odor-causing components. Odora is also available in an 8-ounce spray bottle for home use. The product eradicates odors of organic origin associated with pets, strong-smelling foods and skunk attacks. Odora is made with all natural ingredients of plant origin, is non-toxic to children and pets, is environmentally safe and economical to use. The product was designed to eliminate odors of biological origin, and does not effectively handle odors that are of inorganic chemical origin. Company management is presently unaware of any competing odor control product whose modality of operation relies totally on natural, non-toxic ingredients. The Registrant's assertions regarding this product are based on well-known chemical principles. The principle is that in order to eliminate the odor of organic chemical substances, e.g. hydrogen sulfide, the odorous molecule must be converted to a non-smelly substance by an oxidation-reduction reaction, often with a strong acid or a strong base. Relatively high redux potentials are required to effectuate this. On the other hand, complex and relatively more labile compounds, such as the odor-causing chemicals in skunk spray and cadaverine (the main odor-causing component of decomposing human flesh) degrade relatively more easily than hydrogen sulfide. Hence, the Registrant's product more readily attacks the complex odorous organic chemicals than it does simple foul-smelling inorganic chemicals. Simple, non-rigorous, uncontrolled tests have generally confirmed the outcome described above. Since the efficacy, profile described above was well documented from the beginning, it will have no effect on marketing plans. There is a significant market for products that deal effectively with odors from pet food and other sources. Zoom The Registrant is currently manufacturing Zoom, the first all natural liquid Ephedra (a natural herb that enhances alertness and awareness as well as counteracting fatigue and drowsiness) spray. Using advanced technology and all natural ingredients, Zoom is a mixture of natural ingredients in a spray form. The Registrant purchases high grade, natural herbs from established sources in Mainland China, which are delivered directly to the Registrant and kept in special sealed vats and drums. The herbs are guaranteed to be pure and can withstand any FDA tests. Doctor Michael Samuels is the only person with the Registrant who has access to the herbs. When the Registrant is ready to mix products, Doctor Samuels supervises the mixing efforts. Final products are shipped to Florida for bottling, labelling, and packing. The product is then palletized and shipped to the distributors warehouse in Arizona. Bathe 'N CarryT This patented product (see Exhibit 99.3 to this Form 10-KSB) allows cats to be transported, bathed, held still for examinational purposes or to administer medication. Research has shown that cats feel comfortable, calm down within seconds of being placed inside this carrying case. The wire frame is restrictive enough to allow for safe handling of the feline and yet allows enough movement for the cat not to feel trapped or in any way threatened. This product has been introduced to large pet-supply chain stores Cats have minds of their own, which is one of the things we love about them. But our whiskered pets' independent streak can also drive us "Crazy" at times, like when we're trying to make Kitty hold still for a bath or flea dip at home or for a veterinary exam. A carrying case made of vinyl-coated wire, Bathe 'N CarryTM can be used as a conventional carrier to transport pets to the groomer or veterinarian. Then, once there, the cat remains inside the case, where it can be bathed, dipped, groomed, examined, inoculated or medicated while under restraint, eliminating the problem of scratching or biting. Now these procedures can even be done easily at home. The secret is in the Bathe 'N CarryT case's patented design, which features very widely spaced wire "hoops." The open spaces provide easy access to the animal, allowing virtually any type of medical or hygienic treatment to be administered while the cat is inside the case. The case allows for fingers and hands to touch the animal without the cat fighting back. The open design also prevents the animal from feeling confined, thereby minimizing stress. "The cat is restrained, yet it feels comfortable and secure," said Dennis Ferber, director of sales and marketing of Prima International LLC, the licensee that manufactures the Bathe 'N CarryT case for CraZy Cat. "Bathe 'N CarryT is a more gentle, less stressful method of administering treatments to pets than any other restraining device currently in use." Although designed for cats and kittens up to 20 lb., the Bathe 'N CarryT case can also be used for other pets, including small dogs and puppies. The carrier works equally well for home grooming and medication as it does in a professional setting. The uses of Bathe 'N CarryT are virtually endless including flea treatments, brushing, blow drying, clipping nails, and giving pills," said Jim Moore. "It's a valuable tool for keeping animals healthier, better-groomed, and free of fleas because no longer does the owner put off treatment out of reluctance to "struggle" with their pet." Cat owners won't have to struggle to get their pet inside the case, either, thanks to Bathe 'N Carry'sT modular design. The case consists of a contoured wire upper piece and two removable, flat floor pieces. You simply slip the upper piece over your pet's body, and then slide the floor pieces in from both ends, for fast, easy, non-traumatic restraint. The Bathe 'N CarryT case is such a simple solution that it could only have been developed by CraZy Cat, the new feline division of CraZy Dog, a company known for its fun and innovative approach to merchandising pet products. Like all items in the CraZy Cat and CraZy Dog lines, Bathe 'N CarryT features bold, eye-popping packaging with a colorful pet cartoon character. The Bathe 'N CarryT case itself is bright turquoise and purple, much more attractive and warm-looking than traditional "steely" wire pet carriers This product can be used for: - Bathing - Blow Drying - Flea Dipping - Flea Powdering - Transporting - Manicuring - Medicating - Examining Bathe 'N CarryT is designed for kittens and cats up to approximately twenty pounds, but it is equally effective for many fur-bearing pets, such as puppies and small dogs. Handi Gym This small-patented device (which consist of two patents: see Exhibits 99.4 and 99.5 to this Form 10-KSB) takes advantage of adjustable resistance with the turn of a knob to provide the user with a self-contained mini exercise machine that can be easily stored in a drawer, bag, or purse. Rotating handles offer unlimited applications for an unbelievable workout of the upper body, including muscle groups in the chest, shoulders, arms, forearms, and wrists. Furthermore, it offers the elderly and partially disabled individual (e.g. stroke victims) the opportunity to work in the safety of his/her home and isolate muscle groups that need strengthening and flexibility. There are several models of this product currently available. Due to its potential application as a rehabilitation tool, the Registrant is seeking endorsement from the Medicare administration for use in physical therapy centers and as a prescription items at the disposal of physicians. Patented HANDI-GYMr is an upper body exerciser that is lightweight, portable, hand-held, and targets more than 80 individual muscles of the arms, hands, shoulders, upper back and chest. HANDI-GYMr features a full range of variable resistance power settings that challenge the user as strength increases. Push, pull, twist, turn, or rotate depending upon which muscles you want to work. Easily adjust and set each of three resistance tabs during the workout for a multitude of increased or decreased tension settings. With no springs or elastic bands, tension is constant, resulting in the application of equal resistance to opposing muscle groups including but not limited to the chest, upper back, triceps, forearms, and shoulders. Pain Relief Thousands of years of actual use in the Far East lend credence to the use of Chinese herbal preparations that are vastly superior to any currently available over the counter topical pain reliever. This product is fully developed and can be applied as a spray or in the form of a patch. The Pain Relief formula relies on the analgesic power of those Chinese herbs rather than the ineffective high concentrations of menthol and camphor that characterize the other products that are presently available to the public. In addition to dozens of physicians' offices and pain centers, Pain Relief has been successfully used at Loma Linda University and Cedars Sinai Hospital. Traditional Chinese medicine, the greatest treasure of ancient China, has been rooted deeply in Chinese life. Its effectiveness has been proven over the millennia; thus, it has stood the test of time. Traditional Chinese medicine is founded on Qi, which is regarded as the vital force or the energy influencing our health. Qi travels in the meridians of the body and nourishes the muscles, joints and bones, so does the blood in the vessels. If Qi and blood are insufficient, stagnated, or blocked, the most common symptom is the feeling of pain. Several Chinese herbs, along with acupuncture, have been found to relieve pain. KING CARE was originated from a classic herbal formula more than one thousand years old. After some minor alterations, it was widely used in China and has become a household remedy for pain of the muscles, joints, and bones. Among many Chinese herbs, besides natural menthol and camphor, there are Radix Gentianae Macrophyllae, Radix Angelicae Sinensis, Radix Ledebouriellae, etc. Most importantly, KING CARE is extracted from all Chinese herbs. It is a natural product, but contains no "chemicals." Topical Fast Relief of Arthritis Pains Arthritis is a chronic illness, particularly among the elderly. About 80% of Americans will have some degree of arthritis by the time they reach their seventieth birthday. The most common complaints are the pain and stiffness of the joints. The most affected areas are the hands, feet, and knees. KING CARE is an all-natural herbal formula specific for arthritis, originated and depended upon for hundreds of years. KING CARE provides relief of pains and discomfort of hands, feet, and knees caused by arthritis. It also relieves pains and aches of muscles, joints, and bones that occur in daily life, sports, and physical exertion. KING CARE contains more than ten different Chinese herbs known for their improvement of local circulation and anti- inflammatory action. Its effectiveness is usually noticed within minutes. It does not stain clothing and is not greasy; it also contains no animal by-products and is never tested on animals. Topical Fast Relief of Pains In Sports SPORTS CARE is an all-natural herbal formula specific for sport related injuries and proven in China for hundreds of years. SPORTS CARE provides fast relief and soothing of tired, sore, and strained muscles. It also provides powerful relief of pains and aches in muscles, joints, and bones that occur in daily life. SPORTS CARE is made from different Chinese herbs known for their improvement of local circulation, soothing of the muscles and topical pain relief. It does not stain clothing, is not greasy, contains no animal by-products and is never tested on animals. Cutter Clip/Bag Opener This is a fully developed product made of plastic, and a hidden, retractable and safe cutting blade that allows the user to slice the bag by sliding the opener across the top, avoiding the all-too-common problem of the contents flying all over the place when the bag is forced or squeezed open. Once the bag is open, the device also seals it back with a durable spring action that clamps the sides of the bag together. This product comes in two sizes and a variety of colors. Inventory In its plans for expansion, the Registrant has decided to use the just-in-time method of production and inventory distribution, thereby, limiting the amount of inventory it keeps to a bare minimum. Typical in the nutriceutical business is a receipt of orders approximately two weeks in advance. This amount of lead-time is ideal for just-in-time inventory planning, since production, bottling, and shipping of the orders requires about one week. Retail distributors are typically happy to take receipt of items two or three days early. Therefore, the Registrant will gear its production schedule around guaranteed orders, thus producing in quantities according to specific demand. The just-in-time method of inventory planning and delivery is a natural inventory management method because: the existing and proposed products have an expiration date; retailers typically wish for quick product delivery; and production capabilities are expected to be enough to match orders up to a high end of estimated sales. The use of the just-in-time inventory method eliminates the need for complex calculations concerning the optimal use of space to store products. Competition The Registrant has no detailed information concerning its competitors in the Christmas tree preservative market, other than to note that in management's conversations with retail Christmas tree vendors, they were told that in their opinion the competing products are ineffective. In the Registrant's opinion, its has the only efficacious product on the market and hence expect significant market penetration as it has funds to address new markets. In the nutriceutical industry there is competition on several levels which are neatly divided into two distinct categories within the industry: multinational nutriceutical research and development companies who outsource their production requirements or who have in-house manufacturing facilities, and the small, independent nutriceutical producers. The multinational nutriceutical research and development companies capitalize on their substantial research and development capabilities. Their capital backing, brand recognition, advertising capabilities, sales budgets, and effective distribution channels keep their products on the shelves and in consumers' minds. The smaller, independent nutriceutical manufacturers typically have a minimal research and development function consisting primarily of labs used to analyze products other companies introduce. They are usually very small (less than 50 employees), and have limited manufacturing facilities. They usually distribute locally or regionally, occasionally maintaining a regional account in another part of the country. These companies often compete on price due to the limited scope of the their operations. Prima International fits into this industry cluster of independent manufacturers. Marketing The Registrant's marketing campaign is designed to generate awareness of, and educate our targeted user groups about, the products in their respective industries. The Registrant intends to reach potential consumers, retailers and other distributors through print advertising material, participating in trade events, video presentations - tape and CD ROM, direct Solicitation, and Internet advertising. The products of the Registrant are principally marketed to wholesale and retail distributors for retail sale to individual purchasers. The sales of some of the products are in fact seasonal in nature, specifically Season's Greenings, designed and marketed for use with Christmas trees. However, as with most Christmas products, sales begin in the early part of the year and extend to the holiday season. Print Advertising Material. The Registrant has developed material for use in printed promotions. The Registrant utilizes pamphlets and flyers containing product-specific information to disseminate in direct mailings or in direct contact with potential purchasers and suppliers. These handouts are designed to provide a brief overview of the potential benefits of the products to generate awareness of their capabilities and benefits. In addition, the Registrant advertises its products in trade publications and periodicals. The Registrant's advertisements are generally similar to its flyers and pamphlets in design and content. Trade Events. During the test marketing phase the Registrant attended five industry-related trade shows during the summer of 2000 in the following cities: Rochester, New York; Portland, Oregon; San Martin, California; Greensboro, North Carolina; and St. Paul, Minnesota. At each event, the Registrant maintained an exhibition booth that prominently promotes our brand and the Season's Greenings product. The booth features print advertising materials for interested conventioneers. The booth was staffed with company employees, who are able to assist visitors with questions regarding the company and its products. The Registrant believes that trade shows are an important networking opportunity. The Registrant intends to continue to attend such events to maximize its marketing efforts, but until financing is secured by the Registrant, it will be unable to do so. Video Presentations - Tape and CD-ROM. The Registrant has developed two Season's Greenings presentations containing our advertising and marketing materials. The Registrant uses these media in presentations to prospective customers, including retailers and individual consumers. The video presentations educate users about the application and potential benefits of the Season's Greenings Christmas tree preservative. Additional video presentations will be produced to support the sales and marketing of our new product offerings, as necessary. Direct Solicitation. The Registrant has and will continue to use its staff and resources to make direct sales calls on potential customers. The Registrant will especially focus on direct marketing contacts with independent and regional retail sellers. The Registrant's direct involvement in marketing will both help to generate potential sales and help to constantly re-evaluate its selling basis and the effectiveness of the promotional message. In addition to the direct contacts with hundreds of potential customers at five trade shows in the year 2000, the company's staff has made direct sales calls with the operators of 43 Christmas tree lot operators in San Diego, Orange, and Riverside, California counties. In addition, such persons have made direct sales calls on five independent regional distributors of Christmas trees in the same areas. Internet Advertising. The Registrant has implemented and is generating new business leads from its Internet site at www.primainternational.biz. The web site provides information regarding the Registrant, as well as the Season's Greenings product. The intention is to use the web site as a complementary advertising medium and method for selling the Registrant's products. The Internet allows the Registrant to disseminate product information and respond to frequently asked questions about our product. Our web site also serves as an e-commerce mechanism. The Registrant has the ability to process sales through the site. To date, the Registrant has sold a minimal amount of the Season's Greenings Christmas tree formula over the Internet, but the Registrant feels that this medium will prove to provide a viable source of revenues in the future. On average, the Registrant receives 421 user hits per week. This average is smoothed for the year, so it does not show the increased volume of activity during the winter holiday months which is the Registrant's peak season for Season's Greenings. From late November through December, the Registrant has experienced weeks with over 2,200 hits per week. Target Markets. The Christmas Tree Industry Based on the Registrant's own research and data provided by the National Christmas Tree Association and various regional Christmas tree growers associations, the Registrant is aware that: Over 28 million natural Christmas trees are sold in the United States each year (based on face-to-face and telephone conversations with three of the principal Christmas tree growers in the Pacific Northwest); most are produced on Christmas tree farms concentrated in the Pacific Northwest, the upper mid-west, the Carolinas and Georgia. The trees are distributed throughout the U.S. by thousands of independently owned and operated tree lots and, increasingly, through large nationwide grocery, hardware and home center chains. Freshly cut Christmas trees have seen increasing market share go to artificial trees and live trees. A principal factor in market share reduction has been a consumer fear of fire hazards associated with live trees, coupled with the problem of needle drop. Needle drop reduces the attractiveness of the tree and makes after-Christmas cleanup an unwelcome chore. Odor Control The control of odors in motor homes, recreational vehicles and pleasure boats represents a serious, ongoing problem for the owners of such vehicles. Products presently on the market, other than that of the Registrant, are principally aimed at covering up such odors rather than eliminating them, they are expensive and widely perceived by consumers as only marginally effective. The Cut Flower Industry According to the