SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-KSB
[x] Annual Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the fiscal year ended December 31, 2004 [x]
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 0-22934
ANIMAL CLONING SCIENCES, INC.
(Exact name of small business issuer
in its charter)
<s> <c>
Washington 91-1268870
(State or other jurisdiction IRS Information
of incorporation or organization) Identification No.
51625 Desert Club Drive, La Quinta CA 92262
(Address of principal executive offices) (Zip Code)
(760) 219-2776
Registrant's telephone number, including area code:
Securities registered pursuant to Section 12(b) of the Act:
Preferred Stock, no par value: None.
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, no 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) has been
subject to such filing requirements for the past 90 days.
YES NO X
Check if there is no disclosure of delinquent filers in response to
Item 405 of Regulation S-B is not contained in this form, and no
disclosure will be contained, to the best of registrant's knowledge, in
definitive proxy or information statements incorporated by reference in
part III of this Form 10-K or any amendment to this Form 10-KSB. [X]
State issuer's revenues for its most recent fiscal year: $0.00. The
aggregate market value of the voting stock held by non-affiliates of
the registrant was $54,300 based upon the average of the bid and asked
price of the Common Stock of $.38 as of December 31, 2004. The number
of shares outstanding of the issuer's classes of Common Stock as of
December 31, 2004: Common Stock, No Par Value - 142,894 shares
PART I
Item 1. Description of Business. Animal Cloning Sciences, Inc. was
incorporated on August 16, 1984 in the state of Washington under the
name Gold Valley, Inc. On October 4, 1993 the company's shareholders
authorized the issuance of preferred stock, adopted a Stock Option Plan
and ratified a reverse stock split.
On November 14, 2000, the Company changed its name to Animal Cloning
Sciences, Inc. to reflect the direction of the firm's efforts. The
Company had been conducting research on cloning horses and evaluating
license agreements to distribute equine DNA for equine clones. The
Company was focusing its research on a cloning method that would lend
itself to commercialization of equine cloning.
In early 2003, the Company was informed by the USDA that its license to
import frozen embryos, which was expected to be issued, would not be
forthcoming because of concerns arising out of 9-11, As a result, the
Company ceased its efforts at cloning and disposed of assets used for
Cloning in the third quarter of 2003. For full details on these matters,
please refer to the prior year 2003 quarterly SEC 10QSB for period ending
9/30/03 and the audited year end financials 12/31/03 in the SEC 10KSB
reports.
Employees. The Company has no employees. The officers of the Company
do not work exclusively for the Company.
Subsidiaries. The Company's subsidiary, Societe Financiere de
Distribution, Geneva, SA was dissolved with the liquidation of the
assets of Animal Cloning during third quarter ending September 31,
2003.
Item 2. Description of Property
With the closing of and disposition of the Company's Ranch and Equine Cloning
Operations, the Company's headquarters were relocated in early 2004 to La
Quinta, CA in an office furnished free of charge by Mr. Dempsey Mork, the
President/CEO of Animal Cloning.
Item 3. Legal Proceedings
None
Item 4. Submission of Matters to a Vote of Security Holders
None
PART II
Item 5. Market for Registrant's Common Equity and Related Stockholder
Matters
Market Information. The common stock of Animal Cloning Sciences is
quoted on the NASD's Electronic Bulletin Board. The following list
represents high and low prices of the stock for the last three years:
.. . .
4
Quarter Ended High Low
<s> <c> <c>
March 31, 2002 .16 .07
June 30, 2002 .16 .07
September 30, 2002 .19 .06
December 31, 2002 .19 .06
March 31, 2003 .05 .05
June 30, 2003 .04 .04
September 30, 2003 .04 .04
December 31, 2003 .11 .06
March 31, 2004 --- ---
June 30, 2004 --- ---
September 30, 2004 --- ---
December 31, 2004 --- ---
Dec 31, 2004 Closing $.38
These prices reflect inter-dealer prices, without retail mark-up,
markdown, or commission, and, may not represent actual transactions.
The Company does not believe that trading of its common stock currently
is necessarily reflective of an established trading market.
Holders.
As of December 31, 2004, there were approximately 166 record
holders of Company common stock. There are no preferred shareholders.
Dividends.
The Company has not paid any cash dividends on its common stock. The Company
currently intends to retain any earnings for use in its business and
therefore does not anticipate paying cash dividends in
the foreseeable future.
Item 6. Management's Discussions and Analysis or Plan of Operations
The following discussion regarding the financial statements of the
Company should be read in conjunction with the financial statements and
notes thereto included in this Report and the prior reports for fiscal year
2003. The following Summary Financial Information is derived from the
financial statements of the Company.
Trends and Uncertainties.
The firm of Pritchett, Siler and Hardy, Salt Lake City, Utah has replaced our
prior auditor, Mr. David Winnings, CPA, Palm Desert, CA because of long
delays caused in certification by the Public Company Accounting Oversight
Board (PCAOB). There were no disagreements with Mr. Winnings and the
Company. Animal Cloning Management is actively pursuing merger opportunities
with various companies.
