UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
ANNUAL REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
For the fiscal year ended Commission file number
September 30, 2007 33-27042-NY
- ------------------------- ----------------------
BAXX SYSTEMS INC.
(Formerly known as: BARRINGTON SCIENCES CORPORATION)
(Exact name of registrant as specified in its charter)
Nevada
(State or other jurisdiction of incorporation or organization)
Nevada 93-0996537
------ ----------
(State of Incorporation) (I.R.S. Employer
Identification No.)
1107 Bennet Drive
Port Coquitlam, British Columbia, Canada V3C 6H2
---------------------------------------- -------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number: (604) 868-7400
Securities registered pursuant to Section 12(b) of the Act:
NONE NONE
(Title of Each Class) (Name of Each Exchange
on which Registered)
Securities registered pursuant to Section 12 (g) of the Act:
Common
(Title of Class)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934
during the preceding 12 months (or for such shorter period that the registrant
was required to file such reports) and (2) has been subject to such filing
requirements for the past 90 days.
(1) Yes [ X ] No [ ] (2) Yes [ X ] No [ ]
Indicate by check mark if the registrant is a well-known seasoned issuer, as
defined in Rule 405 of the Securities Act. Yes [ ] No [ X ]
Indicate by check mark whether the registrant is a large accelerated filer, an
accelerated filer, or a non-accelerated filer. See definition of "accelerated
filer and large accelerated filer" in Rule 12b-2 of the Exchange Act. (Check
one):
Large accelerated filer [ ] Accelerated filer [ ] Non-accelerated filer [X]
Indicate by check mark whether the registrant is a shell company (as defined in
Rule 12b-2 of the Act). Yes [ X ] No [ ]
The number of shares of the Common Stock of the registrant outstanding as of
September 30, 2007 was 7,022,476. The aggregate common stock held by
non-affiliates on September 30, 2007 was 3,169,938.
2
FORM 10-K INDEX
PART I
Item 1. Description of the Business 10
Item 2. Properties 10
Item 3. Legal Proceedings 10
Item 4. Submission of Matters to a Vote of Security Holders 10
PART II
Item 5. Market for Registrant's Common Equity 10
and Related Stockholders Matters
Item 6. Selected Financial Matters 11
Item 7. Management's Discussion and Analysis of Financial 11
Condition and Results of Operations
Item 7A. Quantitative and Qualitative Disclosures About Market Risk 12
Item 8. Financial Statements and Supplementary Data 12
Item 9. Changes in and Disagreements with Accountants 13
on Accounting and Financial Disclosure
PART III
Item 10. Directors and Executive Officers of Registrant 14
Item 11. Executive Compensation 16
Item 12. Security Ownership of Certain Beneficial Owners and Mgmt 17
Item 13. Certain Relationships and Related Transactions 17
Item 14. Principal Accounting Services and Fees 17
PART IV
Item 15. Exhibits, Financial Statement Schedules, and Reports on Form 8-K
Financial Statements 18
Item 1. Description of the Business
3
Forward-Looking Statements. The following information contains information
concerning possible future results, and accordingly, are what the Securities and
Exchange Commission ("SEC") has defined as forward-looking statements. You
should not consider this information about the future to be either accurate or
reliable. The future performance of the Company is subject to many uncertainties
and risk factors (see "Risk Factors" below for a discussion of major risks).
Although they represent Management's present plans, no assurance can be given
that actual results will approximate current plans.
GENERAL
The company was originally incorporated as Financial Express Corporation on
January 5, 1989 as Harley Equities Ltd.
On October 17, 2002 the company entered into an agreement with Barrington
Sciences International Corporation and changed its name to Barrington Sciences
Corporation. On May 9, 2007 Barrington changed its name to Baxx Systems Inc.
On May 15, 2007 Baxx Systems Inc. USA entered into an agreement with Baxx
Systems Inc. Canada for the acquisition of all the issued and outstanding shares
of Baxx Canada. On July 10, 2007 the shareholders of Baxx Systems Inc. USA
ratified the agreement between the companies and Baxx Systems Canada is now a
wholly owned subsidiary of Baxx USA. Baxx Canada holds patents pending for the
Intelligent Retrofit System(TM) and the commercialization of the product is
starting immediately. The Intelligent Retrofit System(TM) is an alternative
method for window replacement and enhancement. www.inteligentretrofit.com
The company has opened a corporate dealership in Mississauga, Ontario and has
appointed a dealer for the Lower Mainland in British Columbia the company will
also appoint dealers in various locations throughout Canada and the United
States.
The sales and marketing activity has started in Eastern Canada and on the West
Coast by the Dealer. Plans continue to take place to create awareness of the
system and provide an alternative to window replacement for building owners. The
company had a booth at PMXPO 2007 in Toronto the last week of November 2007.
(Property Managers Exposition) The reception and interest in the technology and
product was extremely positive.
The construction of multi story commercial and residential buildings has grown
enormously over the past 40 years, creating huge opportunities for the supply of
new and replacement windows. Buildings that were built in the sixties, seventies
and eighties, and are now in need of upgrading, have created a vast opportunity
for window professionals. About one half of all the windows sold in the United
States and Canada are replacement windows and for the building owner and
property manager, replacing the windows has been the only solution available to
them.
The Company provides a new and very attractive alternative to replacing windows
through the introduction of the Intelligent Retrofit System(TM). The new
Intelligent Retrofit System(TM) will address all of the issues concerned in the
4
need to upgrade. The system will significantly increase the overall performance
of window conditions as well as installation, enhance the overall appearance of
the building, decrease energy costs and provide a more comfortable environment
for the occupants. It will do all of this for less than half the cost of
replacing the windows.