Society of American Florists, sales of cut flowers in the United States were projected to exceed $16 billion in the year 2000, continuing the steady growth trend in cut flower sales over the past decade. Flowers imported into the United States accounted for almost 70% of all domestic retail floral sales. The transport time associated with imported flowers has exacerbated the long-standing problem of product perishability in the flower industry and increased the industry's need for products and procedures, which can maximize the serviceable life of their product. Nutriceuticals In introducing Zoom to the market, the Registrant has set its objective at capturing a 1 to 5% local market share in the twelve months following the product's rollout. In the longer term, the company will seek to capture 1% of the national market for each of its products within the next five years, combining Zoom, Zyox, nicotine spray, and the moth-repellent. These objectives will be pursued through an aggressive pull strategy of advertising and promotions aimed at end-users of the Prima International products. This approach is designed to stimulate demand at the retail level by promoting the products to consumers who will then seek to find the specific products on the shelves of the local retail stores. This strategy will be supplemented with a direct-sales push aimed specifically at purchasing agents of high-quality chain stores. This push strategy is intended to communicate a specific message about the Prima International products -- that the products will appeal to consumers more readily than products from competitors who are unwilling or incapable of guaranteeing their content. A secondary message aimed at retailers will emphasize that Prima's products will be delivered more quickly and more reliably than those of other competitors. Since many of the potential retailers being targeted are familiar with similar products, Prima International will emphasize the selling features of its products, such as high quality, content, purity, ease of administration and method of absorption. Finally, Prima International plans to use its growing customer base in the first two years to slowly expand its market concentration into other regions of the country. As the company grows and the marketing budget increases, Prima International will slowly capitalize on its brand recognition in it regional base in order to increase marketing and promotions activities in other regions and countries. Marketing Objectives The Registrant intends to achieve its short-term objectives through an aggressive strategy, involving heavy advertising and promotions based on its themes of product quality, reliability, and effectiveness. The longer-term objective will be met by gradually relying more on brand identity and name recognition. The selling advantage of the Registrant is its ability to induce both price-sensitive and value-oriented consumers to purchase its products through clever promotions and packaging. It hopes to use its expansion as a mechanism to amplify these advantages substantially. While other companies are involved in the nutriceutical business, the Registrant believes those companies have taken an improper approach to packaging and promotion of their product. Most independents have packaged their products by emphasizing their name and by utilizing clever graphic designs, not necessarily creating a better product or a product that is more easily administered or better absorbed. The Registrant's market research, as well as some recent articles in economics journals suggests that nutriceuticals are one product type in which many consumers believe that the products coming from well-known companies, e.g. The Good Earth, are substantially different (i.e. better) from those from their competitors. This line of thought has been well-promoted by large multinational companies, and has fostered the impression from consumers that products from major nutriceutical companies are significantly better than their smaller competitors in their ability to cure product-specific ailments. However, little has been done by the independent producers to attempt to counter that image. The Registrant is determined to prove that concept wrong. The Registrant believes that independent nutriceutical companies are doing themselves a disservice by appealing to customers' sensitivity to brand name or alleged content of active natural substances alone. The Registrant believes it can attract a much more broad-based appeal if its packaging, labels and in- store promotions are as quality-oriented as its large counterparts, particularly if their stated content of those substances is lower than what the label reflects or the emphasis is on taste rather than content, a phenomenon that has been consistently observed. The Registrant intends to sell its program of packaging and promotions not only to consumers, but also to distributors as a reason its value products will actually sell more than one of the other independents'. It believes that consumers notice the higher quality, and are educated by the Registrant's labelling and promotions. Pricing Strategy Almost all of the independent companies tend to stay in the same price ranges for their products, since variable costs such as chemicals and raw materials tend to be consistent the world over. Those competitors that substantially exceed the lower tier price range or try to undercut it are not able to maintain a competitive position for long. Those who undercut the lower price range set by the market simply cannot sustain such a small profit margin. Likewise, those who exceed the upper end of the range price themselves in the tier where they compete with the high-end products from better known and established manufacturers. As a result, sales plummet because they cannot compete with the market leaders' advertising and promotions efforts to establish loyalty to their particular brand. Thus, the Registrant believes that its pricing policy is very much in line with the industry standard for the independents. Distribution Strategy The Registrant's distribution chain will involve the following steps: First, the company will source the chemical and raw material inputs from various suppliers on short-term contractual grounds as needed. These transactions will be initially conducted directly by the owners. In the future, they may need to be brokered by a middleman who will shop the chemical and raw materials markets as demand conditions dictate to find the best prices for the Registrant. As the Registrant begins to form more industry relationships and as the company establishes a steady production schedule, the supply channels are expected to become more concrete and longer-term. Second, the Registrant will source its packaging and labelling products in the same manner, where short-term needs will be met as demand conditions dictate until a routine operating schedule is in place. Bottles to contain Zoom, Zyox and Odora will be ordered directly from the manufacturers as will the cardboard boxes that will house cases of the end products. Third, the Registrant intends to use International Wholesale Supply to distribute to retail chains. In order to keep inventory to a bare minimum, the production schedule for the Registrant products will be driven by new orders. Prima International will guarantee that the company can fill and deliver those orders anywhere in the USA in 3 weeks or less. Milestones The Registrant's current milestones are related to new product deployment and sales. The following sets forth the timeline for these deployments as well as the estimated costs associated with them:
Milestones Plan Milestone Start Date End Date Budget Manager Department Listing on Stock Market 3/14/02 3/31/03 $0 CEO Admin Launch Zyox 6/1/02 7/31/03 $5,000 COO Sales Launch Lungsaver 7/1/02 8/31/03 $10,000 COO Sales Launch No-stink Moth Away 8/1/02 8/31/03 $8,000 COO Sales Launch Bag opener 9/1/02 12/1/03 $5,000 COO Sales Totals $28,000
Future Products In addition to the current product line, the Registrant is in the constant pursuit of developing and testing new products. These have not yet been released, such releases being placed on indefinite hold due to lack of funds for completion of packaging and production of initial inventories. These products are: Zyox Production for Zyox is set to begin shortly. A test-market batch is ready. This is a combination of amino-acids and vitamins to help the recovering addict replenish the building blocks of neurotransmitters in the brain, liver and immune system that months or years of alcohol or drug use and abuse have depleted. Medical research offers ample documentation of the damage caused by inadequate nutrition and chemical abuse. Zyox targets the depleted and deficient organs that cannot recover, let alone function normally unless those essential vitamins and amino acids are supplied. Due to its formula, Zyox will offer the recovering addict not only those building blocks but also a smoother period of withdrawal and a greatly increased chance of success in maintaining abstinence. Zyox is provided in two forms. A slow-release capsule is to be taken several times daily. A spray form provides a quick booster for the individual whose craving for chemicals is intense, thereby maximizing the effectiveness of this product. Our research has shown that products containing a fraction of the vitamins and amino acids provided by Zyox are very popular and report significant sales via the Internet. Zyox will appeal not only to the individual fighting addictions, but also to specialized treatment facilities. Thus, it will be produced in two different packages for individual and institutional use. This recovery support protocol was formulated for two entirely different groups: Those afflicted with the disease of substance addiction (alcohol, drugs) and those who have tried to cut down or would like to cut down on their alcohol consumption (problem drinkers). GOAL: To provide a nutriceutical compound that assists in diminishing the negative physiological or psychological impact of abrupt cessation of the use of alcohol and other mind-altering substances. It is intended that our product will replace the use of psychotropic drugs in the rehabilitation process, since these drugs are expensive and have a multitude of side effects. Drugs and alcohol have inhibited and drastically altered the natural functions of the abuser, hence, creating excessive deficiencies. Our compound does not produce a drug response, but rather assists the body's natural pathways, neurotransmitters and enzymatic actions. In short, our formula replenishes and balances. It enhances the body's natural response to addiction. It is 100% natural and totally non-addictive. The removal of one's "drug of choice" can put a person into clinical anxiety, depression, confusion, frustration, irritability, and insomnia. In addition, the individual is beset with uncontrollable cravings. Most abusers have become woefully deficient in B vitamins and Magnesium, all of which are required for the central nervous system to function normally. Our compound helps strengthen and restore the nervous system via an encapsulated method or by an oral spray dispenser. Our compound is intended to accomplish the following Cravings: Craving can be greatly minimized with L-Glutamine Blood Sugar Balance: Chromium picolinate assists in balancing blood sugar levels and preventing hypoglycemia (low blood sugar.... major problem with alcoholics). Relaxation: Our amino acids; 5 HTP, Tyrosine and GABA all work, synergistically, to calm and relax, while also elevating the mood. Some medical practitioners use them in place of prescription drugs. Stress: Pantothenic acid is sometimes referred to as an anti-stress nutrient, because it plays a role in the function of the adrenal gland. Purifies: Nux voniica helps to detoxify the body. Liver Detoxification: Milk thistle is the primary herb for all liver diseases. It contains Silymarin and other substances that restore and protect liver function. LungSaver This nicotine spray is in its final developmental phase. Despite the claims of many groups that allege that nicotine is a strongly addictive chemical in the same category as "hard drugs", nowhere in the medical and research literature is there any evidence that nicotine is damaging. In fact, a recent study from John Hopkins Hospital reveals that nicotine enhances the growth of new blood vessels in the heart muscle, helping individuals prone to heart attacks or who already have suffered from a heart attack. Other studies suggest that nicotine can prevent or ameliorate Parkinson's Disease and may have a similar effect on Alzheimer's Disease. There are multiple forms of over the counter nicotine products available to the public. The best known is chewing gum. Chewing gum provides the user with different quantities of nicotine, released as the gum is masticated. Other products like nicotine water demand that the user carry an 8 or 16 ounce bottle of water and consume the entire bottle in order to get the nicotine equivalent to a cigarette. Our spray, on the other hand, is a small device containing a pleasant combination of nicotine in a concentrated form. All the user requires is a few sprays, thus obviating the need to pack several bottles of water into work, a restaurant, a public place, or an important meeting. The spray bottle is small enough to be carried in a shirt pocket and is virtually indistinguishable from a breath-refreshing product to surrounding people. Only the user knows this is a safe form of nicotine. NoStink-MothAway This moth repellent is being developed. Traditionally, Middle Eastern countries have been weaving wool for millennia. From generation to generation, the secret to keeping moths and other fabric-eating insects at bay has been to spread a mixture of different herbs and leaves at the bottom of the storage space. These natural products release chemicals into the confined area that makes it unsuitable for moths. In this country, that principle is partially applied when closets are lined with cedar. Unfortunately, unless the cedar lining is regularly sanded to release the chemicals, it becomes totally ineffective. Moth balls (paradichclorobenzene) do the job, but can be smelled not only by the wearer of the particular garment but also by everyone else who ventures to get within 10 feet of the mothballed clothing. In addition, mothballs are very short lived. Our product takes advantage of that proven method used in the Middle East to repel moths without the unpleasant smell of the Western mothballs. The product will be liquefied and packed in a container from which it is gradually released over an extended period. NS-18 NS-18 is a liquid compound designed to extend the life of cut flowers by 8 to 14 days, while maintaining their natural color, texture, and fragrance. This statistic is based on extensive in-house testing conducted by company technical personnel. Double blind experiments have demonstrated that the serviceable life of roses and other types of cut flowers has been lengthened by that amount versus controls (untreated flowers of the same variety). This will also help to reduce spoilage and improve consumer satisfaction with flower purchases. The product is sold as a concentrated solution that is added to water that the flowers are kept in, acting to maintain the purity of that water, the integrity of the plant's vascular tissues and the water-holding capacity of the flowers. However, the product has only been extensively tested on roses, daisies, phlox, larkspurs, and certain lilies. There is no guarantee that it will be equally effective on species that have not yet been tested. Company management is unaware of any flower life-extending product whose formula, mode of action and/or efficacy is comparable to that of NS-18. Prevent-It This product is a spray on shirt collar soil guard undergoing development and testing. The product appears to work extremely well, but, presently, is too pungent. ITEM 2. PROPERTIES. The Registrant is provided office space without cost by a shareholder of the company. The facility is an 800 square foot office that serves as the administrative offices for the Registrant. All product development and manufacturing is done by outsourcing throughout Arizona and southern California. It currently does not own any equipment at that location. ITEM 3. LEGAL PROCEEDINGS. The Registrant is not a party to any material pending legal proceedings and, to the best of its knowledge, no such action by or against the Registrant has been threatened. ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS. The Registrant's Board of Directors unanimously approved the following by written consent of the Directors on December 3, 2001: (a) approve an Agreement and Plan of Merger by and between Syconet.com, Inc. (Delaware) and the newly incorporated Syconet.com., Inc. (Nevada) (with a common stock par value of $0.001); and (b) amend the Articles of Incorporation of the new Nevada company to increase the authorized shares of that company to 500,000,000. The Registrant received the consent of a majority of the outstanding shares of common stock for the Registrant for such actions. The filing of Articles of Merger, which has the effect of redomiciling the Registrant to Nevada, and the filing of a Certificate of Amendment of Articles of Incorporation with the Nevada Secretary of State, were both filed on April 12, 2002 (a date which is more than twenty days after the filing of this Definitive Information Statement (Amendment No. 1) with the Securities and Exchange Commission on March 5, 2002). PART II. ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS. Market Information. The Registrant's common stock began trades on the Over the Counter Bulletin Board under the symbol "SYCD". With the change in the name of the Registrant to Point Group Holdings, Incorporated, the symbol changed to "PGHI" on December 13, 2002. The range of closing prices shown below is as reported by this market. The quotations shown reflect inter-dealer prices, without retail mark-up, markdown or commission and may not necessarily represent actual transactions. Per Share Common Stock Bid Prices by Quarter For the Fiscal Year Ended on December 31, 2002 High Low Quarter Ended December 31, 2001 .004 .0001 Quarter Ended September 30, 2001 .0001 .006 Quarter Ended June 30, 2001 .001 .0001 Quarter Ended March 31, 2001 .001 .0001 Per Share Common Stock Bid Prices by Quarter For the Fiscal Year Ended on December 31, 2001 High Low Quarter Ended December 31, 2001 0.03 0.01 Quarter Ended September 30, 2001 0.04 0.01 Quarter Ended June 30, 2001 0.07 0.02 Quarter Ended March 31, 2001 0.17 0.03 Holders of Common Equity. As of March 1, 2003, there were approximately 146 shareholders of record of the Registrant's common stock. Dividend Information. The Registrant has not declared or paid a cash dividend to stockholders since it became a corporation. The Board of Directors presently intends to retain any earnings to finance Registrant operations and does not expect to authorize cash dividends in the foreseeable future. Any payment of cash dividends in the future will depend upon the Registrant's earnings, capital requirements and other factors. Equity Securities Sold Without Registration. The Registrant made the following sales of unregistered securities during the fiscal year ended December 31, 2002. (a) On August 19, 2002, the Registrant issued 8,662,800 shares of common stock to Four Winds Associates as reimbursement of certain expenses advanced by the Registrant on behalf of the Registrant in the amount of $54,997 ($0.006 per share). (b) On September 9, 2002, the Registrant issued 1,300,000 shares of common stock to Four Winds Associates as reimbursement of certain additional expenses advanced by the Registrant on behalf of the Registrant in the amount of $8,218 ($0.006 per share). (c) On September 24, 2002, the Registrant issued a total of 78,300,000 shares of common stock to three individuals (two of whom are directors of the Registrant) in connection with the acquisition of all the issued and outstanding common stock of AmCorp Group, Inc. under an acquisition agreement dated September 13, 2002. (d) On December 10, 2002, the Registrant issued a total of 27,889,801 shares of common stock to a total of 64 individuals and companies (a majority of which are accredited investors in connection with the acquisition of all the issued and outstanding common stock of Naturally Safe Technologies, Inc. under an acquisition agreement dated October 31, 2002. No commissions were paid in connection with these issuances. These issuances were undertaken under Rule 506 of Regulation D under the Securities Act of 1933, as amended ("Act"), by the fact that: - the sales were made to a sophisticated or accredited investors, as defined in Rule 502; - the Registrant gave each purchaser the opportunity to ask questions and receive answers concerning the terms and conditions of the offering and to obtain any additional information which the Registrant possessed or could acquire without unreasonable effort or expense that is necessary to verify the accuracy of information furnished; - at a reasonable time prior