.. . .
5
Capital and Source of Liquidity.
During the third quarter of 2003, the Company sold its ranch and equine
cloning facilities which were originally purchased during the first quarter
of 2002 through the issuance of its Note Payable and the assumption of long
term debt.
Results of Operations
In 2004, the Company's had no revenues and $9,375 in Admin Expenses that
resulted in a net <loss> of <$9,375>.
In 2003, the Company had no revenues and had a <Loss> of $<698,806>.
Item 7. Financial Statements and Supplementary Financial Data.
Financial Statements
ANIMAL CLONING SCIENCES, INC.
[A Development Stage Company]
Index to Financial Statements
Fiscal years ending December 31, 2004 and 2003
Independent auditors' report.
Balance sheets, December 31, 2004 and 2003.
Statements of operations, for the years ended December 31,
2004 and 2003, and from the re-entering of Development Stage on
September 30, 2003 through December 31, 2004.
Statement of shareholders' equity, for the period December
31, 2002 through December 31, 2004.
Statements of cash flows, for the years ended December 31,
2004 and 2003, and from the re-entering of Development Stage on
September 30, 2003 through December 31, 2004.
Notes to financial statements.
.. . .
6
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
Board of Directors
ANIMAL CLONING SCIENCES, INC.
La Quinta, CA
We have audited the accompanying balance sheet of Animal Cloning Sciences,
Inc. [a development stage company] at December 31, 2004, and the related
statements of operations, stockholders' equity (deficit) and cash flows for
the year ended December 31, 2004 and for the period from the re-entering
development stage on September 30, 2003 through December 31, 2004. 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. The financial statements of Animal Cloning Sciences, Inc. for
the year ended December 31, 2003 and for the period from re-entering
development stage on September 30, 2003 through December 31, 2003 were
audited by other auditors whose report included an explanatory paragraph
expressing concern about the Company's ability to continue as a going
concern. The financial statements as of December 31, 2003 reflect an
accumulated deficit of $12,798,890. The other auditors' report has been
furnished to us, and our opinion, insofar as it relates to the amounts for
such prior periods is based solely on the report of the other auditors.
We conducted our audit in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we
plan and perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures
in the financial statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our
audit provides a reasonable basis for our opinion.
In our opinion, based on our audit and the report of the other auditors, the
financial statements audited by us present fairly, in all material respects,
the financial position of Animal Cloning Sciences, Inc. [a development stage
company] as of December 31, 2004, and the results of its operations and its
cash flows for the year ended December 31, 2004 and for the period from the
re-entering development stage on September 30, 2003 through December 31,
2004, in conformity with accounting principles generally accepted 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 H to the financial
statements, the Company has not yet been successful in establishing
profitable operations. This factor raises substantial doubt about the ability
of the Company to continue as a going concern. Management's plans in regards
to these matters are also described in Note H. The financial statements do
not include any adjustments that might result from the outcome of these
uncertainties.
/s/ Pritchett, Siler & Hardy, P.C.
PRITCHETT, SILER & HARDY, P.C.
July 5, 2005
Salt Lake City, Utah
INDEPENDENT AUDITOR'S REPORT
Animal Cloning Sciences, Inc.
La Quinta, California
I have audited the accompanying balance sheets of Animal Cloning Sciences,
Inc., as of December 31, 2003, and the related statements of operations,
shareholders' equity, and cash flows for the year then ended. These
financial statements are the responsibility of the Corporation's management.
My responsibility is to express an opinion on these financial statements
based on my audit.
I conducted my audit in accordance with generally accepted auditing
standards. Those standards require that I plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. I believe that my
audit provides a reasonable basis for my opinion.
The financial statements for the year ended December 31, 2003 have been
restated from my previous audit of this year. As explained more fully in
Note H, the company had previously recorded a note payable to a related
entity as preferred stock. This amount has been reclassified as a note
payable.
In my opinion, the financial statements referred to above present fairly, in
a material respects, the financial position of Animal Cloning Sciences, Inc.
as of December 31, 2003, and the results of its operations and shareholders'
equity, and cash flows for the year then ended in conformity with generally
accepted accounting principles.
/s/ David M. Winings
David M. Winings
October 28, 2005
ANIMAL CLONING SCIENCE, INC.
