AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MARCH 16, 2000
REGISTRATION NO. 333-____________
U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
____________________
FORM S-8
REGISTRATION STATEMENT
Under
THE SECURITIES ACT OF 1933
____________________
PINNACLE BUSINESS MANAGEMENT, INC.
(Exact Name of Registrant as Specified in Its Charter)
NEVADA 91-1871963
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
2963 Gulf to Bay Boulevard, Suite 265
Clearwater, Florida 33759
(Address of Principal Executive Offices, Including Zip Code)
Consulting Agreement
(Full Title of the Plan)
____________________
Jeffrey G. Turrino
2963 Gulf to Bay Boulevard, Suite 265
Clearwater, Florida 33759
(727) 669-7781
(Name, Address, and Telephone Number of Agent for Service)
CALCULATION OF REGISTRATION FEE
Title of Securities Amount to be Proposed Maximum Proposed Maximum Amount of
to be Registered Registered Offering Price per Share Aggregate Offering Price Registration Fee
Common Stock,
par value $0.001 1,525,000 $ 0.25 (1) $381,250 $100.65
(1) Estimated solely for the purpose of computing the amount of the
registration fee pursuant to Rule 457(c) based on the closing market price on
March 9, 2000.
1
EXPLANATORY NOTE
Pinnacle Business Management, Inc., ("PCBM") has prepared this Registration
Statement in accordance with the requirements of Form S-8 under the Securities
Act of 1933, as amended (the "1933 Act"), to register certain shares of common
stock, $.001 par value per share, issued to certain selling shareholders.
Under cover of this Form S-8 is a Reoffer Prospectus PCBM prepared in accordance
with Part I of Form S-3 under the 1933 Act. The Reoffer Prospectus may be
utilized for reofferings and resales of up to 1,525,000 shares of common stock
acquired by the selling shareholders.
2
PART I
INFORMATION REQUIRED IN THE SECTION 10(A) PROSPECTUS
PCBM will send or give the documents containing the information specified in
Part 1 of Form S-8 to employees or consultants as specified by Securities and
Exchange Commission Rule 428 (b) (1) under the Securities Act of 1933, as
amended (the "1933 Act"). PCBM does not need to file these documents with the
commission either as part of this Registration Statement or as prospectuses or
prospectus supplements under Rule 424 of the 1933 Act.
3
REOFFER PROSPECTUS
PINNACLE BUSINESS MANAGEMENT, INC.
2963 GULF TO BAY BOULEVARD, SUITE 265
CLEARWATER, FLORIDA 33759
(727) 669-7781
1,525,000 SHARES OF COMMON STOCK
The shares of common stock, $0.001 par value per share, of Pinnacle Business
Management, Inc. ("PCBM" or the "Company") offered hereby (the "Shares") will be
sold from time to time by the individuals listed under the Selling Shareholders
section of this document (the "Selling Shareholders"). The Selling Shareholders
acquired the Shares pursuant to a Consulting Agreement for consulting services
that the Selling Shareholders provided to PCBM.
The sales may occur in transactions on the NASD Over-The-Counter market at
prevailing market prices or in negotiated transactions. PCBM will not receive
proceeds from any of the sale the Shares. PCBM is paying for the expenses
incurred in registering the Shares.
The Shares are "restricted securities" under the Securities Act of 1933 (the
"1933 Act") before their sale under the Reoffer Prospectus. The Reoffer
Prospectus has been prepared for the purpose of registering the Shares under the
1933 Act to allow for future sales by the Selling Shareholders to the public
without restriction. To the knowledge of the Company, the Selling Shareholders
have no arrangement with any brokerage firm for the sale of the Shares. The
Selling Shareholders may be deemed to be an "underwriter" within the meaning of
the 1933 Act. Any commissions received by a broker or dealer in connection with
resales of the Shares may be deemed to be underwriting commissions or discounts
under the 1933 Act.
PCBM's common stock is currently traded on the NASD Over-the-Counter Bulletin
Board under the symbol "PCBM."
________________________
This investment involves a high degree of risk. Please see "Risk Factors"
beginning on page 17.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR DETERMINED WHETHER
THIS REOFFER PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
________________________
March 10, 2000
4
TABLE OF CONTENTS
Where You Can Find More Information 5
Incorporated Documents 5
The Company 7
Risk Factors 17
Use of Proceeds 20
Selling Shareholders 21
Plan of Distribution 21
Legal Matters 22
Experts 22
________________________
You should only rely on the information incorporated by reference or provided in
this Reoffer Prospectus or any supplement. We have not authorized anyone else
to provide you with different information. The common stock is not being
offered in any state where the offer is not permitted. You should not assume
that the information in this Reoffer Prospectus or any supplement is accurate as
of any date other than the date on the front of this Reoffer Prospectus.
WHERE YOU CAN FIND MORE INFORMATION
PCBM is required to file annual, quarterly and special reports, proxy statements
and other information with the Securities and Exchange Commission (the ASEC@) as
required by the Securities Exchange Act of 1934, as amended (the A1934 Act@).
You may read and copy any reports, statements or other information we file at
the SEC's Public Reference Rooms at:
450 Fifth Street, N.W., Washington, D.C. 20549;
Seven World Trade Center, 13th Floor, New York, N.Y. 10048
Please call the SEC at 1-800-SEC-0330 for further information on the Public
Reference Rooms. Our filings are also available to the public from commercial
document retrieval services and the SEC website (http://www.sec.gov).
INCORPORATED DOCUMENTS
The SEC allows PCBM to "incorporate by reference" information into this Reoffer
Prospectus, which means that the Company can disclose important information to
you by referring you to another document filed separately with the SEC. The
information incorporated by reference is deemed to be part of this Reoffer
Prospectus, except for any information superseded by information in this Reoffer
Prospectus.
5
PCBM's Report on Form 8-K, dated March 6, 2000 is incorporated herein by
reference. PCBM also incorporates herein by reference the Form 10-SB, as
amended, filed by MAS Acquisition XIX Corp., the Company's predecessor,
originally filed on August 31, 1999. In addition, all documents filed or
subsequently filed by the Company under Sections 13(a), 13(c), 14 and 15(d) of
the 1934 Act, before the termination of this offering, are incorporated by
reference.