The Intelligent Retrofit System(TM) consists of highly profiled aluminum
extrusions that contain seals and thermal breaks in a component format. These
profiles have been uniquely designed to fit over the top of the existing window
frame, curtain walls and sashes, providing a positive seal and thereby
eliminating the need to remove and replace the existing window.
Industry reports state that the window and door industry in North America will
grow significantly throughout the remainder of this decade and well into the
next one. The Company will focus on this home market primarily, but cannot
ignore the huge opportunities that exist internationally. The construction
industry is the third largest player in the Chinese economy and represents
tremendous market opportunity for the Intelligent Retrofit System"(TM), as does
the rest of the world.
The products are made of extruded aluminum and can be recycled at the end of
their life cycle. They fit the cradle-to-cradle profile of production - use -
recovery - recycle. Use of the IR System will eliminate waste materials, which
are typically taken to the landfill. The Company will make application for
approval under the Energy Star program, offering tax benefits and grants to
building owners who reduce energy use.
The Company will deliver and install its products through a network of trained
and certified dealers, first in North America and later to foreign markets that
present immediate opportunity for the Company and its network.
AVAILABLE INFORMATION
The Company files annual and quarterly reports (Forms 10-K and 10-Q with the
U.S. Securities and Exchange Commission and such other supplemental current
reports (Form 8-K) as may be required or appropriate from time to time.
These reports may be found at http://www.sec.gov/edgar.shtml.
Information about the Company may also be found at the Company's WEB site at
www.intelligentretrofit.com
- ---------------------------
The Company currently has no full time employees. The Company uses the part time
services of 4 individuals.
5
Item 1A. Risk Factors
At this early stage in the development of the Company, an investment in the
Company's Common Stock involves a high degree of risk. You should carefully
consider the risks and uncertainties described below and all other information
contained in the Form 10-K before deciding to invest in the Company. Although
the Company has described the risks and uncertainties that it believes to be
material to its business, it is possible that other risks and uncertainties that
affect the Company's business will arise or become material in the future.
If the Company is unable to effectively address these and other potential risks
and uncertainties, its business, financial condition or results of operations
could be materially and adversely affected. In this event, the value of the
Company's Common Stock could decline and an investor could lose all or part of
the investor's investment.
Lack of Public Market for the Company's Common Stock
There is no public or trading market for the Company's Common Stock, and no
assurance can be given that any such market will develop in the future, or that
a public offering of any of the Company's Common Stock will ever take place. No
broker-dealer presently intends to make a market in the Company's Common Stock.
An investment should be considered a long-term investment.
No Revenues reported to Date and No Guarantee of Revenues to be reported in the
Future
The Company has not achieved any material revenue to date and there is no
guarantee that the Company will achieve revenues in the near future or at any
time. The Company's financial future is premised upon certain factors beyond the
Company's control including: (1) market acceptance of the Company's products;
(2) the quality of the Company's product development; (3) the quality and
pricing of the Company's products; (4) the ability of the Company's competitors
to develop and market comparable or superior products; and (5) the Company's
maintenance and establishment of certain strategic relationships and alliances,
as well as on other factors, many of which may be beyond the Company's control.
If the Company fails to achieve success in these areas or if the Company's
competitors develop superior products, the Company's investors may lose all or
part of their investment in the Company.
Additional Capital Is required and No Guarantee that the Company can obtain such
Capital
In order to continue its operations and its growth strategies, the Company is
seeking additional equity financing. If the Company is unable to obtain adequate
financing, there can be no assurance that the Company will be able to
successfully implement its business plan or meet its working capital
requirements. In addition, the Company may experience rapid growth and may
require additional funds to expand its operations or enlarge its organization.
While the Company intends to explore a number of options in order to secure
alternative financing in the event anticipated financing is not obtained or is
insufficient, there can be no assurance that additional financing will be
available when needed or on terms favorable to the Company. The failure to
obtain sufficient financing may materially affect the Company's ability to
expand or to remain in business.
6
Ability to Attract and Retain High-Quality Management and Employees
The Company's shareholders are fully dependent upon and will rely on the
Company's Management to conduct the Company's business. Success of the business
depends on the skills and efforts of management and, to a large extent, on the
active participation of the Company's executive. The inability to attract,
retain and motivate qualified senior management and other skilled employees will
adversely affect the Company's business.
Ability to Compete Effectively in Competitive Market
If the Company fails to execute its strategy in a timely or effective manner,
its competitors may be able to seize the opportunity the Company has identified.
The Company's business strategy is complex and requires that the Company
successfully and simultaneously complete many tasks, and the failure to complete
any one of these tasks may jeopardize the Company's strategy as a whole.
Certain of the Company's competitors may have substantially greater financial,
technical and marketing resources, larger customer bases, longer operating
histories, greater name recognition and more established relationships in the
industry than the Company. As a result, certain of these competitors may be able
to:
o Adapt to new or emerging developments and to changes in customer
requirements more quickly;
o Take advantage of joint venture, acquisition, alliance, and other
opportunities more readily; and
o Devote greater resources to the marketing and sale of their products and
adopt more aggressive pricing policies than the Company.
Variations in Revenues and Operating Results Expected
As the Company's business develops and expands, the Company may experience
significant quarterly fluctuations in its results of operations. Because of
these fluctuations, comparisons of the Company's operating results from period
to period may not necessarily be meaningful and should not be relied upon as an
indicator of future performance. The Company expects to continue to experience
significant fluctuations in its quarterly and annual results of operations due
to a variety of factors, many of which are outside the Company's control. These
factors include:
o Demand for and market acceptance of the Company's products;
o Introductions of products enhancements by both the Company and by the
Company's competitors;
o Customer retention;
7
o The timing and success of the Company's advertising and marketing efforts;
o costs relating to the expansion of the Company's infrastructure;
o Changes in the Company's pricing policies and the pricing policies of the
Company's competitors;
o Gains or losses of key strategic relationships; and
o Other general and industry specific economic factors.