[A Development Stage Company]
BALANCE SHEETS
December 31, 2004 and 2003
ASSETS
2004 2003
[Restated]
<s> <c> <c>
CURRENT ASSETS $ -0- $ -0-
---------- ----------
TOTAL ASSETS $ -0- $ -0-
========== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts Payable $ 1,575 $ -0-
Accounts Payable - Related Party 300 -0-
Other Accrued Liabilities
Accrued Expenses/NP Interest Expense and
Administrative Expenses (NOTE I) 20,625 13,125
Salaries Payable-Officers/Directors
(Note H) 645,000 645,000
---------- ----------
TOTAL CURRENT LIABILITIES $ 667,500 $ 658,125
Long-Term Note Payable
related party(Note I) 150,000 150,000
---------- ----------
TOTAL LIABILITIES $ 817,500 $ 808,125
---------- ----------
SHAREHOLDERS' EQUITY (Note C)*
*Preferred stock, no par value; 2,000,000
Shares authorized;-0- outstanding $ -0- $ -0-
*Common stock, no par value;
100,000,000 shares authorized; Issued and
outstanding 142,894 at 12/31/04 and
142,825 at 12/31/03 (See Statement of
Shareholders' Equity, Pg 9 of Fin Stmts) 11,990,765 11,990,765
Retained earnings (accumulated deficit) <12,797,015> <12,797,015>
Deficit accumulated during
Re-entering development stage <11,250> <1,875>
---------- ----------
TOTAL SHAREHOLDERS' EQUITY $< 817,500> $< 808,125>
---------- ----------
TOTAL LIABILITIES & EQUITY $ -0- $ -0-
========== ==========
See accompanying notes to the
financial statements.
.. . .
8 ANIMAL CLONING SCIENCES, INC.
[A Development Stage Company]
STATEMENTS OF OPERATIONS From Re-entering
Development Stage
Sept. 30, 2003
Years Ended Dec. 31, Through
2004 2003 Dec. 31, 2004
<s> <c> <c> <c>
Revenues/Income $ -0- $ -0- $ -0-
Expenses:
General and Admin Exp (NOTE I) 1,875 -0- 1,875
----- -------- --------
INCOME<LOSS> FROM OPER. $ 1,875 $ -0- $< 1,875>
----- -------- --------
Other income/(expenses)
Interest Expense/NP (NOTE I) <7,500> <1,875> < 9,375>
----- -------- --------
Total other income/(expenses) $<7,500> $< 1,875> $< 9,375>
----- -------- --------
TOTAL EXPENSE<LOSS>BEFORE INCOME
TAX(NOTE G) $<9,375> $< 1,875> $< 11,250>
Income tax benefit (expense)
Current income tax benefit -0- -0- -0-
Deferred income tax expense -0- -0- -0-
----- ------- --------
INCOME<LOSS> FROM CONTINUING
OPERATIONS $<9,375> $< 1,875> $< 11,250>
INCOME<LOSS> FROM DISCONTINUED
OPERATIONS -0- <665,533> -0-
INCOME<LOSS> Sale of assets
from Discontinued operations -0- <31,398> -0-
----- ------- --------
NET INCOME<LOSS> $<9,375> $<698,806> $< 11,250>
===== ======= =========
Basic (Loss) per common share,
continuing operations (NOTE J) $<0.004> $<0.01> $<0.08>
Basic (Loss) per common share,
discontinued operations (NOTE J) $-0- $<4.67> $-0-
sale of assets from discontinued
operations -0- $<0.22> -0-
===== ======= =========
Total (Loss) per share $<0.004> $<4.90> $<0.08>
===== ======= =========
Basic weighted average common
shares outstanding (NOTE J) 142,894 142,825 142,894
========= ======= =========
See accompanying notes to the financial statements.
.. . .
9
ANIMAL CLONING SCIENCES, INC.
[A Development Stage Company]
STATEMENT OF SHAREHOLDERS' EQUITY
From December 31, 2002 through
December 31, 2004
[Restated}
<Deficit>
Accumulated
Retained During The
Pref. Stk. Common Stock Earnings Development
Shs $ Amt Shares $ Amount <(Deficit> Stage
--- ------- --------- ---------- ---------- ----------
<s> <c> <c> <c> <c> <c> <c>
BALANCES FWD.
12/31/02 -0- -0- 142,825 11,990,765 <11,500,084> -0-
TOTAL NET
EQUITY <$490,681>
==============
ActivityYr/03:
- --------------
(Writedown)SFP
Bank Stk FMV
Liquidation < 600,000>
Comprehensive
Net(Loss)Yr03 < 696,931> <1,875>
ADJ BALANCE* - ------- ---------- ---------- ----------- --------
12/31/2003 -0- -0- 142,825 11,990,765 <12,797,015> <1,875>
NET<DEFICIT>
$<808,125>*
==========
2/24/04 10/1
Reverse Stk
Split Rounding 69
2/24/04 Issued 25,415,000
3/4/04 Issued 2,400,000
4/7/04 Reduced <27,815,000>
ActivityYr/04 -0- -0- -0- -0- -0- <9,375>
- -------------
BALANCES AT --- --- ---------- ---------- ----------- --------
12/31/2004 --> -0- -0- 142,894 11,990,765 <12,797,015> <11,250>
NET<DEFICIT> === === ========== ========== =========== ========
$<817,500>
==========
See accompanying notes to the financial statements.
.. . .
10
ANIMAL CLONING SCIENCES, INC.
