As filed with the Securities and Exchange Commission on _______, 2002
Registration No. 333______
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
--------------
FORM SB-2
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
---------------
PREMIUM FINANCIAL SERVICES & LEASING, INC.
(Exact name of Registrant as specified in its charter)
(Formerly known as Business to Business, Inc.)
Wyoming 6159 86-0970133
------- ---- ----------
(State or other jurisdiction of (Primary Standard Industrial (IRS Employer
incorporation or organization) Classification Number) Identification Number)
9229 Delegates Row, Suite 130
Indianapolis, Indiana 46240
(317) 575-1800
(Address, including zip code, and telephone number,
including area code, of registrant's principal
executive offices)
---------------
Michael Gooch
Premium Financial Services & Leasing, Inc.
9229 Delegates Row, Suite 130
Indianapolis, Indiana 46240
(317) 575-1800
(Name, address, including zip code, and telephone
number, including area code, of agent for service
of service)
---------------
With copies to:
Kevin M. Sherlock, Esq.
2609 E. Broadway Blvd.
Tucson, Arizona 85716-5305
(520) 906-3567
---------------
Approximate date of commencement of proposed sale of the securities to public:
From time to time after the Registration Statement becomes effective as
determined by market conditions and the needs of the Selling Shareholders. If
any of the securities being registered on this Form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. /X/
---------------
CALCULATION OF REGISTRATION FEE
- ------------------------------------- ------------------ --------------------- ---------------------------- ------------------
Title of Each Class of Security to Amount to be Proposed Maximum Proposed Maximum Aggregate Amount of
be Registered Registered Offering Price (1) Offering Price (1) Registration Fee
- ------------------------------------- ------------------ --------------------- ---------------------------- ------------------
Common Stock, $.001 par value (1) 5,000,000 shares $.10 $500,000 $100
- ------------------------------------- ------------------ --------------------- ---------------------------- ------------------
(1) Estimated for purpose of calculating registration fee.
The Registrant hereby amends this Registration Statement on such date or dates
as may be necessary to delay its effective date until the Registrant shall file
a further amendment which specifically states that this Registration Statement
shall thereafter become effective in accordance with Section 8(a) of the
Securities Act of 1933, as amended (the "Securities Act") or until the
Registration Statement shall become effective on such date as the Commission,
acting pursuant to said Section 8(a), may determine.
PREMIUM FINANCIAL SERVICES & LEASING, INC.
5,000,000 Shares of Common Stock
This prospectus is part of a registration statement that covers
1,000,000 shares of our common stock currently owned by the selling shareholders
(the "selling shareholders"). The shares of the selling shareholders were
acquired as follows: (i) 1,000,000 shares issued to our original shareholders
and (ii) 4,000,000 shares issued to the shareholder of Premium Financial, an
Indiana company, in connection with our acquisition of Premium Financial. These
shares may be offered or sold from time to time by the selling shareholders.
We will not receive any proceeds from the sale of shares by the selling
shareholders.
Our common stock is not currently listed or quoted on any quotation
medium. There can be no assurance that our common stock will ever be quoted on
any quotation medium or that any trading market for our common stock will ever
develop.
Unless the context otherwise requires "we," "our," "us," or the
"Company," refers to Premium Financial Services & Leasing, Inc. Our principal
executive offices are located at 9229 Delegates Row, ite 130, Indianapolis,
Indiana 46240, and our telephone number is (317) 575-1800
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or passed upon the
adequacy or accuracy of the prospectus. Any representation to the contrary is a
criminal offense.
See "risk factors" beginning on page 6 for a discussion of certain risks
related to an investment in our common stock.
The date of this prospectus is _______, 2002
Table of Contents
Page
PROSPECTUS SUMMARY............................................................1
RISK FACTORS AND INVESTMENT CONSIDERATIONS....................................4
USE OF PROCEEDS...............................................................7
DETERMINATION OF OFFERING PRICE...............................................7
SELLING SHAREHOLDERS..........................................................7
PLAN OF DISTRIBUTION..........................................................9
LEGAL PROCEEDINGS............................................................10
MANAGEMENT...................................................................11
DESCRIPTION OF SECURITIES....................................................12
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS...............................13
BUSINESS.....................................................................14
SELECTED COMBINED FINANCIAL DATA.............................................15
MANAGEMENT'S DISCUSSION AND ANALYSIS AND RESULTS OF OPERATIONS...............17
DESCRIPTION OF PROPERTY......................................................21
MARKET FOR THE SHARES AND RELATED STOCKHOLDER MATTERS........................22
LEGAL MATTERS................................................................22
EXPERTS......................................................................23
i
PROSPECTUS SUMMARY
The following summary is qualified in its entirety by reference to the
more detailed information and financial statements appearing elsewhere in and
incorporated by reference into this Prospectus. The shares offered hereby are
speculative and involve a high degree of risk. Each prospective investor should
carefully review the entire Prospectus, the financial statements and all
exhibits and documents referred to therein. See "Risk Factors."
Premium Financial
We were organized under the laws of the state of Wyoming on July 11,
1997 under the name Business to Business, Inc. On April 8, 2002 we entered into
a acquisition agreement with Premium Financial Services & Leasing, Inc. of
Indiana to acquire Premium Financial and its assets and liabilities. Our
shareholders approved the acquisition and we completed the Acquisition on May
21, 2002. Premium Financial was originally founded in September 1995 in Indiana.
As a result of the Acquisition, we issued 4,000,0000 shares of our common stock
to the shareholder of Premium Financial. On May 31, 2002 we filed articles of
amendment to change our name to Premium Financial Services & Leasing, Inc.
pursuant to the closing of the acquisition of Premium Financial.
Our common stock is not listed on any recognized exchange or quoted on
any quotation medium. There are no plans, proposals, arrangements or
understandings with any persons concerning the development of a trading market
in our common stock.
Our principal executive offices are located at 9229 Delegates Row,
Suite 130, Indianapolis, Indiana 46240, and our telephone number is (317)
575-1800.
Summary of Our Business
Prior to the acquisition we had no assets or business operations. We
are engaged in the leasing and finance with a focus on offering medium sized and
small ticket leasing programs to a national network of brokers, vendors and end
users. Our financing solutions allow businesses the ability to acquire the
capital needed to facilitate equipment acquisition, whether the equipment is new
or used.
1
Summary of the Offering
Securities Offered........................................ 5,000,000 shares of common stock, $.001 par value
Capital Stock Outstanding
Common Stock outstanding prior to and after
Offering............................................. 5,000,000 shares (1)
Use of Proceeds........................................... We will not receive any proceeds from the sale of
the shares by the Selling Shareholders. See "Use of
Proceeds."
Plan of Distribution...................................... The shares offered hereby may be sold from time to
time by the Selling Shareholders. These shares may
be offered from time to time in one or more
transactions on the OTC Bulletin Board or any public
market on which the our common stock trades at
market prices prevailing at the time of the sale, at
prices related to such prevailing market prices, or
at negotiated prices.
We are paying all of the expenses in connection with the
preparation of this Prospectus and the related
Registration Statement, estimated at $20,600. See
"Selling Shareholders" and "Plan of Distribution."
Risk Factors.............................................. An investment in our common stock involves a high
degree of risk. See "Risk Factors and Investment
Considerations."
- --------------------
(1) Indicates shares of common stock outstanding as of the date of this
Prospectus.
2
Summary Financial Data
The following table summarizes certain of our selected financial data
and unaudited data is qualified in its entirety by the more detailed financial
statements contained elsewhere in this Prospectus. The summary financial
information contained in the following table is derived from and should be read
in conjunction with our audited financial statements the notes thereto appearing
elsewhere in this Prospectus. The pro forma consolidated statement of operations
data and the pro forma consolidated balance sheet data give effect to the
acquisition of Premium Financial. The pro forma consolidated statement of
operations data give effect to such events as if they had occurred as of the
first day of the periods presented and the pro forma consolidated balance sheet
data are presented as if such events had occurred on the balance sheet date. See
"Business" and our Consolidated Financial Statements.
Premium Financial Services & Leasing, Inc.
(in thousands, except per share date)
Year Ended Three Months Ended
December 31, March 31
-------------------------- --------------------------
2000 2001 2001 2002
------------ ------------ ------------ ------------
(Unaudited)
Statement of Pro Pro
Operation Data: Actual Forma(1) Actual Forma(1)
- --------------- ------------ ------------ ------------ ------------
Net sales $ 383 $ 428 $ 141 $ 51
Operating expenses 351 361 121 98
Operating income (loss) 32 67 20 (47)
Other income (expense) (1) (1) -- 40
Net income attributable
to common stockholders 31 66 20 (7)
Basic & Diluted
income per share $ 314.81 $ 0.01 $ 199.93 $ --
Weighted average number
of shares outstanding 100 5,000,000 100 5,000,000
(in thousands)
Three Months Ended
March 31,2002
(Unaudited)
Balance Sheet Data: Actual
- ---------------------------- -----------
Working capital $ (69)
Total assets 129
Short-term debt 98
Long-term debt 6
Total stockholders' equity $ 22
- --------------------
(1) The pro forma figures for the year ended December 31, 2001 include
the operating results of Premium Financial for its fiscal year ended December
31, 2001 and our operating results for the twelve months ended December 31,
2001. The pro forma figures for the three months ended March 31, 2002 include
the operating results of Premium Financial for the three months ended March 31,
2002 and our operating results for the three months ended March 31, 2002.
3
RISK FACTORS AND INVESTMENT CONSIDERATIONS
Investment in our common stock involves a number of risks. In addition
to the risks and investment considerations discussed elsewhere in this
Prospectus the following factors should be carefully considered by anyone
purchasing shares of our common stock. Any of the following risks would
adversely effect our business, financial condition and results of operation.
Risks of Premium Financial
The primary risks associated with leasing and financing is the measure of
effectively functioning controls and governance over credit parameters. Pitfalls
such as residual concentrations at high dollar amounts and the failure to
develop back-end functions such as equipment tracking and remarketing are key in
the development of controls.
Premium Financial Services & Leasing will likely need additional funds that, if
available, could result in dilution of your shareholdings or an increase in its
interest expense.
Premium Financial Services & Leasing's business plan projects expansion through
acquisitions funded mostly with stock but requiring some cash expenses and
consideration. Premium Financial Services & Leasing will need to raise
additional funds through public or private debt or equity financing in order to:
- - take advantage of anticipated opportunities or
acquisitions of complementary assets, technologies
or businesses;
- - develop new products; or
- - respond to unanticipated competitive pressures.
When additional funds become necessary, additional financing may not be
available on terms favorable to Premium Financial Services & Leasing or
available at all. Adequate funds may not be available or may not be available on
acceptable terms when needed. If additional funds are raised through the
issuance of equity securities, the percentage ownership of Premium Financial
Services & Leasing's then current stockholders may be reduced, and the new
equity securities may have rights, preferences or privileges senior to those of
the holders of our common stock. If additional funds are raised through the
issuance of debt securities, these securities could have some rights,
preferences and privileges senior to those of the holders of Premium Financial
Services & Leasing common stock, and the terms of this debt could impose
restrictions on its operations and result in significant interest expense to
Premium Financial Services & Leasing.
Rapid growth strategy is likely to place a significant strain on our resources.
The future success of Premium Financial Services & Leasing depends in large part
on its ability to manage any achieved growth in its business. For its business
plan to succeed, Premium Financial Services & Leasing will need:
4
- - to expand its business with new and current customers;
- - to develop and offer successful new products and services;
- - to retain key employees and hire new employees; and
- - to ensure that any future business that may be developed or acquired
will perform in a satisfactory manner.
These activities are expected to place a significant strain on its resources.
Also, Premium Financial Services & Leasing cannot guarantee that any of these
will occur or that Premium Financial Services & Leasing will succeed in managing
the results of any success in its business plan.
Management will control 80% of our common stock, and this person may have
conflicts of interest.
Michael Gooch will own 80% of the outstanding common stock following the
combination with Business to Business. Accordingly, Mr. Gooch is able to exert
considerable influence over any stockholder vote, including any vote on the
election or removal of directors and any merger, consolidation or sale of all or
substantially all of our assets, and control our management and affairs. Such
control could discourage others from initiating potential merger, takeover or
other change in control transactions.
There is no market for our shares and you may not be able to sell them
There has been no trading market for our common stock. Although we
intend to apply to list our common stock on the OTC Bulletin Board, there can be
no assurance that our application will be granted and there can be no assurance
that an active market will develop for our common stock. Therefore, it may be
difficult to sell your shares if you should desire or need to sell.
If we do become listed on the OTC Bulletin Board, we do not know how
our common stock will trade. The market price of our common stock may fluctuate
significantly due to a number of factors, some of which may be beyond our
control, including:
o the potential absence of securities analysts covering us and
distributing research and recommendations about us;
o the liquidity of our common stock will be low because only 200,000
shares will be in the hands of non-affiliates;
o changes in earnings estimates by securities analysts or our ability to
meet those estimates;
o the operating results and stock price performance of other comparable
companies;
o overall stock market fluctuations; and
5
o economic conditions generally and in the lease financing industry in
particular. Any of these factors could have a significant and adverse
impact on the market price of our common stock. In addition, the stock
market in general has experienced extreme volatility and rapid decline
that has often been unrelated or disproportionate to the operating
performance of particular companies. These broad market fluctuations may
adversely affect the trading price of our common stock, regardless of
our actual operating performance.