Reliance on Third-party Suppliers
In general, the Company purchases raw materials and supplies on the open market.
Substantially all such materials are obtainable from a number of sources so that
the loss of any one source of supply would not have a material adverse effect
upon the Company. Additionally, the Company is not dependent on any one supplier
for any of its component parts.
Reliance on Certain Strategic Relationships
The Company's future success is dependent on the development and maintenance of
strategic relationships. If the Company's strategic partners or third parties
fail to perform effectively, the Company may not generate any revenues or a
profit.
No Dividends Declared on Common Stock
The Company currently intends to retain the Company's future earnings, if any,
to finance the growth, development and expansion of the Company's business and
marketing efforts, and accordingly, the Company does not currently intend to
declare or pay any dividends on the Common Stock for the foreseeable future. The
declaration, payment and amount of future dividends, if any, will be at the sole
discretion of the Company's Board of Directors after taking into account various
factors, including, among others, the Company's financial condition, results of
operations, cash flows from operations, current and anticipated capital
requirements and expansion plans, the income tax laws then in effect and any
applicable state law requirements.
Ownership and Control of the Outstanding Common Stock is Concentrated
The Company's directors, executive officers and principal stockholders
beneficially own approximately 57% of the Company's outstanding Common Stock.
See "Principal Stockholders."
Shares Eligible for Future Sale May Adversely Affect the Market
In general, Rule 144 under the Securities Act of 1933, as amended ("Rule 144")
provides that securities may be sold without registration if there is current
public information available regarding the Company and the securities have been
held at least one year. Rule 144 also includes restrictions on the amount of
securities sold and the manner of sale, and requires notice to be filed with the
SEC. Under rule 144, a minimum of one year must elapse between the later of the
date of the acquisition of the securities from the issuer or from an affiliate
of the issuer, and any resale under the Rule. If a one-year period has elapsed
8
since the date the securities were acquired, the amount of restricted securities
that may be sold for the amount of any person within any three-month period,
including a person who is an affiliate of the issuer, may not exceed the greater
of one percent (1%) of the then outstanding shares of common stock of the issuer
or the average weekly trading volume in the over-the-counter ("OTC") market
during the four calendar weeks preceding the date on which notice of sale is
filed with the SEC. If a two-year period has elapsed since the date the
securities were acquired from the issuer or from an affiliate of the issuer, a
seller who is not an affiliate of the issuer at any time during the three months
preceding a sale is entitled to sell the shares without regard to volume
limitations, manner of sale provisions or notice requirements.
Outstanding shares, including shares held by affiliates, will be eligible in the
future for resale in the open market, if any, in compliance with Rule 144. The
sale in the public market of these shares of restricted Common Stock under Rule
144 may depress prevailing market prices of the Common Stock.
No Assurance of Public Trading Market
Although the Company desires to trade on an exchange such as the OTC Bulletin
Board, there can be no assurance that the Company will ever be listed on either
trading market or, if a listing is obtain, that a regular trading market for the
securities will be sustained in either trading market.
The OTC Bulletin Board is an unorganized, inter-dealer, over-the-counter market,
which provides significantly less liquidity than the NASDAQ Stock Market. Quotes
for stocks included on the OTC Bulletin Board are not listed in the financial
sections of newspapers, as are those for the NASDAQ Stock Market. Quotes for
stocks listed on the OTC Bulletin Board may be obtained on an Internet website
maintained by OTC Bulletin Board at www.otcbb.com, which requires investors to
have Internet access. Therefore, prices for securities traded solely on the OTC
Bulletin Board may be difficult to obtain and holders of common stock may be
unable to resell their securities at or near their original offering price or at
any price. Furthermore, the NASD has proposed certain regulation changes that
affect the OTC Bulletin Board, which if and when implemented, will affect both
issuers and market makers. The effect on the OTC Bulletin Board cannot be
determined at this time.
"Penny Stock" Regulations May Impose Certain Restrictions on Marketability of
Securities
A "penny stock" is generally defined by the regulations of the SEC to be any
equity security that is not traded on a national securities exchange or NASDAQ
that that has a market price of less than $5.00 per share or an exercise price
of less than $5.00 per share, subject to certain exceptions. If the Company's
securities are trading at less than $5.00 per share on the OTC Bulletin Board or
the TSX, the Company's securities may become subject to rules that impose
additional sales practice requirements on broker-dealers who sell such
securities to persons other than established customers and accredited investors.
Accredited investors generally have assets in excess of $1,000,000 or an
9
individual annual income exceeding $200,000 or together with the investor's
spouse, a joint income of $300,000. For transactions covered by these rules, the
broker-dealer must make a special suitability determination for the purchase of
such securities and have received the purchaser's written consent to the
transaction prior to the purchase. Additionally, for any transaction involving a
penny stock, unless exempt, the rules require, among other things, the delivery,
prior to the transaction, of a risk disclosure document mandated by the SEC
relating to the penny stock market and the risks associated therewith. The
broker-dealer must also disclose the commission payable to both the
broker-dealer and the registered representative and current quotations for the
securities. If the broker-dealer is the sole market maker, the broker-dealer
must disclose this fact and the broker-dealers presumed control over the market.
Finally, monthly statements must be sent disclosing recent price information for
the penny stock held in the account and information on the limited market in
penny stocks. Consequently, the penny stock rules may restrict the ability of
broker-dealers to sell the Company's securities and may affect the ability of
shareholders of the Company to sell their securities on the secondary market.