[A Development Stage Company]
STATEMENTS OF CASH FLOWS
From Re-entering
Development Stage
On Sept. 30, 2003
For Years Ended Through
December 31, December 31, 2004
--------------- -----------------
2004 2003
<s> <c> <c> <c>
Net Income(loss) Current Operations$< 9,375> < 1,875> <11,250>
Net Income(loss) Discontinued Oper. -0- < 696,931> -0-
TRANSACTIONS NOT REQUIRING CASH:
Depreciation Fixed Assets -0- 23,800 -0-
Amortization Capital R&D/Goodwill -0- 43,180 -0-
CASH PROVIDED/(USED)FOR CHANGES IN:
LIABILITIES INCREASE/(DECREASE):
Accts Payable -0- < 16,943> -0-
Other Accrued Liabilities -0- < 39,000> -0-
Expense Accruals (Admin/Int Exp) 9,375 7,500 11,250
Minority Interest SFD Subsidiary -0- < 2,000> -0-
NP Cash Advances/Operating Exp -0- < 198,968> -0-
NP Cowan-Mitchell Land Mortgage -0- < 47,648> -0-
SFP Margin Account -0- < 750,000> -0-
Officers/Directors Salaries
Fees Accrual -0- < 255,000> -0-
NP Hulven Mortgage on Ranch -0- < 690,440> -0-
------ -------- ------
Total Cash Provided (Used) from
Operating Activities -0- <2,624,325> -0-
INVESTING ACTIVITIES CASH EFFECT-
Sale SFP Common Stock -0- 1,568,500 -0-
Sale of Ranch Facility -0- 1,054,750 -0-
------ -------- ------
Total Cash Provided (Used) from
Investing Activities -0- 2,623,250 -0-
Total Cash Provided (Used) from
Financing Activites: -0- -0- -0-
------ -------- ------
NET INCREASE (DECREASE) IN CASH $ -0- $< 1,075> $ -0-
CASH, BEGINNING OF PERIOD -0- 1,075 -0-
---- -------- ------
CASH, END OF PERIOD $ -0- $ -0- $ -0-
==== ======== ======
SUPPLEMENTAL DISCLOSURE OF CASH
FLOW INFORMATION:
Cash paid during the period for
interest & charges SFP Bank/Geneva,
net of dividend income $ -0- $ 73,662 $ -0-
===== ======== =======
SUPPLEMENTAL DISCLOSURE OF CASH
FLOW INFORMATION:
Income taxes Paid $ -0- $ -0- $ -0-
===== ======== =======
See accompanying notes to the financial statements.
.. . .
11
ANIMAL CLONING SCIENCES, INC.
[A Development Stage Company]
NOTES TO FINANCIAL STATEMENTS
December 31, 2004
General:
The financial statements of Animal Cloning Sciences, Inc. included herein,
have been prepared pursuant to the rules and regulations of the Securities
and Exchange Commission.
Note A: Nature of organization and summary of significant accounting
policies
Nature of organization:
ANIMAL CLONING SCIENCES, INC. (the "Company") was organized in the
state of Washington. The Company was a holding company involved in the
cloning of horses. Because of adverse rulings from the U.S. Department
of Agriculture in refusing to grant licenses for importing animal
embryos into the United States, Animal Cloning discontinued its
operations and its cloning efforts and sold its Ranch Facilities during
the third quarter of Fiscal Year 2003. The results of these
transactions were reported in the SEC 10-QSB Quarterly Report ending
September 30, 2003 and the 2003 SEC 10-KSB Year End Audited Reports. For all
intensive purposes, Animal Cloning has ceased all of its operations and is in
the process of finding a suitable merger entity.
The Company is considered to have re-entered into the development stage on
September 30, 2003. The Company has not generated any revenues and is
considered to be a development stage company according to the provisions of
Industry Guide 7. The Company at the present time has not paid any
dividends, and, any dividends that may be paid in the future will depend upon
the financial requirements of the Company and other relevant factors.
Use of estimates:
The preparation of the financial statements, in conformity with
generally accepted accounting principles, requires management to make
estimates and assumptions that affect the reported amounts of assets,
liabilities, and contingent assets and liabilities at the date of the
financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those
estimates.
Cash equivalents:
For the purposes of the statement of cash flows, the Company considers
all highly liquid debt instruments purchased with an original maturity
of three months or less to be cash equivalents.
.. . .
12
Marketable securities:
Marketable securities consist of various equity and debt securities and
are stated at current market value. All equity securities are
considered "trading" securities and all debt securities are considered
"available for sale" under the provisions of Statement of Financial
Accounting Standards No. 115, "Accounting for Certain Investments in
Debt and Equity Securities". Accordingly, unrealized gains and losses
on equity securities are reflected in operations, and unrealized gains
and losses on debt securities are charged to cumulative translation
adjustments on the accompanying consolidated balance sheet. Market
value is determined by quoted market prices as of the balance sheet
date. Net realized gains or losses are determined on the specific
identification cost method.
Investments:
During the quarter ended March 31, 2003 the Company recorded a $600,000
write-down of its investment in SFP Bank, Geneva. During the quarter ended
September 30, 2003 the Company sold its investment to pay liabilities. There
were no investments held at December 31, 2003 and 2004.