The purchase of penny stocks can be risky
In the event that a public trading market develops for our shares, they
may be classified as a "penny stock" depending upon their market price and the
manner in which they are traded. Section 3(a)(51) of the Securities Exchange Act
of 1934 defines a "penny stock," for purposes relevant to us, as any equity
security that has a market price of less than $5.00 per share and is not
admitted for quotation and does not trade on the Nasdaq Stock Market or on a
national securities exchange. For any transaction involving a penny stock,
unless exempt, the rules require delivery by the broker of a document to
investors stating the risks of investment in penny stocks, the possible lack of
liquidity, commissions to be paid, current quotations and investors' rights and
remedies, a special suitability inquiry, regular reporting to the investor and
other requirements. Prices for penny stocks are often not available and
investors are often unable to sell such stock. Thus an investor may lose his
entire investment in a penny stock and consequently should be cautious of any
purchase of penny stocks.
Risks Relating to Offering
Possible Depressive Effect on Market Price of Securities Eligible for Future
Sale
Our officers and directors own an aggregate of 4,000,000 shares of our
common stock. Those 4,000,000 shares of common stock currently held by our
officers and directors are registered hereunder. The common stock held by our
officers and directors will be "restricted securities" upon conversion as that
term is defined in Rule 144 promulgated under the Securities Act, and may be
sold only in compliance with Rule 144, pursuant to registration under the
Securities Act or pursuant to an exemption from such registration. Generally,
under Rule 144, each person holding restricted securities for a period of one
year may, every three months, sell in ordinary brokerage transactions or to
market makers an amount of shares up to (and including) the greater of 1% of a
company's then outstanding Common Stock or the average weekly trading volume for
the four weeks prior to the proposed sale. None of such restricted securities
were eligible for sale under Rule 144 as of May 15, 2002. Sales of substantial
amounts of common stock under Rule 144 or otherwise, or even the potential for
such sales, could have a depressive effect on the market price of the shares of
our common stock and could impair our ability to raise capital through the sale
of our equity securities. See "Description of Securities," "Security Ownership
of Certain Beneficial Owners and Management" and "Plan of Placement."
Lack of Dividends
Holders of common stock are entitled to receive such dividends as may
be declared by our board of directors. To date, we have paid no cash dividends
on our shares of common stock and we do not expect to pay cash dividends on our
6
common stock in the near term. We intend to retain future earnings, if any, to
provide funds for operations of our business. Investors who anticipate the need
for dividends from investments should refrain from purchasing the common stock
offered by this Prospectus.
USE OF PROCEEDS
We will not receive any proceeds from this offering. All proceeds from
the sale of the shares sold under this Prospectus will go to the Selling
Shareholders.
DETERMINATION OF OFFERING PRICE
This Prospectus may be used from time to time by the Selling
Shareholders who offer the common stock registered under the Registration
Statement of which this Prospectus is a part. We anticipate that the common
stock sold by the Selling Shareholders will be sold from time to time in
transactions (which may include block transactions) on the OTC Bulletin Board or
other public market at the then prevailing prices.
SELLING SHAREHOLDERS
The following table provides certain information with respect to the
common stock owned by the Selling Shareholders who are entitled to use this
Prospectus. The information in the table is as of the date of this Prospectus.
Except as described below, no Selling Shareholder has had a material
relationship with us within the past three years other than as a result of the
ownership of common stock.
Shares Available Percent Owned After
for Sale Under Completion of the
Name and Address of Selling Shareholder Shares Owned(1) this Prospectus Offering (1)
- ----------------------------------------- ----------------- -------------------- -------------------------
Michael Gooch (2) 4,000,000 4,000,000 80%
9229 Delegates Row
Indianapolis, IN 46240
Daniel L. Hodges 800,000 800,000 6.25%
11601 E. Lusitano Place
Tucson, AZ 85748
David Adams 8,000 8,000 *
6556 E. Calle Herculo
Tucson, AZ 85711
Frank Anjakos 8,000 8,000 *
1971 N. Lindenwood Dr.
Tucson, AZ 85712
Gerald Bowlin 8,000 8,000 *
1 East River Road, #720
Tucson, AZ 85704
Robert C. Daly 8,000 8,000 *
6250 Kelly Lynn Ct
Waxhaw, NC 28173
Brian Delfs 8,000 8,000 *
5162 E. Citrus St.
Tucson, AZ 85712
James Delfs 8,000 8,000 *
3730 N. Tucson Blvd.
Tucson, AZ 85716
7
Eric Evans 8,000 8,000 *
305 N. Hidalgo
Alhambra, CA 91801
Andrew Gerrish 8,000 8,000 *
2231 N. Norris
Tucson, AZ 85719
Audra Guthery 8,000 8,000 *
4810 E. Seneca
Tucson, Az 85712
David Hack 8,000 8,000 *
232 W. Smoot Dr.
Tucson, AZ 85705
Matthew Hodges 8,000 8,000 *
1529 N. Desmond
Tucson, AZ 85712
Scott Krause 8,000 8,000 *
9160 E. Walnut Tree Dr.
Tucson, AZ 85749
Michael McKendrick 8,000 8,000 *
3015 N. Wentworth Rd.
Tucson, AZ 85749
John R. Ogden 8,000 8,000 *
5765 N. Paseo Otono
Tucson, AZ 85715
Ron Olson 8,000 8,000 *
9969 E. Paseo San Ardo
Tucson, AZ 85747
Mark Polifka 8,000 8,000 *
1132 Mohawk
Topanga, CA 90290
Michael Rhyner 8,000 8,000 *
9737 E. Mount Pleasant
Tucson, AZ 85749
Monica Romero 8,000 8,000 *
2528 W. Criswell Ct.
Tucson, AZ 85745
Melissa Saucedo 8,000 8,000 *
7019 W. Avondale
Tucson, AZ 85743
Howard Smith 8,000 8,000 *
4050 N. Hiddencove Pl.
Tucson, AZ 85749
John Sylvester 8,000 8,000 *
10222 E. Sylvester Rd.
Hereford, AZ 85615
Roger Tamietti 8,000 8,000 *
HC 70 Box 4254
Sahuarita, AZ 85629
Raymond Willey 8,000 8,000 *
1192 Joseph Ct.
Ripton, CA 95366
8
Jennifer Worden 8,000 8,000 *
9055 E. Catlina Hwy, No. 5206
Tucson, AZ 85749
Roger Wright 8,000 8,000 *
5294 W. Peridot St.
Tucson, AZ 85741
- ----------------------
* These shareholders each hold 0.0016%.
(1) Percentages and share ownership numbers are based on the assumption that
all such Shares will be sold by the Selling Shareholder. Excludes
additional shares of Common Stock, which the Selling Shareholder may
acquire from time to time subsequent to the date of this Prospectus.
(2) President and director of Premium Financial.
PLAN OF DISTRIBUTION
We are registering the Shares covered by this prospectus for the
selling shareholders. As used in this prospectus, selling shareholders includes
the pledgees, donees, transferees or others who may later hold the selling
shareholders' interests. We will pay the costs and fees of registering the
shares, but the selling shareholders will pay any brokerage commissions,
discounts or other expenses relating to the sale of the shares.
The selling shareholders may sell the shares in the over-the-counter
market or otherwise, at market prices prevailing at the time of sale, at prices
related to the prevailing market prices, or at negotiated prices. In addition,
the selling shareholders may sell some or all of their shares through:
o a block trade in which a broker-dealer may resell a portion of the
block, as principal, in order to facilitate the transaction;
o purchases by a broker-dealer, as principal, and resale by the
broker-dealer for its account; or
o ordinary brokerage transactions and transactions in which a broker
solicits purchasers.
When selling the shares, the selling shareholders, may enter into
hedging transactions. For example, the selling shareholders may:
o enter into transactions involving short sales of the shares by
broker-dealers;
o sell shares short themselves and redeliver such shares to close out
their short positions;
9
o enter into option or other types of transactions that require the
selling shareholder to deliver shares to a broker-dealer, who will then
resell or transfer the shares under this prospectus; or
o loan or pledge the common shares to a broker-dealer, who may sell the
loaned shares or, in the event of default, sell the pledged shares.
The selling shareholders may negotiate and pay broker-dealers
commissions, discounts or concessions for their services. Broker-dealers engaged
by the selling shareholders may allow other broker-dealers to participate in
resales. However, the selling shareholders and any broker-dealers involved in
the sale or resale of the shares may qualify as "underwriters" within the
meaning of the Section 2(a)(11) of the Securities Act. In addition, the
broker-dealers' commissions, discounts or concession may qualify as
underwriters' compensation under the Securities Act. If the selling shareholders
qualify as "underwriters," they will be subject to the prospectus delivery
requirements of Section 5(b)(2) of the Securities Act. We have informed the
selling shareholders that the anti-manipulative provisions of Regulation M
promulgated under the Securities Exchange Act of 1934 may apply to their sales
in the market.
In addition to selling their shares under this prospectus, the selling
shareholders may:
o agree to indemnify any broker-dealer or agent against certain
liabilities related to the selling of the common shares, including
liabilities arising under the Securities Act;
o transfer their shares in other ways not involving market makers or
established trading markets, including directly by gift, distribution,
or other transfer; or
o sell their shares under Rule 144 of the Securities Act rather than under
this prospectus, if the transaction meets the requirements of Rule 144.
LEGAL PROCEEDINGS
Premium Financial Services & Leasing is a party to the lawsuit S & S
Embroidery, etc vs. Premium Financial Services, where the plaintiffs are seeking
damages as a result of a lease signed in August 1999, and cancelled in November,
1999. Premium retained its fee for the lease and Plaintiff now claims that they
did not execute the lease. The Company intends to vigorously defend this action.
The ultimate resolution of this matter is not ascertainable at this time. No
provision has been made in the financial statements related to this claim.
10
MANAGEMENT
Executive Officers and Directors
The following table sets forth the names, positions and ages of the
individuals who wills serve as our directors and executive officers following
the combination. All directors are elected at each annual meeting and serve for
one year and until their successors are elected and qualify. Officers are
elected by the Board of Directors and their terms of office are at the
discretion of the Board.
Name of Director/Officer Age Position(s) With Company
Michael Gooch 35 President, CEO, Director
Bret Pafford 42 Vice President, Director
Glen Gangi 48 Chief Operating Officer, Director
Dennis Kluzke 39 Chief Financial Officer, Director
Kent Abernathy 44 Director
Michael Gooch - President
Mr. Gooch founded Premium Financial in September 1995. Prior to the founding of
Premium Financial, Mr. Gooch was involved at various levels within the leasing
services industry for more than a decade. Mr. Gooch launched his National Broker
Network in conjunction with Premium Financial. Premium is currently delivering
services to thousands of business every day nationwide. Considered an expert in
the Financial Services and Leasing industry, Mr. Gooch resides in Sheridan,
Indiana with his family.
Bret Pafford - Vice President
Mr. Pafford's area of expertise lays in the arena of organizational start-ups
and the development of national sales support programs. Mr. Pafford has
generated millions of dollars for Fortune 500 companies over the years. Numerous
private investors and venture capitalists alike have benefited from investments
in Mr. Pafford's ventures. Mr. Pafford has been in the financial services
industry for over 15 years. An accomplished corporate trainer, Mr. Pafford has
the ability to construct, foster and refine an optimum sales force. Mr. Pafford
is a charter member of The American Entrepreneurs Association and a decorated
veteran of the United States Navy.
Glen Gangi - Chief Operating Officer, Director
Glen Gangi has over 20 years of experience in the commercial leasing industry.
Mr. Gangi currently operates a self-held portfolio leasing company in
Indianapolis, IN. Mr. Gangi's expertise lies in his ability to make key credit
decisions. Mr. Gangi is an experienced portfolio and operations manager.
Dennis Klutzke - Chief Financial Officer
Mr. Klutzke graduated from Purdue University with an MBA in Finance and has
since amassed over 20 years of executive level financial management and
corporate development experience. For many years, Mr. Klutzke acted in a senior
level executive capacity with MBD Bank. A former Vice President for CompUSA, Mr.
Klutzke is currently schooling other CFO's in their operational techniques
directed towards a joint venture between Workscape and General Motors.
11
Kent Abernathy - Director
Mr. Abernathy is a charismatic leader with a demonstrated aptitude for
developing and implementing winning strategies. Mr. Abernathy has extensive
experience planning, coordinating and executing operational plans as well as
direct management of numerous projects. Mr. Abernathy has a comprehensive
knowledge of financial products and services including corporate finance, cash
management, international, and investment banking applications. Mr. Abernathy is
the current Principal at Eagle Advisors and a past Vice President at Bank One,
Vice President at National City Bank, Assistant Vice President at Apple Bank and
Analyst / Commercial Account Officer at Chemical Bank (J.P. Morgan Chase).
Principal Stockholders and Stockholdings of Management
Name and Address of Shares Beneficially Percent of
Beneficial Owner) Owned After Acquisition Common Stock (2)
----------------- ----------------------- ----------------
Michael Gooch (1) 4,000,000 80%
Daniel L. Hodges 800,000 6.25%
All Officers and Directors as a group 4,000,000 80%
(1) The address of Mr. Gooch is 9229 Delegates Row, Suite 130, Indianapolis,
IN 46240.