to the sale of securities, the Registrant advised each purchaser of the limitations on resale in the manner contained in Rule 502(d)2; - neither the Registrant nor any person acting on its behalf sold the securities by any form of general solicitation or general advertising; and - the Registrant exercised reasonable care to assure that each purchaser of the securities is not an underwriter within the meaning of Section 2(11) of the Securities Act of 1933 in compliance with Rule 502(d). ITEM 6. PLAN OF OPERATION. The following Plan of Operation should be read in conjunction with the financial statements and accompanying notes included in this Form 10-KSB. Financial Overview. Since inception through December 31, 2002 the Registrant has incurred losses resulting in an accumulated deficit at December 31, 2002 of approximately $8.5 million. Currently, the Registrant during the period of October 1, 2002 through December 31, 2002 has begun to implement its business model by acquiring Naturally Safe Technologies, Inc. and its wholly owned subsidiary Prima International, LLC in October, 2002. Liquidity and Capital Resources. As of December 31, 2002 and 2001, the Registrant's cash position was $22,530 and $0.00 respectively. Prior to 2002, the Registrant has funded its operations primarily through private equity financing from accredited investors pursuant to Regulation D, which is a limited offer and sale of securities without registration under the Securities Act of 1933. During the twelve months of 2002, net cash provided by financing was $322,072 as compared to $51,502 provided by financing during the twelve months of 2001. The Registrant has made no provision for any current or deferred U.S. federal, state income tax or benefit for any of the periods presented. The Registrant cannot provide an assurance as to when profits will materialize, if at all. Therefore, the Registrant cannot predict when it can use the net operating loss carry-forwards, which begin to expire in 2017, and which may be subject to certain limitations imposed under Section 382 of the Internal Revenue Code of 1986. Due to the uncertainty concerning the Registrant's ability to realize the related tax benefit, it has provided a full valuation allowance on the deferred tax asset, which consists primarily of net operating loss carry- forwards ("NOL"). Because of an ownership change, the NOL's will be substantially reduced. Net cash (used) in operations was $(292,228) during the 2002 compared to $(70,234) during the comparable period of 2001. Net cash provided by in investing activities was $(7,314) and $0 for the same period of 2002 and 2001, respectively. Net cash provided in financing activities was $322,072 and $51,502 for the same period of 2002 and 2001, respectively. Net increase in cash was $22,530 during 2002 compared to $0 during 2001, respectively. The Registrant's accompanying financial statements have been prepared assuming that the Registrant will continue as a going concern, which contemplates the recoverability of assets and the satisfaction of liabilities in the normal course of business. The Registrant is in the development stage and, accordingly, has not yet generated a proven history of operations. Since its inception, the Registrant has been engaged substantially in financing activities and developing its product line, incurring substantial costs and expenses. As a result, the Registrant incurred accumulated net losses through the year ended December 31, 2002 of $8,557,563. In addition, the Registrant's development activities since inception have been financially sustained by capital contributions. It is expected that with the addition of acquisitions during 2003 the Registrant will develop cash flow in 2003. Inflation. The Registrant's management does not believe that inflation has had or is likely to have any significant impact on the Registrant's operations. Twelve-Month Plan of Operation. (a) Business Summary. The Registrant intends to function as a holding company which through its subsidiaries (wholly owned and partially owned) to provide management services to businesses that have an operating history and can substantiate future performance in their respective industries. The Registrant participates in companies in various fields of business by providing executive-level managerial assistance as well as arranging for and contributing capital investment. Potential ventures are evaluated based on the ability of the business to be viable and reach significant milestones set forth in their business plans through strong intellectual property rights and experienced management. The Registrant also continually seeks out and evaluates investment opportunities that have the potential of earning reasonable returns. The Registrant also has plans to raise capital specifically for the purpose of permitting it to start new ventures and make investments in portfolio companies that it believes are attractive based upon its investment criterion (see below for more details). The Registrant consults in ventures have at least a two-year operating history and a need for experienced managerial assistance. Identifying and developing each new business opportunity may require the Registrant to dedicate certain amounts of financial resources, management attention, and personnel, with no assurance that these expenditures will be recouped. Similarly, the selection of companies and the determination of whether a company offers a viable business plan, an acceptable likelihood of success and future profitability involves inherent risk and uncertainty. (b) Business Segments. Management Services (Current). The Registrant's primary business segment is performing management consulting services for emerging companies and realizing a return on from those services through management fess paid and stock appreciation. The Registrant provides these services through its wholly owned subsidiary AmCorp Group, Inc., a Nevada corporation formed in June 2002. The services to be provided are most often geared towards marketing, distribution, accounting, and finance. These management fees will be the primary source of revenue for the Registrant and are negotiated based upon the level of participation and the complexity of the services. However, generally the monthly management fees range from $5,000 and $20,000 per company and the payments are often a combination of stock and cash. Since the Registrant will receive a portion of its revenue in the form of stock, the revenue derived from stock appreciation is realized when the shares of stock held by the Registrant are judiciously sold either in the open market or by private transaction. As the Registrant expands its client base, the turnover of stock will increase to a level whereby the Registrant will have a monthly revenue stream from the strategic depletion of its stock portfolio. Any dividends received from the investment portfolio companies is considered ancillary to the investment return and is not relied upon for the Registrant's operations. The Registrant plans to obtain least three clients per year starting in 2003. These companies will be selected by the Registrant's management based upon their qualifications, both qualitative and quantitative. They must satisfy, at minimum, the Registrant's client selection criterion as well as be considered an attractive investment given the economic and capital market conditions present at the time of evaluation. Each company selected will enter into a two-year consulting agreement with the Registrant for the management services to be provided. Acquisition of Operating Company (Current) In October 2002 the Registrant acquired its first operating company, Naturally Safe Technologies, Inc. and its wholly owned subsidiary Prima International, LLC these subsidiaries reported revenue of $148,816 at the close of December 31, 2002. Both Naturally Safe Technologies, Inc. and Prima International, LLC will continue to grow their sales of their five current products and the development of new products with the added management and capital from the parent company during 2003. Small-business Lending (Proposed Activity). The Registrant plans to enter into the small-business lending market by acting as a broker/underwriter for loans qualified emerging companies for between $25,000 and $5,000,000. The loans are generally used for accounts receivable, inventory, real estate, purchase order financing, rediscount, SBA Loans, construction, and equipment. The interest rates on the loans will vary based upon the financial qualifications of the borrowing entity and amount borrowed. The Registrant will receive a commission on brokered loans and interest revenue on any directly financed loans. The Registrant projects an anticipated average of $6,000,000 of brokered transactions and $500,000 of direct finance loans per year once its fully operational (fiscal year 2005). The small-business lending is not only intended to produce recurring income for the Registrant, but it will also provide a steady flow of potential clients that the Registrant can evaluate for client selection. The Registrant has several lending institutions that it will use for its brokered deals, with the primary lender being Alliance Bank in Culver City, California. The funding for this venture will come from the accumulated earnings of the Registrant and/or from capital raised in a public offering of the Registrant's common stock. (c) Management Criteria The Registrant has a management team strategy that allows it to evaluate its potential portfolio companies independent from each other to determine their suitability. This strategy imposes the following criterion on potential portfolio companies: 1. An operating history of at least two complete fiscal years, or net income of greater than $200,000 for the previous fiscal year, or future potential revenue that management considers important, or net assets of $1,000,000 or greater; 2. A need for experienced managerial assistance to further its business plan; and 3. A desire to realize growth by use of higher outside management. Risk Factors Connected with Plan of Operation. (a) Limited Prior Operations, History of Operating Losses, and Accumulated Deficit May Affect Ability of Registrant to Survive. The Registrant has had limited prior operations to date. Since the Registrant's principal activities recently have been limited to organizational activities, and seeking new business ventures, it has no recent record of any revenue-producing operations. Consequently, there is only a limited operating history upon which to base an assumption that the Registrant will be able to achieve its business plans. In addition, the Registrant has only limited assets. As a result, there can be no assurance that the Registrant will generate significant revenues in the future; and there can be no assurance that the Registrant will operate at a profitable level. Accordingly, the Registrant's prospects must be considered in light of the risks, expenses and difficulties frequently encountered in connection with the establishment of a new business. The Registrant has incurred losses from operations: $646,939 for the year ended December 31, 2001, and $885,163 for the year ended December 31, 2002. At December 31, 2002, the Registrant had an accumulated deficit of $8,589,016. This raises substantial doubt about the Registrant's ability to continue as a going concern. (b) Need for Additional Financing May Affect Operations and Plan of Business. Current funds available to the Registrant will not be adequate for it to be competitive in the areas in which it intends to operate. The Registrant's continued operations, as well as the implementation of its business plan, therefore will depend upon its ability to raise additional funds through bank borrowings, equity or debt financing. The Registrant estimates that it will need to raise up to approximately $500,000 over the twelve months from December 31, 2002 for these purposes. There is no guarantee that these funding sources, or any others, will be available in the future, or that they will be available on favorable terms. In addition, this funding amount may not be adequate for the Registrant to fully implement its business plan. Thus, the ability of the Registrant to continue as a going concern is dependent on additional sources of capital and the success of the Registrant's business plan. Regardless of whether the Registrant's cash assets prove to be inadequate to meet the Registrant's operational needs, the Registrant might seek to compensate providers of services by issuance of stock in lieu of cash. If funding is insufficient at any time in the future, the Registrant may not be able to take advantage of business opportunities or respond to competitive pressures, any of which could have a negative impact on the business, operating results and financial condition. In addition, if additional shares were issued to obtain financing, current shareholders may suffer a dilutive effect on their percentage of stock ownership in the Registrant. (c) No Assurance of Protection of Proprietary Rights May Affect Ability to Manufacture Products. The Registrant's success and ability to compete will be dependent in part on the protection of its patents, trademarks, trade names, service marks and other proprietary rights. The Registrant intends to rely on trade secret and copyright laws to protect the intellectual property that it plans to develop, but there can be no assurance that such laws will provide sufficient protection to the Registrant, that others will not develop a service that are similar or superior to the Registrant's, or that third parties will not copy or otherwise obtain and use the Registrant's proprietary information without authorization. In addition, certain of the Registrant's know-how and proprietary technology may not be patentable. The Registrant may rely on certain intellectual property licensed from third parties, and may be required to license additional products or services in the future, for use in the general operations of its business plan. The Registrant currently has no licenses for the use of any specific products. There can be no assurance that these third party licenses will be available or will continue to be available to the Registrant on acceptable terms or at all. The inability to enter into and maintain any of these licenses could have a material adverse effect on the Registrant's business, financial condition or operating results. There is a risk that some of the Registrant's products may infringe the proprietary rights of third parties. In addition, whether or not the Registrant's products infringe on proprietary rights of third parties, infringement or invalidity claims may be asserted or prosecuted against it and it could incur significant expense in defending them. If any claims or actions are asserted against the Registrant, it may be required to modify its products or seek licenses for these intellectual property rights. The Registrant may not be able to modify its products or obtain licenses on commercially reasonable terms, in a timely manner or at all. The Registrant's failure to do so could have a negative affect our business and adversely our revenues. (d) Product Errors Could Affect Impact Business of the Registrant. The Registrant develops products that are complex, and the products it produces may contain undetected errors when first introduced or when new updated versions are released to the marketplace. Despite the Registrant's rigorous product testing procedures and testing by current and potential customers, it is possible that errors will be found in new products or upgrades after commencement of commercial shipments. The occurrence of product defects or errors could result in adverse publicity, delay in product introduction, diversion of resources to remedy defects, loss of or a delay in market acceptance, claims by customers against us, or could cause us to incur additional costs, any of which could adversely affect our business. (e) Dependence on Outsourced Manufacturing May Affect Ability to Bring Products to Market. The risks of association with outsourced manufacturers are related to aspects of these firms' operations, finances and suppliers. The Registrant may suffer losses if the outside manufacturer fails to perform its obligations to manufacture and ship the product manufactured. These manufacturers' financial affairs may also affect the Registrant's ability to obtain product from these firms in a timely fashion should they fail to continue to obtain sufficient financing during a period of incremental growth. The Registrant intends to maintains a strong relationship with these manufacturers to ensure that any issues they may face are dealt with in a timely manner (f) No Assurance of Market Acceptance May Affect Ability to Sell Products. There can be no assurance that any products successfully developed by the Registrant or its corporate collaborators, if approved for marketing, will ever achieve market acceptance. The Registrant's products, if successfully developed, may compete with a number of traditional products manufactured and marketed by major e-commerce and technology companies, as well as new products currently under development by such companies and others. The degree of market acceptance of any products developed by the Registrant or its corporate collaborators will depend on a number of factors, including the establishment and demonstration of the efficacy of the product candidates, their potential advantage over alternative methods and reimbursement policies of government and third party payors. There can be no assurance that the marketplace in general will accept and utilize any products that may be developed by the Registrant or its corporate collaborators. (g) Substantial Competition May Affect Ability to Sell Products. The Registrant may experience substantial competition in its efforts to locate and attract customers for its products. Some competitors in its industry have greater experience, resources, and managerial capabilities than the Registrant and may be in a better position than the Registrant to obtain access to attract customers. There are a number of larger companies that will directly compete with the Registrant. Such competition could have a material adverse effect on the Registrant's profitability or viability. The Registrant's current and future competitors may develop products or systems that may be comparable or superior to those developed by it or adapt more quickly than it to new technologies, evolving industry standards or customer requirements. Increased competition could result in price reductions, reduced margins and loss of market share, any or all of which could have a material adverse effect on our business, financial condition, results of operations and prospects. (h) Government Regulations May Affect the Ability of the Registrant to Operate. Because the Registrant intends to sell its products internationally, as well as domestically, it must comply with federal laws that relate to the export and applicable foreign government laws regulating the import of our products. However, the federal government may rescind these approvals at any time. Additionally, the Registrant may apply for export approval, on a specific case by case basis, for specific future products. It is possible that the Registrant will not receive approval to export future products on a timely basis, on the basis we request, or at all. As a result of government regulation of its products, the Registrant may be at a disadvantage when competing for international sales with foreign companies not subject to these restrictions. Various aspects of the Registrant's business are subject to governmental regulation in the United States and other countries in which it operates. Failure to comply with such regulation may, depending upon the nature of the noncompliance, result in the suspension or revocation of any license or registration at issue, the termination or loss of any contract at issue or the imposition of contractual damages, civil fines or criminal penalties. The Registrant has experienced no material difficulties in complying with the various laws and regulations affecting its business. (i) Other External Factors May Affect Viability of Registrant. The industry of the Registrant in general is a speculative venture necessarily involving some substantial risk. There is no certainty that the expenditures to be made by the Registrant will result in commercially profitable business. The marketability of its products will be affected by numerous factors beyond the control of the Registrant. These factors include market fluctuations, and the general state of the economy (including the rate of inflation, and local economic conditions), which can affect peoples' spending. Factors that leave less money in the hands of potential customers of the Registrant will likely have an adverse effect on the Registrant. The exact effect of these factors cannot be accurately predicted, but the combination of these factors may result in the Registrant not receiving an adequate return on invested capital. (j) Control by Officers and Directors Over Affairs of the Registrant May Override Wishes