Income taxes:
Income taxes are provided for the tax effects of transactions reported
in the financial statements and consist of taxes currently due plus
deferred taxes related primarily to differences between the recorded
book basis and tax basis of assets and liabilities for financial and
income tax reporting. The deferred tax assets and liabilities
represent the future tax return consequences of those differences,
which will either be taxable or deductible when the assets and
liabilities are recovered or settled. Deferred taxes are also
recognized for operating losses that are available to offset future
taxable income and tax credits that are available to offset future
federal income taxes.
Stock-based compensation:
The Company accounts for its stock-based compensation plans under the
principles prescribed by the Accounting Principles board's Opinion No.
25, "Accounting for Stock Issued to Employees" (APB 25). Accordingly,
stock option awards are considered to be "non-compensatory" and do not
result in the recognition of compensation expense (see Note E).
Earnings per common share:
SFAS 128 "Earnings per Share" requires a dual presentation of earnings
per share-basic and diluted. Basic earnings per share, which excludes
the impact of common stock equivalents, replaces primary earnings per
share. Diluted earnings per share, which utilizes the average market
price per share as opposed to the greater of the average market price
per share or ending market price per share when applying the treasury
stock method in determining common stock equivalents, replaces fully
diluted earnings per share. Basic earnings per common share has been
computed based on the weighted average number of common shares
outstanding.
Restatement-Common Stock Shares Outstanding at 12/31/04 and 12/31/03:
On February 24, 2004, the Company effected a 10-for-1 stock split. The
financial statements have been restated, for all periods presented, to
reflect the stock split. (See Note C).
Recently Enacted Accounting Standards:
Statement of Financial Accounting Standards ("SFAS") No. 151, "Inventory
Costs - an amendment of ARB No. 43, Chapter 4", SFAS No. 152, "Accounting for
Real Estate Time-Sharing Transactions - an amendment to FASB Statements No.
66 and 67", SFAS No. 153, "Exchanges of Nonmonetary Assets - an amendment of
APB Opinion No. 29", SFAS No. 123 (revised 2004), "Share-Based Payment", and
SFAS No. 154, "Accounting Changes and Error Corrections - a replacement of
APB Opinion No. 20 and FASB Statement No. 3", were recently issued. SFAS No.
151, 152, 153, 123 (revised 2004) and 154 have no current applicability to
the Company or their effect on the financial statements would not have been
significant.
.. . .
13
NOTE B: Related party transactions
On November 13, 2000, the board of directors approved the acquisition
of a medical data base from a Director of Animal Cloning Sciences, Inc.
for $425,000 to be amortized over a five year period. This transaction
was recorded as capitalized R&D for $395,000 based on actual cost of U.
S. Medical Access. The $30,000 difference is Goodwill.
Note C: Shareholders' Equity
Preferred stock:
During February, 2004, the Company Shareholders voted to increase the number
of authorized shares from 1,000,000 to 2,000,000.
Class A Preferred Stock:
The Company has designated 1,500 shares of no par value Class A
preferred stock. Class A shareholders are not entitled to receive
dividends, however holders of the Class A preferred stock are entitled
to elect two thirds of the directors of the Company. As of December 31,
2004 and 2003, there are no shares issued or outstanding.
Class B Convertible Preferred Stock:
The Company has designated 110,000 shares of no par value convertible
Class B preferred stock. Class B shareholders are entitled to receive
dividends in a manner similar to common shareholders when declared by
the board of directors. Each Class B share is convertible into one
share of common stock, at the option of the shareholder, provided that
the market price for the Company's common stock is at or above $4.50
per share. At December 31, 2004 and 2003 there were no shares issued
and outstanding.
Common Stock:
During February 2004, the Company Shareholders voted to increase the number
of shares authorized from 50,000,000 to 100,000,000. On February 24, 2004,
the Company effected a ten for one reverse common stock split. The financial
statements, for all periods presented, have been restated to reflect the
stock split.
During February and March 2004, the Company issued 27,815,000 shares of its
previously un-issued stock for the cancellation of salaries payable to
officers, the cancellation of a note payable of $150,000, and 100% of BBMF,
Inc. stock. However, during April 2004, the Company reversed the transaction
and cancelled the 27,815,000 shares of its previously issued stock for the
attempted merger with BBMF, Inc. and reduction of liabilities.
....
14
Note D: Income taxes
The Company accounts for income taxes in accordance with Statement of
Financial Accounting Standards No. 109 "Accounting for Income Taxes". SFAS
No. 109 requires the Company to provide a net deferred tax asset/Liability
equal to the expected future tax benefit/expense of temporary reporting
differences between book and tax accounting methods and any available
operating loss or tax credit carryforwards. At December 31, 2004, the
Company has available unused operating loss carryforwards of approximately
$1,325,000, which may be applied against future taxable income and which
expire in various years through 2024.
The amount of and ultimate realization of the benefits from the deferred tax
assets for income tax purposes is dependent, in part, upon the tax laws in
effect, the future earnings of the Company, and other future events, the
effect of which cannot be determined. Because of the uncertainty surrounding
the realization of the deferred tax assets, the Company has established a
valuation allowance equal to their tax effect and, therefore, no deferred tax
asset has been recognized for the deferred tax assets. The net deferred tax
assets, which consist mainly of net operating loss carryforwards and accrued
compensation expense, are approximately $669,800 and $666,500 as of December
31, 2004 and December 31, 2003, respectively, with an offsetting valuation
allowance of the same amount, resulting in a change in the valuation
allowance of approximately $3,300 during the twelve months ended December 31,
2004.