(2) Applicable ownership percentages were based on 5,000,000 shares issued
and outstanding as of May 20, 2002.
DESCRIPTION OF SECURITIES
Common Stock
We are authorized to issue 100,000,000 shares of Common Stock, $.001
par value per share, of which 5,000,000 shares are issued and outstanding at the
date of this Prospectus.
Holders of our common stock are entitled to one vote for each share
owned for all matters to be voted on by the shareholders, including the election
of directors. Holders of common stock are entitled to receive such dividends as
may be declared from time to time by our board of directors out of funds legally
available therefore and, in the event of liquidation, dissolution or winding up,
to share ratably in all assets remaining after payment of liabilities. The
holders of common stock have no preemptive or conversion rights. The holders of
common stock are not subject to further calls or assessments. There are no
redemption or sinking fund provisions applicable to the common stock.
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Dividend Policy
Holders of common stock are entitled to receive such dividends as may
be declared by our board of directors. We have not declared or paid cash
dividends on our common stock and we do not anticipate that we will pay such
dividends in the foreseeable future. Rather, we intend to apply any earnings to
the expansion and development of our business. Any payment of future dividends
on our common stock and the amount of any dividends will be determined by our
board of directors and will depend, among other factors, upon our earnings,
financial condition and cash requirements, and any other factors our board of
directors may deem relevant.
Transfer Agent
Our transfer agent is Holiday Stock Transfer located at 2939 N. 67th
Place, Scottsdale, AZ 85251. All inquiries may be made at (480) 481-3940.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
On December 4, 2001, an officer, Michael Gooch, loaned the Company
$75,000. The Company shall repay $90,000 to the officer within 180 days of the
date of the loan.
13
BUSINESS
We were incorporated in 1997 under the name Business to Business, Inc. Premium
Financial was originally operated as a sole proprietorship from 1995, and then
incorporated under the laws of the state of Indiana on February 8, 2000. After
the acquisition, we are a leasing and finance company that is focused on
offering medium sized and small ticket leasing programs to a national network of
brokers, vendors and end users. Our financing solutions allow business the
ability to acquire the capital needed to facilitate equipment acquisition,
whether the equipment is new or used.
Industry and Market Overview
According to the Equipment Leasing Association's 2001 Survey of Industrial
Activity, the $280 billion equipment leasing and finance industry continues to
show steady growth based on a 6.4 percent increase in volume of new business in
2000. Bank lessors experienced the largest growth in 2000, with a 39 percent
increase in new business volume, independents showed a 37 percent increase, and
captives reported a 24 percent growth rate. Equipment leasing has
demonstratively been an effective way for small, medium sized and start-up
companies to acquire the capital goods they require. Leasing is prevalent and
advantageous for the following reasons: Flexible - Companies have different
needs, different cash flow patterns and sometimes irregular streams of income.
Cost-Effective - Sophisticated business managers have learned that the primary
benefits of higher productivity and profit come from the use of equipment, not
owning it.
Tax Advantages - Rather than deal with depreciation schedules and Alternative
Minimum Tax (AMT) problems, a lessee makes lease payments and deducts it as a
business expense. Purchasing Power - Leasing puts equipment to work immediately,
at minimal initial cost. Monthly lease payments represent a small portion of the
cost of equipment, allowing one the ability to obtain more equipment for their
business.
Operating Capital - Leasing keeps operating lines of credit open, cash remains
free and costly down payments are avoided.
Competition
Premium Financial Services & Leasing is not a significant participant in the
market for lease financing. There are many established leasing companies that
have significantly greater financial and personnel resources, technical
expertise and experience than we have in this field. In view of its limited
resources and size, Premium Financial Services & Leasing will continue to be at
a significant competitive disadvantage.
Intellectual Property
We own no intellectual property of any kind.
Employees
We have a workforce of 25 staff and associates. Premium Financial Services &
Leasing's employees are not represented by a union. Premium Financial Services &
Leasing considers its relations with its employees to be satisfactory.
14
Regulation
Premium Financial's leasing activities are generally not subject to
regulation, except that certain states may regulate motor vehicle transactions,
impose licensing, documentation and lien perfection requirements, and/or
restrict the amount of interest or finance rates and other amounts the Company
may charge. The Company's failure to comply with such regulations, requirements
or restrictions could result in loss of principal and interest or finance
charges, penalties and imposition of restrictions on future business activities.
Although we believe we have systems and procedures in place to ensure
compliance with these requirements and believe that we currently are in
compliance in all material respects with applicable federal, state and local
laws, rules, regulations, there can be no assurance of full compliance with
current laws, regulations and rules, that more restrictive laws, regulations and
rules will not be adopted in the future, or that existing laws, regulations and
rules or the lease financing documents will not be interpreted in a different or
more restrictive manner. The occurrence of any such event could make compliance
substantially more difficult or expensive, restrict our ability to originate,
sell or service leases, further limit or restrict the amount of interest and
other fees and charges earned from leases that we originate, sell or service,
expose us to claims by borrowers and administrative enforcement actions, or
otherwise materially and adversely affect our business, financial condition and
prospects.
SELECTED COMBINED FINANCIAL DATA
The following table contains certain selected financial data and is
qualified by the more detailed financial statements, including the pro forma
consolidated financial statements, and the notes thereto included elsewhere in
this Prospectus. The financial data for the years ended December 31, 2000 and
2001 have been derived from our financial statements, which statements have been
audited by Robison, Hill & Co., independent public accountants, and are included
elsewhere in this Prospectus. The financial data for the three months ended
March 31, 2002 and 2001 have been derived from our unaudited financial
statements which, in our opinion, reflect all adjustments, consisting only of
normal recurring adjustments, necessary for a fair presentation of results of
operations of such periods.
The pro forma consolidated statement of operations data for the year
ended December 31, 2001 and for the three months ended March 31, 2002 and the
pro forma consolidated balance sheet at March 31, 2002 have been derived from
our unaudited pro forma consolidated financial statements of Premium Financial,
which give effect to the acquisition of Premium Financial. The pro forma
consolidated statement of operations data give effect to such events as if they
occurred as of the first day of the periods presented and the pro forma
consolidated balance sheet data give effect to such events as if they had
occurred on March 31, 2002. We have neither declared nor paid any cash dividends
on its outstanding Common Stock. See "Business."
The actual pro forma results for the three months ended March 31, 2002
are not necessarily indicative of the results that may be expected for any
subsequent interim period or for the full year. This data should be read in
conjunction with our financial statements (including the pro forma consolidated
financial statements) and the Notes thereto included elsewhere in this
Prospectus and "Management's Discussion and Analysis of Financial Conditions and
Result of Operations."
15
Premium Financial Services & Leasing, Inc.
(in thousands, except per share date)
Year Ended Three Months Ended
December 31, March 31
-------------------------- --------------------------
2000 2001 2001 2002
------------ ------------ ------------ ------------
(Unaudited)
Statement of Pro Pro
Operation Data: Actual Forma(1) Actual Forma(1)
- --------------- ------------ ------------ ------------ ------------
Net sales $ 383 $ 428 $ 141 $ 51
Operating expenses 351 361 121 98
Operating income (loss) 32 67 20 (47)
Other income (expense) (1) (1) -- 40
Net income attributable
to common stockholders 31 66 20 (7)
Basic & Diluted
income per share $ 314.81 $ 0.01 $ 199.93 $ --
Weighted average number
of shares outstanding 100 5,000,000 100 5,000,000
(in thousands)
Three Months Ended
March 31,2002
(Unaudited)
Balance Sheet Data: Actual
- ---------------------------- -----------
Working capital $ (69)
Total assets 129
Short-term debt 98
Long-term debt 6
Total stockholders' equity $ 22
- --------------------
(1) The pro forma figures for the year ended December 31, 2001 include
the operating results of Premium Financial for its fiscal year ended December
31, 2001 and our operating results for the twelve months ended December 31,
2001. The pro forma figures for the three months ended March 31, 2002 include
the operating results of Premium Financial for the three months ended March 31,
2002 and our operating results for the three months ended March 31, 2002.
16
MANAGEMENT'S DISCUSSION AND ANALYSIS AND RESULTS OF OPERATIONS
The following statement is made pursuant to the safe harbor provision
for forward-looking statements described in the Private Securities Litigation
Reform Act of 1995. Premium Financial Services & Leasing, Inc. may make certain
statements in this Prospectus, including, without limitation statements that
contain the words "believes," "anticipates," "estimates," "expects," and words
of similar import, constitute "forward-looking statements." Forward-looking
statements may relate to our future growth and profitability; the anticipated
trends in our industry; our competitive strengths and business strategies.
Further, forward-looking statements are based on our current expectations and
are subject to a number of risks, uncertainties and assumptions relating to our
operations, financial condition and results of operations. For a discussion of
factors that may affect the outcome projected in such statements, see "Risk
Factors and Investment Considerations." If any of these risks or uncertainties
materialize, or if any of the underlying assumptions prove incorrect, actual
results could differ materially from results expressed or implied in any of our
forward-looking statements. We do not undertake any obligation to revise these
forward-looking statements to reflect events or circumstances arising after the
date of this Prospectus.
Acquisition
On May 21, 2002 we closed on the acquisition of Premium Financial. As a
result of the acquisition, we issued 4,000,000 shares of our common stock to the
former shareholder of Premium Financial and the business of Premium Financial
became our business. On May 31, 2002, we filed articles of amendment to amend
our articles of incorporation to change our name from Business to Business, Inc.
to Premium Financial Services & Leasing, Inc. to reflect our new business. After
the acquisition, we are a leasing and finance company that is focused on
offering medium sized and small ticket leasing programs to a national network of
brokers, vendors and end users. Our financing solutions allow business the
ability to acquire the capital needed to facilitate equipment acquisition,
whether the equipment is new or used.
Before our acquisition of Premium Financial we were an inactive
publicly registered shell corporation and had no significant assets or
operations.
17
PLAN OF OPERATION
Management Discussion and Plan of Operation
Premium Financial Services & Leasing's primary objective is to provide its
national network of banking institutions with exclusively tailored leasing
clearinghouse services. To date, it has been able to facilitate lease-financing
deals up to $10,000,000. Moreover, it has the ability to fund lease initiatives
up to $75,000 without the need for financials or tax return documentation from
the lessee.
Premium Financial's specific strategy is to:
o Attend to the special funding requirements that national lender's are
currently unable to address towards small and medium sized businesses as
well as start-up's.
o Increase marketing efforts in the areas of direct mail campaigns, trade
show arenas and local and national advertising.
o Capitalize and expand upon its national network.
o Provide leasing and financing products in all categories.
o Establish the top product development team in the business.
o Channel marketing investments towards awareness.
o Offer the best financing products to entry-level organizations.
o Create innovative and interactive financial service processes.
o Take advantage of its abilities to deliver high volume and gross profit
margins with minimal incurred costs in order to invigorate marketing
directions.
Growth Strategy
Premium Financial Services & Leasing's keys to success in the lease financing
industry underline it's growth strategy, they are:
o Focused, consistent management, particularly of internal systems and
processes. o An unwavering concern for reputation - for quality, integrity,
reliability and consistency. o The aggressive pursuit of knowledge management as
a key competitive advantage. o An unequivocal commitment to discipline in all
aspects of leadership and management.
Vendor Relationships
Premium Financial will pursue growth in its number and quality of vendor
relationships. More vendor relationships means more financings. Vendor
relationships are the key to high sales volumes. Premium Financial is committed
to assist vendors in simplifying the leasing process and getting valued
customers funded quickly.
18
Target Market - Start-Up Markets
Premium Financial has identified the start-up community as one that presents the
business with an enormous source of growth. Equipment leasing is a critical
component for the financial success of a start-up. Equipment leasing is a
strategic option for start-ups, and is represented as such by the fact that many
start-ups identify and utilize leasing as an essential component of financial
success. While most leasing companies shy away from business start-ups, Premium
Financial has designed several programs for young businesses.
Over the past 15 years, Premium Financial has financed over 85% of its applicant
transactions within the start-up market. Over 95% of the business start-up
market is current in their accounts payable. Most business start-ups have to
monitor the value of their assets. As these businesses look to build and develop
overall value they are conscious of not retaining assets that quickly diminish
in their worth. By facilitating lease transactions for this market, Premium
Financial increases new business cash flows and provides tax benefits, balance
sheet management and in most cases assists new business in avoiding
technological obsolescence.
Premium Financial's leasing arrangements are advantageous to small business as
it allows them to re-invest capital into marketing, research, development and
other areas of expansion. Premium's programs provide the opportunity for a lower
recorded capital burn rate. As these new businesses grow, so does their
relationship with Premium Financial. Historically, Premium has seen more and
more leasing dollars flowing into the organization as its clients grow.
Premium Financial has minimized the risk associated with business start-ups by
developing a relationship with each client. The more Premium Financial knows
about a business, the better equipped the company is to assess the business
potential and any risk factors involved.
Start-Up lease finance programs
Premium Financial has designed seven programs to assist the new business owner
in the financing of equipment.
1. Application Program (up to $20K) - client fills out a credit application and
consents to a personal/business credit check, `no time in business' requirement.
2. Limited Financial Program (up to $30K) - same as Application Program plus
previous year's tax return and a personal financial statement.