The Company will provide without charge to each person to whom a copy of this
Reoffer Prospectus is delivered, upon oral or written request, a copy of any or
all documents incorporated by reference into this Reoffer Prospectus (excluding
exhibits unless the exhibits are specifically incorporated by reference into the
information the Reoffer Prospectus incorporates). Requests should be directed to
the Chief Financial Offer at PCBM at PCBM's executive offices, located at 2963
Gulf to Bay Boulevard, Suite 265, Clearwater, FL 33759. PCBM's telephone number
is (727) 669-7781.
6
THE COMPANY
BUSINESS
This Reoffer Prospectus contains certain forward-looking statements within the
meaning of the federal securities laws. Actual results could differ materially
from those projected in the forward-looking statements due to a number of
factors, including those set forth under "Risk Factors" and elsewhere in this
Reoffer Prospectus.
SUMMARY
Pinnacle Business Management Inc. ("Pinnacle" or the "Company") is a
holding company with two subsidiaries actively engaged in consumer lending and
deferred deposit services. Pinnacle is a Nevada corporation chartered in May
1997.
Originally, Pinnacle was a wholly-owned subsidiary of 300365 BC, Ltd. d/b/a
Peakers Resources Company, a Canadian corporation (the "Predecessor").The
Predecessor was organized in 1986 to conduct mining operations, but never
actively engaged in business. On May 15, 1997, the shareholders of the
Predecessor agreed to exchange all the shares of the Predecessor with the shares
of the Company on a share-for-share basis. The Predecessor became inactive and
its business was wound up. United States residents now own the majority of
Pinnacle's shares.
In 1997, Pinnacle acquired Fast Title Loans, Inc.("Fast Title"). It did so
by forming JTBH Corporation, a wholly owned subsidiary, which merged with Fast
Title on a share for share basis. Fast Title was the surviving entity and is
now a wholly owned subsidiary of Pinnacle.
Fast Title is a consumer lender chartered in Florida in April, 1996. It
makes relatively short term loans on the basis of a security interest in vehicle
titles.
In 1998, Pinnacle formed Fast PayCheck Advance of Florida, Inc.("Fast
PayCheck"), also a wholly owned subsidiary. Fast PayCheck is a Florida
corporation. Fast Paycheck offers deferred deposit services to individual
customers who find it difficult to obtain credit.
In 1998, Pinnacle formed Summit Property, Inc. ("Summit Property") a
Florida corporation. Summit Property is inactive.
BUSINESS OF THE ISSUER
Pinnacle is a Company in transition. In the past, Fast Title, its consumer
lending subsidiary, has generated all of its revenues. Fast Title lends money
short-term, secured by the borrower's vehicle title. Certain local ordinances
recently enacted create a hostile environment for the title loan business. As a
7
result, the Company plans to discontinue its efforts to expand the Fast Title
business. It plans, instead, to concentrate on the Fast PayCheck business and
its potential for growth.
Fast PayCheck offers payday deferred deposit services to individuals. The
maximum amount of a deferred deposit is $500. The Company has recently signed an
agreement to offer Fast PayCheck services through Mail Boxes Etc. USA, Inc.
stores ("MBE Agreement"). Management is very optimistic about the potential for
growth in this business endeavor. Operations are expected to render a yield to
the Company, which should grow conservatively for several years into the future.
Mail Boxes Etc. USA, Inc. ("MBE") has over 3000 locations in the United States.
Locating in even a fraction of these stores could greatly expand the business of
Fast PayCheck.
Illustrated below is an estimate of the percentage of total revenue
contributed to Pinnacle by Fast Title operations compared to Fast PayCheck
operations;
1997 Fast title = 100% Fast PayCheck = 0%
1998 Fast title = 99% Fast PayCheck = 1%
1999 Fast title = 95% Fast PayCheck = 5%
In 1999, the Company has spent approximately $100,000 on new proprietary
software to process its payday deferred deposit operations. This system also
services the title loan business; it accepts and processes all information
necessary for Pinnacle' s bookkeeping system.
These costs are incurred at the same time the cash flow from Fast Title is
decreasing. Management believes that any negative impact on revenues will be
temporary. Net income should increase as the new operations begin generating
revenues.
Fast Title
- -----------
Fast Title loans money on motor vehicle titles. It markets loans to
individuals and businesses with poor or non-existent credit. Fast Title
provides fast access to short-term cash loans. Borrowers pledge the title of
their vehicle as collateral. The Company will not accept a vehicle as
collateral unless there are no other outstanding liens on the vehicle. No
credit checks on the individual are required. The individual generally retains
the use of his vehicle during the loan period.
Loan amounts are generally less than 40% of the blue book value of the
collateral. The maximum interest rate is 22% per month, the maximum allowed by
Florida law. The average net yield to the Company is 12%. The average loan is
$500.00. The average term of a loan is four months, but the term may extend to
a year. In Florida, the law provides that a creditor may keep any surplus
realized from the repossession and the sale of the vehicle. Fast Title,
however, does not repossess vehicles on a regular basis. It is the policy of the
8
Company to repossess only if there is no activity on the account for 60 days,
and only after efforts are made to secure repayment of the loan. In 1999, Fast
Title netted approximately $1,200 from the sales of repossessed vehicles.
Fast Title recently consolidated its eight store front locations, and now
markets its services through six store locations, telephone solicitation and
newspaper and Yellow Pages advertisements. Management plans to keep the six
store locations open but does not intend to open any more stores. Fast Title
holds a consumer-lending license from the State of Florida pursuant to Florida
Statutes Chapter 538. This license requires Pinnacle to register and pay a fee
for each location. Pinnacle is subject to the pawn broker laws of Florida.