Note E: Commitments and contingencies
Stock option plan:
At December 31, 2002, an aggregate of 800,000 shares of common stock
was reserved for issuance under the Company's 1993 stock option plan.
Pursuant to the plan, the board of directors may grant options to
employees, officers, directors, or others at their discretion. As of
December 31, 2004 and 2003, no options had been granted under the plan.
Other stock options:
At December 31, 2003, an aggregate of 233,334 shares of common stock
was reserved for issuance upon exercise of non-qualified stock options
outstanding to purchase an aggregate of 233,334 shares of common stock
(of which 194,834 were to Company officers) at $2.50 per share. The
options expired in April 2004. These options were not issued under the
Company's 1993 stock option plan.
A summary of the status of the options is presented below:
<table>
For the Year Ended December 31,
2004____ _____2003____
Weighted Weighted
Average Average
Exercise Exercise
Shares Price Shares Price
<s> <c> <c> <c> <c>
Outstanding at beginning of period 233,334 $2.50 233,344 $2.50
Granted -0- -0- -0- -0-
Exercised -0- -0- -0- -0-
Forfeited -0- -0- -0- -0-
Expired 233,334 $2.50 -0- -0-
======= ======== ======= =====
Outstanding at end of Period -0- -0- 233,334 $2.50
======= ======== ======= =====
Weighted average fair value of
Options granted during the period -0- -0- -0- -0-
======= ======== ======= =====
</table>
On November 14th 2000 an aggregate of 3,715,000 shares of common stock
was reserved for management compensation and/or incentives. As of
December 31, 2004 and 2003, no options had been granted.
Officers' salaries:
The board approved the accrual (for future payment at a time to be set)to two
officers (Mr. Dempsey Mork, CEO/Director and Mr. Riccardo
Mortara, President/Director) at a rate of $60,000 per year each for salaries
in 1995, 1996, 1997, 1998, 1999, 2000, 2001, 2002 and 2003,
totaling $1,020,000 as of September 30, 2003 to be payable in common stock of
Animal Cloning, based on the market value at time of issuance. At December
31, 2002 and September 30, 2003, no amounts had been paid nor had any common
stock been issued in satisfaction of this commitment. These costs have been
classified as Notes Payable for years 1995 through September 30, 2003.
During the 3RD Quarter ending September 30, 2003, as part of the sale of the
SFP Stock Investments, a partial payment of $375,000 was made by the transfer
of an equivalent
amount of $375,000 of SFP Common Stock to these two officers,
leaving a net amount due at December 31, 2004 and 2003 of $645,000; $352,500
due Mr.Dempsey Mork and $292,500 due Mr. Riccardo Mortara.
Note F: Industry and geographical segment reporting
As of and for the years ended December 31, 2004 and 2003, the Company
operated and had assets in the United States and Europe as follows:
2004 2003
<s> <c> <c>
INCOME (LOSS) FROM OPERATIONS
United States $< 9,375> $ <565,144>
Europe -0- <133,662>
-------- ---------
TOTAL LOSS FROM OPERATIONS $< 9,375> $ <698,806>
======== =========
IDENTIFIABLE ASSETS
United States $ -0- $1,122,505
Europe -0- 2,168,500
--------- ---------
TOTAL IDENTIABLE ASSETS $ -0- $3,291,005
========= =========
Note G: Discontinued operations
There were no costs associated with discontinued operations in 2004.
Note H: Restatement
The Company previously issued December 31, 2003 financial statements which
have been restated to reflect the following adjustments: the Comapany had
previously recorded a note payable to a related entity as preferred stock.
The note instrument has a maturity date and stated interest rate and
conversion feature. To date the not has not been converted and interest has
never been accrued. Payment Terms: the note payable will accrue interest on
the principle balance until the note is due in March 2007, at that time the
accrued interest and principle balance are due and payable. The following
schedule provides disclosure of th effects of the restatement as the company
has accrued interest.
For the Year Ended
December 31, 2003
As previously
reported As Restated Change
<c> <c> <c>
Total Assets 0 0 0
Total Equity (645,000) (808,125) (163,125)
Net Loss (691,306) (698,806) (7,500)
Net loss Per Common
Share (4.838) (4.890) (0.052)
Weighted Shares Outstanding 42,825 142,825 0
</table>
Note I: Going Concern
The accompanying financial statements have been prepared in conformity with
generally accepted accounting principles in the United States of America,
which contemplate continuation of the Company as a going concern. However,
the Company has no on-going operations and has current liabilities in excess
of current assets. These factors raise substantial doubt about the ability
of the Company to continue as a
going concern. In this regard, management is proposing to raise any
necessary additional funds not provided by operations through loans or
through sale of its common stock or through a possible business combination
with another entity. There is no assurance that the Company
will be successful in raising this additional capital or in establishing
profitable operations. The financial statements do not include any
adjustments that might result from the outcome of these uncertainties.