3. Complete Financial Program (up to $75K) - client is required to provide
interim financial statements, a business plan, resume, two years tax returns and
a pro-forma financial statement for the business.
4. Two Payments Program - this program assists those with more challenging
credit histories to obtain one of the above three programs.
5. 20% Security Program - similar to the Two Payments Program or a client may
choose this option to receive a better interest rate resulting in a lower
monthly payment.
6. Second Chance Program - for those clients with more challenging credit
histories - can facilitate an equipment lease by providing Premium Financial
with 1+5 payments.
7. Better Credits Program - for the financing of more challenging equipment, ie.
tanning beds, software, website development - typically one must be a homeowner
in order to finance this type of equipment.
19
Private Label Agreements
Premium Financial is ramping up on its ability to offer manufacturers and
distributors leasing arrangements under their own company's name directly. An
ideal market position for Premium Financial would be to contract with large
manufacturer or distributors to finance and service their lease portfolio under
a private label agreement.
Portfolio Financing and Acquisitions
By offering financing to other smaller rapidly growing lease finance companies,
Premium Financial has the opportunity to grow throughout several markets. The
lease and financial services industries are in the process of consolidation
whereby both large and small companies are being acquired. Premium Financial
sees acquisitions as part of its growth strategy for two reasons. It is a way to
add experienced personnel to its team and it also provides a way to add lease
portfolios and continued future business.
Premium Financial is protected by receivable insurance, business collateral and
after-market resale values. This level of protection has facilitated its ability
to capture and exploit the most profitable opportunity in leasing: business
start-ups.
Equipment eligible for leasing transaction.
Premium Financial is able to provide financing for various types of equipment.
The following is a partial list of eligible equipment: Audio/Visual Equipment;
ATM's; Architectural Equipment (CADs, Plotters); Agricultural Machinery;
Ambulances; Automobiles; Buses; Computer Systems (Networks, Mainframes, PC's);
Copiers, Facsimile, Mail Machines; Compressors; Construction Equipment; Dental
Equipment; Electronic Testing Equipment; Exercise/Fitness Equipment; Industrial
Machinery; Industrial Heading & Air Units; Mall Decor; Marine Electronics;
Material Handling Equipment; Medical Equipment; Model Home Interiors; Office
Furniture/Panel Systems; Off-Road Vehicles; Ophthalmic Equipment; Patient
Transports; Portable Toilets; Point of Sale Systems; Printing Equipment; Refuse
Containers/Bailers; Restaurant Equipment; Security Systems; Signage; Software
Packages; Storage Containers; Telephone Systems; Trucks; Two-Way Radio Systems;
Vending Machines; Veterinary Equipment
Our Partners
Our lending partner network is comprised of a large national network of private
and public lending facilities including banks, independent finance organizations
and funding agencies. Our list of lending partners includes:
Republic Leasing Co.
Pawnee Leasing
Financial Pacific Leasing
Manifest Funding Corp.
Pioneer Capital
Centerpoint Leasing
Safe Leasing
CFC Leasing Corporation
20
Premium Financial has a large network of lease brokers that it has worked with
over the past 15 years. Premium Financial employs other brokers to strategically
position particular transactions for funding. Our list of lending partners
includes:
Jensen West Leasing
Easy Lease
Dimension Funding
Maximum Capital
Action Leasing Services
RESULTS OF OPERATIONS AND ANALYSIS OF FINANCIAL CONDITION
Revenues
Premium Financial Services & Leasing had net revenues for year ended December
31, 2001 in the amount of $428,221 compared to $383,351 for the same period
ended December 31, 2000. Net revenues for the three months ended March 31, 2002
were $51,134 compared to $141,228 for the same period ended March 31, 2001.
Revenues consisted primarily of fees collected for the management and sale of
leasing agreements.
Costs and Expenses
Premium Financial Services & Leasing had costs and expenses for year ended
December 31, 2001 in the amount of $358,294 compared to $351,273 for the same
period ended December 31, 2000. Costs and expenses for the three months ended
March 31, 2002 $87,128 compared to $121,235 for the same period ended March 31,
2001. Costs and expenses consist of primarily of selling and marketing expenses
and general and administrative expenses.
LIQUIDITY AND CAPITAL RESOURCES
At March 31, 2002, Premium Financial Services & Leasing had total current assets
of $33,047 compared to $33,030 at December 21, 2001. Stockholders equity in
Premium Financial Services & Leasing was $21,718 at March 31, 2002 compared to
$30,194 as of December 31, 2001.
We expect that we will be able to satisfy our cash requirements for the next
twelve months from its existing cash flow. The Company will not have sufficient
funds (unless it is able to raise funds in a private placement) to undertake any
significant acquisitions or developments. There are no known material trends,
events or uncertainties that have or are reasonably likely to have a material
impact on our short-term or long-term liquidity
Description Of Property
Premium Financial has entered into a lease agreement for its office facilities.
The rental charges are approximately $1,400 per month and this lease expires in
21
April 2006. On January 14, 2002 the Company entered into a sublease for
additional office space. The rental charge ranges from $3,500 to $6,992 per
month expiring November 30, 2004.
MARKET FOR THE SHARES AND RELATED STOCKHOLDER MATTERS
Our common stock is not listed or quoted at the present time, and there
is no public market for our common stock. There can be no assurance that a
public market for our common stock will ever develop. We intend to qualify our
common stock for trading on the OTC Bulletin Board or other public market after
the Registration Statement, of which this Prospectus is a part, becomes
effective.
We have no options or warrants outstanding at the current time.
Executive Compensation
The following table sets forth all compensation paid by us to the chief
executive officer and the four most highly compensated executive officers for
services rendered during the last three completed fiscal years.
Summary Compensation Table
Long-Term
Compensation Awards
------------------------
Annual Restricted Securities
Compensation Stock Underlying All Other
Name and Principal Position Year Salary ($) Bonus ($) Awards ($) Options/SARs Compensation
--------------------------- ---- ---------- --------- ---------- ------------ ------------
Michael Gooch 2001 120,000 - - - -
President, CEO 2000 68,000 - - - -
1999 42,000 - - - -
Glen Gangi 2001 - - - - -
COO 2000 - - - - -
1999 - - - - -
Bret Pafford 2001 3,400 - - - -
Vice Presidnet 2000 - - - - -
1999 - - - - -
Dennis Klutzke 2001 - - - - -
CFO 2000 - - - - -
1999 - - - - -
Director Compensation
Directors currently receive no cash compensation for their services in
that capacity. Reasonable out-of-pocket expenses may be reimbursed to directors
in connection with attendance at meetings.
22
LEGAL MATTERS
The legality of the securities offered hereby has been passed upon for
Premium Financial by Kevin Sherlock, Esq..
EXPERTS
The Consolidated Financial Statements and Related Financial Statement
Schedules incorporated in this Prospectus have been audited by Robison, Hill &
Co., independent auditors, as stated in their reports, and have been included in
reliance upon the reports of such firm given upon their authority as experts in
accounting and auditing.
23
INDEPENDENT AUDITOR'S REPORT
Business to Business, Inc.
(A Development Stage Company)
We have audited the accompanying balance sheets of Business to Business,
Inc. (a development stage company) as of September 30, 2001 and 2000, and the
related statements of operations and cash flows for the two years ended
September 30, 2001 and 2000, and the statement of stockholders' equity from July
11, 1997 (inception) to September 30, 2001. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audits.
We conducted our audits in accordance with auditing standards generally
accepted 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
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of Business to
Business, Inc. (a development stage company) as of September 30, 2001 and 2000,
and the results of its operations and its cash flows for the two years ended
September 30, 2001 and 2000 in conformity with accounting principles generally
accepted in the United States of America.
Respectfully submitted
/S/ ROBISON, HILL & CO.
Certified Public Accountants
Salt Lake City, Utah
December 12, 2001
F - 1
BUSINESS TO BUSINESS, INC.
(A Development Stage Company)
BALANCE SHEETS
September 30,
--------------------------------
2001 2000
-------------- ----------------
Assets: $ - $ -
============== ================
Liabilities - Accounts Payable $ 532 $ 511
-------------- ----------------
Stockholders' Equity:
Common Stock, Par value $.001
Authorized 100,000,000 shares,
Issued 1,000,000 shares at September 30,
2001 and 2000 1,000 1,000
Paid-In Capital 5,057 2,824
Retained Deficit (1,075) (1,075)
Deficit Accumulated During the
Development Stage (5,514) (3,260)
-------------- ----------------
Total Stockholders' Equity (532) (511)
-------------- ----------------
Total Liabilities and
Stockholders' Equity $ - $ -
============== ================
The accompanying notes are an integral part of these financial
statements.
F - 2
BUSINESS TO BUSINESS, INC.
(A Development Stage Company)
STATEMENTS OF OPERATIONS
Cumulative
since
October 20,
1999
For the year ended inception of
September 30, development
------------------------------
2001 2000 stage
-------------- -------------- ---------------
Revenues: $ - $ - $ -
Expenses: 2,254 3,260 5,514
-------------- -------------- ---------------
Net Loss $ (2,254) $ (3,260) $ (5,514)
============== ============== ===============
Basic & Diluted loss per share $ - $ -
============== ==============
The accompanying notes are an integral part of these financial
statements.
F - 3
BUSINESS TO BUSINESS, INC.
(A Development Stage Company)
STATEMENT OF STOCKHOLDERS' EQUITY
SINCE JULY 11, 1997 (INCEPTION) TO SEPTEMBER 30, 2001
Deficit
Accumulated
During
Common Stock Paid-In Retained Development
Shares Par Value Capital Deficit Stage
------------ ----------- --------- ----------- -------------
Balance at July 11, 1997
(inception) - $ - $ - $ - $ -
Net Loss - - - (1,025) -
------------ ----------- --------- ----------- -------------
Balance at September 30, 1997 - - - (1,025) -
November 4, 1997 Issuance of
Stock for Services and payment
of Accounts Payable 1,000 1,000 - - -
Net Loss - - - (25) -
------------ ----------- --------- ----------- -------------
Balance at September 30, 1998
As Originally Reported 1,000 1,000 - (1,050) -
Retroactive adjustment for 1,000
to 1 stock split October 20, 1999 999,000 - - - -
------------ ----------- --------- ----------- -------------
Restated balance October 1, 1998 1,000,000 1,000 - (1,050) -
Capital contributed by shareholder - - 75 - -
Net Loss - - - (25) -
------------ ----------- --------- ----------- -------------
Balance at September 30, 1999 1,000,000 1,000 75 (1,075) -
Capital contributed by shareholder - - 2,749 - -
Net Loss - - - - (3,260)
------------ ----------- --------- ----------- -------------
Balance at September 30, 2000 1,000,000 1,000 2,824 (1,075) (3,260)
Capital contributed by shareholder - - 2,233 - -
Net Loss - - - - (2,254)
------------ ----------- --------- ----------- -------------
Balance at September 30, 2001 1,000,000 $ 1,000 $ 5,057 $ (1,075) $ (5,514)
============ =========== ========= =========== =============
The accompanying notes are an integral part of these financial
statements.
F - 4
BUSINESS TO BUSINESS, INC.
(A Development Stage Company)
STATEMENTS OF CASH FLOWS
Cumulative
since
October 20,
1999
For the years ended inception of
September 30, development
------------------------------
2001 2000 stage
-------------- --------------- ---------------
CASH FLOWS FROM OPERATING
ACTIVITIES:
Net Loss $ (2,254)$ (3,260)$ (5,514)
Increase (Decrease) in Accounts Payable 21 511 532
-------------- --------------- ---------------
Net Cash Used in operating activities (2,233) (2,749) (4,982)
-------------- --------------- ---------------
CASH FLOWS FROM INVESTING
ACTIVITIES:
Net cash provided by
investing activities - - -
-------------- --------------- ---------------
CASH FLOWS FROM FINANCING
ACTIVITIES:
Capital contributed by shareholder 2,233 2,749 4,982
-------------- --------------- ---------------
Net Cash Provided by
Financing Activities 2,233 2,749 4,982
-------------- --------------- ---------------
Net (Decrease) Increase in
Cash and Cash Equivalents - - -
Cash and Cash Equivalents
at Beginning of Period - - -
-------------- --------------- ---------------
Cash and Cash Equivalents
at End of Period $ - $ - $ -
============== =============== ===============
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the year for:
Interest $ - $ - $ -
Franchise and income taxes $ 25 $ 25 $ 25
SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING AND FINANCING
ACTIVITIES: None
The accompanying notes are an integral part of these financial
statements.
F - 5
BUSINESS TO BUSINESS, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
FOR THE YEARS ENDED SEPTEMBER 30, 2001 AND 2000
NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
This summary of accounting policies for Business to Business, Inc. is
presented to assist in understanding the Company's financial statements. The
accounting policies conform to generally accepted accounting principles and have
been consistently applied in the preparation of the financial statements.
Organization and Basis of Presentation
The Company was incorporated under the laws of the State of Wyoming on
July 11, 1997. The Company ceased all operating activities during the period
from July 11, 1997 to October 20, 1999 and was considered dormant. Since October
20, 1999, the Company is in the development stage, and has not commenced planned
principal operations.
Nature of Business
The Company has no products or services as of September 30, 2001. The
Company was organized as a vehicle to seek merger or acquisition candidates. The
Company intends to acquire interests in various business opportunities, which in
the opinion of management will provide a profit to the Company.