Item 2. Properties
----------
The Company does not currently lease or own any properties.
Item 3. Legal Proceedings
-----------------
None
Item 4. Submission of Matters to a Vote of Security Holders
----------------------------------------------------
On June 23, 2007 Form 14 A was mailed to all shareholders which; in
addition to the annual meeting notification asked the shareholders to vote on
the acquisition of Baxx Systems Inc. Canada. At the meeting on July 10, 2007 the
shareholders ratified the agreement. It received unanimous approval.
The following persons were elected as Directors with unanimous approval.
George Moore continued from prior year Lorne Broten continued from prior year
Jim Lambright continued from prior year Les Geirholm new Director
PART II
Item 5. Market for Registrant's Common Equity and Related Stockholder Matters
(A) Stock transactions
The only share transaction in this year is the one reported in Form 14A. There
were no stock sales.
10
Item 6. Selected Financial Data
-----------------------
2007 2006
--------- ---------
Revenues 0 0
Profit (Loss) $(118,328) $ 233,474
Working Capital $ 82,191 $ 111,147
See financial statements and notes for more detail.
Item 7. Management's Discussion and Analysis of Financial Condition and
---------------------------------------------------------------
Results of Operations
----------------------
LIQUIDITY.
At September 30, 2007 the company had working capital of $82,190.00
OPERATIONS.
BUSINESS PLANS FOR 2007/2008
The company operates a corporate owned dealership in Mississauga Ontario. The
part time sales representative has been very active and very successful in
creating interest in the Intelligent Retrofit System(TM). He continues to
develop sales opportunities and to date has created over $3 million of probable
business. The company has now employed a second sales agent who will focus on
school boards and Government accounts. The company has prepared quotes and
estimates for over 50% of this activity and additional quotes will be prepared
within the next few days.
The following are our projections for 2008. It is possible one $500,000 contact
will happen in Q - 2.
11
Budget for 2007 - 2008
- ----------------------
(in 000's) Q-1 Q-2 Q-3 Q-4 Total
- --------------------------------------------------------------------------------
Sales
Direct to Customer 0 0 625 600 1,225
To Dealer 0 0 150 150 300
- --------------------------------------------------------------------------------
Total Sales 0 0 775 750 1,525
- --------------------------------------------------------------------------------
Cost of Sales 0 0 3888 375 763
- --------------------------------------------------------------------------------
Gross Margin 0 0 3888 375 763
- --------------------------------------------------------------------------------
Expenses 59 59 126 132 376
- --------------------------------------------------------------------------------
EBITA (59) (59) 262 243 387
- --------------------------------------------------------------------------------
The company already has approximately $3.5 million of orders in the pipe line.
Of this amount $500,000 has been confirmed for installation in early 2008.
In order to implement the business plan the company needs to raise working
capital. It intends to sell 2.4 million shares in private placements at $0.25
per share.
If the Company is able to raise the needed capital to implement its plans, it is
expected that the Company will increase its employment from the current 4 part
time employees to a total of approximately 5 full time employees by the end of
2008.
Item 7A. Quantitative and Qualitative Disclosures about Market Risk
----------------------------------------------------------
None
The Company does not hold any material market risk sensitive instruments.
Item 8. Financial Statements and Supplementary Data
-------------------------------------------
Reference is made to the financial statements included later in this report
after Item 15.
Item 9. Changes in and Disagreements with Accountants on Accounting and
---------------------------------------------------------------
Financial Disclosure
--------------------
None
12
Item 9A. Controls and Procedures
-----------------------
(a) With the participation of management, including the CEO and CFO, we
conducted an evaluation of our disclosure controls and procedures; as such term
is defined under Rule 13a-14(c) promulgated under the Securities Exchange Act of
1934, as amended (the "Exchange Act"), within 90 days of the filing date of this
Form 10-K. Based on this evaluation, our CEO and CFO concluded that our
disclosure controls and procedures are effective.
(b) There have been no significant changes (including corrective actions with
regard to significant deficiencies or material weaknesses) in our internal
controls or in other factors that could significantly affect these controls
subsequent to the date of the evaluation referenced in paragraph (a) above.
13
PART III
Item 10. Directors and Executive Officers of the Registrant
--------------------------------------------------
The following individuals currently serve as the Directors and executive
officers of the Registrant. Each Director serves for a term of one year or until
their successors have been elected at the annual meeting of shareholders in the
year each director's term expires. The year each director's term expires is
noted below. Under the Company's Articles of Incorporation, three-year staggered
terms are authorized. At the next annual shareholders meeting, it is anticipated
that Directors will be nominated for terms of one, two and three years to
implement this staggered Board provision.
Name Position
- ---- --------
George Moore President & Chief Executive Officer and
Director Term Expires 2009
Lorne Broten C.M.A.,CMC CFO and Director Term Expires 2009
Jim Lambright Director Term Expires 2008
Les Geirholm Director Term Expires 2008
The Officers are elected annually by the Directors and serve at the discretion
of the Board of Directors
George Moore
President & Chief Executive Officer & Director
Mr. Moore was the founder and senior partner of Uni-Ray Inc., a consulting
company specializing in concept and business development. His client list
included many well-known international companies such as IBM, Xerox, Nortel,
Decorating Den Systems and Travelodge. From 1994 to 1996, he served as Director
of Franchise Development for Decorating Den Systems Inc. From 1996 to 1999, Mr.
Moore was Manager of Business Development, Western Canada, for Travelodge
Canada. From 1999 to the present he has served as President and CEO of Baxx.
Lorne H. A. Broten, C.M.A. CMC
Secretary, Treasurer, CFO and Director
Mr. Broten has practiced as a self employed Management Consultant since 1967.