.. . .
16
Note J: Loss Per Share
The following data show the amounts used in computing loss per share for the
periods presented:
From Re-entering
For the Three Months Development Stage
December 31, 9/30/03 - 12/31/04
--------------------
2004 2003
-----------------------------------------
Net <loss> available to common
Shareholders (numerator) $ <9,375> $<698,806> $< 11,250>
Weighted average number of
common shares outstanding
used in <loss> per share for
the period (denominator) 142,894 142,825 142,894
Dilutive <loss> per share was not presented, because the effect would be
anti-dilutive.
Item 8. Changes in and Disagreements with Accountants on Accounting
and Financial Disclosure.
None. There were no disagreements with our former Auditor, Mr. David M.
Winnings, Palm Desert, CA who was replaced by Pritchett, Siler and Hardy,
Salt Lake City, Utah in mid 2004 due to the fact that the PCAOB Certification
was taking an extensive amount of time to complete.
.. . .
17
Item 8A. Controls and Procedures
Evaluation of The Company's Disclosure Controls. As of the end of the
period covered by this Annual Report on Form 10-KSB, the Company's
principal executive officer and principal financial officer have
evaluated the effectiveness of the Company's "disclosure controls and
procedures" ("Disclosure Controls"). Disclosure Controls, as defined
in Rule 13a-15(e) of the Securities Exchange Act of 1934, as amended
(the "Exchange Act") are procedures that are designed with the
objective of ensuring that information required to be disclosed in our
reports filed under the Exchange Act, such as this Annual Report, is
recorded, processed, summarized and reported within the time periods
specified in the Securities and Exchange Commission's (SEC) rules and
forms. Disclosure Controls are also designed with the objective of
ensuring that such information is accumulated and communicated to our
management, including the CEO and CFO, as appropriate to allow timely
decisions regarding required disclosure.
The Company's management, including the CEO and CFO, does not expect
that our Disclosure Controls will prevent all error and all fraud. A
control system, no matter how well conceived and operated, can provide
only reasonable, not absolute, assurance that the objectives of the
control system are met. Further, the design of a control system must
reflect the fact that there are resource constraints, and the benefits
of controls must be considered relative to their costs. Because of the
inherent limitations in all control systems, no evaluation of controls
can provide absolute assurance that all control issues and instances of
fraud, if any, within the company have been discovered.
PART III
Item 9. Directors, Executive Officers, Promoters and Control Persons;
The members of the Board of Directors of the Company serve until the
next annual meeting of stockholders, or until their successors have
been elected. No annual meeting has been set. Identification of Directors
and Executive Officers of the Company.
The names and positions of the present directors and officers of the Company
are set forth below:
Name Age Position
<s> <c> <c>
Dempsey K. Mork 64 Chief Executive Officer
and Director,
Riccardo Mortara 55 President and Director
Norbert L. LeBoeuf 76 Secretary & Chief Financial
Officer and Director
.. . .
18
Resumes:
Riccardo Mortara has been President and a Director of the Company since
June 1993. Mr. Mortara is the managing director of Societe Financiere
du Seujet, Geneva, Switzerland, a company which provides portfolio
management and financial services to banks, corporations, and high net-
worth individuals primarily in Europe. Between the years of 1984 and
1991, Mr. Mortara was a director of a Geneva private portfolio
management company in which he still is a co-owner. Mr. Mortara
currently serves on the boards of five financial services companies.
Dempsey K. Mork has been the Chief Financial Officer and a Director of
the Company since December 1992 and was President from December 1992 to
June 1993. Mr. Mork is now Chief Executive Officer and Director of the
Company. Mr. Mork's background includes corporate development, mergers
& acquisitions and financial services and has been active in these
fields for the past 25 years.
Norbert L. LeBoeuf is currently Secretary & Chief Financial Officer of
the Company. Mr. LeBoeuf has served as Controller for the Company
since June 1998. His professional career includes three years with
The U.S. Marine Corps in Legal and Administrative Areas (1952-55) and
40 years in all areas of finance for small, medium and large (Fortune
500) companies, in electronics, manufacturing and aerospace. Mr.
LeBoeuf retired in 1995 and has done accounting and tax consulting.
Since 1996, he has been Controller for various companies associated
with Mr. Mork.
Item 10. Executive Compensation at December 31, 2004
At December 31, 2003, an aggregate of 233,334 shares of common stock
were reserved for issuance upon exercise of non-qualified stock options
outstanding to purchase an aggregate of 233,334 shares of common stock
(of which 194,834 were to the Company officers) at $2.50 per share. The
options expired in April, 2004. The exercise price was $2.50. Mr.
Mortara and Mr. Mork each held 97,417. These options were not issued
under the Company's 1993 stock option plan.
Stock Option Plan.