Fast Title Competition
Fast Title's primary competitor is Florida Title Loans, Inc.("Florida
Title"). Florida Title has 300 locations in the Southeast and has a long
operating history. Florida Title has a loan to value ratio of 33% of the
wholesale value of the collateral. Fast Title has a loan to value ratio of up
to 50% of the wholesale value of the collateral. Fast Title therefore competes
with the larger distribution base by attracting a wider market.
Fast Title's second major competitor is Speedy Cash. Speedy Cash has
approximately 200 locations. Speedy Cash is located in the states of Florida,
Georgia, Mississippi, South Carolina and North Carolina. Management believes
that it effectively competes with Speedy Cash. The presence of these competitor
companies is favorable for Fast Title. These companies advertise heavily. This
publicity educates consumers about the title loan method of borrowing cash.
Fast Title to some extent experiences the same seasonal fluctuations that any
consumer lending facility would experience. It may experience a slight increase
in business during the Christmas season, for example. It is not, however,
considered a seasonal business. Any such fluctuations are relatively minor and
are not considered by Management in the overall planning and budgeting for the
Company.
Fast PayCheck
- --------------
Fast PayCheck offers deferred deposit services to individuals with poor or
non-existent credit or who need short-term financing. Fast PayCheck provides
fast access to short-term cash. Customers complete an application. If accepted,
the customer writes a post-dated personal check to Fast PayCheck. Fast PayCheck
then issues the customer a debit card. Pinnacle holds the personal check until
the customer's payday, and then electronically debits the individual's bank
account. The transaction is considered an exchange of a payment instrument for a
payment instrument. As a result, Fast PayCheck is not considered a paycheck
lender, but a money transmitter. No credit checks on the individual are
required.
Fast PayCheck charges the customer a fee of 10% of the check amount and a
$5 transaction fee. The maximum amount of a loan is $500.00. The average loan
is $200. The maximum term of a loan is two weeks. The Company receives an
average return of 25% per month on these transactions.
9
Pinnacle has a contract with Comdata Network, Inc. d/b/a Comdata
Corporation ("Comdata") and Master Card to issue the borrower the pre-credited
private label debit card for the amount of the personal check minus the fees
charged. Distribution of funds to the customer is only made through this debit
card system. This insures maximum security at the store locations by
eliminating the need for each store to carry large amounts of cash. The Company
keeps a bank account by agreement with Master Card. This account generally
keeps a balance of up to $50,000. Purchases made by a customer's use of the
debit card are deducted from Pinnacle's Master Card cash account. If Pinnacle
does not keep sufficient cash in the account, Master Card will not honor debit
card purchases.
Pinnacle also has a remarketing agreement with Comdata. This allows
Pinnacle to offer the card to its competitors and receive transactional revenue
from the card usage. At the present time, the Company receives little income
from this agreement. Pinnacle also receives recurring revenue through a per
transaction fee associated with the customer's use of the Fast PayCheck debit
card.
In third quarter 1999, Fast PayCheck and Pinnacle signed a three year
contract with MBE to offer Fast PayCheck services in MBE locations throughout
the United States. MBE is a franchiser of retail outlets ("MBE Centers") which
provide a variety of postal, business and communication services to businesses
and the general public. Through this Agreement, Fast PayCheck may offer its
services in any participating MBE Centers. To participate, an individual
franchisee must agree to offer Fast PayCheck services in their MBE Center. The
MBE Agreement carries an option to renew upon terms agreed to by MBE, Pinnacle
and Fast PayCheck.
Under the terms of the MBE Agreement, customers complete the
application and provide it to MBE personnel. MBE Centers fax the documents to
Pinnacle's call center and distribute a card to the borrower at the MBE
location. MBE is paid $3.50 per transaction. Management intends the call center
to receive the fax application from the MBE centers, qualify the application,
enter the customers information into the computer, re-fax the approval or denial
and activate the debit card for the customer.
Currently, Fast PayCheck offers its services in Fast Title and Florida MBE
Center locations. Pinnacle intends to expand into a multi-state operation in the
year 2000 offering services in MBE Centers. By the end of 2001, Management
plans to expand into every MBE location in states with laws favorable to the
provisions of Fast PayCheck services. Several states have usury laws, for
example, that would prohibit Fast PayCheck practices. Management estimates that
as many as 2800 MBE stores are located in favorable states. At this time,
Pinnacle has applied for the appropriate licenses in Idaho, Missouri, Utah and
Indiana.
10
Fast PayCheck holds a license from the State of Florida Department of
Banking and Finance pursuant to the provisions of Florida Statutes 560.200
through 560.213.
Fast PayCheck Competition
Fast PayCheck competes with paycheck lenders and check cashers. Its largest
competitor is Ace Check Cashing. Ace has approximately 1,800 locations
throughout the United States. However, Ace cashes checks. Fast PayCheck can
offer a customer the use of funds before the paycheck is actually deposited.
Therefore, Ace's competitive effect is minimal.
Several companies offer payday advance loans. These companies are
considered lenders and must comply with consumer lending laws to a greater
extent than Fast PayCheck. These companies have received a great deal of
negative press because they will "roll" the loaned amount into a greater loan
term with the payment of additional fees. Many customers find themselves having
to borrow against their paycheck in this manner every pay period. Fast PayCheck
will not roll any amounts forward. Fast PayCheck will not credit the debit card
unless all prior amounts have been paid through the electronic debit. As a
result, a true comparison of Fast PayCheck and traditional paycheck advance
lenders cannot be made.
Fast PayCheck's payday advance business has not operated for a full fiscal
year. Presently, Management does not know whether Fast PayCheck's business will
be seasonal in nature. Management anticipates a small increase in business
during the Christmas season as individuals need cash to meet holiday expenses.
EMPLOYEES
Pinnacle has four full time employees. Fast Title employs 11 people. Of
the Fast Title employees, eight manage the stores and three are administrators
in the corporate office.
Fast PayCheck currently employs 15 people. Currently, ten employees operate
the call center. Management is currently hiring more employees to man the call
center. More people will be added as additional business is added from the MBE
Agreement. At this time, it is not possible to estimate the amount of business
the MBE Agreement will generate or the resulting number of employees needed by
Fast PayCheck.