Over the past five years he has been involved with a number of start-up
companies, including Baxx Systems Inc and a privately owned technology company.
In addition he has had a number of consulting jobs for private companies. Mr.
Broten is a Certified Management Accountant and a Certified Management
Consultant.
14
Jim Lambright
Director
Jim Lambright is best known for his long association with the University of
Washington football program. Jim was the Head Coach of the Husky football team.
He won one Pac-10 title and led his teams to four post-season bowl games. After
his coaching career he joined Lou Tice and The Pacific Institute as a Vice
President and Keynote speaker, encouraging and challenging people to build
strong work teams through communication, dedication, commitment, and trust.
Building a team on the field requires the same elements as building a team on
the production floor, in an office, or in the boardroom.
Les Geirholm
Director
Mr. Geirholm spent most of his career in the newspaper industry. From 1985 to
1991 he was General Advertising Manager for the Vancouver Sun and The Province
where he had total responsibility for a department with $40 Million in annual
sales. During his tenure with the Southam Group from 1976 to 1991 he also held
various other management positions. After leaving Southam he purchased three
Academy of Learning College Franchises and became their most successful
franchisee in Canada. In 2001 he sold the business and is now semi retired. He
continues to work in various endeavors including some residential construction.
Section 12 Beneficial Ownership Reporting Compliance.
To the best of Registrant's knowledge, based solely upon a review of Forms 3 and
4 and amendments thereto furnished to Registrant pursuant to Rule 16a-3(e)
during the Company's most recent fiscal year (2007) and Form 5 and amendments
thereto furnished to the Registrant with respect to its most recent fiscal year,
the persons in the following table served as a director or officer of the
Company or owned more than 10 percent of any class of Registrant's equity
securities during Registrant's fiscal year ended September 30, 2007.
During 2007 and through the date of the filing of this Form 10-K, there has been
no trading of the Company's Common Stock or any other securities issued by the
Company. Although the Company will continue to voluntarily file Form 10-Q's for
quarters ending during 2007 and a Form 10-K for 2007, the Company is not aware
of any filing by the Directors, Officers or 10% shareholders until after the
acquisition of Baxx was closed as of May 9, 2007.
The Company believes that all of its Officers and Directors are now current on
their filings of applicable forms.
The following table lists all of the Company Officers, Directors and known 10%
or more shareholders during 2006.
Name Offices Held in 2007 Forms Filed
- ---- -------------------- -----------
George Moore President & CEO, Director from Form 3, March 26, 2003
Dec. 13, 2002
Lorne Broten CFO, Treasurer Director from Form 3, March 26, 2003
December 13, 2002
Jim Lambright Director from March 31, 2006
Les Geirholm Director from July 10, 2007
15
Item 11. Executive Compensation
----------------------
The Company did not pay any compensation to its Officers or Directors during
2006. However, in the interest of complete disclosure, Baxx and its subsidiary
did pay the following compensation to its Chief Executive Officer in 2007 there
were no other Executive Officers who received total compensation of over
$100,000 during 2007.
- ----------------------------------------------------------------------------------------------------------------------------------
Annual Compensation Long-Term Compensation
- ----------------------------------------------------------------------------------------------------------------------------------
Awards Payouts
- ----------------------------------------------------------------------------------------------------------------------------------
Name and Year/ All Other Restricted Securities All
Principle term of Compensation Stock underlying LTIP Other
Position service Salary Bonus (fees) Awards SARs/Options Payouts Compensation
- ----------------------------------------------------------------------------------------------------------------------------------
George Moore,
CEO 2007 42,281*
- ----------------------------------------------------------------------------------------------------------------------------------
* Consulting fees.
The Chief Executive Officer has not received any other compensation, including
any options or other rights to acquire any stock or other interest in the
Company. Neither the Chief Executive Officer nor any other executive officer or
Director of the Company holds any such rights as of the date of this Form 10-K.
16
Item 12. Security Ownership of Certain Beneficial Owners and Management
--------------------------------------------------------------
The following table is current as of September 30, 2007.
- ----------------------------------------- ------------------------------------- --------------------------------------
Name and address of beneficial owner Number of Shares of Percentage
Common Stock Owned Of Ownership
- ----------------------------------------- ------------------------------------- --------------------------------------
George Moore * 803,614 Note 1 11.4%
15286 - 98th Ave
Surrey, BC V$N 2V3
- ----------------------------------------- ------------------------------------- --------------------------------------
Lorne Broten ** 803,518 Note 1 11.4%
1107 Bennet Drive
Port Coquitlam, BC V3C6H2
- ----------------------------------------- ------------------------------------- --------------------------------------
Charles Payne 735,573 Note 1 10.5%
3213 W. Wheeler Street
PBM 249
Seattle, WA 98199
- ----------------------------------------- ------------------------------------- --------------------------------------
Paul Alkhoury 842,698 12.0%
632 McBean Ave
Newmarket, ON L3X 2L5
- ----------------------------------------- ------------------------------------- --------------------------------------
Jim Lambright 667,135 9.5%
16319 - 170th Avenue
Woodinville, WA 98072
- ----------------------------------------- ------------------------------------- --------------------------------------
All Officers and Directors and 3,852,538 54.9%
affiliates as a group
- ----------------------------------------- ------------------------------------- --------------------------------------
* Anne Moore his wife owns 136,479. The balance of the shares are held George
Moore.
** Marc Broten son of Lorne Broten owns 136,383 of these shares and Lorne Broten
does not have control of them. Lorne Broten Family Trust owns the balance of the
shares. Lorne Broten is not a beneficiary of the trust.