Cash and Cash Equivalents
For purposes of the statement of cash flows, the Company considers all
highly liquid debt instruments purchased with a maturity of three months or less
to be cash equivalents to the extent the funds are not being held for investment
purposes.
Pervasiveness of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles required management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
F - 6
BUSINESS TO BUSINESS, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
FOR THE YEARS ENDED SEPTEMBER 30, 2001 AND 2000
(Continued)
NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(Continued)
Loss per Share
The reconciliations of the numerators and denominators of the basic loss
per share computations are as follows:
Per-Share
Income Shares Amount
------ ------ ------
(Numerator) (Denominator)
For the year ended September 30, 2001
Basic Loss per Share
Loss to common shareholders $ (2,254) 1,000,000 $ -
=============== =============== ==============
For the year ended September 30, 2000
Basic Loss per Share
Loss to common shareholders $ (3,260) 1,000,000 $ -
=============== =============== ==============
The effect of outstanding common stock equivalents would be
anti-dilutive for September 30, 2001 and 2000 and are thus not considered.
Concentration of Credit Risk
The Company has no significant off-balance-sheet concentrations of
credit risk such as foreign exchange contracts, options contracts or other
foreign hedging arrangements. The Company maintains the majority of its cash
balances with one financial institution, in the form of demand deposits.
NOTE 2 - INCOME TAXES
As of September 30, 2001, the Company had a net operating loss
carryforward for income tax reporting purposes of approximately $6,500 that may
be offset against future taxable income through 2012. Current tax laws limit the
amount of loss available to be offset against future taxable income when a
substantial change in ownership occurs. Therefore, the amount available to
offset future taxable income may be limited. No tax benefit has been reported in
the financial statements, because the Company believes there is a 50% or greater
chance the carryforwards will expire unused. Accordingly, the potential tax
benefits of the loss carryforwards are offset by a valuation allowance of the
same amount.
F - 7
BUSINESS TO BUSINESS, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
FOR THE YEARS ENDED SEPTEMBER 30, 2001 AND 2000
(Continued)
NOTE 3 - DEVELOPMENT STAGE COMPANY
The Company has not begun principal operations and as is common with a
development stage company, the Company has had recurring losses during its
development stage.
NOTE 4 - COMMITMENTS
As of September 30, 2001 all activities of the Company have been
conducted by corporate officers from either their homes or business offices.
Currently, there are no outstanding debts owed by the company for the use of
these facilities and there are no commitments for future use of the facilities.
NOTE 5 - STOCK SPLIT
On October 20, 1999 the Board of Directors authorized 1,000 to 1 stock
split, changed the authorized number of shares to 100,000,000 shares and the par
value to $.001 for the Company's common stock. As a result of the split, 999,000
shares were issued. All references in the accompanying financial statements to
the number of common shares and per-share amounts for 2001 and 2000 have been
restated to reflect the stock split.
F - 8
INDEPENDENT ACCOUNTANT'S REPORT
Business to Business, Inc.
(A Development Stage Company)
We have reviewed the accompanying balance sheets of Business to
Business, Inc. (a development stage company) as of March 31, 2002 and September
30, 2001 and the related statements of operations for the three and six month
periods ended March 31, 2002 and 2001 and cash flows for the six month periods
ended March 31, 2002 and 2001. These financial statements are the responsibility
of the Company's management.
We conducted our review in accordance with standards established by the
American Institute of Certified Public Accountants. A review of interim
financial information consists principally of applying analytical procedures to
financial data and making inquiries of persons responsible for financial and
accounting matters. It is substantially less in scope than an audit conducted in
accordance with generally accepted auditing standards, the objective of which is
the expression of an opinion regarding the financial statement taken as a whole.
Accordingly, we do not express such an opinion.
Based on our review, we are not aware of any material modifications that
should be made to the accompanying financial statements for them to be in
conformity with accounting principles generally accepted in the United States of
America.
Respectfully submitted
/S/ ROBISON, HILL & CO.
Certified Public Accountants
Salt Lake City, Utah
April 22, 2002
F - 9
BUSINESS TO BUSINESS, INC.
(A Development Stage Company)
BALANCE SHEETS
March 31, September 30,
2002 2001
--------------- --------------
Assets: $ - $ -
=============== ==============
Liabilities - Accounts Payable $ 5,000 $ 532
--------------- --------------
Stockholders' Equity:
Common Stock, Par value $.001
Authorized 100,000,000 shares,
Issued 1,000,000 Shares at March 31, 2002
and September 30, 2001 1,000 1,000
Paid-In Capital 11,439 5,057
Retained Deficit (1,075) (1,075)
Deficit Accumulated During the
Development Stage (16,364) (5,514)
--------------- --------------
Total Stockholders' Equity (5,000) (532)
--------------- --------------
Total Liabilities and
Stockholders' Equity $ - $ -
=============== ==============
See accompanying notes and accountants' report.
F - 10
BUSINESS TO BUSINESS, INC.
(A Development Stage Company)
STATEMENTS OF OPERATIONS
Cumulative
since
October
20, 1999
Inception
For the three months ended For the six months ended of
March 31, March 31, development
--------------------------- ---------------------------
2002 2001 2002 2001 stage
------------- ------------- ------------ ------------- ------------
Revenues: $ - $ - $ - $ - $ -
Expenses: 10,850 1,672 10,850 1,672 16,364
------------- ------------- ------------ ------------- ------------
Net Loss $ (10,850)$ (1,672) $ (10,850) $ (1,672) $ (16,364)
============= ============= ============ ============= ============
Basic & Diluted
loss per share $ (0.01) $ - $ (0.01) $ -
============= ============= ============ =============
See accompanying notes and accountants' report.
F - 11
BUSINESS TO BUSINESS, INC.
(A Development Stage Company)
STATEMENTS OF CASH FLOWS
Cumulative
since October
20, 1999
For the six months ended Inception of
March 31, Development
-------------------------------
2002 2001 Stage
--------------- --------------- --------------
CASH FLOWS FROM OPERATING
ACTIVITIES:
Net Loss $ (10,850)$ (1,672) $ (16,364)
Increase (Decrease) in Accounts Payable 4,468 1,161 5,000
--------------- --------------- --------------
Net Cash Used in operating activities (6,382) (511) (11,364)
--------------- --------------- --------------
CASH FLOWS FROM INVESTING
ACTIVITIES:
Net cash provided by investing activities - - -
--------------- --------------- --------------
CASH FLOWS FROM FINANCING
ACTIVITIES:
Capital contributed by shareholder 6,382 511 11,364
--------------- --------------- --------------
Net Cash Provided by
Financing Activities 6,382 511 11,364
--------------- --------------- --------------
Net (Decrease) Increase in
Cash and Cash Equivalents - - -
Cash and Cash Equivalents
at Beginning of Period - - -
--------------- --------------- --------------
Cash and Cash Equivalents
at End of Period $ - $ - $ -
=============== =============== ==============
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the year for:
Interest $ - $ - $ -
Franchise and income taxes $ - $ - $ 25
SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING AND FINANCING
ACTIVITIES: None
See accompanying notes and accountants' report.
F - 12
BUSINESS TO BUSINESS, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED MARCH 31, 2002 AND 2001
NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
This summary of accounting policies for Business to Business, Inc. (a
development stage company) is presented to assist in understanding the Company's
financial statements. The accounting policies conform to generally accepted
accounting principles and have been consistently applied in the preparation of
the financial statements.
Interim Reporting
The unaudited financial statements as of March 31, 2002 and for the six
month period then ended reflect, in the opinion of management, all adjustments
(which include only normal recurring adjustments) necessary to fairly state the
financial position and results of operations for the six months. Operating
results for interim periods are not necessarily indicative of the results which
can be expected for full years.
Organization and Basis of Presentation
The Company was incorporated under the laws of the State of Wyoming on
July 11, 1997. The Company ceased all operating activities during the period
from July 11, 1997 to October 20, 1999 and was considered dormant. Since October
20, 1999, the Company is in the development stage, and has not commenced planned
principal operations.
Nature of Business
The Company has no products or services as of March 31, 2002. The
Company was organized as a vehicle to seek merger or acquisition candidates. The
Company intends to acquire interests in various business opportunities, which in
the opinion of management will provide a profit to the Company.
Cash and Cash Equivalents
For purposes of the statement of cash flows, the Company considers all
highly liquid debt instruments purchased with a maturity of six months or less
to be cash equivalents to the extent the funds are not being held for investment
purposes.
Pervasiveness of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles required management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
F - 13
BUSINESS TO BUSINESS, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED MARCH 31, 2002 AND 2001
(Continued)
NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(Continued)
Loss per Share
The reconciliations of the numerators and denominators of the basic loss
per share computations are as follows:
Per-Share
Income Shares Amount
------ ------ ------
(Numerator) (Denominator)
For the three months ended March 31, 2002
-----------------------------------------
Basic Loss per Share
Loss to common shareholders $ (10,850) 1,000,000 $ (0.01)
=============== =============== ==============
For the three months ended March 31, 2001
-----------------------------------------
Basic Loss per Share
Loss to common shareholders $ (1,672) 1,000,000 $ -
=============== =============== ==============
For the six months ended March 31, 2002
---------------------------------------
Basic Loss per Share
Loss to common shareholders $ (10,850) 1,000,000 $ (0.01)
=============== =============== ==============
For the six months ended March 31, 2001
---------------------------------------
Basic Loss per Share
Loss to common shareholders $ (1,672) 1,000,000 $ -
=============== =============== ==============
The effect of outstanding common stock equivalents would be
anti-dilutive for March 31, 2002 and 2001 and are thus not considered.
Concentration of Credit Risk
The Company has no significant off-balance-sheet concentrations of
credit risk such as foreign exchange contracts, options contracts or other
foreign hedging arrangements.
Reclassification
Certain reclassifications have been made in the 2001 financial
statements to conform with the March 31, 2002 presentation.
F - 14
BUSINESS TO BUSINESS, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED MARCH 31, 2002 AND 2001
(Continued)
NOTE 2 - INCOME TAXES
As of March 31, 2002, the Company had a net operating loss carryforward
for income tax reporting purposes of approximately $17,000 that may be offset
against future taxable income through 2021. Current tax laws limit the amount of
loss available to be offset against future taxable income when a substantial
change in ownership occurs. Therefore, the amount available to offset future
taxable income may be limited. No tax benefit has been reported in the financial
statements, because the Company believes there is a 50% or greater chance the
carry-forwards will expire unused. Accordingly, the potential tax benefits of
the loss carry-forwards are offset by a valuation allowance of the same amount.
NOTE 3 - DEVELOPMENT STAGE COMPANY
The Company has not begun principal operations and as is common with a
development stage company, the Company has had recurring losses during its
development stage.
NOTE 4 - COMMITMENTS
As of March 31, 2002 all activities of the Company have been conducted
by corporate officers from either their homes or business offices. Currently,
there are no outstanding debts owed by the company for the use of these
facilities and there are no commitments for future use of the facilities.
F - 15
INDEPENDENT ACCOUNTANTS' REPORT
Premium Financial Services and Leasing, Inc.
We have audited the accompanying balance sheet of Premium Financial
Services and Leasing, Inc. as of December 31, 2001 and the related statements of
operations, cash flows, and stockholders' equity (deficit) for the years ended
December 31, 2001 and 2000. 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 audits in accordance with auditing standards generally
accepted 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
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the December 31, 2001 financial statements referred to
above present fairly, in all material respects, the financial position of
Premium Financial Services and Leasing, Inc. as of December 31, 2001, and the
results of its operations and its cash flows for the years ended December 31,
2001 and 2000 in conformity with generally accepted accounting principles in the
United States of America.
Respectfully submitted
/S/ ROBISON, HILL & CO.
Certified Public Accountants
Salt Lake City, Utah
February 2, 2002
F - 16
PREMIUM FINANCIAL SERVICES AND LEASING, INC.
BALANCE SHEET
(Unaudited)
March 31, December 31,
--------------- --------------
2002 2001
--------------- --------------
ASSETS
Current Assets:
Cash and cash equivalents $ 33,047 $ 33,030
Fixed Assets:
Computer and office equipment 26,767 26,767
Less accumulated depreciation (5,799) (4,461)
--------------- --------------
20,968 22,306
--------------- --------------
Other assets - deposits 75,000 75,000
--------------- --------------
TOTAL ASSETS $ 129,015 $ 130,336
=============== ==============
LIABILITIES
Current Liabilities:
Accounts Payable $ 4,717 $ 2,932
Accrued Expenses 229 151
Current portion of lease obligations 3,792 4,071
Related Party Loans - Current 92,943 85,943
--------------- --------------
Total Current Liabilities 101,681 93,097
--------------- --------------
Long-Term Debt - lease obligations 5,616 7,045
--------------- --------------
Total Liabilities 107,297 100,142
--------------- --------------
STOCKHOLDERS EQUITY
Common Stock - No par value, 500 shares
authorized, 100 shares issued and
outstanding
at March 31, 2002 and December 31, 2001 100 100
Accumulated adjustments account 21,618 30,094
--------------- --------------
Total Stockholders' Equity 21,718 30,194
--------------- --------------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $ 129,015 $ 130,336
=============== ==============
See accompanying notes and accountants' report.
F - 17
PREMIUM FINANCIAL SERVICES AND LEASING, INC.