Both Michael Bruce Hall and Jeff Turino have employment agreements with
the Company.
REGULATIONS
- -----------
GENERAL. The Company is, or expects to be, subject to regulation in several
--------
jurisdictions in which it operates, including jurisdictions that regulate check
cashing fees, or require the registration of check cashing companies or money
transmission agents. The Company is also subject to regulation in jurisdictions
where it offers title loans. In addition, Pinnacle is subject to federal and
11
state regulation relating to the reporting and recording of certain currency
transactions.
STATE REGULATIONS. Florida law requires licensing and regulates check
-------------------
cashing fees. The ceiling on fees is in excess or equal to the fees charged by
the Company.
As the Company's operations expand, check cashing fee ceilings in
additional jurisdictions could have an adverse effect on the Company's business.
Existing fee ceilings could restrict the ability of the Company to expand its
operations into certain states.
The Company must be licensed as a check casher in all jurisdictions in
which it offers payday deferred deposit services and must comply with the
regulations governing those services. In addition, in some jurisdictions, check
cashing companies or money transmission agents are required to meet minimum
bonding or capital requirements and are subject to record-keeping requirements.
FEDERAL REGULATIONS.
---------------------
The Money Laundering Suppression Act of 1994 added a section to the Bank
Secrecy Act requiring the registration of businesses, like the Company, that
engage in check cashing, currency exchange, money transmission, or the issuance
or redemption of money orders, traveler's checks, and similar instruments. The
purpose of the registration is to enable governmental authorities to better
enforce laws prohibiting money laundering and other illegal activities. The
registration requirement was suspended pending the adoption of regulations
implementing the statute, and in May 1997, the Financial Crimes Enforcement
Network of the Treasury Department ("FinCEN") proposed regulations for comment.
In August 1999, FinCEN announced the adoption of final implementing regulations,
effective September 20, 1999. The regulations require "money services
businesses" to register with the Treasury Department, by filing a form to be
adopted by FinCEN, by December 31, 2001, and to re-register at least every two
years thereafter. The regulations also require that a money services business
maintain a list of names and addresses of, and other information about, its
agents and that the list be made available to any requesting law enforcement
agency (through FinCEN). That agent list must first be maintained by January 1,
2002, and must be updated at least annually. Though FinCEN must adopt further
regulations and procedures to more fully implement these requirements, based on
the newly adopted regulations, management of the Company does not believe that
compliance with these requirements will have any material impact on the
Company's operations.
In November 1999, the Federal Reserve Board proposed new regulations that
would include "payday loans" as credit for purposes of the federal Truth in
Lending Act. The Company's lending activities may be subject to the new
regulations, if the Company's activities are included in the definition of
payday lending. The proposed regulations require that payday lenders clearly
disclose the interest rate of the loan, calculated on an annual basis, to
consumers applying for credit. The Company expects that the effect of the
proposed regulations on the Company will be minimal because Florida law already
requires such disclosures, and the Company complies. The regulations, if
adopted, would become effective October 1, 2000. Compliance with the proposed
regulations is optional until that date.
12
To the extent that use of the debit card falls within the Electronic Funds
Transfer Act, Federal Reserve Board Regulation E will apply to Fast PayCheck
transactions. These govern electronic funds transfers ("EFT") between customer
accounts. Primarily, the Act and regulation 1) require EFT merchants to provide
customers with certain disclosures, 2 detail the circumstances under which an
EFT merchant may issue a card, 3) limit a customer's liability for a lost or
stolen card, and 4) require EFT merchants to follow certain dispute resolution
procedures.
MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION.
Management's discussion is based on an analysis of the audited year end
financial statements for 1997 and 1998, and unaudited financial statements for
year end 1999.
Plan of Operation
Operating expenses for the Company are approximately $1,100,000 annually.
Management expects that expenses will be greater in the near future, due to the
costs of expansion of Fast PayCheck services.
The Company has suffered substantial net operating losses in each of 1997
and 1998. Management expects audited 1999 financial statements to also indicate
a net loss. In addition, the Company has a $100,000 note payable with an
investor that expired May 14, 1999.The investor has not yet called this loan.
There is no agreement as of yet to the terms of a possible reinstatement.
Moreover, the Company has approximately one million dollars in debt that will
mature between February 28, 2000 and December 31, 2000. At this time, it is
unlikely that the Company will have adequate capital available to repay the
debt. If these loans are called, the Company's financial condition will be
further negatively impacted. The Company is also defending various lawsuit
claims which, if lost, would negatively impact the Company. Even if the outcome
is positive, the cost to the Company in legal fees and employees' time is
substantial.
To meet these needs over the next twelve months, Management is pursuing
both the reduction of debt and the increase of revenue. The Company is
negotiating with investors to either extend the existing obligations or convert
the debt to equity. Additionally, Management is vigorously defending the
lawsuits that have been filed. Management believes that the Company is entitled
to certain offsets against the claims in litigation. Further, Management is
seeking an alliance partner or banking institution that could offer long-term
debt to carry the expenses of the Company until revenues are increased.
13
At the same time, Management expects revenues to increase as the MBE
Centers begin processing Fast PayCheck services. Any increase will be affected
by the length of time it takes to complete the licensure process in each state,
and the agreement of each of the franchisees to start servicing Fast PayCheck
customers. The number of customers who participate at each location will also
affect any increase.
Further, future income could be severely affected by new federal laws,
various state laws and/or local ordinances that Fast PayCheck may encounter.
For example, should federal interest rates continue to rise, the cost of funds
to Fast PayCheck may increase. State usury laws may limit any increase Fast
PayCheck can pass through to its customers. This could effectively reduce Fast
PayCheck's margin and therefore reduce revenues.
Past and Future Financial Condition
Total Assets of the Company are $1,426,508 at year end 1997; $1,606,122 at
year end 1998, and $ 1,749,799 at year end 1999. The slight increase is
attributable primarily to the acquisition of computer equipment and software.