of Other Stockholders. The Registrant's officers and directors beneficially own approximately 58% of the outstanding shares of the Registrant's common stock. As a result, such persons, acting together, have the ability to exercise significant influence over all matters requiring stockholder approval. In addition, all decisions with respect to the management of the Registrant will be made exclusively by the officers and directors of the Registrant. Investors will only have rights associated with stockholders to make decisions that affect the Registrant. Accordingly, it could be difficult for the investors hereunder to effectuate control over the affairs of the Registrant. Therefore, the success of the Registrant, to a large extent, will depend on the quality of the directors and officers of the Registrant. Accordingly, no person should invest in the Registrant unless he is willing to entrust all aspects of the management of the Registrant to the officers and directors. (k) Loss of Any of Current Management Could Have Adverse Impact on Business and Prospects for Registrant. The Registrant's success is dependent upon the hiring and retention of key personnel. None of the Registrant's officers and directors currently has employment or non-competition agreements with the Registrant. Therefore, there can be no assurance that these personnel will remain employed by the Registrant. Should any of these individuals cease to be affiliated with the Registrant for any reason before qualified replacements could be found, there could be material adverse effects on the Registrant's business and prospects. The Registrant's success will also be highly dependent on its ability to attract and retain qualified employees. (l) Limitations on Liability, and Indemnification, of Directors and Officers May Result in Expenditures by Registrant. The bylaws of the Registrant and the Nevada Revised Statutes generally provide for permissive indemnification of officers and directors and the Registrant may provide indemnification under such provisions. Any indemnification of directors, officer, or employees, could result in substantial expenditures being made by the Registrant in covering any liability of such persons or in indemnifying them. (m) Potential Conflicts of Interest May Affect Ability of Officers and Directors to Make Decisions in the Best Interests of Registrant. The officers and directors have other interests to which they devote time, either individually or through partnerships and corporations in which they have an interest, hold an office, or serve on boards of directors, and each will continue to do so notwithstanding the fact that management time may be necessary to the business of the Registrant. As a result, certain conflicts of interest may exist between the Registrant and its officers and/or directors that may not be susceptible to resolution. All of the potential conflicts of interest will be resolved only through exercise by the directors of such judgment as is consistent with their fiduciary duties to the Registrant. It is the intention of management, so as to minimize any potential conflicts of interest, to present first to the board of directors of the Registrant, any proposed investments for its evaluation. (n) Non-Cumulative Voting May Affect Ability of Shareholders to Influence Registrant Decisions. Holders of the shares are not entitled to accumulate their votes for the election of directors or otherwise. Accordingly, the holders of a majority of the shares present at a meeting of shareholders will be able to elect all of the directors of the Registrant, and the minority shareholders will not be able to elect a representative to the Registrant's board of directors. (o) Absence of Cash Dividends May Affect Investment Value of Registrant's Stock. The board of directors does not anticipate paying cash dividends on the shares for the foreseeable future and intends to retain any future earnings to finance the growth of the Registrant's business. Payment of dividends, if any, will depend, among other factors, on earnings, capital requirements, and the general operating and financial condition of the Registrant, and will be subject to legal limitations on the payment of dividends out of paid-in capital. (p) No Assurance of Continued Public Trading Market and Risk of Low Priced Securities May Affect Market Value of Registrant's Stock. There has been only a limited public market for the common stock of the Registrant. The common stock of the Registrant is not currently traded on any exchange. As a result, an investor may find it difficult to dispose of, or to obtain accurate quotations as to the market value of the Registrant's securities. In addition, the common stock is subject to the low- priced security or so called "penny stock" rules that impose additional sales practice requirements on broker-dealers who sell such securities. The Securities Enforcement and Penny Stock Reform Act of 1990 requires additional disclosure in connection with any trades involving a stock defined as a penny stock (generally, according to recent regulations adopted by the U.S. Securities and Exchange Commission, any equity security that has a market price of less than $5.00 per share, subject to certain exceptions), including the delivery, prior to any penny stock transaction, of a disclosure schedule explaining the penny stock market and the risks associated therewith. The regulations governing low-priced or penny stocks sometimes limit the ability of broker-dealers to sell the Registrant's common stock and thus, ultimately, the ability of the investors to sell their securities in the secondary market. (q) Shares Eligible For Future Sale. Approximately 165,000,000 shares of common stock that are controlled directly or indirectly by affiliates of the Registrant have been issued in reliance on the private placement exemption under the Securities Act of 1933. Such shares will not be available for sale in the open market without separate registration except in reliance upon Rule 144 under the Securities Act of 1933. In general, under Rule 144 a person (or persons whose shares are aggregated) who has beneficially owned shares acquired in a non-public transaction for at least one year, including persons who may be deemed affiliates of the Registrant (as that term is defined under that rule) would be entitled to sell within any three-month period a number of shares that does not exceed the greater of 1% of the then outstanding shares of common stock, or the average weekly reported trading volume during the four calendar weeks preceding such sale, provided that certain current public information is then available. If a substantial number of the shares owned by these shareholders were sold pursuant to Rule 144 or a registered offering, the market price of the common stock could be adversely affected. Forward Looking Statements. The foregoing Plan of Operation contains "forward looking statements" within the meaning of Rule 175 of the Securities Act of 1933, as amended, and Rule 3b-6 of the Securities Act of 1934, as amended, including statements regarding, among other items, the Registrant's business strategies, continued growth in the Registrant's markets, projections, and anticipated trends in the Registrant's business and the industry in which it operates. The words "believe," "expect," "anticipate," "intends," "forecast," "project," and similar expressions identify forward-looking statements. These forward-looking statements are based largely on the Registrant's expectations and are subject to a number of risks and uncertainties, certain of which are beyond the Registrant's control. The Registrant cautions that these statements are further qualified by important factors that could cause actual results to differ materially from those in the forward looking statements, including, among others, the following: reduced or lack of increase in demand for the Registrant's products, competitive pricing pressures, changes in the market price of ingredients used in the Registrant's products and the level of expenses incurred in the Registrant's operations. In light of these risks and uncertainties, there can be no assurance that the forward-looking information contained herein will in fact transpire or prove to be accurate. The Registrant disclaims any intent or obligation to update "forward looking statements." ITEM 7. FINANCIAL STATEMENTS. Financial statements as of and for the year ended December 31, 2002, and for the year ended December 31, 2001 are presented in a separate section of this report following Item 14. ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE. (a) Effective on August 19, 2002, the independent accountant who was previously engaged as the principal accountant to audit the Registrant's financial statements, Smith & Registrant, was dismissed. This dismissal was approved by the Board of Directors. This firm audited the Registrant's financial statements for the fiscal year ended December 31, 2001. This firm's report on these financial statements was modified as to uncertainty that the Registrant will continue as a going concern; other than this, the accountant's report on the financial statements for that period neither contained an adverse opinion or a disclaimer of opinion, nor was qualified or modified as to uncertainty, audit scope, or accounting principles. During the Registrant's two recent fiscal years and the subsequent interim period preceding such dismissal, there were no disagreements with the former accountant on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure. In addition, there were no "reportable events" as described in Item 304(a)(1)(iv)(B)1 through 3 of Regulation S-B that occurred within the Registrant's most recent fiscal year and the subsequent interim period preceding the former accountant's dismissal. (b) Effective on August 19, 2002, the firm of George Brenner, C.P.A was engaged to serve as the new principal accountant to audit the Registrant's financial statements. The decision to retain this firm was approved by the Board of Directors. During the Registrant's two most recent fiscal years, and the subsequent interim period prior to engaging that accountant, neither the Registrant nor someone on its behalf consulted the newly engaged accountant regarding any matter. (c) Effective on February 17, 2003, Mr. Brenner resigned. This accountant never performed any auditing functions for the Registrant. During the Registrant's most recent fiscal year and the subsequent interim period preceding such resignation, there were no disagreements with the former accountant on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure. In addition, there were no "reportable events" as described in Item 304(a)(1)(iv)(B)1 through 3 of Regulation S-B that occurred within the Registrant's most recent fiscal year and the subsequent interim period preceding the former accountant's resignation. (d) Effective on March 30, 2003, the firm of Beckstead and Watts, LLP has been engaged to serve as the new principal accountant to audit the Registrant's financial statements. The decision to retain this accountant was approved by the Board of Directors. During the Registrant's two most recent fiscal years, and the subsequent interim period prior to engaging this accountant, neither the Registrant (nor someone on its behalf) consulted the newly engaged accountant regarding any matter. PART III. ITEM 9. DIRECTORS, EXECUTIVE OFFICERS AND COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT. Officers and Directors. The names, ages, and respective positions of the directors, executive officers, and key employees of the Registrant are set forth below; there are no other promoters or control persons of the Registrant. The directors named below will serve until the next annual meeting of the Registrant's stockholders or until their successors are duly elected and qualified. Directors are elected for a one-year term at the annual stockholders' meeting. Officers will hold their positions at the will of the board of directors, absent any employment agreement. There are no arrangements, agreements or understandings between non-management shareholders and management under which non-management shareholders may directly or indirectly participate in or influence the management of the Registrant's affairs. The directors and executive officers of the Registrant are not a party to any material pending legal proceedings and, to the best of their knowledge, no such action by or against them has been threatened. On September 12, 2002, Gary Borglund and Richard Nuthmann resigned as directors of the Registrant (after appointing the current directors). John Fleming, President/Secretary/Director Mr. Fleming, age 54, was the managing partner of AFI Capital, LLC, a venture capital company, located in San Diego, California for the past 5 years (before joining the Registrant in September 2002). Before AFI Capital, Mr. Fleming managed Fleming & Associates, a business-consulting firm that provided services to companies looking to create business plans and/or review current plans in order to move forward with fund raising from both private and public sectors. I. Matt Sawaqed, Director Mr. Sawaqed, age 44, became the executive vice president and General Manager of KENT North America, a manufacturer and distributor of confectionary products, in 1995. Within 18 months after joining this firm, KENT's products were represented in over 20,000 retail stores. In 1999, Mr. Sawaqed became president and CEO of Solutions by Magnasoft Inc., a mobile asset-management software company. He was hired to arrange the required funding and guide the company from research and development to a fully developed commercial product. In just over one year, this company successfully launched its products. In 2001, Mr. Sawaqed joined Mytee Products, Inc. as a part- time management consultant. In January 2002, he came on board full-time and assumed the positions of CEO and a director. Mark Crist, Director Mark Crist, 44, has a widely varied background in business development. In 1979, he founded Manufacturer's Revenue Service, a commercial collection agency located in Tustin, California. In 1984 he negotiated the sale of that business to a division of Dun & Bradstreet and thereafter left to become a partner in the marketing services firm of Jay Abraham & Associates. In 1985, he founded the Computer Trivia Fan User Group (CTFUG) as a public benefit, non-profit organization to promote the playing of online trivia contests. Since 1996, Mr. Crist has held the position of President and CEO of GamesGalore.com, Incorporated. That company supplies Trivia contest content to users of America Online, and since its founding has asked in excess of 300,000 trivia questions of in excess of 1.5 million AOL users. The company's live, chatroom-format games have proven to be one of the most popular features of the AOL service with many of its members. Mr. Crist is an alumnus of California State University at Northridge. Compliance with Section 16(a) of the Exchange Act. Section 16(a) of the Securities Exchange Act of 1934 requires the Registrant's directors, certain officers and persons holding 10% or more of the Registrant's common stock to file reports regarding their ownership and regarding their acquisitions and dispositions of the Registrant's common stock with the Securities and Exchange Commission ("SEC"). Such persons are required by SEC regulations to furnish the Registrant with copies of all Section 16(a) forms they file. Based solely upon a review of Forms 3 and 4 and amendments thereto furnished to the registrant under Rule 16a-3(d) during fiscal 2002, and certain written representations from executive officers and directors, the Registrant is aware that the following required reports were not timely filed: (a) Form 3's for John Fleming and I. Matt Sawaqed (both of which have been prepared and filed with the SEC); and (b) Form 3 for Mark Crist, which is in the process of being prepared for filing. The Registrant is not aware of any other such required reports that have not been timely filed. ITEM 10. EXECUTIVE COMPENSATION. The following table sets forth certain information relating to the compensation paid by the Registrant during the last three fiscal years to the Registrant's Chief Executive Officer/President. No other executive officer of the Registrant received total salary and bonus in excess of $100,000 during the fiscal year ended December 31, 2002 and for the two prior years. Summary Compensation Table.
Annual compensation Long-term Compensation Awards Payouts Name and Other Restricted Securities principal annual stock underlying LTIP All other position Year Salary Bonus compensation award(s) options/SARs payouts compensation ($) ($) ($) ($) (#) ($) ($) (a) (b) (c) (d) (e) (f) (g) (h) (i) John Fleming, 2002 - - - $100,000 - - - President Gary Borglund, Former president (1) 2002 - - - - - - - William Spears, former CEO (2) 2001 - - - - - - - 2000 $175,308 - - - 500,000 - - Gary Fox, former President (3) 2001 - - - - - - - Sy R. Picon, former CEO (4) 2000 $153,752 - - - - - -
(1) Mr. Borglund was appointed president on April 28, 2001 and resigned on September 12, 2002. (3) Mr. Spears was appointed CEO in June 2000 and resigned on April 28, 2001. (4) Mr. Fox was appointed President on April 28, 2001 and resigned on January 21, 2002. (4) Mr. Picon resigned as CEO in June 2000. Directors of the Registrant who are also employees do not receive cash compensation for their services as directors or members of the committees of the Board of Directors. All directors may be reimbursed for their reasonable expenses incurred in connection with attending meetings of the Board of Directors or management committees. Employment Contracts. The Registrant has not entered into any written employment agreement with its former or current directors or officers. Other Compensation. (a) There are no annuity, pension or retirement benefits proposed to be paid to officers, directors, or employees of the Registrant in the event of retirement at normal retirement date as there was no existing plan as of December 31, 2001 provided for or contributed to by the Registrant. (b) On July 1, 2002, the Registrant adopted a Non-Employee Directors and Consultants Retainer Stock Plan; 5,550,000 shares were issued under this plan after December 31, 2001. ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT. The following table sets forth information regarding the beneficial ownership of shares of the Registrant's common stock as of March 10, 2003 (283,571,449 issued and outstanding) by (i) all shareholders known to the Registrant to be beneficial owners of more than 5% of the outstanding Common Stock; (ii) each director and executive officer; and (iii) all officers and directors of the Registrant as a group. Except as may be otherwise indicated in the footnotes to the table, each person has sole voting power and sole dispositive power as to all of the shares shown as beneficially owned by them. Title of Class Name and Address Amount and Nature Percent of of Beneficial Owner (1) of Beneficial Class Owner (2) Common Stock John Fleming 131,320,000 46.31% 2240 Shelter Island Drive Suite 202 San Diego, CA 92106 Common Stock I. Matt Sawaqed 32,320,000 11.40% 2240 Shelter Island Drive Suite 202 San Diego, CA 92106 Common Stock Damon Fleming 15,660,000 5.52% 2240 Shelter Island Drive Suite 202 San Diego, CA 92106 Common Stock Mark Crist 1,750,000 0.62% 2240 Shelter Island Drive Suite 202 San Diego, CA 92106 Common Stock Shares of all directors and 165,390,000 58.32% executive officers as a group (3 persons) (1) Except as noted, each person has sole voting power and sole dispositive power as to all of the shares shown as beneficially owned by them. (2) None of these security holders has the right to acquire any amount of the shares within sixty days from options, warrants, rights, conversion privilege, or similar obligations. ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS. During the last two fiscal years, there have not been any transactions that have occurred between the Registrant and its officers, directors, and five percent or greater shareholders other than as set forth below: (a) On February 1, 2001 and March 30, 2001, the Registrant sold a total of 3,825,000 shares of common stock to three sophisticated investors, two of which were the then current directors of the Registrant (Messrs. Spears and Hineline), for a total consideration of $51,502. (b) On July 11, 2001, the Registrant entered into a consulting services agreement with Richard Nuthmann (see Exhibit 4.10 to this Form 10-KSB). Under this agreement, Mr. Nuthmann is to provide services in connection with assisting in due diligence and evaluation of acquisition candidates for the Registrant. Mr. Nuthmann was paid a total of 300,000 shares of free trading common stock of the Registrant, registered under a Form S-8, in February 2002. (c) On July 11, 2001, the Registrant entered into a consulting services agreement with Gary Borglund (see Exhibit 4.11 to this Form 10-KSB). Under this agreement, Mr. Borglund is to provide services in connection with general business consulting. Mr. Borglund was paid a total of 1,500,000 shares of free trading common stock of the Registrant, registered under a Form S-8, in February 2002. (d) On July 11, 2001, the Registrant entered into a consulting services agreement with Richard Epstein (see Exhibit 4.12 to this Form 10-KSB). Under this agreement, Mr. Epstein is to provide services in connection with general business consulting. Mr. Epstein was paid a total of 750,000 shares of free trading common stock of the Registrant, registered under a Form S-8, in February 2002. (e) On September 17, 2001, the Registrant issued 10,000,000 shares of restricted common stock to Four Way Associates, Inc. as reimbursement for expenses of the Registrant paid by Four Way in the amount of $20,000. There is no written documentation on this transaction. (f) On September 13, 2002, the Registrant entered into an acquisition agreement with the shareholders of AmCorp Group, Inc., a privately held Nevada corporation. Under the terms of this agreement, on the closing date, the parties exchanged common stock on a 1-for-1 basis, with AmCorp selling to the Registrant all of its issued and outstanding shares. Mr. Fleming served as the authorized representative of the shareholders of AmCorp. (g) On October 31, 2002, the Registrant entered into an acquisition agreement with the shareholders of Naturally Safe Technologies, Inc., a privately held Nevada corporation. Under the terms of this agreement, on the closing date, the parties exchanged common stock on a 1-for-1 basis, with Naturally Safe exchanging with the Registrant all of its issued and outstanding shares. Messrs. Fleming and Sawaqed were shareholders of Naturally Safe. (h) The Registrant is provided office space without cost by Mr. Fleming. The facility is an 800 square foot office that serves as the administrative offices for the Registrant. For each of the transactions noted above, the transaction was negotiated, on the part of the Registrant, on the basis of what is in the best interests of the Registrant and its shareholders. In addition, in each case the interested affiliate did vote in favor of the transaction; however, the full board of directors did make the determination that the terms in each case were as favorable as could have been obtained from non-affiliated parties. Certain of the officers and directors of the Registrant are engaged in other businesses, either individually or through partnerships and corporations in which they have an interest, hold an office, or serve on a board of directors. As a result, certain conflicts of interest may arise between the Registrant and its officers and directors. The Registrant will attempt to resolve such conflicts of interest in favor of the Registrant. The officers and directors of the Registrant are accountable to it and its shareholders as fiduciaries, which requires that such officers and directors exercise good faith and integrity in handling the Registrant's affairs. A shareholder may be able to institute legal action on behalf of the Registrant or on behalf of itself and other similarly situated shareholders to recover damages or for other relief in cases of the resolution of conflicts is in any manner prejudicial to the Registrant. ITEM 13. CONTROLS AND PROCEDURES. Controls and Procedures. (a) Evaluation of disclosure controls and procedures. Within the 90 days prior to December 31, 2002, the Registrant carried out an evaluation of the effectiveness of the design and operation of its disclosure controls and procedures pursuant to Rule 13a-14 under the Securities Exchange Act of 1934 ("Exchange Act"). This evaluation was done under the supervision and with the participation of the Registrant's President and Chief Financial Officer. Based upon that evaluation, they concluded that the Registrant's disclosure controls and procedures are effective in gathering, analyzing and disclosing information needed to satisfy the Registrant's disclosure obligations under the Exchange Act. (b) Changes in internal controls. There were no significant changes in the Registrant's internal controls or in its factors that could significantly affect those controls since the most recent evaluation of such controls. Critical Accounting Policies. The Securities and Exchange Commission ("SEC") recently issued Financial Reporting release No. 60, "Cautionary Advice Regarding Disclosure About Critical Accounting Policies" ("FRR 60"), suggesting companies provide additional disclosure and commentary on their most critical accounting policies. In FRR 60, the SEC defined the most critical accounting policies as the ones that are most important to the portrayal of a company's financial condition and operating results, and require management to make its most difficult and subjective judgments, often as a result of the need to make estimates of matters that are inherently uncertain. Based on this definition, the Registrant's most critical accounting policies include: non-cash compensation valuation that affects the total expenses reported in the current period. The methods, estimates and judgments the Registrant uses in applying these most critical accounting policies have a significant impact on the results the Registrant reports in its financial statements. ITEM 14. EXHIBITS, REPORTS ON FORM 8-K, AND INDEX TO FINANCIAL STATEMENTS. Exhibits. Exhibits included or incorporated by reference in this document are set forth in the Exhibit Index. Reports on Form 8-K. The following reports on Form 8-K were filed during the last quarter of the fiscal year covered by this report: (a) An amended Form 8-K filed on November 5, 2002 to include the letter from Smith & Company, the prior independent accountant for the Registrant, regarding its agreement with the statements made by the Registrant in the amended Form 8-K in response to Item 304(a)(1) of Regulation S-B. (b) A Form 8-K filed on November 13, 2002 to disclose that on October 31, 2002 the Registrant entered into an acquisition agreement with the shareholders of Naturally Safe Technologies, Inc., a privately held Nevada corporation. Index to Financial Statements. Page Independent Auditor's Report 43 Consolidated Balance Sheet as of December 31, 2002 44 Consolidated Statements of Operations for the years ended December 31, 2002 and December 31, 2001 45 Consolidated Statement of Changes in Stockholders' Equity for the years ended December 31, 2002 and December 31, 2001 46 Consolidated Statements of Cash Flows for the years ended December 31, 2002 and December 31, 2001 48 Notes to Consolidated Financial Statements 50 SIGNATURES Pursuant to the requirements of Section 13 or 15(d) 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. Point Group Holdings, Incorporated Dated: April 14, 2003 By: /s/ John Fleming John Fleming, President Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the date indicated: Signature Title Date /s/ John Fleming President/Director April 14, 2003 John Fleming /s/ I. Matt Sawaqed Director April 14, 2003 I. Matt Sawaqed /s/ Mark Crist Director April 14, 2003 Mark Crist CERTIFICATION I, John Fleming, certify that: 1. I have reviewed this annual report on Form 10-KSB of Point Group Holdings, Incorporated; 2. Based on my knowledge, this annual report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this annual report; 3. Based on my knowledge, the financial statements, and other financial information included in this annual report, fairly present in all material respects the financial condition, results of operations and cash flows of the Registrant as of, and for, the periods presented in this annual report; 4. I am responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the Registrant and have: (a) designed such disclosure controls and procedures to ensure that material information relating to the Registrant, including its consolidated subsidiaries, is made known to me by others within those entities, particularly during the period in which this annual report is being prepared; (b) evaluated the effectiveness of the Registrant's disclosure controls and procedures as of a date within 90 days prior to the filing date of this annual report (the "Evaluation Date"); and (c) presented in this annual report my conclusions about the effectiveness of the disclosure controls and procedures based on my evaluation as of the Evaluation Date; 5. I have disclosed, based on my most recent evaluation, to the Registrant's auditors and the audit committee of Registrant's board of directors (or persons performing the equivalent functions): (a) all significant deficiencies in the design or operation of internal controls which could adversely affect the Registrant's ability to record, process, summarize and report financial data and have identified for the Registrant's auditors any material weaknesses in internal controls; and (b) any fraud, whether or not material, that involves management or other employees who have a significant role in the Registrant's internal controls; 6. I have indicated in this annual report whether there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses. Dated: April 14, 2003 /s/ John Fleming John Fleming, President BECKSTEAD AND WATTS, LLP Certified Public Accountants 3340 Wynn Rd., Ste. B Las Vegas, NV 89102 702.257.1984 INDEPENDENT AUDITORS' REPORT Board of Directors Point Group Holdings, Incorporated San Diego, California We have audited the Balance Sheet of Point Group Holdings, Incorporated (the "Company"), as of December 31, 2002, and the related Statements of Operations, Stockholders' Equity, and Cash Flows for the year then ended. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with generally accepted auditing standards in the United States of America. 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 statement presentation. 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 audit provides a reasonable basis for opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the balance sheet of Point Group Holdings, Incorporated, as of December 31, 2002, and its related statements of operations, equity and cash flows for the year then ended, in conformity with generally accepted accounting principles in the United States of America. The accompanying financial statements have been prepared assuming the Company will continue as a going concern. As discussed in Note 2 to the financial statements, the Company has had limited operations and have not commenced planned principal operations. This raises substantial doubt about its ability to continue as a going concern. Management's plan in regard to these matters are also described in Note 2. The financial statements do not include any adjustments that might result from the outcome of this uncertainty. /s/ Beckstead and Watts, LLP Beckstead and Watts, LLP Las Vegas, Nevada April 13, 2003 POINT GROUP HOLDINGS, INCORPORATED (formerly Syconet.com, Inc.) CONSOLIDATED BALANCE SHEET December 31 2002 Assets Current assets: Cash and equivalents $ 22,530 Accounts receivable 8,137 Inventory 21,221 Total current assets 51,888 Fixed assets, net 7,314 Other assets 11,608 70,810 Liabilities and Stockholders' (Deficit) Current liabilities: Accounts payable and accrued expenses 961,707 Notes payable 278,313 Other liabilities 323,050 Total current liabilities 1,563,070 Stockholders' (deficit): Preferred stock, authorized 500,000 shares; no shares issued and outstanding - Common stock, $0.001 par value, 500,000,000 Shares authorized, 283,571,449 shares issued and outstanding 283,571 Additional paid-in capital 6,781,732 Retained (deficit) (8,557,563) (1,492,260) 70,810 See accompanying notes to consolidated financial statements POINT GROUP HOLDINGS, INCORPORATED (formerly Syconet.com, Inc.) CONSOLIDATED STATEMENTS OF OPERATIONS For the Years Ended December 31 December 31 2002 2001 Revenue $ 202,234 $ 25,446 Cost of revenues 99,541 91,328 102,693 (65,882) Expenses Selling, general and administrative expenses 109,468 124,817 Amortization of deferred compensation related to stock options - 116,275 Officer compensation 102,000 Consulting fees 271,315 - Professional fees 57,385 - Loss from impairment of goodwill 116,809 - Restructuring and other non-recurring charges - 335,891 656,977 576,983 Net operating (loss) (554,284) (642,865) Other income (expense): Interest expense (362,848) (4,074) Debt forgiveness 31,453 - Interest income 516 - Net (loss) (885,163) (646,939) Stockholders' Equity: Weighted average number of common shares outstanding - basic and fully diluted 92,092,740 34,397,875 Net (loss) per share - basic and fully diluted (0.01) (0.02) See accompanying notes to consolidated financial statements POINT GROUP HOLDINGS, INCORPORATED (formerly Syconet.com, Inc.) CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
Common Stock Additional Total Paid-In Deferred Retained Stockholder's Shares Amount Capital Compensation Deficit Equity Balance as of December 31, 2000 31,730,000 $ 3,173 $ 6,714,203 $ (116,275) $(7,025,461) $ (424,360) Shares issued for services 3,825,000 383 51,119 - 51,502 Amortization of deferred compensation 116,275 116,275 Cancelled shares 5,000,000 (500) (39,500) (40,000) Shares issued for services 10,610,000 1,061 30,939 32,000 Net (loss) for the ear ended December 31, 2001 (646,939) (646,939) Balance as of December 31, 2001 51,165,000 4,117 6,756,761 - (7,672,400) (911,523) Shares issued for consulting services 5,500,000 5,500 - 5,500 Recapitalization Adjustment - 47,048 (47,048) - Shares issued for debt settlement 8,662,800 8,663 46,334 54,997 Shares issued for consulting services 3,753,848 3,754 18,769 22,523 Shares issued for consulting services 5,000,000 5,000 - 5,000 Shares issued for debt settlement 1,300,000 1,300 6,916 8,216 Shares issued for business acquisition 78,300,000 78,300 - 78,300 Shares issued for business acquisition 27,889,801 27,890 - 27,890 Shares issued to officers for compensation 102,000,000 102,000 - 102,000 Net (loss) for the year ended December 31, 2002 (885,163) (885,163) Balance as of December 31, 2002 283,571,449 $283,571 $6,781,732 - (8,557,563) (1,492,260)
See accompanying notes to consolidated financial statements POINT GROUP HOLDINGS, INCORPORATED (formerly Syconet.com, Inc.) CONSOLIDATED STATEMENTS OF CASH FLOWS For the Years Ended December 31, December 31, 2002 2001 Cash flows from operating activities Net (loss) $ (885,163) $ (646,939) Adjustments to reconcile net (loss) to cash (used) by operating activities: Shares issued for consulting services 33,023 - Shares issued to officers for compensation 102,000 32,000 Depreciation expense - 44,059 Amortization of deferred compensation related to stock options - 116,275 Loss on disposal of property and equipment - 335,891 Loss from impairment of goodwill 116,809 Changes in assets and liabilities: (Increase) decrease in accounts receivable (8,137) 35,965 (Increase) decrease in inventory (21,221) 91,328 Decrease in other assets (11,608) 5,156 Increase in other liabilities 282,839 - Increase (Decrease) in accounts payable and accrued expenses 112,926 (83,969) Net cash (used) by operating activities (278,532) (70,234) Cash flows from investing activities Purchases of fixed assets (7,314) - Net cash (used) by investing activities (7,314) - Cash flows from financing activities Proceeds from notes payable 308,376 - Proceeds from issuance of stock - 51,502 Net cash provided by financing activities 308,376 51,502 Net increase in cash 22,530 (18,732) Cash and equivalents- beginning - 18,732 Cash and equivalents - ending 22,530 - Supplemental disclosures: Interest paid - - Non-cash transactions: Shares issued for consulting services 33,023 - Shares issued to officers for compensation 102,000 32,000 Shares issued for debt settlement 63,213 - Shares issued for business acquisitions 106,190 - See accompanying notes to consolidated financial statements POINT GROUP HOLDINGS, INCORPORATED (formerly Syconet.com, Inc.) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES AND PROCEDURES Organization Point Group Holdings, Incorporated (the "Company") was originally formed under the laws of the State of Delaware in June 1997 under the name SyCo Comics and Distribution Inc. and is the successor to a limited partnership named SyCo Comics and Distribution, formed under the laws of the Commonwealth of Virginia on January 15, 1997. On February 17, 1999, SyCo Comics and Distribution Inc. changed its name to Syconet.com, Inc. On April 12, 2002 the Company adopted an Agreement and Plan of Merger for the purpose of redomiciling the Company to the State of Nevada. The Company then discontinued its operations as Syconet.com, Inc. and changed its name to Point Group Holdings, Incorporated effective November 21, 2002. Cash and cash equivalents The Company maintains a cash balance in a non-interest-bearing account that currently does not exceed federally insured limits. For the purpose of the statements of cash flows, all highly liquid investments with an original maturity of three months or less are considered to be cash equivalents. There are no cash equivalents as of December 31, 2002. Inventory Inventory consists solely of finished goods product, which are warehoused in Los Angeles, California. All inventory items are stated at the lower of cost (first-in, first out) or market value. Investments Investments in companies over which the Company exercises significant influence are accounted for by the equity method whereby the Company includes its proportionate share of earnings and losses of such companies in earnings. Other long-term investments are recorded at cost and are written down to their estimated recoverable amount if there is evidence of a decline in value which is other than temporary. Property, plant and equipment Property, plant and equipment are stated at the lower of cost or estimated net recoverable amount. The cost of property, plant and equipment is depreciated using the straight-line method based on the lesser of the estimated useful lives of the assets or the lease term based on the following life expectancy: Computer equipment 5 years Office furniture and fixtures 7 years Repairs and maintenance expenditures are charged to operations as incurred. Major improvements and replacements, which extend the useful life of an asset, are capitalized and depreciated over the remaining estimated useful life of the asset. When assets are retired or sold, the costs and related accumulated depreciation and amortization are eliminated and any resulting gain or loss is reflected in operations. Revenue recognition Revenue from proprietary software sales that does not require further commitment from the company is recognized upon shipment. Consulting revenue is recognized when the services are rendered. License revenue is recognized ratably over the term of the license. The cost of services, consisting of staff payroll, outside services, equipment rental, communication costs and supplies, is expensed as incurred. Advertising costs The Company expenses all costs of advertising as incurred. There were no advertising costs included in general and administrative expenses as of December 31, 2002. 