STATEMENTS OF OPERATIONS
(Unaudited)
For The Three For The Year
Months Ended Ended
March 31, December 31,
------------------------------- ------------------------------
2002 2001 2001 2000
--------------- --------------- -------------- --------------
REVENUES
Sales commissions $ 51,134 $ 141,228 $ 428,221 $ 383,351
--------------- --------------- -------------- --------------
EXPENSES
Selling & Marketing 38,597 72,347 244,871 210,578
General & Administrative 48,531 48,888 113,423 140,695
--------------- --------------- -------------- --------------
87,128 121,235 358,294 351,273
--------------- --------------- -------------- --------------
Net Income from Operations (35,994) 19,993 69,927 32,078
Other Income (Expense)
Interest Income (Expense) 40,000 - (1,409) (597)
--------------- --------------- -------------- --------------
NET INCOME (LOSS) $ 4,006 $ 19,993 $ 68,518 $ 31,481
=============== =============== ============== ==============
See accompanying notes and accountants' report.
F - 18
PREMIUM FINANCIAL SERVICES AND LEASING, INC.
STATEMENT OF STOCKHOLDERS' EQUITY
FOR THE YEARS ENDED DECEMBER 31, 2001 AND 2000
REFERENCES TO MARCH 31, 2002 ARE UNAUDITED
Accumulated
Common Stock Adjustments
-------------------------------
Shares Value Account
--------------- --------------- --------------
Balance at February 8, 2000 (inception) - $ - $ -
Common stock issued for cash
on February 8, 2000 100 100 -
Distributions - - (29,600)
Net Income - - 31,481
--------------- --------------- --------------
Balance at December 31, 2000 100 100 1,881
Distributions - - (40,305)
Net Income - - 68,518
--------------- --------------- --------------
Balance at October 31, 2001 (Unaudited) 100 100 30,094
Distributions - - (12,482)
Net Income - - 4,006
--------------- --------------- --------------
Balance at March 31, 2002 (Unaudited) 100 $ 100 $ 21,618
=============== =============== ==============
See accompanying notes and accountants' report.
F - 19
PREMIUM FINANCIAL SERVICES AND LEASING, INC.
STATEMENTS OF CASH FLOWS
(Unaudited)
For The Three For The
Months Ended Year Ended
March 31, December 31,
------------------------------- ------------------------------
2002 2001 2001 2000
--------------- -------------- -------------- --------------
Cash Flows From Operating Activities
Net income for the period $ 4,006 $ 19,993 $ 68,518 $ 31,481
Adjustments to reconcile net loss to net cash
provided by operating activities
Depreciation 1,338 - 4,461 1,603
Changes in Operating Assets and Liabilities
Increase (Decrease) in Accounts Payable 1,785 3,319 (15,925) 17,253
Increase (Decrease) in Accrued Expenses 78 2,298 151 -
--------------- -------------- -------------- --------------
Net Cash Provided by (Used in) Operating
Activities 7,207 25,610 57,205 50,337
--------------- -------------- -------------- --------------
Cash Flows From Investing Activities
Purchase of Equipment - (21,122) (10,425) (16,342)
Deposit - - (75,000) -
--------------- -------------- -------------- --------------
Net Cash Used by Investing Activities - (21,122) (85,425) (16,342)
--------------- -------------- -------------- --------------
Cash Flows From Financing Activities
Proceeds from Loans - Related Party 7,000 - 80,000 5,943
Proceeds Long-Term Debt - 15,330 - 16,342
Proceeds from Sale of Common Stock - - - 100
AAA Distributions (12,482) (7,150) (40,304) (29,600)
Principle Payments on Long-term Debt (1,708) - (3,446) (1,780)
--------------- -------------- -------------- --------------
Net Cash Provided by (Used in) Financing
Activities (7,190) 8,180 36,250 (8,995)
--------------- -------------- -------------- --------------
Increase (Decrease) in Cash 17 12,668 8,030 25,000
Cash at beginning of period 33,030 31,556 25,000 -
--------------- -------------- -------------- --------------
Cash at End of Period $ 33,047 $ 44,224 $ 33,030 $ 25,000
=============== ============== ============== ==============
Supplemental Disclosure of Interest and Income Taxes Paid
Interest paid during the period $ - $ - $ 1,338 $ 597
=============== ============== ============== ==============
Income taxes paid during the period $ - $ - $ - $ -
=============== ============== ============== ==============
Supplemental Disclosure of Non-cash Investing and Financing Activities:
None
See accompanying notes and accountants' report.
F - 20
PREMIUM FINANCIAL SERVICES AND LEASING, INC.
NOTES TO FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2001 AND 2000
REFERENCES TO MARCH 31, 2002 ARE UNAUDITED
NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
This summary of accounting policies for Premium Financial Services and
Leasing, Inc. ( the "Company") is presented to assist in understanding the
Company's financial statements. The accounting policies conform to generally
accepted accounting principles and have been consistently applied in the
preparation of the financial statements.
Interim Reporting
The unaudited financial statements as of March 31, 2002 and for the
three month period then ended reflect, in the opinion of management, all
adjustments (which include only normal recurring adjustments) necessary to
fairly state the financial position and results of operations for the three
months. Operating results for interim periods are not necessarily indicative of
the results which can be expected for full years.
Organization and Basis of Presentation
The Company was incorporated under the laws of the State of
Indiana on February 8, 2000. Prior to incorporation the Company operated as a
sole proprietorship since 1995.
Nature of Business
The Company is an Indiana based, independently-owned full service
leasing brokerage firm that is focused on offering medium sized and small
ticket-leasing programs to a national network of brokers, vendors and end users.
Pervasiveness of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles required management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
F - 21
PREMIUM FINANCIAL SERVICES AND LEASING, INC.
NOTES TO FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2001 AND 2000
REFERENCES TO MARCH 31, 2002 ARE UNAUDITED
(Continued)
NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(Continued)
Depreciation
Fixed assets are stated at cost. Depreciation is calculated primarily
using the straight-line method over the estimated useful lives of the assets as
follows:
Asset Rate
- --------------------------------------- --------------
Computer Equipment 5 years
Maintenance and repairs are charged to operations; betterments are
capitalized. The cost of property sold or otherwise disposed of and the
accumulated depreciation thereon are eliminated from the property and related
accumulated depreciation accounts, and any resulting gain or loss is credited or
charged to income.
Income Taxes
For the years 2001 and 2000 the Company has elected to be an
"S-Corporation" and is not subject to income tax. Income is taxed directly to
the shareholders.
Cash and Cash Equivalents
For purposes of the statement of cash flows, the Company considers all
highly liquid debt instruments purchased with a maturity of three months or less
to be cash equivalents to the extent the funds are not being held for investment
purposes.
Reclassifications
Certain reclassifications have been made in the 2001 and 2000 financial
statements to conform with the 2001 presentation.
Revenue recognition
The Company's primary source of revenue is from acting as a lease
broker. Revenue is recognized from the sale or assignment of sales-type or
direct financing leases to third parties when the lease is funded by the
purchaser.
F - 22
PREMIUM FINANCIAL SERVICES AND LEASING, INC.
NOTES TO FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2001 AND 2000
REFERENCES TO MARCH 31, 2002 ARE UNAUDITED
(Continued)
NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(Continued)
Income per Share
The reconciliations of the numerators and denominators of the basic
income per share computations are as follows:
Income Shares Per-Share
(Numerator) (Denominator) Amount
--------------- --------------- --------------
For the Three Months Ended March 31, 2002
------------------------------------------------
Basic Earning per Share
Income to common shareholders $ 4,006 100 $ 40.06
=============== =============== ==============
For the Three Months Ended March 31, 2001
------------------------------------------------
Basic Earning per Share
Income to common shareholders $ 19,993 100 $ 199.93
=============== =============== ==============
For the Year Ended December 31, 2001
------------------------------------------------
Basic Earnings per Share
Income to common shareholders $ 68,518 100 $ 685.18
=============== =============== ==============
For the Year Ended December 31, 2000
------------------------------------------------
Basic Earnings per Share
Income to common shareholders $ 31,481 100 $ 314.81
=============== =============== ==============
There were no common stock equivalents outstanding at December 31, 2001
and 2000.
Concentrations of Credit Risk
The Company has no significant off-balance-sheet concentrations of
credit risk such as foreign exchange contracts, options contracts or other
foreign hedging arrangements. The Company maintains the majority of its cash
balances with two financial institutions, in the form of demand deposits
Advertising Expense
Advertising costs are expensed when the services are provided.
F - 23
PREMIUM FINANCIAL SERVICES AND LEASING, INC.
NOTES TO FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2001 AND 2000
REFERENCES TO MARCH 31, 2002 ARE UNAUDITED
(Continued)
NOTE 2 - RELATED PARTY PAYABLES
On December 4, 2001, an officer loaned the Company $75,000. The Company
shall repay $90,000 to the officer within 180 days of the date of the loan.
Due to related party at December 31, 2001 and 2000 consists of the
following:
(Unaudited)
March 31, December 31,
----------------------- -----------------------
2002 2001 2001 2000
---------- ----------- ----------- -----------
Note payable to officer, unsecured, at 40% interest,
due June 2, 2002 $ 75,000 - $ 75,000 $ -
Advances, unsecured, non-interest bearing,
due on demand 17,943 - 10,943 5,943
---------- ----------- ----------- -----------
$ 92,943 $ - $ 85,943 $ 5,943
========== =========== =========== ===========
NOTE 3 - LONG TERM DEBT
Long-term liabilities of the Company at December 31, 2001 and 2000
consists of the following:
(Unaudited)
March 31, December 31,
----------------------- -----------------------
2002 2001 2001 2000
---------- ----------- ----------- -----------
Lease payable to a Bank, due July 31, 2004 with
interest of 7.65%, secured by computer equipment $ 9,408 $ 15,330 $ 11,116 $ 14,562
Less Current Portion 3,792 - 4,071 3,772
---------- ----------- ----------- -----------
Total Long-Term Liability $ 5,616 $ 15,330 $ 7,045 $ 10,790
========== =========== =========== ===========
F - 24
PREMIUM FINANCIAL SERVICES AND LEASING, INC.
NOTES TO FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2001 AND 2000
REFERENCES TO MARCH 31, 2002 ARE UNAUDITED
(Continued)
NOTE 4 - LEASES
The Company leases facilities and equipment under various capital and
operating leases with expiration dates through 2006.
The Company has entered into a lease agreement for its office
facilities. The rental charges are approximately $1,400 per month. The lease
expires in April 2006. On January 14, 2002 the Company entered into a sublease
for additional office space. The rental charge ranges from $3,500 to $6,992 per
month expiring November 30, 2004.
Equipment capitalized under capital leases had fair market value of
$16,342 as of June 30, 2000 (date of acquisition of the equipment and assumption
of the related leases by the Company). Total rental expense for the Company for
the years ended December 31, 2001 and 2000 was $19,885 and $17,077,
respectively, including rent under month-to month leases.
Net minimum rental commitments under all non-cancelable operating leases are as
follows:
Capital Operating
Year Ending December 31, Leases Leases Total
--------------- --------------- --------------
2002 $ 4,755 $ 59,038 $ 63,793
2003 4,755 88,343 93,098
2004 2,379 98,947 101,326
2004 - 31,545 31,545
2005 - 16,800 16,800
--------------- --------------- --------------
Total minimum lease payments due 11,889 294,673 306,562
Less amounts representing interest (1,099) - (1,099)
--------------- --------------- --------------
$ 10,790 $ 294,673 $ 305,463
=============== =============== ==============
F - 25
PREMIUM FINANCIAL SERVICES AND LEASING, INC.
NOTES TO FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2001 AND 2000
REFERENCES TO MARCH 31, 2002 ARE UNAUDITED
(Continued)
NOTE 4 - LEASES (Continued)
The minimum future lease payments under these leases for the next five
years are:
Twelve Months
Ended December 31, Real Property Equipment
- ---------------------- --------------- --------------
2002 $ 51,300 $ 12,493
2003 72,741 20,357
2004 93,712 7,614
2005 16,800 14,745
2006 16,800 -
--------------- --------------
Total minimum future lease payments $ 251,353 $ 55,209
=============== ==============
The leases generally provides that insurance, maintenance and tax
expenses are obligations of the Company. It is expected that in the normal
course of business, leases that expire will be renewed or replaced by leases on
other properties.
NOTE 5 - CONTINGENCIES
The Company at times will have agreements with a funding source to sell
certain receivables with recourse. In the event of the customer's default the
company must repurchase the receivables from the funding source. As of December
31, 2001 and 2000 the company is not contingently liable to such receivables
sold with recourse.
The Company is a defendant in a lawsuit. In the opinion of Company's
management, the lawsuit will not have a material adverse impact on the Company's
financial position, results of operations or cash flows.
F - 26
UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS
On May 21, 2002, Business to Business, Inc., (a development stage
company) ("B2B") and Premium Financial Services & Leasing, Inc. ("Premium"),
closed on an Acquisition Agreement between Premium and B2B. The following
unaudited pro forma condensed combined financial statements are based on the
March 31, 2002 unaudited and September 30, 2001 audited historical financial
statements of B2B and the March 31, 2002 unaudited and December 31, 2001 audited
historical financial statements of Premium contained elsewhere herein, giving
effect to the transaction under the purchase method of accounting, with Premium
treated as the acquiring entity for financial reporting purposes. The unaudited
pro forma condensed combined balance sheet presenting the financial position of
the Surviving Corporation assumes the purchase occurred as of March 31, 2002.