The deferred tax benefit realized in 1998 and 1999 accounts for the increase as
well. Liabilities, however, have substantially increased from $1,724,497 at year
end 1997 to $2,033,959 at year end 1998, and $2,078,376 at year end 1999. The
increase is due in large part to maturing long term debt. This results in a
current stockholders' deficit as reflected in the financial statements.
Management cautions that the current financial condition of the Company will
continue in its weak condition until and unless the business envisioned in the
MBE Agreement materializes.
Results of Operations
Revenue has decreased from $1,459,026 at year end 1997 to $633,478 year end
1998. In 1999, Management estimates revenue of $409,341. This is due to the
loss of business experienced by Fast Title. Unfortunately, operating expenses
continue to increase over the same time period, from $1,063,372 year end 1997 to
$1,101,311 year end 1998. In 1999, year end operating figures are estimated to
be $1,553,392. The amount of expenses is reasonable considering the expansion
and litigation expenses the Company has borne. As a result, Management believes
that the financial condition of the Company will improve substantially by 2002.
Liquidity
Maintaining sufficient liquidity is a material challenge to Management at
the present time. The Company has customer loans receivable of $1,001,658 in
1997; $804,708 in 1998; and $839,851 in 1999. With the application of net
allowance for doubtful accounts, this results in a net loans receivable of
$870,965 in 1997; $743,877 in 1998; and $831,268 in 1999. Further, the Company
owns a note receivable dated December 29, 1997 for $25,000 with 18% per annum
interest. The principal balance and accrued interest is due and payable on the
earlier of 1) a private placement being completed in whole or part including but
not limited to, any escrow disbursements of any funds to the maker, or 2) March
27, 2000. There are no payments received in 1997,1998, or 1999.
14
In August 1999, the Company secured a national contract with Comdata. This
contract allows the distribution of the Fast PayCheck debit card at the point of
sale locations. As a result, the Company is in negotiation with its competitors
to allow them to use the debit card system. This may generate revenue on a
broader basis and increase Company value.
Capital Expenditures
The Company is engaged in consumer finance and electronic technology
development. As a result, capital expenditures are not substantial. The
facilities are leased. Property and equipment net costs are $70,902 in 1997,
$101,761 in 1998, and $169,417 in 1999. This represents approximately 6% of
total operating expenses in 1997; 9% in 1998, and 10% in 1999. Substantially all
of the value of the Company is not in physical assets but in the ongoing
operations of the Company. Should the Company be liquidated, there are few
assets to distribute to creditors or shareholders.
Non-cancelable lease commitments run until 2002. The total amount due under
the lease terms, however, for 2000 is $37,373. Rent and related expenses under
operating leases amount to $110,923 for 1997; $83,792 for 1998, and $167,641 for
1999. The Company is operating various locations on a month to month basis.
Litigation
The Company is in the process of settling litigation involving a claim in
Bankruptcy by First American Reliance, Inc. against the Company for $800,000
Including 9% interest, for amounts loaned and advanced by First American
Reliance, Inc. The Company had asserted a defense and set off alleging monies
due to Pinnacle from stock subscriptions in 1998, which were never turned over
to the Company. Pinnacle accrued a liability for $538,276 in 1998 and $355, 755
in 1997, respectively. The financial condition of the Company will benefit
greatly from settlement of the suit without liability to the Company.
Tyler Jay & Company, L.L.C. and First American Reliance, Inc.
- ----------------------------------------------------------------------
The first proceeding regarding Tyler Jay is an adversary proceeding brought by
the Trustee in Bankruptcy of First American Reliance, Inc.("the Debtor") in the
United States Bankruptcy Court, Western District, New York, BK Case No.
98-23906, AP No. 99-2186, entitled Douglas J. Lustig, as Trustee v. Pinnacle
-----------------------------------------
Business Management, Inc., and Fast Title Loans, Inc. The trustee is seeking to
- ----------------------------------------------------
recover purported loans from the Debtor to Fast Title and/or Pinnacle, in a sum
of approximately $800,000. An answer to the suit has been filed and the parties
are currently in the discovery process. Management has agreed to determine the
actual amount of the loans against proceeds of a private placement diverted by
the Debtor's principal using a separate corporation. Management believes that
the setoff for funds diverted during the private placement will equal or exceed
the amounts loaned to Fast Title.
In the second proceeding, Pinnacle and Fast Title Loans are defendants in a
pending civil action instituted in 1999, in Erie County, New York, entitled
Tyler Jay & Company, L.L.C. v. Fast Title Loans, Inc. and Pinnacle Business
- --------------------------------------------------------------------------------
Management, Inc., Index No. I-1999/5697. Plaintiffs asserts a claim for fees
- ------------------------------------------
15
and commissions arising from loans made by the Debtor in the previously
described adversary proceeding and sums lost by Tyler Jay allegedly because
Tyler Jay was not permitted to conduct the private placement noted above. Tyler
Jay claims that it is owed certain monies and stock options, which damages are
allegedly in excess of $600,000. Fast Title and Pinnacle have filed a motion to
dismiss the case alleging that the New York courts do not have jurisdiction over
them in this matter. They have also asserted that Tyler Jay is not entitled to
recovery since the agreed-upon services were not provided. Moreover, Fast Title
and Pinnacle have filed a counterclaim seeking $34,000, the sum paid to Tyler
Jay, on the basis that Tyler Jay's fraudulent representations and breach of
fiduciary duty damaged them.
Peter Polland and Euro Products
- -----------------------------------
By letter dated October 14, 1999, addressed to Fast Title and Pinnacle, a
law firm representing Peter Pollard and Euro Products Limited demanded payment
of the sum of $300,000 with accrued interest for default in payment obligations
relating to certain business arrangements. These obligations are evidenced in a
promissory note in the principal amount of $300,000 dated June 28, 1999,
executed by Pinnacle in favor of Euro Products Limited. Fast Title is neither a
party to nor a guarantor of the promissory note. The demand was reduced to
$200,000 by reason of a payment of $100,000 that was made. Pinnacle's counsel
responded to said demand by letter dated November 5, 1999, which proposed a
schedule as to payment by Pinnacle of the $200,000 outstanding balance owing
under the note. As of the date hereof, Peter Pollard and Euro Products have not
responded, in writing or otherwise. Neither Pinnacle nor Fast Title has been
served with citation of a lawsuit.