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. Fair value of financial instruments Fair value estimates discussed herein are based upon certain market assumptions and pertinent information available to management as of December 31, 2002. The respective carrying value of certain on-balance-sheet financial instruments approximated their fair values. These financial instruments include cash and accounts payable. Fair values were assumed to approximate carrying values for cash and payables because they are short term in nature and their carrying amounts approximate fair values or they are payable on demand. Impairment of long-lived assets The Company reviews its long-lived assets and intangibles periodically to determine potential impairment by comparing the carrying value of the long-lived assets with the estimated future cash flows expected to result from the use of the assets, including cash flows from disposition. Should the sum of the expected future cash flows be less than the carrying value, the Company would recognize an impairment loss. An impairment loss would be measured by comparing the amount by which the carrying value exceeds the fair value of the long-lived assets and intangibles. The Company recognized a $116,809 loss due to impairment of goodwill. Reporting on the costs of start-up activities Statement of Position ("SOP") 98-5 ("SOP 98-5"), "Reporting on the Costs of Start-Up Activities," which provides guidance on the financial reporting of start-up costs and organizational costs, requires most costs of start-up activities and organizational costs to be expensed as incurred. SOP 98-5 is effective for fiscal years beginning after December 15, 1998. With the adoption of SOP 98-5, there has been little or no effect on the Company's financial statements. Loss per share Net loss per share is provided in accordance with Statement of Financial Accounting Standards ("SFAS") No. 128 ("SFAS #128"), "Earnings Per Share". Basic loss per share is computed by dividing losses available to common stockholders by the weighted average number of common shares outstanding during the period. As of December 31, 2002, the Company had no dilutive common stock equivalents, such as stock options or warrants. Dividends The Company has not yet adopted any policy regarding payment of dividends. No dividends have been paid or declared since inception. Comprehensive Income SFAS No. 130, "Reporting Comprehensive Income", establishes standards for the reporting and display of comprehensive income and its components in the financial statements. The Company had no items of other comprehensive income and therefore has not presented a statement of comprehensive income. Segment reporting The Company follows SFAS No. 130, "Disclosures About Segments of an Enterprise and Related Information." The Company operates as a single segment and will evaluate additional segment disclosure requirements as it expands its operations. Income taxes The Company follows SFAS No. 109, "Accounting for Income Taxes" ("SFAS No. 109"), for recording the provision for income taxes. Deferred tax assets and liabilities are computed based upon the difference between the financial statement and income tax basis of assets and liabilities using the enacted marginal tax rate applicable when the related asset or liability is expected to be realized or settled. Deferred income tax expenses or benefits are based on the changes in the asset or liability each period. If available evidence suggests that it is more likely than not that some portion or all of the deferred tax assets will not be realized, a valuation allowance is required to reduce the deferred tax assets to the amount that is more likely than not to be realized. Future changes in such valuation allowance are included in the provision for deferred income taxes in the period of change. Deferred income taxes may arise from temporary differences resulting from income and expense items reported for financial accounting and tax purposes in different periods. Deferred taxes are classified as current or non-current, depending on the classification of assets and liabilities to which they relate. Deferred taxes arising from temporary differences that are not related to an asset or liability are classified as current or non- current depending on the periods in which the temporary differences are expected to reverse. Recent pronouncements In July 2002, the Financial Accounting Standards Board ("FASB") issued SFAS No. 146, "Accounting for Costs Associated with Exit or Disposal Activities", which addresses financial accounting and reporting for costs associated with exit or disposal activities and supersedes EITF No. 94-3, "Liability Recognition for Certain Employee Termination Benefits and Other Costs to Exit an Activity (including Certain Costs Incurred in a Restructuring)." SFAS No. 146 requires that a liability for a cost associated with an exit or disposal activity be recognized when the liability is incurred. Under EITF No. 94-3, a liability for an exit cost was recognized at the date of an entity's commitment to an exit plan. SFAS No. 146 also establishes that the liability should initially be measured and recorded at fair value. The provisions of SFAS No. 146 will be adopted for exit or disposal activities that are initiated after December 31, 2002. In December 2002, the FASB issued SFAS No. 148, "Accounting for Stock-Based Compensation-Transition and Disclosure-an amendment of SFAS No. 123." This Statement amends SFAS No. 123, "Accounting for Stock-Based Compensation", to provide alternative methods of transition for a voluntary change to the fair value based method of accounting for stock-based employee compensation. In addition, this statement amends the disclosure requirements of SFAS No. 123 to require prominent disclosures in both annual and interim financial statements about the method of accounting for stock- based employee compensation and the effect of the method used on reported results. The adoption of SFAS No. 148 is not expected to have a material impact on the company's financial position or results of operations. In November 2002, the FASB issued FASB Interpretation ("FIN") No. 45, "Guarantors Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees and Indebtedness of Others", an interpretation of FIN No. 5, 57 and 107, and rescission of FIN No. 34, "Disclosure of Indirect Guarantees of Indebtedness of Others". FIN 45 elaborates on the disclosures to be made by the guarantor in its interim and annual financial statements about its obligations under certain guarantees that it has issued. It also requires that a guarantor recognize, at the inception of a guarantee, a liability for the fair value of the obligation undertaken in issuing the guarantee. The initial recognition and measurement provisions of this interpretation are applicable on a prospective basis to guarantees issued or modified after December 31, 2002; while, the provisions of the disclosure requirements are effective for financial statements of interim or annual periods ending after December 15, 2002. The company believes that the adoption of such interpretation will not have a material impact on its financial position or results of operations and will adopt such interpretation during fiscal year 2003, as required. In January 2003, the FASB issued FIN No. 46, "Consolidation of Variable Interest Entities", an interpretation of Accounting Research Bulletin No. 51. FIN No. 46 requires that variable interest entities be consolidated by a company if that company is subject to a majority of the risk of loss from the variable interest entity's activities or is entitled to receive a majority of the entity's residual returns or both. FIN No. 46 also requires disclosures about variable interest entities that companies are not required to consolidate but in which a company has a significant variable interest. The consolidation requirements of FIN No. 46 will apply immediately to variable interest entities created after January 31, 2003. The consolidation requirements will apply to entities established prior to January 31, 2003 in the first fiscal year or interim period beginning after June 15, 2003. The disclosure requirements will apply in all financial statements issued after January 31, 2003. The company will begin to adopt the provisions of FIN No. 46 during the first quarter of fiscal 2003. Stock-Based Compensation The Company accounts for stock-based awards to employees in accordance with Accounting Principles Board Opinion No. 25, "Accounting for Stock Issued to Employees" and related interpretations and has adopted the disclosure-only alternative of SFAS No. 123, "Accounting for Stock-Based Compensation." Options granted to consultants, independent representatives and other non- employees are accounted for using the fair value method as prescribed by SFAS No. 123. Year end The Company has adopted December 31 as its fiscal year end. NOTE 2 - GOING CONCERN The accompanying financial statements have been prepared assuming that the Company will continue as a going concern, which contemplates the recoverability of assets and the satisfaction of liabilities in the normal course of business. As noted above, the Company is in the development stage and, accordingly, has not yet generated a proven history of operations. Since its inception, the Company has been engaged substantially in financing activities and developing its product line, incurring substantial costs and expenses. As a result, the Company incurred accumulated net losses through the year ended December 31, 2002 of $8,557,563. In addition, the Company's development activities since inception have been financially sustained by capital contributions. The ability of the Company to continue as a going concern is dependent upon its ability to raise additional capital from the sale of common stock and, ultimately, the achievement of significant operating results. The accompanying financial statements do not include any adjustments that might be required should the Company be unable to recover the value of its assets or satisfy its liabilities. NOTE 3 - FIXED ASSETS Fixed assets consists of the following: December 31, 2002 Computer and office equipment $ 10,564 Less accumulated depreciation (3,250) Total $ 7,314 NOTE 4 - INTANGIBLE ASSET Intangible asset consists of costs related to obtaining a patent on the Season's Greenings product as of December 31, 2002: Patent $ 14,354 Less: accumulated amortization 2,746 11,608 NOTE 5 - ACQUISITIONS On September 24, 2002, the Company executed an Acquisition Agreement ("Agreement") with AmCorp Group, Inc. ("AmCorp"). Under the terms of the Agreement, the Company exchanged 78,300,000 shares of $0.001 par value restricted common stock for 100% of the outstanding shares of AmCorp. The fair market value of the common shares issued on September 24, 2002 was $0.001 per share, resulting in a valuation of $78,300. Effective December 31, 2002, the goodwill was devalued to zero and recorded as a "Loss from impairment of goodwill". On October 31, 2002, the Company executed an Acquisition Agreement ("Agreement") with Naturally Safe Technologies, Inc. ("NSTI") Under the terms of the Agreement, the Company exchanged 27,889,801 shares of $0.001 par value restricted common stock for 100% of the issued and outstanding shares of NSTI. The fair market value of the common shares issued on October 31, 2002 was $0.001 per share, resulting in a valuation of $27,890. Effective December 31, 2002, the goodwill was devalued to zero and recorded as a "Loss from impairment of goodwill". NOTE 6 - RELATED AND UNRELATED NOTES PAYABLE On March 10, 2000 NSTI, the Company's wholly-owned subsidiary, entered into an agreement with an investor whereby the NSTI received a loan of $175,000 with a maturity date no later than 12 months from the date of the note. The note is secured by assets of NSTI. As of December 31, 2002, NSTI was in default on the note. The Company entered into a Forbearance Agreement with the investor to defer payment until 2003. As of December 31, 2002, NSTI had a note payable to a consulting firm totalling $27,642. The note is unsecured, bears an interest of 10%, and is due on demand. As of December 31, 2002, NSTI had a note payable to an investor totalling $25,000. The note is unsecured, bears an interest rate of 10%, and is due on demand. As of December 31, 2002, NSTI had a note payable to an investor totalling $4,000. The note is unsecured, bears an interest rate of 5%, and is due on demand. As of December 31, 2002, NSTI had a note payable to an individual totalling $130. The note is unsecured, bears no interest, and is due on demand. As of December 31, 2002, NSTI had a note payable to a former director of NSTI totalling $1,000. The note is unsecured, bears an interest rate of 5%, and is due on demand. As of December 31, 2002, NSTI had a note payable to a consulting firm totalling $1,000. The note is unsecured, bears an interest of 10%, and is due on demand. As of December 31, 2002, NSTI had a note payable to a former CEO of NSTI totalling $500. The note is unsecured, bears no interest, and is due on demand. Accrued interest on related party notes payable, included in accrued expenses as of December 31, 2002 was $362,848. NOTE 7 - INCOME TAXES The Company accounts for income taxes under Statement of Financial Accounting Standards No. 109, "Accounting for Income Taxes" ("SFAS No. 109"), which requires use of the liability method. SFAS No. 109 provides that deferred tax assets and liabilities are recorded based on the differences between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes, referred to as temporary differences. Deferred tax assets and liabilities at the end of each period are determined using the currently enacted tax rates applied to taxable income in the periods in which the deferred tax assets and liabilities are expected to be settled or realized. The provision for income taxes differs from the amount computed by applying the statutory federal income tax rate to income before provision for income taxes. The sources and tax effects of the differences are as follows: U.S federal statutory rate (34.0%) Valuation reserve 34.0% Total -% As of December 31, 2002, the Company has a net operating loss carry forward of approximately $8,557,563. The related deferred asset has been fully reserved. NOTE 8 - STOCKHOLDER'S EQUITY Common stock The Company has authorized 500,000,000 shares of $0.001 par value common stock and 500,000 shares of $0.001 par value preferred stock. The Company filed with the Securities Exchange Commission Form S- 8 on February 6, 2002 registering 5,550,000 shares of its $0.001 par value common stock as a "Non-Employee Directors and Consultants Retainer Stock Plan." The 5,500,000 shares were issued March 1, 2002 at a market value of $0.001 per share. On July 30, 2002 the Company amended the above S-8 filing to bring the Plan up to 25,000,000 shares including the 5,500,000 shares already issued. On August 19, 2002, the Corporation issued 13,700,000 shares and on September 19, 2002, 5,000,000 shares were issued. The Company increased its authorized common shares from 85,000,000 to 500,000,000 shares and changed the par value from $0.0001 to $0.001 (in connection with its re-domicile from Delaware to Nevada). The transaction was recorded as a recapitalization adjustment with an increase in common stock ($47,048) and a decrease in additional paid-in capital. On August 19, 2002, the Company issued 8,662,800 shares of its $0.001 par value common stock as reimbursement of certain expenses advanced on behalf of the Company in the amount of $54,997. On September 9, 2002, the Company issued 1,300,000 shares of its $0.001 par value common stock to as reimbursement of certain additional expenses advanced on behalf of the Company in the amount of $8,218 ($0.006 per share). On September 24, 2002, the Company issued 78,300,000 shares of its $0.001 par value common stock to three individuals (two of whom are directors of the Company) in connection with the acquisition of all the issued and outstanding common stock of AmCorp Group, Inc. pursuant to an acquisition agreement dated September 13, 2002. On October 31, 2002, the Company issued 27,889,801 shares of its $0.001 par value common stock in connection with the acquisition of all the issued and outstanding common stock of Naturally Safe Technologies, Inc. pursuant to an acquisition agreement dated October 31, 2002. On December 31, 2002, the Company issued 102,000,000 shares of its $0.001 par value common stock to its directors as compensation for past services rendered valued at $102,000, the par value of the underlying shares on the date of issuance. There have been no other issuances of common stock. EXHIBIT INDEX Number Description 2.1 Agreement and Plan of Merger between the Registrant and Syconet.com, Inc., a Delaware corporation, dated December 1, 2001 (see below). 2.2 Acquisition Agreement between the Registrant and shareholders of AmCorp Group, Inc., dated September 13, 2002 (incorporated by reference to Exhibit 2 of the Form 8-K filed on September 23, 2002). 2.3 Acquisition Agreement between the Registrant and shareholders of Naturally Safe Technologies, Inc., dated October 31, 2002 (incorporated by reference to Exhibit 2 of the Form 8-K filed on November 13, 2002). 3.1 Articles of Incorporation, dated December 19, 2001 (see below). 3.2 Certificate of Amendment to Articles of Incorporation, dated November 21, 2002 (see below). 3.3 Certificate of Amendment to Articles of Incorporation, dated March 5, 2003 (see below). 3.4 Bylaws (incorporated by reference to Exhibit 3.2 of the Form 10-SB filed on January 25, 2000). 4.1 Specimen Common Stock Certificate (incorporated by reference to Exhibit 4 of the Form 10-SB/A filed on March 21, 2000). 4.2 1997 Incentive Compensation Program, as amended (incorporated by reference to Exhibit 10.1 of the Form SB-2 POS filed on August 28, 2000). 4.3 Common Stock Purchase Warrant issued to Alliance Equities, Inc., dated May 21, 2000 (incorporated by reference to Exhibit 4.1 to the Form SB-2 filed on June 2, 2000). 4.4 Form of Redeemable Common Stock Purchase Warrant to be issued to investors in the private placement offering, dated January 27, 2000 (incorporated by reference to Exhibit 4.2 to the Form SB-2/A filed on June 27, 2000). 4.5 Redeemable Common Stock Purchase Warrant issued to Diversified Leasing Inc., dated May 1, 2000 (incorporated by reference to Exhibit 4.3 of the Form SB-2/A filed on June 27, 2000). 4.6 Redeemable Common Stock Purchase Warrant issued to John P. Kelly, dated August 14, 2000 (incorporated by reference to Exhibit 4.4 of the Form SB-2 POS filed on August 28, 2000). 4.7 Redeemable Common Stock Purchase Warrant for Frank N. Jenkins, dated August 14, 2000 (incorporated by reference to Exhibit 4.5 of the Form SB-2 POS filed on August 28, 2000). 4.8 Redeemable Common Stock Purchase Warrant for Ronald Jenkins, dated August 14, 2000 (incorporated by reference to Exhibit 4.6 of the Form SB-2 POS filed on August 28, 2000). 4.9 Non-Employee Directors and Consultants Retainer Stock Plan, dated July 1, 2001 (incorporated by reference to Exhibit 4.1 of the Form S-8 filed on February 6, 2002). 4.10 Consulting Services Agreement between the Registrant and Richard Nuthmann, dated July 11, 2001 (incorporated by reference to Exhibit 4.2 of the Form S-8 filed on February 6, 2002). 4.11 Consulting Services Agreement between the Registrant and Gary Borglund, dated July 11, 2001 (incorporated by reference to Exhibit 4.3 of the Form S-8 filed on February 6, 2002). 4.12 Consulting Services Agreement between the Registrant and Richard Epstein, dated July 11, 2001 (incorporated by reference to Exhibit 4.4 of the Form S-8 filed on February 6, 2002). 4.13 Amended and Restated Non-Employee Directors and Consultants Retainer Stock Plan, dated July 1, 2002 (incorporated by reference to Exhibit 2 of the Form S-8 filed on July 30, 2002). 10.1 Funding Agreement between the Registrant and Alliance Equities, Inc., dated December 16, 1999 (incorporated by reference to Exhibit 10.1 of the Form 10-SB filed on January 25, 2000). 10.2 Addendum to the between the Registrant and Alliance Equities, Inc., dated August 4, 2000 (incorporated by reference to Exhibit 10.6 of the Form SB-2 POS filed on August 28, 2000). 16.1 Letter on Change in Certifying Accountant (incorporated by reference to Exhibit 16 of the Form 8-K/A filed on August 24, 2001). 16.2 Letter on Change in Certifying Accountant (incorporated by reference to Exhibit 16 of the Form 8-K/A filed on March 7, 2002). 21 Subsidiaries of the Registrant (see below). 99.1 Certification Pursuant to Section 906 of the Sarbanes- Oxley Act of 2002 (18 U.S.C. Section 1350) (see below). 99.2 Patent issued to Donald V. Duffy, Jr., dated October 17, 2000 (see below). 99.3 Patent issued to Dennis A. Ferber, dated February 19, 1997 (see below). 99.4 Patent issued to Dennis Ferber, dated December 1, 1992 (see below). 