*** These shares are owned by Undici Ltd. PO Box 150 Leeward Highway
Providenciales Turks & Caicos Islands B.W.I. Estelle Payne, wife of Charles
Payne, controls this company.
Item 13. Certain Relationships and Related Transactions
----------------------------------------------
None.
Item 14. Principal Accounting Fees and Services
--------------------------------------
(1) Audit Fees
The audit fees for the past two years were $7,500 per year. There have
been no other fees from the Principal Accountant
(2) The company does not have an audit committee.
17
PART IV
Item 15. Exhibits, Financial Statements Schedules and Reports on Form 8-K
----------------------------------------------------------------
(a) The financial statements are set forth below. Financial statement
schedules have been omitted since they are either not required, not
applicable, or the information is otherwise included.
(b) Reports on Form 8-K
On July 12, 2007 the company files Form 8-K wherein the company
acquired all the issued and outstanding shares of Baxx
Systems Inc. (Canada)
On May 14, 2007 Form 8-K was filed wherein the company rolled back the
common shares from 100,000,000 to 19,276,700. Also the company changed
its name from Barrington Sciences Corporation to Baxx Systems Inc.
18
MOORE & ASSOCIATES, CHARTERED
ACCOUNTANTS AND ADVISORS
------------------------
PCAOB REGISTERED
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
-------------------------------------------------------
To the Board of Directors
Baxx Systems, Inc. and Subsidiary
(A Development Stage Company)
We have audited the accompanying balance sheet of Baxx Systems, Inc. and
Subsidiary (A Development Stage Company) as of September 30, 2007 and September
30, 2006, and the related statements of operations, stockholders' equity and
cash flows through September 30, 2007, and Inception on August 22, 2001 through
September 30, 2007. 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 standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audits 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 Baxx Systems, Inc. and
Subsidiary (A Development Stage Company) as of September 30, 2007 and September
30, 2006 and the results of its operations and its cash flows through September
30, 2007, and Inception on August 22, 2001 through September 30, 2007, in
conformity with accounting principles generally accepted in the United States of
America.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note 2 to the
financial statements, the Company has incurred accumulated losses of $4,300,000
through September 30, 2007, which raises substantial doubt about its ability to
continue as a going concern. Management's plans concerning these matters are
also described in Note 2. The financial statements do not include any
adjustments that might result from the outcome of this uncertainty.
/s/ Moore & Associates, Chartered
Moore & Associates Chartered
Las Vegas, Nevada
November 29, 2007
2675 S. Jones Blvd. Suite 109, Las Vegas, NV 89146
(702) 253-7499 Fax (702) 253-7501
-------------------------------------------------------------------------------
19
BAXX SYSTEMS INC. AND SUBSIDUARY
(FORMERLEY BARRINGTON SCIENCES CORP)
CONSOLIDATED FINANCIAL STATEMENTS
(A development stage enterprise)
SEPTEMBER 30, 2007 and 2006
(U.S. DOLLARS)
20
BAXX SYSTEMS INC. AND SUBSIDUARY
(FORMERLY BARRINGTON SCIENCES CORP)
CONSOLIDATED FINANCIAL STATEMENTS
(A development stage enterprise)
SEPTEMBER 30, 2007 and 2006
(U.S. DOLLARS)
INDEX
PAGE
----
CONSOLIDATED BALANCE SHEET F-1
CONSOLIDATED STATEMENT OF OPERATIONS F-2
CONSOLIDATED STATEMENT OF CASH FLOWS F-3
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY F-4
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS F-5 - F-7
21
Baxx Systems Inc.
(Formerly Barrington Sciences Corp)
(A Development Stage Company)
Consolidated Balance Sheet
For the Year Ended September 30
ASSETS
------
2007 2006
----------- -----------
Current assets:
Cash $ 75,656 $ 259,007
Prepaid Expenses & Other $ 2,007 $ --
Inventory $ 6,647 $ --
----------- -----------
Total Current Assets $ 84,310 $ 259,007
----------- -----------
Total assets $ 84,310 $ 259,007
----------- -----------
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
Current liabilities:
Bank overdraft $ -- $ --
Accounts payable $ 2,120 $ 147,860
----------- -----------
Total current liabilities $ 2,120 $ 147,860
----------- -----------
Stockholders Equity
Preferred stock, $.001 par value
25,000,000 shares authorized $ -- $ --
Common stock, $.001 par value,
19,276,700 shares authorized,
4,700,000 shares issued and outstanding 2006 $ 4,700
7,022,476 shares issued and outstanding 2007 $ 7,022
Additional paid in capital $ 4,378,383 $ 4,296,033
(Deficit) accumulated during
d evelopment stage $(4,303,214) $(4,184,886)
----------- -----------
Stockholders Equity $ 82,191 $ 111,147
----------- -----------
Total Liabilities and Stockholders Equity $ 84,311 $ 259,007
----------- -----------
See accompanying notes to financial statements.
F-1
Baxx Systems Inc.
(Formerly Barrington Sciences Corp)
(A Development Stage Company)
Consolidated Statement of Operations
For the Year Ended September 30
2007 2006
----------- -----------
Sales $ -- $ --
Costs and Expenses
Cost of sales -- --
Selling, general and administrative 118,328 (233,474)
----------- -----------
118,328 (233,474)
----------- -----------
Profit (Loss) from operations (118,328) 233,474
Other income (expense) -- --
----------- -----------
----------- -----------
Net (loss) $ (118,328) $ 233,474
----------- -----------
Per share information:
Basic and diluted (loss)
per common share $ (0.02) $ 0.04
----------- -----------
Weighted average shares outstanding 5,272,337 4,700,000
----------- -----------
See accompanying notes to financial statements.