The unaudited pro forma condensed combined statement of operations for the year
ended December 31, 2001 presents the results of operations of the Surviving
Corporation, assuming the merger was completed on January 1, 2001. The unaudited
pro forma condensed combined statement of operations for the three months ended
March 31, 2002 presents the results of operations of the Surviving Corporation,
assuming the merger was completed on January 1, 2002.
The unaudited pro forma condensed combined financial statements have
been prepared by management of Premium and B2B based on the financial statements
included elsewhere herein. The pro forma adjustments include certain assumptions
and preliminary estimates as discussed in the accompanying notes and are subject
to change. These pro forma statements may not be indicative of the results that
actually would have occurred if the combination had been in effect on the dates
indicated or which may be obtained in the future. These pro forma financial
statements should be read in conjunction with the accompanying notes and the
historical financial information of both Premium and B2B (including the notes
thereto) included in this Information Statement. See "FINANCIAL STATEMENTS."
F - 27
UNAUDITED PRO FORMA CONDENSED BALANCE SHEET
MARCH 31, 2002
Premium Business
Financial to Pro Forma
Services and Business, Pro Forma Combined
Leasing, Inc. Inc. Adjustments Balance
-------------- -------------- -------------- ---------------
ASSETS
Current assets $ 33,047 $ - $ - $ 33,047
Fixed assets (net) 20,968 - - 20,968
Other assets 75,000 - - 75,000
-------------- -------------- -------------- ---------------
Total Assets $ 129,015 $ - $ - $ 129,015
============== ============== ============== ===============
LIABILITIES AND STOCKHOLDERS'
EQUITY
Accounts payable & accrued expenses $ 4,946 $ - $ - $ 4,946
Other current liabilities 96,735 - - 96,735
Long-term debt 5,616 - - 5,616
-------------- -------------- -------------- ---------------
Total Liabilities 107,297 - - 107,297
-------------- -------------- -------------- ---------------
Stockholders' Equity:
Common stock 100 1,000 3,900 A 5,000
Paid in capital - 5,589 11,129 A 16,718
Retained deficit - (1,075) 1,075 0
Accumulated adjustments account 21,618 (21,618)A -
Deficit accumulated during the
development stage - (5,514) 5,514 A -
-------------- -------------- -------------- ---------------
Total Stockholders' Equity (Deficit) 21,718 - - 21,718
-------------- -------------- -------------- ---------------
Total Liabilities and Stockholders' Equity $ 129,015 $ - $ - $ 129,015
============== ============== ============== ===============
See accompanying notes to unaudited pro forma condensed combined financial
statements.
F - 28
UNAUDITED PRO FORMA STATEMENTS OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 2001
Premium Business
Financial to Pro Forma
Services and Business, Pro Forma Combined
Leasing, Inc. Inc. Adjustments Balance
-------------- -------------- -------------- ---------------
Revenues: $ 428,221 $ - $ - $ 428,221
Expenses:
Selling & marketing 244,871 - 244,871
General & administrative 113,423 2,254 - 115,677
-------------- -------------- -------------- ---------------
Net Income from Operations 69,927 - 67,673
Other Income (expense) (1,409) - (1,409)
-------------- -------------- -------------- ---------------
Net Income (Loss) $ 68,518 $ $ - $ - 66,264
============== ============== ============== ===============
Income (Loss) per share $ 685.18 $ $ - $ - 0.01
============== ============== ============== ===============
Weighted average shares outstanding 100 1,000,000 5,000,000
See accompanying notes to unaudited pro forma condensed combined financial
statements.
F - 29
UNAUDITED PRO FORMA STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED MARCH 31, 2002
Premium Business
Financial to Pro Forma
Services and Business, Pro Forma Combined
Leasing, Inc. Inc. Adjustments Balance
-------------- -------------- -------------- ---------------
Revenues: $ 51,134 $ - $ - $ 51,134
Expenses:
Selling & marketing 38,597 - - 38,597
General & administrative 48,531 10,850 - 59,381
-------------- -------------- -------------- ---------------
Net Income from Operations (35,994) - (46,844)
Other Income (expense) 40,000 - 40,000
-------------- -------------- -------------- ---------------
Net Income (Loss) $ 4,006 $ - $ - $ (6,844)
============== ============== ============== ===============
Income (Loss) per share $ 40.06 $ - $ - $ -
============== ============== ============== ===============
Weighted average shares outstanding 100 1,000,000 5,000,000
See accompanying notes to unaudited pro forma condensed combined financial
statements.
F - 30
NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS
(1) General
In the acquisition, B2B will acquire all of the assets and liabilities of
Premium in exchange for 4,000,000 shares of Common Stock, or approximately 80%
of the New Common Stock outstanding subsequent to the Merger, subject to certain
adjustments. Premium has not yet performed a detailed evaluation and appraisal
of the fair market value of the net assets acquired in order to allocate the
purchase price among the assets acquired. For purposes of preparing these pro
forma financial statements, certain assumptions as set forth in the notes to the
pro forma adjustments have been made in allocating the sales price to the net
assets acquired. As such, the pro forma adjustments discussed below are subject
to change based on final appraisals and determination of the fair market value
of the assets and liabilities of B2B.
(2) Fiscal Year Ends
The unaudited pro forma condensed combined statements of operations for
the year ended December 31, 2001, include Premium's and B2B's operations on a
common fiscal year. B2B's financials have been adjusted by subtracting the
quarterly results for the three months ended December 31, 2000 from the annual
financials and adding the quarterly results for December 31, 2001. The unaudited
pro forma condensed combined statements of operations for the three months ended
March 31, 2002, include Premium's and B2B's operations on a common fiscal year.
(3) Pro Forma Adjustments
The adjustments to the accompanying unaudited pro forma condensed
combined balance sheet as of March 31, 2002, are described below:
(A) Record acquisition by issuing 4,000,000 shares of Common Stock, par
value $0.001.
The adjustments to the accompanying unaudited pro forma condensed
combined statements of operations for the year ended December 31, 2001 and the
three months ended March 31, 2002 are described below:
There are no anticipated adjustments to the statements of operations as
a result of the merger.
F - 31
PART II
INFORMATION NOT REQUIRED IN THE PROSPECTUS
Item 24. Indemnification of Directors and Officers.
The Wyoming Business Corporation Act permits the inclusion in the articles of
incorporation, provisions limiting or eliminating the personal monetary
liability of directors to a corporation or its shareholders by reason of their
conduct as directors. The Wyoming Business Corporation Law limits or eliminates
the liability of a director of a corporation for monetary damages for any action
taken or not taken as a director in all instances except (i) instances where a
director receives financial benefits to which he is not entitled; (ii) any
intentional infliction of harm on the corporation or its shareholders; (iii) the
making of unlawful distributions; and (iv) intentional violations of criminal
law.
The bylaws of the Company allow for the elimination of personal monetary
liability on the part of a director to the fullest extent permitted by Wyoming
law. A shareholder is able to prosecute an action against a director for
monetary damages for any action taken, or any failure to take any action, as a
director, for the amount of financial benefit received by a director for which
he is not entitled, an intentional infliction of harm on the corporation or
shareholders, a violation of Section 17-16-833 of the Wyoming Business
Corporation Law or an intentional violation of criminal law.
ARTICLE XI of the Bylaws of the Registrant provide as follows:
Section 43. Indemnification of Directors, Executive Officers, Other
Officers, Employees and Other Agents.
(a.) Directors Officers. The corporation shall indemnify its directors
and officers to the fullest extent not prohibited by the Wyoming General
Corporation Law; provided, however, that the corporation may modify the extent
of such indemnification by individual contracts with its directors and officers;
and, provided, further, that the corporation shall not be required to indemnify
any director or officer in connection with any proceeding (or part thereof)
initiated by such person unless (i) such indemnification is expressly required
to be made by law, (ii) the proceeding was authorized by the Board of Directors
of the corporation, (iii) such indemnification is provided by the corporation,
in its sole discretion, pursuant to the powers vested in the corporation under
the Wyoming General Corporation Law or (iv) such indemnification is required to
be made under subsection (d).
(b.) Employees and Other Agents. The corporation shall have power to
indemnify its employees and other agents as set forth in the Wyoming General
Corporation Law.
(c.) Expense. The corporation shall advance to any person who was or is
a party or is threatened to be made a party to any threatened, pending or
completed action, suit or proceeding, whether civil, criminal, administrative or
investigative, by reason of the fact that he is or was a director or officer, of
the corporation, or is or was serving at the request of the corporation as a
director or executive officer of another corporation, partnership, joint
venture, trust or other enterprise, prior to the final disposition of the
proceeding, promptly following request therefor, all expenses incurred by any
director or officer in connection with such proceeding upon receipt of an
undertaking by or on behalf of such person to repay said mounts if it should be
determined ultimately that such person is not entitled to be indemnified under
this Bylaw or otherwise.
II-1
Notwithstanding the foregoing, unless otherwise determined pursuant to
paragraph (e) of this Bylaw, no advance shall be made by the corporation to an
officer of the corporation (except by reason of the fact that such officer is or
was a director of the corporation in which event this paragraph shall not apply)
in any action, suit or proceeding, whether civil, criminal, administrative or
investigative, if a determination is reasonably and promptly made (i) by the
Board of Directors by a majority vote of a quorum consisting of directors who
were not parties to the proceeding, or (ii) if such quorum is not obtainable,
or, even if obtainable, a quorum of disinterested directors so directs, by
independent legal counsel in a written opinion, that the facts known to the
decision-making party at the time such determination is made demonstrate clearly
and convincingly that such person acted in bad faith or in a manner that such
person did not believe to be in or not opposed to the best interests of the
corporation.
(d.) Enforcement. Without the necessity of entering into an express
contract, all rights to indemnification and advances to directors and officers
under this Bylaw shall be deemed to be contractual rights and be effective to
the same extent and as if provided for in a contract between the corporation and
the director or officer. Any right to indemnification or advances granted by
this Bylaw to a director or officer shall be enforceable by or on behalf of the
person holding such right in any court of competent jurisdiction if (i) the
claim for indemnification or advances is denied, in whole or in part, or (ii) no
disposition of such claim is made within ninety (90) days of request therefor.
The claimant in such enforcement action, if successful in whole or in part,
shall be entitled to be paid also the expense of prosecuting his claim. In
connection with any claim for indemnification, the corporation shall be entitled
to raise as a defense to any such action that the claimant has not met the
standard of conduct that make it permissible under the Wyoming General
Corporation Law for the corporation to indemnify the claimant for the amount
claimed. In connection with any claim by an officer of the corporation (except
in any action, suit or proceeding, whether civil, criminal, administrative or
investigative, by reason of the fact that such officer is or was a director of
the corporation) for advances, the corporation shall be entitled to raise a
defense as to any such action clear and convincing evidence that such person
acted in bad faith or in a manner that such person did not believe to be in or
not opposed in the best interests of the corporation, or with respect to any
criminal action or proceeding that such person acted without reasonable cause to
believe that his conduct was lawful. Neither the failure of the corporation
(including its Board of Directors, independent legal counsel or its
stockholders) to have made a determination prior to the commencement of such
action that indemnification of the claimant is proper in the circumstances
because he has met the applicable standard of conduct set forth in the Wyoming
General Corporation Law, nor an actual determination by the corporation
(including its Board of Directors, independent legal counsel or its
stockholders) that the claimant has not met such applicable standard of conduct,
shall be a defense to the action or create a presumption that claimant has not
met the applicable standard of conduct. In any suit brought by a director or
officer to enforce a right to indemnification or to an advancement of expenses
hereunder, the burden of proving that the director or officer is not entitled to
be indemnified, or to such advancement of expenses, under this Article XI or
otherwise shall be on the corporation.
(e.) Non-Exclusivity of Rights. The rights conferred on any person by
this Bylaw shall not be exclusive of any other right which such person may have
or hereafter acquire under any statute, provision of the Articles of
Incorporation, Bylaws, agreement, vote of stockholders or disinterested
directors or otherwise, both as to action in his official capacity and as to
action in another capacity while holding office. The corporation is specifically
authorized to enter into individual contracts with any or all of its directors,
officers, employees or agents respecting indemnification and advances, to the
fullest extent not prohibited by the Wyoming General Corporation Law.
II-2
(f.) Survival of Rights. The rights conferred on any person by this
Bylaw shall continue as to a person who has ceased to be a director, officer,
employee or other agent and shall inure to the benefit of the heirs, executors
and administrators of such a person.
(g.) Insurance. To the fullest extent permitted by the Wyoming General
Corporation Law, the corporation, upon approval by the Board of Directors, may
purchase insurance on behalf of any person required or permitted to be
indemnified pursuant to this Bylaw.
(h.) Amendments. Any repeal or modification of this Bylaw shall only be
prospective and shall not affect the rights under this Bylaw in effect at the
time of the alleged occurrence of any action or omission to act that is the
cause of any proceeding against any agent of the corporation.
(i.) Saving Clause. If this Bylaw or any portion hereof shall be
invalidated on any ground by any court of competent jurisdiction, then the
corporation shall nevertheless indemnify each director and officer to the full
extent not prohibited by any applicable portion of this Bylaw that shall not
have been invalidated, or by any other applicable law.