Acquisition of MAS XIX Consulting Agreement
On March 3, 2000 the Company entered into a consulting agreement between the
Company and the following individual professional persons who acted as
consultants to the Company: M. Richard Cutler, Brian A. Lebrecht, Vi Bui, James
Stubler, and Samuel Eisenberg for services involving consultation, advice and
counsel with respect to the negotiation and completion of the stock exchange
between Pinnacle and MAS XIX. In addition to cash compensation, the
agreement calls for issuance of a total of 1,500,000 shares of Pinnacle
to be issued to the consultants together with an obligation for the Company
to register such shares on Form S-8.
Property
The Company lease certain office space and store front facilities. It has
made no investments in real estate, real estate mortgages, or securities or
interest in persons primarily engaged in real estate activities. There is no
plan to do so in the future.
16
RISK FACTORS
In this section we highlight some of the risks associated with our business
and operations. Prospective investors should carefully consider the following
risk factors when evaluating an investment in the common stock offered by this
Reoffer Prospectus.
RISKS RELATED TO OUR BUSINESS
YOU MAY BE UNABLE TO EFFECTIVELY EVALUATE OUR COMPANY FOR INVESTMENT PURPOSES
BECAUSE OUR BUSINESS HAS EXISTED FOR ONLY A SHORT PERIOD OF TIME.
We began operations in 1997. As a result, we have only a limited operating
history upon which you may evaluate our business and prospects. In addition,
you must consider our prospects in light of the risks and uncertainties
encountered by companies in an early stage of development in new and rapidly
evolving markets.
YOUR INVESTMENT MAY NOT INCREASE IN VALUE UNLESS WE ARE ABLE TO BECOME
PROFITABLE. We have incurred losses in our business operation since inception.
We expect to continue to lose money for the foreseeable future, and we cannot be
certain when we will become profitable, if at all. Failure to achieve and
maintain profitability may adversely affect the market price of our common
stock.
WE ARE PRESENTLY IN UNSOUND FINANCIAL CONDITION WHICH MAKES INVESTMENT IN
OUR SECURITIES HIGHLY RISKY. Our financial statements include an auditor's
report containing a modification regarding an uncertainty about our ability to
continue as a going concern. Our financial statements also include an
accumulated deficit of $427,837 as of December 31, 1998 and other indications
of weakness in our present financial position. We have been operating primarily
through the issuance of common stock for services by entities, including
affiliates, that we could not afford to pay in cash. We are consequently deemed
by state securities regulators to presently be in unsound financial condition.
No person should invest in this offering unless they can afford to lose their
entire investment.
OUR BUSINESS DEPENDS ON A FEW KEY INDIVIDUALS AND MAY BE NEGATIVELY
AFFECTED IF WE ARE UNABLE TO KEEP OUR KEY PERSONNEL. Our future success depends
in large part on the skills, experience and efforts of our key marketing and
management personnel. The loss of the continued services of any of these
individuals could have a very significant negative effect on our business. In
particular, we rely upon the experience of Michael Bruce Hall and Jeffrey G.
Turino, our president and chief executive officer, respectively. We do not
currently maintain a policy of key man life insurance on any of our employees or
management team.
17
OUR BUSINESS PLAN REQUIRES ADDITIONAL PERSONNEL AND MAY BE NEGATIVELY
AFFECTED IF WE ARE UNABLE TO HIRE AND RETAIN NEW SKILLED PERSONNEL. Qualified
personnel are in great demand throughout our industry. Our success depends
in large part upon our ability to attract, train, motivate and retain highly
skilled sales and marketing personnel and other senior personnel. Our failure to
attract and retain the highly trained technical personnel that are integral
to our direct sales, product development, service and support teams may limit
the rate at which we can generate sales and develop new products and services or
product and service enhancements. This could hurt our business, operating
results and financial condition.
OUR TECHNOLOGY BUSINESSES OWN PROPRIETARY TECHNOLOGY AND OUR SUCCESS
DEPENDS ON OUR ABILITY TO PROTECT THAT TECHNOLOGY. The unauthorized
reproduction or other misappropriation of our proprietary technology could
enable third parties to benefit from our technology without paying us for it.
This could have a material adverse effect on our business, operating results and
financial condition. We have relied primarily on the use of trade secrets to
protect our proprietary technology, which may be inadequate. We do not know
whether we will be able to defend our proprietary rights because the validity,
enforceability and scope of protection of proprietary rights in Internet-related
industries are uncertain and still evolving. Moreover, the laws of some foreign
countries are uncertain and may not protect intellectual property rights to the
same extent as the laws of the United States. If we resort to legal proceedings
to enforce our intellectual property rights, the proceedings could be burdensome
and expensive and could involve a high degree of risk.
WE WILL INCUR SIGNIFICANT EXPENSES IF OTHER COMPANIES CLAIM WE HAVE
INFRINGED ON THEIR PROPRIETARY RIGHTS. Although we attempt to avoid infringing
known proprietary rights of third parties, we are subject to the risk of claims
alleging infringement of third party proprietary rights. If we were to discover
that any of our products violated third party proprietary rights, there can be
no assurance that we would be able to obtain licenses on commercially reasonable
terms to continue offering the product without substantial reengineering or that
any effort to undertake such reengineering would be successful. We do not
conduct comprehensive searches to determine whether the technology used in our
products infringes patents, trademarks, tradenames or other protections held by
third parties. In addition, product development is inherently uncertain in a
rapidly evolving technological environment in which there may be numerous patent
applications pending, many of which are confidential when filed, with regard to
similar technologies. Any claim of infringement could cause us to incur
substantial costs defending against the claim, even if the claim is invalid, and
could distract our management from our business. Furthermore, a party making
such a claim could secure a judgment that requires us to pay substantial
damages. A judgment could also include an injunction or other court order that
could prevent us from selling our products. Any of these events could have a
material adverse effect on our business, operating results and financial
condition.