F-2
Baxx Systems Inc.
(Formerly Barrington Sciences Corp)
(A Development Stage Company)
Consolidated Statement of Cash Flows
For the Year Ended September 30
2007 2006
--------- ---------
Net income (loss) $(118,328) $ 233,474
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation -- --
Changes in assets and liabilities:
(Increase) decrease in:
Accounts receivable -- --
Inventory (6,647) --
Prepaid expenses (2,007) --
Increase (decrease) in: --
Accounts payable (145,740) 41,773
Bank overdraft -- --
--------- ---------
Total adjustments (154,394) 41,773
--------- ---------
Net cash provided by (used in)
operating activities (272,722) 275,247
Cash flows from investing activities:
Investment in joint venture (loss) -- 335,758
--------- ---------
Net cash provided by (used in)
financing activities -- 335,758
--------- ---------
Cash flows from financing activities:
Proceeds from sale of common stock 89,372 --
Loans from related parties -- (394,533)
--------- ---------
Net cash provided by (used in)
financing activities 89,371 (394,533)
--------- ---------
Increase (decrease) in cash (183,351) 216,472
Cash and cash equivalents,
beginning of period 259,007 42,535
--------- ---------
Cash and cash equivalents,
end of period $ 75,656 $ 259,007
--------- ---------
See accompanying notes to financial statements.
F-3
Baxx Systems Inc.
(Formerly Barrington Sciences Corp)
(A Development Stage Company)
Consolidated Statement of Changes in Stockholders' Equity
For the Year Ended September 30, 2007
Common Stock Additional
----------------------------- Paid-in
Activity Shares Amount Capital Deficit Total
--------------------------------------------------------------------------------
Balance at inception August 22, 2001 $ -- $ -- $ -- $ --
Shares issued for cash prior to
reverse acquisition 14,120,332 $ 14,120 $ 580,419 $ 594,539
Shares issued for acquisitions
May 2002 at $0.31 per share 4,552,570 $ 4,553 $ 1,420,306 $ 1,424,859
Shares issued for conversion
in September 2002 at $1.22 per share 952,344 $ 952 $ 1,162,117 $ 1,163,069
Net loss for the year ended
September 30, 2002 $ (1,881,306) $ (1,881,306)
--------------------------------------------------------------------------------
Balance September 30, 2002 19,625,246 19,625 3,162,842 (1,881,306) 1,301,161
Shares issued for cash
October 1, 2002 to September 30, 2003 1,339,409 $ 1,340 $ 823,316 $ 824,656
Shares issued for services in
2003 at $0.75 per share 91,266 $ 91 $ 68,359 $ 68,450
Shares issued for reverse merger with
Financial Express Corporation 3,744,701 $ 3,745 $ (3,745)
Shares reacquired and cancelled (644,105) $ (644) $ 644
Net Loss for the year ended
September 30, 2003 $ (2,087,698) $ (2,087,698)
--------------------------------------------------------------------------------
Balance September 30, 2003 24,156,517 24,157 4,051,416 (3,969,004) 106,569
Shares Issued for Cash
October 1, 2003 to September 30, 2004 121,960 $ 121 $ 121,839 $ 121,960
Issued for Finders Fees 3,000 $ 3 $ (3) $ --
Net Loss for the year ended
September 30, 2004 $ (403,297) $ (403,297)
--------------------------------------------------------------------------------
Balance September 30, 2004 24,281,477 24,281 4,173,252 (4,372,301) (174,768)
Shares Issued for cash
October 1, 2004 to September 30, 2005 98,500 $ 99 $ 98,401 $ 98,500
Net Loss for the year ended --
September 30, 2005 $ (46,059) $ (46,059)
--------------------------------------------------------------------------------
Balance September 30, 2005 24,379,977 24,380 4,271,653 (4,418,360) (122,327)
Net Profit for the year ended
September 30, 2006 $ 233,474 $ 233,474
--------------------------------------------------------------------------------
Balance September 30, 2006 24,379,977 24,380 4,271,653 (4,184,886) 111,147
Adjustment to number of shares 1,790 2 (2)
--------------------------------------------------------------------------------
24,381,767 24,382 4,271,651 (4,184,886) 111,147
On April 4, 2007 the company
rolled back the common shares
1 for every 5.18761 (19,681,767) $ (19,682) $ 19,682
--------------------------------------------------------------------------------
Balance April 30, 2004 4,700,000 4,700 4,291,333 (4,184,886) 111,147
Shares issued for Debt
May 4, 2007 300,000 $ 300 $ 85,561 $ 85,861
Balance May 4, 2007 5,000,000 5,000 4,376,894 (4,184,886) 197,008
Shares returned to Treasury (1,488,762) (1,489) 1,489
--------------------------------------------------------------------------------
Balance May 4, 2008 3,511,238 3,511 4,378,383 (4,184,886) 197,008
Shares issued for acquisition
on July 10, 2007 at $0.001 per share 3,511,238 3,511 -- 3,511
--------------------------------------------------------------------------------
7,022,476 7,022 4,378,383 (4,184,886) 200,519
Net Loss for the Year Ended
September 30, 2007 (118,328) (118,328)
--------------------------------------------------------------------------------
Balance September 30, 2007 7,022,476 7,022 4,378,383 (4,303,214) 82,191
--------------------------------------------------------------------------------
See accompanying notes to financial statements.
F-4
BAXX SYSTEMS INC. AND SUBSIDUARY
(FORMERLY BARRINGTON SCIENCES CORPORATION)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(A development stage enterprise)
FOR THE YEARS ENDED SEPTEMBER 30, 2007 and 2006
(U.S. DOLLARS)
NOTE 1 ORGANIZATION AND NATURE OF BUSINESS
Financial Express Corporation ("FEC") was originally incorporated in
the State of Nevada on January 5, 1989, as Harley Equities, Inc.