99.5 Patent issued to Dennis A. Ferber, dated July 26, 1996 (see below). EX-2.2 3 pointex21041503.txt EX-2.1 AGREEMENT AND PLAN OF MERGER AGREEMENT AND PLAN OF MERGER BY AND BETWEEN SYCONET.COM, INC. (NEVADA) AND SYCONET.COM, INC. (DELAWARE) This Agreement and Plan of Merger ("Agreement") between Syconet.com, Inc. ("Syconet Nevada" or "Surviving Corporation") and Syconet.com, Inc. ("Syconet Delaware"), the two corporations acting by their respective boards of directors and sometimes collectively referred to as the "Constituent Corporations," is entered into this 1st day of December, 2001 in Santa Ana, California, and will have an effective date, if approved as set forth in Article I, Section 1 hereafter, of January 15, 2002 ("Effective Date"). WHEREAS, Syconet.com Nevada is a corporation organized and existing under the laws of the State of Nevada, having been incorporated on December 19, 2001, with its principal business office to be located at 5020 Campus Drive, Newport Beach, Ca 92660; WHEREAS, the authorized capital stock of Syconet.com Nevada is Five Hundred Million (500,000,000) shares of common stock, par value of One Tenth of One Cent ($0.001) per share, none of which have been issued; WHEREAS, Nevada Revised Statutes 92A.190 confers upon Syconet.com Nevada the power to merge with a foreign corporation, and Nevada Revised Statutes 92A.250 confers upon Syconet.com Group Nevada the right to issue its own shares in exchange for shares of any corporation to be merged into Syconet.com Nevada; WHEREAS, Syconet.com Delaware is a corporation organized and existing under the laws of the State of Delaware, having been originally incorporated on June 30, 1997. WHEREAS, the authorized capital stock of Syconet.com Delaware consists of Eighty Five Million (85,000,000) shares of common stock, par value of $0.0001 per share, of which Forty Six Million, Seven Hundred and Eighteen Thousand, Eight Hundred and Forty Eight (46,718,848) shares are presently issued and outstanding, and One Million (1,000,000) shares of preferred stock, par value of .0001 per share, of which no shares are presently issued and outstanding. Section 252 of the Delaware Statutes provides that a foreign corporation and a domestic corporation may be merged and the foreign corporation can be the surviving entity. WHEREAS, the respective boards of directors of Syconet.com Nevada and Syconet.com Delaware deem it desirable and in the best interests of the corporations and their stockholders that the corporations enter into this Agreement and merge pursuant to the terms and conditions contained herein and for the sole purpose of redomiciling the corporation into the State of Nevada; and WHEREAS, in order to consummate this merger and in consideration of the mutual benefits to be derived and the mutual agreements contained herein, Syconet.com Group Nevada and Syconet.com Delaware approve and adopt this Agreement. NOW, THEREFORE, in consideration of the promises and mutual agreements, provisions and covenants herein contained, it is agreed by and between the parties that, in accordance with the provisions of the laws of the State of Nevada, Syconet.com Nevada and Syconet.com Delaware shall be, and they are, as of the merger date (as defined in Article I, Section 2 hereafter) merged into a single surviving corporation, which shall be and is Syconet.com Nevada, one of the Constituent Corporations, which shall continue its corporate existence and remain a Nevada corporation governed by the laws of that state, all on the terms and conditions set forth as follows: ARTICLE I MERGER 1. Shareholder Approval. Within thirty (30) days from the date of this Agreement, or such longer period as the parties hereto shall agree upon in writing, this Agreement shall be submitted for approval and adoption, pursuant to and in accordance with the applicable provisions of the laws of the State of Nevada and the State of Delaware, to the holders of common stock of Syconet.com Nevada and to the holders of common shares of Syconet.com Delaware at duly held shareholders' meetings or by unanimous written consent. This Agreement shall be approved and adopted upon receiving the affirmative vote of the holders of a majority of the common stock of Syconet.com Nevada outstanding on the record date established for determining the holders of Syconet.com Nevada common stock entitled to vote at such Syconet.com Nevada shareholders' meeting, and the affirmative vote of a majority of the common shares of Syconet.com Delaware outstanding on the record date established for determining the holders of common shares entitled to vote at such Syconet.com Delaware shareholders' meeting. If this Agreement shall be so approved and adopted, Syconet.com Nevada and Syconet.com Delaware shall immediately proceed to effectuate the merger of Syconet.com Delaware into Syconet.com Nevada. If this Agreement shall not be so approved and adopted, it shall, without any further action by the parties, other than certification to the other Constituent Corporation of the results of the vote by the Secretary or Clerk, as the case may be, of the Constituent Corporation the shareholders of which shall not have approved or adopted this Plan, be cancelled without liability from either party to the other. 2. Filings After Shareholder Approval. Under Section 252 of the Delaware Statutes, Syconet.com Delaware will cease to exist and Syconet.com Nevada will possess all the powers and property formerly possessed by Syconet.com Delaware upon approval of this Agreement by its shareholders, and the filing with the Delaware Secretary of State the following (A) an agreement that Syconet.com, Inc. may be served with process in Delaware, in any proceeding for enforcement of any obligation of any constituent corporation of Delaware, as well as for enforcement of any obligation of the surviving or resulting corporation arising from the merger or consolidation, including any suit or other proceedings pursuant to section 262 of the Delaware Statutes, and shall irrevocably appoint the Secretary of State as its agent to accept service of process in any such suit or other proceedings and shall specify the address to which a copy of such process shall be mailed by the Secretary of State. Under Section 251 of the Delaware Statutes, the effective date of the merger is the date on which the merger becomes effective in the State of Nevada. As soon as practicable after the approval of the merger by the shareholders of Syconet.com Nevada has been obtained and all other conditions to the obligations of the parties to this agreement to the effect the merger shall have been satisfied or waived, Syconet.com Nevada shall file with the Nevada Secretary of State a duly executed Articles of Merger, as required by Nevada Revised Statutes 92A.200, and take such other and future actions as may be required by Nevada law to make the merger effective. The merger of Syconet.com Delaware into Syconet.com Nevada shall become effective upon the filing of the Articles of Merger with the Nevada Secretary of State ("Merger Date"). 3. Effect of Merger. Syconet.com Nevada shall succeed to, without other transfer, and shall possess and enjoy all rights, privileges, powers and franchises as well of a public as of a private nature, and be subject to all restrictions, disabilities and duties of each of two Constituent Corporations, and all and singular, the rights, privileges, powers and franchises of each of corporations, and all property, real, personal and mixed, and all debts to either of Constituent Corporations on whatever account, as well for stock subscriptions as all other things in action or belonging to each of the corporations shall be vested in the Surviving Corporation; and all property, rights, privileges, powers and franchises, and all and every other interest shall be as effectually property of the Surviving Corporation as they were of Constituent Corporations, provided, that all rights of creditors and all liens on any property of each of Constituent Corporations shall be preserved unimpaired, limited to property affected by the liens at time of merger, and all debts, liabilities and duties of Constituent Corporations shall attach to the Surviving Corporation, and may be enforced against it to the same extent as if debts, liabilities and duties had been incurred or contracted by it. If at any time the Surviving Corporation shall deem or be advised that any further assignments or assurances in law or things are necessary or desirable to vest, or to perfect or confirm, of record or otherwise, in the Surviving Corporation the title to any property acquired or to be acquired by reason of or as a result of merger provided for by this agreement, proper officers and directors of each of Constituent Corporations shall execute and deliver all proper deeds, assignments and assurances in law and do all things necessary or proper to vest, perfect or confirm title to property in the Surviving Corporation and otherwise to carry out the purpose of this Agreement. ARTICLE II NAME AND CONTINUED CORPORATE EXISTENCE OF SURVIVING CORPORATION The corporate name of Syconet.com Nevada, the Constituent Corporation whose corporate existence is to survive this merger and continue thereafter as the Surviving Corporation, and its identity, existence, purposes, powers, objects, franchises, rights and immunities shall continue unaffected and unimpaired by the merger, and the corporate identity, existence, purposes, powers, objects, franchises, rights and immunities of Syconet.com Delaware shall be wholly merged into Syconet.com Nevada. Accordingly, on the Merger Date the separate existence of Syconet.com Delaware, except insofar as continued by statute, shall cease. ARTICLE III GOVERNING LAW CERTIFICATE OF INCORPORATION As stated, the laws of State of Nevada shall govern the Surviving Corporation. From and after the Merger Date, the Articles of Incorporation of Syconet.com Nevada attached as Appendix A (which Appendix A represents the certificate of incorporation of Syconet.com Nevada filed in the office of the Secretary of State of the State of Nevada on April 12, 2002) shall be and become the certificate of incorporation of the Surviving Corporation. In addition to the powers conferred upon it by law, the Surviving Corporation shall have the powers set forth in Appendix A and be governed by those provisions. From and after the Merger Date, and until further amended as provided by law, Appendix A may be certified, separate and apart from this agreement, as the certificate of incorporation of the Surviving Corporation. ARTICLE IV BYLAWS OF SURVIVING CORPORATION From and after the Merger Date the present bylaws of Syconet.com Nevada shall be and become the bylaws of the Surviving Corporation until they shall be altered, amended or repealed, or until new bylaws shall be adopted, in accordance with the provisions of law, the bylaws and the certificate of incorporation of the Surviving Corporation. ARTICLE V DIRECTORS AND OFFICERS 1. Directors. The number of directors of the Surviving Corporation, who shall hold office until their successors have been duly elected and shall have qualified, or as otherwise provided in the certificate of incorporation of Syconet.com Nevada or its bylaws, shall be three (4) until changed by action of the Board of Directors of the Surviving Corporation pursuant to its bylaws; and the respective names of the first directors of the Surviving Corporation are as follows: Gary Borglund Richard Nuthmann If, on or after the Merger Date, a vacancy shall for any reason exist in the Board of Directors of the Surviving Corporation, or in any of the offices, the vacancy shall be filled in the manner provided in the certificate of incorporation of Syconet.com Nevada or in its bylaws. 2. Annual Meeting. The first annual meeting of the shareholders of the Surviving Corporation after the Merger Date shall be the annual meeting provided by the bylaws of Syconet.com Nevada for the year 2001. 3. Officers. The first officers of the Surviving Corporation, who shall hold office until their successors have been elected or appointed and shall have qualified, or as otherwise provided in its bylaws, are as follows: Gary Borglund, President Richard Nuthmann, Secretary Gary Borglund, Treasurer ARTICLE VI CAPITAL STOCK OF SURVIVING CORPORATION The capitalization of the Surviving Corporation upon the Merger Date shall be as set forth in the certificate of incorporation of Syconet.com Nevada. ARTICLE VII CONVERSION OF SHARES ON MERGER Each of the shares of common stock, par value of One Tenth Cent ($0.001) per share, of Syconet.com Delaware outstanding on the Merger Date ("Syconet.com Delaware Stock"), and all rights shall upon the Merger Date be converted into one share of common stock, par value One Tenth of One Cent ($0.001) per share of Syconet.com Nevada ("Syconet.com Nevada Stock"). At any time and from time to time after the Merger Date, each holder of an outstanding certificate or certificates representing shares of Syconet.com Delaware Stock shall be entitled, upon the surrender of the certificate or certificates at the office of an transfer agent of Syconet.com Nevada to be designated by the Board of Directors of Syconet.com Nevada to receive in exchange a certificate or certificates representing the number of shares of Syconet.com Nevada Stock into which the shares of Syconet.com Delaware Stock represented by the certificate or certificates surrendered shall have been converted. No dividend shall be paid by Syconet.com Nevada to the holders of outstanding certificates expressed to represent shares of Syconet.com Delaware Stock, but, upon surrender and exchange as provided, there shall be paid to the record holder of the certificate or certificates for Syconet.com Nevada Stock issued in exchange therefor an amount with respect to each such share of Syconet.com Nevada Stock equal to all dividends which shall have been paid or become payable to holders of record of Syconet.com Nevada Stock between the Merger Date and the date of exchange. ARTICLE VIII ASSETS AND LIABILITIES On the Merger Date, all property, real, personal and mixed, and all debts due to either of the Constituent Corporations on whatever account, as well for stock subscriptions as all other choses in action, and all and every other interest of or belonging to either of Constituent Corporations shall be taken by and deemed to be transferred to and vested in the Surviving Corporation without further act or deed; and all property and every other interest shall be as effectually the property of the Surviving Corporation as it was of the respective Constituent Corporations, and the title to any real estate or any interest, whether vested by deed or otherwise, in either of the Constituent Corporations shall not revert or be in any way impaired by reason of the merger; provided, however, that all rights of creditors and all liens upon the property of either of the Constituent Corporations shall be preserved unimpaired, and all debts, liabilities, obligations and duties of the respective Constituent Corporations shall attach to the Surviving Corporation, and may be enforced against it to the same extent as if the debts, liabilities, obligations and duties had been incurred or contracted by it. Any action or proceeding pending by or against either of the Constituent Corporations may be prosecuted to judgment as if the merger had not taken place, or the Surviving Corporation may be submitted in place of either of the Constituent Corporations. The parties respectively agree that from time to time, when requested by the Surviving Corporation or by its successors or assigns, they will execute and deliver or cause to be executed and delivered all deeds and instruments, and will take or cause to be taken all further or other action, as the Surviving Corporation may deem necessary or desirable in order to vest in and confirm to the Surviving Corporation or its successors or assigns title to and possession of all the property and rights and otherwise carry out the intent and purposes of this Agreement. ARTICLE IX CONDUCT OF BUSINESS BY CONSTITUENT CORPORATIONS Prior to the Merger Date Syconet.com Delaware shall conduct its business in its usual and ordinary manner, and shall not enter into any transaction other than in the usual and ordinary course of such business except as provided. Without limiting the generality of the above, Syconet.com Delaware shall not, except as otherwise consented to in writing by Syconet.com Nevada or as otherwise provided in this agreement: 1. Issue or sell any shares of its capital stock in addition to those outstanding on this date, except shares issued pursuant to rights or options outstanding at that date; 2. Issue rights to subscribe to or options to purchase any shares of its stock in addition to those outstanding on this date; 3. Amend its certificate of incorporation or its bylaws; 4. Issue or contract to issue funded debt; 5. Declare or pay any dividend or make any other distribution upon or with respect to its capital stock. 6. Repurchase any of its outstanding stock or by any other means transfer any of its funds to its shareholders either selectively or rateably, in return for value or otherwise, except as salary or other compensation in the ordinary or normal course of business; 7. Undertake or incur any obligations or liabilities except current obligations or liabilities in the ordinary course of business and except for liabilities for fees and expenses in connection with the negotiation and consummation of the merger in amounts to be determined after the Merger Date; 8. Mortgage, pledge, subject to lien or otherwise encumber any realty or any tangible or intangible personal property; 9. Sell, assign or otherwise transfer any tangible assets of whatever kind, or cancel any claims, except in the ordinary course of business; 10. Sell, assign, or otherwise transfer any trademark, trade name, patent or other intangible asset; 11. Default in performance of any material provision of any material contract or other obligation; 12. Waive any right of any substantial value; or 13. Purchase or otherwise acquire any equity or debt security of another corporation except to realize on an otherwise worthless debt. ARTICLE X WARRANTIES OF THE CONSTITUENT CORPORATIONS 1. Representations and Warranties of Syconet.com Delaware. Syconet.com Delaware covenants, represents and warrants to Syconet.com Nevada that: a. It is on the date of this Agreement, and will be on the Merger Date, (a) a corporation duly organized and existing and in good standing under the laws of the jurisdiction of the State of Delaware (b) duly authorized under its articles, and under applicable laws, to engage in the business carried on by it, and (c) it is fully qualified to do business in the State of Delaware; b. All federal, state and local tax returns required to be filed by it on or before the Merger Date will have been filed, and all taxes shown to be required to be paid on or before the Merger Date will have been paid; c. It will use its best efforts to collect the accounts receivable owned by it on or prior to the Merger Date and will follow its past practices in connection with the extension of any credit prior to the Merger Date; d. All fixed assets owned by it and employed in its business are of the type, kind and condition appropriate for its business and will be operated in the ordinary course of business until the Merger Date; e. All leases now held by it are now and will be on the Merger Date in good standing and not voidable or void by reason of any default whatsoever; f. During the period between December 1, 2001, and the date of this Agreement, except as disclosed in writing to Syconet.com Nevada, it has not taken any action, or suffered any conditions to exist, to any material or substantial extent in the aggregate, which it has agreed in Article IX or this Article X of this Agreement not to take or to permit to exist during the period between the date of this agreement and the Merger Date; g. It has not been represented by any broker in connection with the transaction contemplated, except as it has advised Syconet.com Nevada in writing; and h. Its Board of Directors has, subject to the authorization and approval of its stockholders, authorized and approved the execution and delivery of this Agreement, and the performance of the transactions contemplated by this Agreement. i. Syconet.com Delaware, in addition to other action which is has covenanted, represented, and warranted to Syconet.com Nevada that it shall take, shall also: (1) Use its best efforts to preserve its business organization intact, to keep available to Syconet.com Nevada the present officers and employees of Syconet.com Delaware, and to preserve for Syconet.com Nevada the relationships of Syconet.com Delaware with suppliers and customers and others having business relations with Syconet.com Delaware; and (2) Not increase the compensation, wages, or other benefits payable to its officers or employees, other than increases which Syconet.com Nevada has approved in writing. 