At December 31, 2004, an aggregate of 800,000
shares of common stock was reserved for issuance under the Company's
1993 stock option plan. Pursuant to the plan, the board of directors
may grant options to employees, officers, directors, or others at their
discretion. As of December 31, 2004, no options had been granted under
the plan.
On November 14th 2000 an aggregate of 3,715,000 shares of common stock
were reserved for management compensation and/or incentives, and
incentive options to scientists. As of December 31, 2004, no options
had been granted.
Any shares which are subject to an award but are not used because the
terms and conditions of the award are not met, or any shares which are
used by participants to pay all or part of the purchase price of any
.. . .
19
option may again be used for awards under the Plan. However, shares
with respect to which a stock appreciation right has been exercised may
not again be made subject to an award.
Stock options may be granted as non-qualified stock options or incentive
stock options, but incentive stock options may not be granted
at a price less than 100% of the fair market value of the stock as of
the date of grant (110% as to any 10% shareholder at the time of
grant); non- qualified stock options may not be granted at a price less
than 85% of fair market value of the stock as of the date of grant.
Restricted stock may not be granted under the Plan in connection with
incentive stock options. Stock options may be exercised during a period
of time fixed by the Company except that no stock option may be
exercised more than ten years after the date of grant or three years
after death or disability, whichever is later.
At the discretion of the Company, payment of the purchase price for the
shares of stock acquired through the exercise of a stock option may be
made in cash, shares of the Company's Common Stock or by delivery or
recourse promissory notes or a combination of notes, cash and shares of
the Company's common stock or a combination thereof. Incentive stock
options may only be issued to directors, officers and employees of the
Company. Stock options may be granted under the Plan may include the
right to acquire an AO (Accelerated Ownership) Non-Qualified Stock
Option. All options granted to date have included the AO feature.
If an option grant contains the AO feature and if a participant pays
all or part of the purchase price of the option with shares of the
Company's common stock, then upon exercise of the option the
participant is granted an AO to purchase, at the fair market value as
of the date of the AO grant, the number of shares of common stock the
Company equal to the sum of the number of whole shares used by the
participant in payment of the purchase price and the number of whole
shares, if any, withheld by the Company as payment for withholding
taxes. An AO may be exercised between the date of grant and the date of
expiration, which will be the same as the date of expiration of the
option to which the AO is related. Stock appreciation rights and/or
restricted stock may be granted in conjunction with or may be unrelated to
stock options.
A stock appreciation right entitles a participant to receive a payment,
in cash or common stock or a combination thereof, in an amount equal to
the excess of the fair market value of the stock at the time of
exercise over the fair market value as of the date of grant. Stock
appreciation rights may be exercised during a period of time fixed by
the Committee not to exceed ten years after the date of grant or three
years after death or disability, whichever is later. Restricted stock
requires the recipient to continue in service as an officer, director,
employee or consultant for a fixed period of time for ownership of the
shares to vest. If restricted shares or stock appreciation rights are
issued in tandem with options, the restricted stock or stock
appreciation right is cancelled upon exercise of the option and the
option will likewise terminate upon vesting of the restricted shares.
.. . .
20
Mr. Mortara and Mr. Mork are eligible to receive $60,000 per year salary
(until September 2003) each which has been accrued on the financial
statements of the Company. This amounted to $1,020,000 as of September 30,
2003. As part of the Company's closing of the Ranch and Equine Operations in
2003, a partial $375,000 payment was made by SFP Bank setting aside an
equivalent amount of $187,500 of SFP Common Stock shares to each Officer,
leaving a total unpaid balance of $645,000 still due and payable ($352,500
due to Mr. Mork and $292,500 due Mr. Mortara).
Compliance with Section 16
Not Applicable.
Item 11. Security Ownership of Certain Beneficial Owners and Management
Principal Shareholders.
The following table lists forth information on the beneficial ownership
of Company securities by executive officers, directors and those
persons beneficially holding more than 5% of the Company capital stock,
based on 1,428,253 common shares outstanding at December 31, 2004:
Name and Address Amount and Nature
Of Beneficial Title of Of Beneficial Percent
Class Ownership: Common Stock Ownership of Class*
<s> <c> <c>
Dempsey K. Mork 136,293 9.54%
52-625 Desert Club Drive
La Quinta, CA 92252
Riccardo Mortara 116,182 8.14%
14 Quai Du Seujet
CH-1201 Geneva
Switzerland
Robert J. Filiatreaux 79,283 5.56%
77-545 Chillon
La Quinta, CA 92253 ------- ------
Total 331,758 23.24%
======= ======
*Percent of Class calculation is based on 1,428,253 total number of Common
Stock Issued and Outstanding at the end of December 31, 2004.
Item 12. Certain Relationships and Related Transactions
Certain conflicts of interest now exist and will continue to exist
between the Company and its officers and directors due to the fact that
each has other business interests to which he devotes his primary
attention. Each officer and director may continue to do so
.. . .
21
notwithstanding the fact that management time should be devoted to the
business of the Company. No procedures have been adopted to resolve
such conflicts of interest.
Item 13. Exhibits and Reports on Form 10-KSB
- - -----------------------------------------------
Exhibits