During December 2002, the Company completed its acquisition of
Barrington Sciences International Corporation's ("BSIC") net assets,
subsequently FEC changed its name to Barrington Sciences Corporation
(together with its subsidiaries, the Company). The acquisition was
accounted for as a reverse takeover and the comparative amounts
represent BSIC's financial position, results of operations and
cash-flows.
On May 9, 2007 the company changed its name from Barrington Sciences
Corporation to Baxx Systems Inc.
The Company is a development stage enterprise and is engaged in the
development and sale of the "Intelligent Retrofit" system for widows
repair.
NOTE 2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Going Concern
The Company experienced significant operating losses since inception
totaling approximately $4,300,000. The consolidated financial
statements have been prepared assuming the Company will continue to
operate as a going concern which contemplates the realization of
assets and the settlement of liabilities in the normal course of
business. No adjustment has been made to the recorded amount of assets
or the recorded amount of classification of liabilities which would be
required if the Company were unable to continue its operations.
Management has prepared an offering memorandum to address this concern
and considers that the Company will be able to obtain additional funds
by equity financing; however there is no assurance of this additional
funding being available.
F-5
BAXX SYSTEMS INC. AND SUBSIDUARY
(FORMERLY BARRINGTON SCIENCES CORPORATION)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(A development stage enterprise)
FOR THE YEARS ENDED SEPTEMBER 30, 2007 and 2006
(U.S. DOLLARS)
NOTE 2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Accounting Estimates
--------------------
Management uses estimates and assumptions in preparing financial
statements in accordance with generally accepted accounting
principles. Those estimates and assumptions affect the reported
amounts of assets and liabilities, the disclosure of contingent assets
and liabilities, and the reported revenues and expenses. Actual
results could vary from the estimates that were used.
Income Taxes
------------
Provisions for income taxes are based on taxes payable or refundable
for the current year and deferred taxes on temporary differences
between the amount of taxable income and pretax financial income and
between the tax basis of assets and liabilities and their reported
amounts in the financial statements. Deferred tax assets and
liabilities are included in the financial statements at currently
enacted income tax rates applicable to the period in which the
deferred tax assets and liabilities are expected to be realized or
settled as prescribed in FASB Statement No. 109, Accounting for Income
Taxes. As changes in tax laws or rates are enacted, deferred tax
assets and liabilities are adjusted through the provision for income
taxes.
Net (Loss) per Share
--------------------
The Company adopted Statement of Financial Accounting Standards No.
128 that requires the reporting of both basic and diluted (loss) per
share. Basic (loss) per share is computed by dividing net (loss)
available to common stockholders by the weighted average number of
common shares outstanding for the period. Diluted (loss) per share
reflects the potential dilution that could occur if securities or
other contracts to issue common stock were exercised or converted into
common stock. In accordance with FASB 128, any anti-dilutive effect on
net (loss) per share is excluded.
Disclosure about Fair Value of Financial Instruments
----------------------------------------------------
The Company estimates that the fair value of all financial instruments
as of September 30, 2007 and 2006, as defined in FASB 107, does not
differ materially from the aggregate carrying values of its financial
instruments recorded in the accompanying consolidated balance sheets.
The estimated fair value amounts have been determined by the Company
using available market information and appropriate valuation
methodologies. Considerable judgment is required in interpreting
market data to develop the estimates of fair value, and accordingly,
the estimates are not necessarily indicative of the amounts that the
Company could realize in a current market exchange.
F-6
BAXX SYSTEMS INC. AND SUBSIDUARY
(FORMERLY BARRINGTON SCIENCES CORPORATION)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(A development stage enterprise)
FOR THE YEARS ENDED SEPTEMBER 30, 2007 and 2006
(U.S. DOLLARS)
NOTE 3 ACQUISITION OF BAXX SYSTEMS INC. (CANADA).
On May 15, 2007 the Company acquired 100% of the outstanding common
stock of Baxx Systems inc. (Canada). Baxx Systems Inc. (Canada) is a
start up operation and the owner of the patent pending "Intelligent
Retrofit' system for repairing windows. The only asset of Baxx Systems
Inc. (Canada) is the patent application. To facilitate this
transaction the Directors of Baxx Systems Inc. (Formerly Barrington
Science Corporation) cancelled and returned all their shares to
treasury. They in turn were issued new shares in Baxx Systems Inc. as
outlined in Form 14A. Baxx Systems Inc. issued 3,511,238 shares to the
shareholders of Baxx Systems Inc. (Canada) for 100% of the outstanding
shares.
NOTE 4 RELATED PARTY TRANSATIONS
During the years, the Company, pursuant to the terms of various
management and service agreements, paid or made provision in the
accounts for the payments of the following amounts to its directors
and officers.
2007 2006
---- ----
Consulting Fees $75,562 $20,400
------- -------
F-7
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the Registrant has duly caused this report to be signed on its
behalf by the undersigned, hereunto duly authorized.
Baxx Systems Inc.
By: /S/ George Moore Date: December 10, 2007
----------------------------
George Moore
President and CEO and Director
Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed by the following persons on behalf of the registrant and in the
capacities and on the date indicated.
NAME & POSITION DATE: December 10, 2007
/S/ George Moore
- --------------------
George Moore
President CEO and Director
/S/ Lorne Broten
- --------------------
Lorne Broten
CFO, Secretary Treasurer and Director
/S/ Les Geirholm
- --------------------
Les Geirholm
Director
/S/ Jim Lambright
- --------------------
Jim Lambright
Director