(j.) Certain Definitions. For the purposes of this Bylaw, the following
definitions shall apply:
(i.) The term "proceeding" shall be broadly construed and shall include,
without limitation, the investigation, preparation, prosecution,
defense, settlement, arbitration and appeal of, and the giving of
testimony in, any threatened, pending or completed action, suit or
proceeding, whether civil, criminal, administrative or investigative.
(ii.) The term "expenses" shall be broadly construed and shall include,
without limitation, court costs, attorneys' fees, witness fees, fines,
amounts paid in settlement or judgment and any other costs and expenses
of any nature or kind incurred in connection with any proceeding.
(iii.) The term the "corporation" shall include, in addition to the
resulting corporation, any constituent corporation (including any
constituent of a constituent) absorbed in a consolidation or merger
which, if its separate existence had continued, would have had power and
authority to indemnify its directors, officers, and employees or agents,
so that any person who is or was a director, officer, employee or agent
of such constituent corporation, or is or was serving at the request of
such constituent corporation as a director, officer, employee or agent
or another corporation, partnership, joint venture, trust or other
enterprise, shall stand in the same position under the provisions of
this Bylaw with respect to the resulting or surviving corporation as he
would have with respect to such constituent corporation if its separate
existence had continued.
(iv.) References to a "director," "executive officer," "officer,"
"employee," or "agent" of the corporation shall include, without
limitation, situations where such person is serving at the request of
the corporation as, respectively, a director, executive officer,
officer, employee, trustee or agent of another corporation, partnership,
joint venture, trust or other enterprise.
(v.) References to "other enterprises" shall include employee benefit
plans; references to "fines" shall include any excise taxes assessed on
a person with respect to an employee benefit plan; and references to
"serving at the request of the corporation" shall include any service as
II-3
a director, officer, employee or agent of the corporation which imposes
duties on, or involves services by, such director, officer, employee, or
agent with respect to an employee benefit plan, its participants, or
beneficiaries; and a person who acted in good faith and in a manner he
reasonably believed to be in the interest of the participants and
beneficiaries of an employee benefit plan shall be deemed to have acted
in a manner "not opposed to the best interests of the corporation" as
referred to in this Bylaw.
Section 17-16-202 of the Wyoming Business Corporation Law allows a
corporation to eliminate the personal liability of directors of a corporation to
the corporation or its stockholders for monetary damages for any action taken,
or any failure to take any action, as a director, except for the amount of
financial benefit received by a director for which he is not entitled, an
intentional infliction of harm on the corporation or shareholders, a violation
of 17-16-833 or an intentional violation of criminal law.
Section 17-16-850, et seq. of the Wyoming Business Corporation Law
provides that a corporation has the power to indemnify a director, officer,
employee or agent of the corporation and certain other persons serving at the
request of the corporation in related capacities against amounts paid and
expenses incurred in connection with an action or proceeding to which he is or
is threatened to be made a party by reason of such position, if such person
shall have acted in good faith and in a manner he reasonably believed to be in
or not opposed to the best interests of the corporation, and, in any criminal
proceeding, if such person had no reasonable cause to believe his conduct was
unlawful; provided that, in the case of actions brought by or in the right of
the corporation, no indemnification shall be made with respect to any matter as
to which such person shall have been adjudged to be liable to the corporation
unless and only to the extent that the adjudicating court determines that such
indemnification is proper under the circumstances.
Insofar as indemnification for liabilities arising under the Securities Act may
be permitted to directors, officers and controlling persons of the Company
pursuant to the foregoing provisions, or otherwise, the Company has been advised
that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Securities Act and
is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the Company of expenses
incurred or paid by a director, officer or controlling person of the Company in
the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Company will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Securities Act and will be governed by the final
adjudication of such issue.
Item 25. Other Expenses of Issuance and Distribution.
The following table sets forth the estimated costs and expenses of
Premium Financial in connection with the offering described in the Registration
Statement.
Securities and Exchange Commission Registration Fee $ 100
Legal Fees and Expenses 10,000
Accounting Fees and Expenses 10,000
Other Expenses 2,500
-----
Total Expenses $20,600
II-4
Item 26. Recent Sales of Unregistered Securities.
None.
Item 27. Exhibits
Exhibit
Number Description Reference
-------------- ------------------------------------------------------------------------------- --------------
2.1 Acquisition Agreement between Registrant and Premium Financial (1)
3.1 Articles of Incorporation of Registrant (2)
3.2 By-laws of Registrant (2)
4.1 Form of Common Stock Certificate *
5.1 Opinion of Kevin M. Sherlock, Esq. as to the legality of securities being *
registered (includes consent)
23.1 Consent of Auditors Robison Hill & Co. *
- ----------
* Filed herewith
(1) Filed with Information Statement on Schedule 14C, dated May 1, 2002.
(2) Filed with Form 10SB 12(g), dated December 17, 1999.
Item 28. Undertakings
(a) Rule 415 Offering. The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this registration
statement:
(i) To include any prospectus required by Section 10(a)(3)
of the Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events which,
individually or together, represent a fundamental change
in the information in the registration statement; and
notwithstanding the forgoing, any increase or decrease
in volume of securities offered (if the total dollar
value of securities offered would not exceed that which
was registered) and any deviation From the low or high
end of the estimated maximum offering range may be
reflected in the form of prospects filed with the
Commission pursuant to Rule 424(b) if, in the aggregate,
the changes in the volume and price represent no more
than a 20% change in the maximum aggregate offering
price set forth in the "Calculation of Registration Fee"
table in the effective registration statement; and
II-5
(iii) To include any material information with respect to the
plan of distribution not previously disclosed in the
registration statement or any material change to such
information in the registration statement;
(2) For determining any liability under the Securities Act of 1933
(the "Securities Act"), to treat each such post-effective
amendment as a new registration statement of the securities
offered, and the offering of the securities at the time to be
the initial bona fide offering.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain
unsold at the termination of the offering.
(b) Indemnification:
Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers and controlling persons of
the small business issuer pursuant to the foregoing provisions, or
otherwise, the small business issuer has been advised that in the
opinion of the Securities and Exchange Commission such indemnification
is against public policy as expressed in the Securities Act and is,
therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the small business
issuer of expenses incurred or paid by a director, officer or
controlling person of the small business issuer in the successful
defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the
securities being registered, the small business issuer will, unless in
the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question
whether such indemnification by it is against public policy as
expressed in the Securities Act and will be governed by the final
adjudication of such issue.
(c) Reliance on Rule 430A:
(1) For determining any liability under the Securities Act, to
treat the information omitted from the form of prospectus
filed as part of this registration statement in reliance upon
Rule 430A and contained in a form of prospectus filed by the
issuer under Rule 424(b)(I), or (4) or 497(h) under the
Securities Act as part of this registration statement as of
the time the Commission declared it effective.
(2) For determining any liability under the Securities Act, to
treat each post-effective amendment that contains a form of
prospectus as a new registration statement for the securities
offering in the registration statement, and that offering of
the securities at that time as the initial bona fide offering
of those securities.
II-6
SIGNATURES
In accordance with the requirements of the Securities Act of 1933, the
registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form SB-2 and authorized this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in Indianapolis, Indiana, on June 11, 2002.
PREMIUM FINANCIAL SERVICES &
LEASING, INC., a
Wyoming corporation
/s/ Michael Gooch
----------------------------------------
Michael Gooch, Chairman of the Board and
President (Chief Executive Officer)
Pursuant to the requirements of the Securities Act of 1933, the
Registration Statement has been signed below by the following persons in the
capacities and on the date indicated.
Signature and Title Date
/s/ Michael Gooch June 11, 2002
- ---------------------------------------------------------------
Michael Gooch, Chairman of the Board,
President, Principal Executive Officer
and Director
/s/ Glen Gangi June 11, 2002
- ---------------------------------------------------------------
Glen Gangi, Director and Chief Operating
Officer
/s/ Bret Pafford June 11, 2002
- ---------------------------------------------------------------
Bret Pafford, Vice President
/s/ Dennis Klutzke June 11, 2002
- ---------------------------------------------------------------
Dennis Klutzke, Chief Financial Officer and
Director
II-7
Exhibit 4.1
SPECIMEN OF COMMON STOCK CERTIFICATE
PREMUIM FINANCIAL SERVICE & LEASING, INC.
[________] NUMBER OF SHARES
OF PREMIUM FINANCIAL SERVICES & LEASING, INC.
INCORPORATED UNDER THE LAWS OF THE STATE OF WYOMING
(100,000,000 SHARES COMMON STOCK AUTHORIZED,
$.001 PAR VALUE COMMON STOCK)
CUSIP NUMBER
SEE REVERSE FOR CERTAIN DEFINITIONS
THIS CERTIFIES THAT ________________________________________________________
IS THE RECORD HOLDER OF SHARES OF FULLY PAID AND NON-ASSESSABLE SHARES OF COMMON
STOCK OF PREMIUM FINANCIAL SERVICES & LEASING, INC. TRANSFERABLE ON THE BOOKS OF
THE CORPORATION IN PERSON OR BY DULY AUTHORIZED ATTORNEY UPON SURRENDER OF THIS
CERTIFICATE PROPERLY ENDORSED. THIS CERTIFICATE AND THE SHARES REPRESENTED
HEREBY ARE SUBJECT TO THE LAWS OF THE STATE OF NEVADA, AND TO THE CERTIFICATE OF
INCORPORATION AND BYLAWS OF THE CORPORATION, AS NOW OR HEREAFTER AMENDED. THIS
CERTIFICATE IS NOT VALID UNTIL COUNTERSIGNED BY THE TRANSFER AGENT.
WITNESS the facsimile seal of the Corporation and the signature of its duly
authorized officers.
Dated: ________________
[SEAL OF PREMIUM FINANCIAL SERVICES & LEASING, INC.]
/s / MICHAEL GOOCH /s/ MICHAEL GOOCH
- --------------------------- -----------------
President Secretary
The following abbreviations, when used in the inscription on the face of this
certificate, shall be construed as though they were written out in full
according to applicable laws or regulations:
TEN COM - as tenants in common UNIF GIFT MIN ACT - ____Custodian____
TEN ENT - as tenants by the entireties (Cust) (Minor)
JT TEN - as joint tenants with right under Uniform Gifts to Minors Act
of survivorship and not as tenants in common
1
- ------------------------
(State)
Additional abbreviation may also be used though not in above list.
FOR VALUE RECEIVED, _________hereby sell, assign and transfer unto
PLEASE INSERT SOCIAL SECURITY OR OTHER
IDENTIFYING NUMBER OF ASSIGNEE
- --------------------------
- --------------------------
- --------------------------------------------------------------------------
(Please print or typewrite name and address including zip code of assignee)
- --------------------------------------------------------------------------
- --------------------------------------------------------------------------
- --------------------------------------------------------------------------
Shares of the capital stock represented by the within Certificate, and do
hereby irrevocably constitute and appoint
- --------------------------------------------------------------------------
Attorney to transfer the said stock on the books of the within-named Corporation
with full power of substitution in the premises.
Dated: __________________
NOTICE: The signature to this assignment must correspond with the name as
written upon the face of the Certificate, in every particular, without
alteration or enlargement, or any change whatever.
2
Exhibit 5.1
May 31, 2002
Premium Financial Services & Leasing, Inc.
9229 Delegates Row, Suite 130
Indianapolis, IN 46240
Gentlemen:
I refer to the Registration Statement on Form SB-2, the "Registration Statement"
filed by Premium Financial Services & Leasing, Inc., a Wyoming corporation (the
"Company"), with the United States Securities and Exchange Commission under the
Securities Act of 1933, relating to the re-offer by the selling shareholders
listed therein of 5,000,000 shares of common stock, $0.001 par value per share
(the "Stock"), originally acquired by these shareholders in earlier private
transactions.
As counsel to the Company, I have examined such corporate records,
documents and questions of law as I have deemed necessary or appropriate for the
purposes of this opinion, including a review of applicable federal law. In such
examinations, I have assumed the genuineness of signatures and the conformity to
the originals of the documents supplied to me as copies. As to various questions
of fact material to this opinion, I have relied upon statements and certificates
of officers and representatives of the Company.
Upon the basis of this examination, I am of the opinion that the
5,000,000 shares of Stock offered by the selling shareholders have been validly
authorized, are legally issued, fully paid, and are non-assessable. If
transferred or sold in accordance to the terms of the prospectus, they would
continue to be legally issued, fully paid, non-assessable shares of the Company.
I hereby consent to the filing of this opinion as Exhibit 5.1 to the
Registration Statement and with such state regulatory agencies in such states as
may require such filing in connection with the registration of the Stock for
offer and sale in those states.
Sincerely,
/s/ Kevin M. Sherlock
Law Office of Kevin M. Sherlock
Exhibit 23.1
Included within Exhibit 5.1 (Opinion of Counsel)
Exhibit 23.2
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
We have issued our report dated February 2, 2002 accompanying the
financial statements of Premium Financial Services and Leasing, Inc., which are
incorporated by reference in this Form SB-2 registration statement. We consent
to the incorporation by reference in the registration statement of the
aforementioned report.
/s/ Robison, Hill & Co.
----------------------------
Certified Public Accountants
Salt Lake City, Utah
June 11, 2002