IF WE ARE UNABLE TO RAISE SUFFICIENT CAPITAL IN THE FUTURE, WE MAY NOT BE
ABLE TO STAY IN BUSINESS. Currently, our capital is insufficient to conduct our
business and if we are unable to obtain needed financing, we will be unable to
promote our products and services, engage in and exploit potential business
opportunities and otherwise maintain our competitive position. Since we intend
to grow our business rapidly, it is certain that we will require additional
capital. We have not thoroughly investigated whether this capital would be
available, who would provide it, and on what terms. If we are unable to raise
the capital required to fund our growth, on acceptable terms, our business may
be seriously harmed or even terminated.
18
RISKS RELATED TO THIS OFFERING AND OWNERSHIP OF OUR STOCK.
OUR BOARD OF DIRECTORS CAN ISSUE PREFERRED STOCK WITHOUT SHAREHOLDER
CONSENT AND DILUTE OR OTHERWISE SIGNIFICANTLY AFFECT THE RIGHTS OF EXISTING
SHAREHOLDERS. Our articles of incorporation provide that preferred stock may be
issued from time to time in one or more series. Our board of directors is
authorized to determine the rights, preferences, privileges and restrictions
granted to and imposed upon any wholly unissued series of preferred stock and
the designation of any such shares, without any vote or action by our
shareholders. The board of directors may authorize and issue preferred stock
with voting power or other rights that could adversely affect the voting power
or other rights of the holders of common stock. In addition, the issuance of
preferred stock could have the effect of delaying, deferring or preventing a
change in control, because the terms of preferred stock that might be issued
could potentially prohibit the consummation of any merger, reorganization, sale
of substantially all of its assets, liquidation or other extraordinary corporate
transaction without the approval of the holders of the outstanding shares of the
preferred stock. We will not offer preferred stock to promoters except on the
same terms as it is offered to all other existing shareholders or to new
shareholder or unless the issuance is approved by a majority of our independent
directors who do not have an interest in the transactions and who have access,
at our expense, to our legal counsel or independent legal counsel.
YOU MAY NOT BE ABLE TO SELL YOUR STOCK, OR MAY BE FORCED TO SELL AT REDUCED
PRICES, BECAUSE THE MARKET FOR OUR COMMON STOCK IS VERY VOLATILE. Our stock is
presently trading on the OTC bulletin board maintained by Nasdaq under the
symbol PCBM. Nevertheless, there has been limited volume in trading in the
public market for the common stock, and there can be no assurance that a more
active trading market will develop or be sustained. The market price of the
shares of common stock is likely to be highly volatile and may be significantly
affected by factors such as fluctuations in our operating results, announcements
of technological innovations or new products and/or services by us or our
competitors, governmental regulatory action, developments with respect to
patents or proprietary rights and general market conditions.
19
YOU MAY NOT BE ABLE TO SELL YOUR SHARES BECAUSE OF THE PENNY-STOCK RULES.
The Securities Enforcement and Penny Stock Reform Act of 1990 requires
additional disclosure relating to the market for penny stocks in connection with
trades in any stock defined as a penny stock. The Commission has adopted
regulations that generally define a penny stock to be any equity security that
has a market price of less than $5.00 per share, subject to a few exceptions.
Such exceptions include any equity security listed on Nasdaq and any equity
security issued by an issuer that has
- - net tangible assets of at least $2,000,000, if such issuer has been in
continuous operation for three years,
- - net tangible assets of at least $5,000,000, if such issuer has been in
continuous operation for less than three years, or
- - average annual revenue of at least $6,000,000, if such issuer has been in
continuous operation for less than three years.
Unless an exception is available, the regulations require the delivery, prior to
any transaction involving a penny stock, of a disclosure schedule explaining the
penny stock market and the risks associated therewith.
FORWARD LOOKING STATEMENTS. Except for historical information, the
discussion in this registration statement contains some forward-looking
statements that involve risks and uncertainties. These statements may refer to
our future plans, objectives, expectations and intentions. These statements may
be identified by the use of the words such as expect, anticipate, believe,
intend, plan and similar expressions. Our actual results could differ materially
from those anticipated in such forward-looking statements.
USE OF PROCEEDS
PCBM will not receive any of the proceeds from the sale of shares of common
stock by the Selling Shareholders.
20
SELLING SHAREHOLDERS
The Shares of the Company to which this Reoffer Prospectus relates are being
registered for reoffers and resales by the Selling Shareholders, who acquired
the Shares pursuant to a compensatory benefit plan with PCBM for consulting
services they provided to PCBM. The Selling Shareholders may resell all, a
portion or none of such Shares from time to time.
The table below sets forth with respect to the Selling Shareholders, based upon
information available to the Company as of March 7, 2000, the number of
Shares owned, the number of Shares registered by this Reoffer Prospectus and the
number and percent of outstanding Shares that will be owned after the sale of
the registered Shares assuming the sale of all of the registered Shares.
NUMBER OF NUMBER OF % OF SHARES
SHARES SHARES NUMBER OF OWNED BY
SELLING OWNED REGISTERED BY SHARES OWNED SHAREHOLDER
SHAREHOLDERS BEFORE SALE PROSPECTUS AFTER SALE AFTER SALE
- ----------------- ------------- ------------- ------------ ------------
M. Richard Cutler 1,552,750 (1) 889,750 663,000 less than 1%
- ----------------- ------------- ------------- ------------ ------------
Brian A. Lebrecht 447,000 243,000 204,000 less than 1%
- ----------------- ------------- ------------- ------------ ------------
Vi Bui 335,250 182,250 153,000 less than 1%
- ----------------- ------------- ------------- ------------ ------------
James Stubler 130,000 70,000 60,000 less than 1%
- ----------------- ------------- ------------- ------------ ------------
Samuel Eisenberg 260,000 140,000 120,000 less than 1%
- ----------------- ------------- ------------- ------------ ------------
(1) Of such shares, 663,000 are held by MRC Legal Services, LLC. M. Richard
Cutler is the beneficial owner of MRC Legal Services, LLC.