2. Representations and Warranties of Syconet.com Nevada. Syconet.com Nevada covenants, represents and warrants to Syconet.com Delaware that: a. Syconet.com Nevada is a corporation duly organized and existing and in good standing under the laws of the State of Nevada and has the corporate power to own its properties and to carry on its business as now being conducted; and b. Its Board of Directors has, subject to the authorization and approval of its stockholders, authorized and approved the execution and delivery of this Agreement, and the performance of the transactions contemplated by this Agreement. ARTICLE XI CONSUMMATION OF MERGER If the merger contemplated is completed, all expenses incurred in consummating the plan of merger shall, except as otherwise agreed in writing between the Constituent Corporations, be borne by Syconet.com Nevada. If the merger is not completed, each of the Constituent Corporations shall be liable for, and shall pay, the expenses incurred by it. Notwithstanding shareholder authorization and at any time prior to the filing, the filing and recording of this agreement may be deferred from time to time by mutual consent of the respective boards of directors of each of the Constituent Corporations, and, to the extent provided in (a), (b), (c) and (d) below, the merger may be abandoned: 1. By the mutual consent of the respective Boards of Directors of each of the Constituent Corporations; 2. At the election of the Board of Directors of Syconet.com Nevada, if (a) demands by shareholders for appraisal of their shares of Syconet.com Delaware Stock have been received from the holders of twenty-five percent (25%) or more of the outstanding shares, or (b) in the judgment of the Board any judgment is rendered relating to any legal proceeding not commenced and the existence of the judgment will or may materially affect the rights of either Constituent Corporation to sell, convey, transfer or assign any of its assets or materially interfere with the operation of its business, renders the merger impracticable, undesirable or not in the best interests of its shareholders; 3. By the Board of Directors of Syconet.com Nevada if there shall not have been submitted to Syconet.com Nevada the opinion of counsel for Syconet.com Delaware, in form and substance satisfactory to Syconet.com Nevada, to the effect that (1) Syconet.com Delaware is a validly organized and duly existing corporation, (2) this Agreement has been duly authorized by, and is binding upon, Syconet.com Delaware in accordance with its terms, and (3) all the properties, estate, rights, privileges, powers and franchises of Syconet.com Delaware and all debts due to Syconet.com Delaware shall be transferred to and vested in Syconet.com Nevada, as the Surviving Corporation, without further act or deed, subject only to any legal requirements for recording or filing any instruments of conveyance, assignment or transfer, the giving of notice of any such conveyance, assignment or transfer, consents of third parties and governmental authorities to assignment of any contract or lease, and other specified exceptions acceptable to Syconet.com Nevada; 4. At the election of the Board of Directors of Syconet.com Delaware if there shall not have been submitted to Syconet.com Delaware the opinion of counsel for Syconet.com Nevada, in form and substance satisfactory to Syconet.com Delaware, to the effect that (1) Syconet.com Nevada is a validly organized and duly existing corporation, (2) this Agreement has been duly authorized by, and is binding upon, Syconet.com Nevada in accordance with its terms, (3) when Articles of Merger shall have been filed as provided in this Agreement, the merger will become effective and all liabilities and obligations of Syconet.com Delaware will become the liabilities and obligations of Syconet.com Nevada, as the surviving corporation, fully and without any further action by either Constituent Corporation, (4) the Syconet.com Delaware Stock will be converted into Syconet.com Nevada Stock, (5) the Syconet.com Nevada Stock into which the Syconet.com Delaware Stock will be converted as provided herein will be legally and validly authorized, exempt from the registration requirements of Section 5 of the Securities Act of 1933, as amended, ("Act'), provided by Section 3(a)(10) thereof, exempt from the registration requirements of Nevada Revised Statutes 90.460, as amended, provided by Nevada Revised Statutes 90.530(11), and may be issued without a restrictive legend pursuant to Rule 145(a)(2) under the Act if the shares of Syconet.com Delaware are otherwise unrestricted, and (6) when issued will be validly issued, fully paid and nonassessable stock of the surviving corporation; 5. At the election of the Board of Directors of either Constituent Corporation if: a. The warranties and representations of the other Constituent Corporation contained in this Agreement shall not be substantially accurate in all material respects on and as of the date of election; or the covenants contained of the other Constituent Corporation shall not have been performed or satisfied in all material respects; b. This agreement shall not have been approved by the requisite votes of shareholders of the Constituent Corporations on or before December 1, 2001; c. Prior to the merger (1) there shall have been filed in any court or agency having jurisdiction a complaint or other proceeding seeking to restrain or enjoin the merger contemplated hereby, or (2) there shall have been presented to Syconet.com Delaware or Syconet.com Nevada or any director or officer of either of them any process, demand or request which, in the opinion of counsel for either Constituent Corporation, offers reasonable ground to believe that a complaint or bill in equity may be forthcoming which, if successful, would restrain, enjoin or dissolve the merger, and if, in either case, such Board of Directors determines that abandonment and cancellation of this Agreement is advisable in the best interests of the Constituent Corporations, their shareholders, employees and customers; d. If the Merger Date shall not have occurred by December 31, 2002, then, at the option of the Board of Directors of either Constituent Corporation, it may be deferred to a date on or after June 30, 2003. If the Merger Date shall not have occurred by June 30, 2003, then, at the option of the Board of Directors of either Constituent Corporation the merger may be abandoned. In the event of the abandonment of the merger pursuant to the foregoing provisions, this Agreement shall become void and have no effect, without any liability on the part of either of the Constituent Corporations or its shareholders or directors or officers in respect of this merger except the obligation of each Constituent Corporation to pay its own expenses as provided in this Article XI. ARTICLE XII RESIDENT AGENT The respective names of the county and the city within the county in which the principal office of the surviving corporation is to be located in the State of Nevada, the street and number of this office, the name of the registered agent will, as of the Merger Date, be as set forth in Article Second of the Articles of Incorporation of the Surviving Corporation. ARTICLE XIII RIGHT TO AMEND ARTICLES OF INCORPORATION The Surviving Corporation reserves the right to amend, alter, change or repeal its Articles of Incorporation in the manner now or later prescribed by statute or otherwise authorized by law; and all rights and powers conferred in the certificate of incorporation on shareholders, directors or officers of Syconet.com Nevada, or any other person, are subject to this reserved power. ARTICLE XIV MISCELLANEOUS 1. Access to Books and Records. To enable Syconet.com Nevada to coordinate the activities of Syconet.com Delaware into those of Syconet.com Nevada on and after the Merger Date, Syconet.com Delaware shall, before the Merger Date, afford to the officers and authorized representatives of Syconet.com Nevada free and full access to the plants, properties, books and records of Syconet.com Delaware, and the officers of Syconet.com Delaware will furnish Syconet.com Nevada with financial and operating data and other information as to the business and properties of Syconet.com Delaware as Syconet.com Nevada shall from time to time reasonably request. Syconet.com Nevada shall, before the Merger Date, afford to the officers and authorized representatives of Syconet.com Delaware such access, and Syconet.com Nevada's officers will furnish such data and information to Syconet.com Delaware, as may be reasonably required by Syconet.com Delaware for the preparation of its proxy statement in connection with the meeting of shareholders to be called pursuant to section 1 of Article I of this Agreement. Syconet.com Nevada and Syconet.com Delaware agree that, unless and until the merger contemplated by this Agreement has been consummated, Syconet.com Nevada and Syconet.com Delaware and their officers and representatives will hold in strict confidence all data and information obtained from one another as long as it is not in the public domain, and if the merger provided for is not consummated as contemplated, Syconet.com Nevada and Syconet.com Delaware will each return to the other party all data as the other party may reasonably request. 2. Rights Cumulative; Waivers. The rights of each of the parties under this Agreement are cumulative. The rights of each of the parties hereunder shall not be capable of being waived or varied other than by an express waiver or variation in writing. Any failure to exercise or any delay in exercising any of such rights shall not operate as a waiver or variation of that or any other such right. Any defective or partial exercise of any of such rights shall not preclude any other or further exercise of that or any other such right. No act or course of conduct or negotiation on the part of any party shall in any way preclude such party from exercising any such right or constitute a suspension or any variation of any such right. 3. Benefit; Successors Bound. This Agreement and the terms, covenants, conditions, provisions, obligations, undertakings, rights, and benefits hereof, shall be binding upon, and shall inure to the benefit of, the undersigned parties and their heirs, executors, administrators, representatives, successors, and permitted assigns. 4. Entire Agreement. This Agreement contains the entire agreement between the parties with respect to the subject matter hereof. There are no promises, agreements, conditions, undertakings, understandings, warranties, covenants or representations, oral or written, express or implied, between them with respect to this Agreement or the matters described in this Agreement, except as set forth in this Agreement. Any such negotiations, promises, or understandings shall not be used to interpret or constitute this Agreement. 5. Assignment. Neither this Agreement nor any other benefit to accrue hereunder shall be assigned or transferred by either party, either in whole or in part, without the written consent of the other party, and any purported assignment in violation hereof shall be void. 6. Amendment. This Agreement may be amended only by an instrument in writing executed by all the parties hereto. 7. Severability. Each part of this Agreement is intended to be severable. In the event that any provision of this Agreement is found by any court or other authority of competent jurisdiction to be illegal or unenforceable, such provision shall be severed or modified to the extent necessary to render it enforceable and as so severed or modified, this Agreement shall continue in full force and effect. 8. Section Headings. The Section headings in this Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement. 9. Construction. Unless the context otherwise requires, when used herein, the singular shall be deemed to include the plural, the plural shall be deemed to include each of the singular, and pronouns of one or no gender shall be deemed to include the equivalent pronoun of the other or no gender. 10. Further Assurances. In addition to the instruments and documents to be made, executed and delivered pursuant to this Agreement, the parties hereto agree to make, execute and deliver or cause to be made, executed and delivered, to the requesting party such other instruments and to take such other actions as the requesting party may reasonably require to carry out the terms of this Agreement and the transactions contemplated hereby. 11. Notices. Any notice which is required or desired under this Agreement shall be given in writing and may be sent by personal delivery or by mail (either a. United States mail, postage prepaid, or b. Federal Express or similar generally recognized overnight carrier), addressed as follows (subject to the right to designate a different address by notice similarly given): To Syconet.com Nevada: Brian F. Faulkner Attorney at Law 3900 Birch Street, Suite 113 Newport Beach, CA 92660 To Syconet.com Delaware Gary Borglund 5020 Campus Drive Newport Beach, CA 92660 12. Governing Law. This Agreement shall be construed and enforced under, in accordance with, and governed by, the laws of the State of Nevada. 13. Consents. The person signing this Agreement on behalf of each party hereby represents and warrants that he has the necessary power, consent and authority to execute and deliver this Agreement on behalf of such party. 14. Termination of Agreement. This Agreement shall terminate on the Effective Date unless all actions required under this Agreement have not been fully performed. 15. Survival of Provisions. The representations and warranties contained in Article X of this agreement and any liability of one Constituent Corporation to the other for any default under the provisions of Articles IX or X of this agreement, shall expire with, and be terminated and extinguished by, the merger under this agreement on the Merger Date. 16. Execution in Counterparts. This Agreement may be executed in any number of counterparts, each of which shall be deemed an original and all of which together shall constitute one and the same agreement. IN WITNESS WHEREOF, the parties have caused this Agreement to be executed and delivered as of the date first above written. SYCONET.COM NEVADA: By: /s/ Gary Borglund Gary Borglund, President SYCONET.COM DELAWARE: By: /s/ Gary Borglund Gary Borglund, President EX-3.1 4 pointex31041503.txt EX-3.1 ARTICLE OF INCORPORATION Articles of Incorporation (PURSUANT TO NRS 78) 1. Name of Corporation Syconet,com, Inc. NAME 2. Resident Agent Name The Corporation Trust Company of Nevada and Street Address: PHYSICAL STREET CITY ZIP ADDRESS 6100 Neil Road, Reno NEVADA 89511 Suite 500 ADDITIONAL MAILING CITY STATE ZIP ADDRESS 3. Shares: Number of shares Number of shares with par value: Par value: without par value: 0 500,000,000 $0.001 4. Names. Addresses. The First Board of Directors/Trustees shall consist of 1 member whose names and addresses are as follows: Number of Board of Directors/Trustees: 1. Gary Fox NAME STREET ADDRESS CITY STATE ZIP 5020 Campus Drive Newport Beach CA 92660 2. NAME STREET ADDRESS CITY STATE ZIP 5. Purpose The purpose of this corporation shall be: Consulting services 6. Other Matters: Number of addition pages: 0 Susan Wheeler 7. Names. Addresses /s/ Susan Wheeler and Signatures NAME Signature of Incorporators: STREET ADDRESS CITY STATE ZIP 818 W. Seventh Los Angeles CA 90017 8. Certificate of I, The Corporation Trust Company of Nevada Acceptance of hereby accept appointment as Resident Agent for the Appointment of above named corporation, Resident Agent: /s/ Scott Ferraro Authorized Signature of Resident Date: 12/19/01 Agent or Resident Agent Company EX-3.2 5 pointex32041503.txt EX-3.2 CERTIFICATE OF AMENDMENT TO ARTICLES OF INCORPORATION Certificate of Amendment to Articles of Incorporation For Nevada Profit Corporation (Pursuant to NRS 78.385 and 78.390 - After Issuance of Stock) 1. Name of corporation: Syconet.com, Inc. 2. The articles have been amended as follows (provide article numbers, if available): Article I. Name of Corporation: Point Group Holdings, Incorporated. 3. The vote by which the stockholders holding shares in the corporation entitling them to exercise at least a majority of the voting power, or such greater proportion of the voting power as may be required in the case of a vote by classes or series, or as may be required by the provisions of the articles of incorporation have voted in favor of the amendment is: 108,962,800 * 4. Officer Signature (Required) /s/ John Fleming /s/ John Fleming President Secretary * If any proposed amendment would alter or change any preference or any relative or other right given to any class or series of outstanding shares, then the amendment must be approved by the vote, in addition to the affirmative vote otherwise required, of the holders of shares representing a majority of the voting power of each class or series affected by the amendment regardless of limitations or restrictions on the voting power thereof. IMPORTANT: Failure to include any of the above information and remit the proper fees may cause this filing to be rejected. EX-3.3 6 pointex33041503.txt EX-3.3 CERTIFICATE OF AMENDMENT TO ARTICLES OF INCORPORATION CERTIFICATE OF AMENDMENT TO ARTICLES OF INCORPORATION OF POINT GROUP HOLDINGS, INCORPORATED I, John Fleming, certify that: 1. The original articles of incorporation of the Company were filed with the Office of the Secretary of State on December 19, 2001. 2. Pursuant to a unanimous written consent of the Board of Directors of the Company, the Company hereby adopts the following amendments to the Articles of Incorporation of this Company: New provisions are added under Article 5 as follows: (a) An increase in the authorized capital stock of the Company can be approved by the Board of Directors without shareholder consent. (b) A decrease in the issued and outstanding common stock of the Company (a reverse split) can be approved by the Board of Directors without shareholder consent. 3. A majority of the shareholders of the common stock of the Company approved of these amendments to the Articles of Incorporation by written consent. /s/ John Fleming John Fleming, President EX-99.1 7 pointex991041503.txt EX-99.1 CERTIFICATION PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 CERTIFICATION PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 (18 U.S.C. SECTION 1350) In connection with the Annual Report of Point Group Holdings, Incorporated ("Company") on Form 10-KSB for the fiscal year ended December 31, 2002 as filed with the Securities and Exchange Commission ("Report"), the undersigned, in the capacity and on the date indicated below, hereby certifies pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. Section 1350), that to his knowledge: 1. The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and 2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. A signed original of this written statement required by Section 906 has been provided to Point Group Holdings, Incorporated of America and will be retained by Point Group Holdings, Incorporated and furnished to the Securities and Exchange Commission or its staff upon request. Dated: April 14, 2003 /s/ John Fleming John Fleming, President EX-99.2 8 pointex992041502.txt EX-99.2 PATENT United States Patent No. 6,131,331 Donald V. Duffy, Jr., October 17, 2000 Composition and method of enhancing moisture content of tree and plants. ABSTRACT Composition and method for enhancing the moisture content of growing and cut trees and plants, including the steps of providing a polyacrylimide polymer in crystalline form, mixing salt with the polymer wherein the salt comprises about 5% by weight relative to the polymer, treating the mixture in a reaction tube for about 60 seconds, and applying the mixture to the tree or plant to enhance the ability thereof to absorb and retain moisture. EX-99.3 9 pointex993041503.txt EX-99.3 PATENT United States Patent No. 5,603,288 Dennis A. Ferber, February 18, 1997 Restraint Device. ABSTRACT An animal restraint having two similar haves, each half having an arcuate shaped cage portion and a flat elongated base for reversible attachment thereto. Each cage portion includes generally parabolically shaped ribs of differing heights wherein the shortest rib is located at a distal end of the cage and the tallest rib is located medially. Each rib is attached, respectively, at each of its ends, to a base frame. A pair of arcuate strengthening members is attached to the base frame and, in turn to each one of the parabolic ribs. The strengthening members of one half of the cage ends medially in a sleeve for receiving its corresponding strengthening member on the other cage half, thereby reversibly joining the two cage halves. A pair of rectangular plates are reversibly held adjacent one another to form the elongated base which, in turn, is reversibly attached to the joined cage portions. EX-99.4 10 pointex994041503.txt EX-99.4 PATENT United States Patent No. 5,167,596 Dennis Ferber, December 1, 1992 Hand-Held Exerciser. ABSTRACT A portable, articulated, hand-held exercising device comprising a pair of elongated tubular handles pivotally connected to the respective ends of an elongated tubular cross-bar for three0axis rotation and having an adjustable torque/force characteristics. The cross-bar may be telescopically adjustable. Each handle may simulate the grip of a handled sports appliance such as a tennis racquet, golf club, and the like. The exerciser serves in general to condition the wrist, arms, chest, torso, back, legs and shoulders or the user. The handles are rotatable about their respective longitudinal axes, and they are hinged to the cross- bar at the respective longitudinal axis, and they are hinged to the cross-bar at the respective ends thereof. Each handle, when held by the user, may be turned back and forth pivotally above the corresponding end of the cross-bar with adjustable force adjustment characteristics, and each handle may be rotated about as longitudinal axis with adjustable torque adjustment characteristics. In addition, the handles may be rotated in opposite directions about the longitudinal axis of the cross-bar assembly. The handles may be replaced with pedals for exercising the upper and lower leg muscles and ankles of the user. EX-99.5 11 pointex995041503.txt EX-99.5 PATENT United States Patent No. 5,536,223 Dennis A. Ferber, July 16, 1996 Exercise Device. ABSTRACT An exercise device having a coupling assembly attaching a pair of elongated handles, is provided for reversible rotation thereabout. Each of the handles includes a tubular housing within which a torque adjustment apparatus is disposed. The coupling assembly permits reversible frictional adjustment of the angle formed by the elongated handles to provide exercise of the musculature of the chest and shoulders as the user moves the arms toward or away from each other. The user can adjust the level of resistance to arm movement by adjustment at the coupling assembly. The coupling assembly includes a first spatulate member having a first elongated arm fixed thereto for rotational movement thereabout, a conical member is fixed at the base to the first spatulate member at an angle to the first elongated arm. An integral anti-rotation boss having an integral threaded rod is faxed thereto, includes an elongated receiving member disposed at an angle to the second elongated arm. The receiving member has a recess for receipt of the conical member, for rotational movement thereabout, and for receipt of an anti-rotation disc which is fixed to the boss. An elongated nut is disposed coaxially within the receiving member for thread engagement with the threaded rod. Cup shaped washers, urged against the anti-rotation disc b the elongated nut provide a capability of altering resistance to movement of the elongated arms. -----END PRIVACY-ENHANCED MESSAGE-----