PLAN OF DISTRIBUTION
The Selling Shareholders may sell the Shares for value from time to time under
this Reoffer Prospectus in one or more transactions on the Over-the-Counter
Bulletin Board maintained by the NASD, or other exchange, in a negotiated
transaction or in a combination of such methods of sale, at market prices
prevailing at the time of sale, at prices related to such prevailing market
prices or at prices otherwise negotiated. The Selling Shareholders may effect
such transactions by selling the Shares to or through brokers-dealers, and such
broker-dealers may receive compensation in the form of underwriting discounts,
concessions or commissions from the Selling Shareholders and/or the purchasers
of the Shares for whom such broker-dealers may act as agent (which compensation
may be less than or in excess of customary commissions).
21
The Selling Shareholders and any broker-dealers that participate in the
distribution of the Shares may be deemed to be "underwriters" within the meaning
of Section 2(11) of the 1933 Act, and any commissions received by them and any
profit on the resale of the Shares sold by them may be deemed be underwriting
discounts and commissions under the 1933 Act. All selling and other expenses
incurred by the Selling Shareholders will be borne by the Selling Shareholders.
In addition to any Shares sold hereunder, the Selling Shareholders may, at the
same time, sell any shares of common stock, including the Shares, owned by him
or her in compliance with all of the requirements of Rule 144, regardless of
whether such shares are covered by this Reoffer Prospectus.
There is no assurance that the Selling Shareholders will sell all or any portion
of the Shares offered.
The Company will pay all expenses in connection with this offering other than
the legal fees incurred in connection with the preparation of this registration
statement and will not receive any proceeds from sales of any Shares by the
Selling Shareholders.
LEGAL MATTERS
The validity of the Common Stock offered hereby will be passed upon for the
Company by the Cutler Law Group. M. Richard Cutler is the sole shareholder of
MRC Legal Services Corporation, which does business as the Cutler Law Group. Mr.
Cutler and his employees are the beneficial owners of an aggregate of 2,335,000
shares of common stock of the Company.
EXPERTS
The balance sheets as of December 31, 1997 and 1998 and the statements of
operations, shareholders' equity and cash flows for the years then ended of PCBM
have been incorporated by reference in this Registration Statement in reliance
on the report of Bagell, Josephs, Levine, Firestone & Co., L.L.C, idependent
accountants, given on the authority of that firm as experts in accounting
and auditing.
22
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
ITEM 3. INCORPORATION OF DOCUMENTS BY REFERENCE.
The following documents are hereby incorporated by reference in this
Registration Statement:
(i) Registrant's Form 8-K for an event on March 3, 2000, filed on March 6,
2000.
(ii) Registrant's Form 10-SB, as amended (in the name of MAS Acquisition
XIX Corp., the Company's predecssor), originally filed on August 30, 1999.
(iii) All other reports and documents subsequently filed by the Registrant
pursuant after the date of this Registration Statement pursuant to Sections
13(a), 13(c), 14, or 15(d) of the Securities Exchange Act of 1934 and prior to
the filing of a post-effective amendment which indicates that all securities
offered hereby have been sold or which deregisters all securities then remaining
unsold, shall be deemed to be incorporated by reference and to be a part hereof
from the date of the filing of such documents.
ITEM 4. DESCRIPTION OF SECURITIES.
Not applicable.
ITEM 5. INTERESTS OF NAMED EXPERTS AND COUNSEL.
Not applicable.
ITEM 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
The Corporation Laws of the State of Nevada and the Company's Bylaws
provide for indemnification of the Company's Directors for liabilities and
expenses that they may incur in such capacities. In general, Directors and
Officers are indemnified with respect to actions taken in good faith in a manner
reasonably believed to be in, or not opposed to, the best interests of the
Company, and with respect to any criminal action or proceeding, actions that the
indemnitee had no reasonable cause to believe were unlawful. Furthermore, the
personal liability of the Directors is limited as provided in the Company's
Articles of Incorporation.
23
ITEM 7. EXEMPTION FROM REGISTRATION CLAIMED.
The Shares were issued for advisory and legal services rendered. These
sales were made in reliance of the exemption from the registration requirements
of the Securities Act of 1933, as amended, contained in Section 4(2) thereof
covering transactions not involving any public offering or not involving any
"offer" or "sale".
ITEM 8. EXHIBITS
*3.1 Articles of Incorporation
*3.3 Bylaws
5 Opinion of Cutler Law Group
10.1 Consulting Agreement dated March 3, 2000.
23.1 Consent of Bagell, Josephs, Levine, Firestone & Co., L.L.C.
idependent accountants
________________________
* Incorporated by reference to PCBM's Form 8-K, filed on March 6, 2000.
ITEM 9. UNDERTAKINGS.
(a) 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 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) That, for the purpose of determining any liability under the Securities
Act of 1933, each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial BONA
FIDE offering thereof.
(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) The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
Registrant's Annual Report pursuant to Section 13(a) or Section 15(d) of the
Securities Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to Section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in the
Registration Statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial BONA FIDE offering thereof.
24
(c) Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the Registrant pursuant to the foregoing provisions, or otherwise, the
Registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the Act
and is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the Registrant of expenses
incurred or paid by a director, officer or controlling person of the Registrant
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 Registrant 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.
25
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
certifies that it has reasonable grounds to believe that is meets all of the
requirements for filing on Form S-8 and has duly caused this registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Clearwater, State of Florida, on March 10, 2000.
PINNACLE BUSINESS MANAGEMENT, INC.
/s/ Michael Bruce Hall
By: Michael Bruce Hall
Its: President
and Chairman of the Board
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities and on the dates indicated.
/S/ Jeffrey G. Turino
- -------------------------------------------------------
Jeffrey G. Turino, Chief Executive Officer and Director
/S/ Michael B. Hall
- -------------------------------------------------------
Michael B. Hall, President and Director