SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE
SECURITIES EXCHANGE ACT OF 1934
Filed by the Registrant |X|
Filed by a Party other than the Registrant |_|
Check the appropriate box:
|_| Preliminary Proxy Statement
|_| Confidential, for Use of the Commission Only (as permitted by Rule 14a-
6(e)(2))
|X| Definitive Proxy Statement
-
|_| Definitive Additional Materials
|_| Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
BOOK CORPORATION OF AMERICA
----------------------------
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)
Payment of Filing Fee (Check the appropriate box):
|X| No fee required.
|_| Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-
11.
1) Title of each class of securities to which transaction applies:
2) Aggregate number of securities to which transaction applies:
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which
the filing fee is calculated and state how it was determined):
4) Proposed maximum aggregate value of transaction:
5) Total fee paid:
|_| Fee paid previously with preliminary materials:
|_| Check box if any part of the fee is offset as provided by
Exchange Act Rule 0-11(a)(2) and identify the filing for
which the offsetting fee was paid previously. Identify the
previous filing by registration statement number, or the form
or schedule and the date of its filing.
1) Amount previously paid:
2) Form, Schedule or Registration Statement No.:
3) Filing Party:
4) Date Filed:
BOOK CORPORATION OF AMERICA
1725 EAST WARM SPRINGS ROAD, STE. 10
LAS VEGAS, NEVADA 89119
NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
A special meeting of stockholders of Book Corporation of America will
be held at the offices of Book Corporation of America, 1725 East Warm
Springs Road, Suite 10, Las Vegas Nevada 89119 on July 23, 2002, at 10:00
a.m., local time, for the following purposes:
1. To approve a resolution of the board of directors to change our
domicile from Utah to Nevada by entering a Agreement and Plan of
Merger with a Nevada corporation;
2. To approve a resolution of the board of directors to amend our
Articles of Incorporation to:
(a) effect a name change to Secured Diversified Investment,
Ltd.("SDI")(or other such name as may be available);
(b) change the par value on the authorized common shares to
$.001; and
(c) to authorize 50,000,000 shares of Preferred Stock at a par
value of $.01;
3. To elect one director to our company's Board of Directors. The
director will be elected to serve for a period of one year and
until his successor is elected and qualified;
4. To adopt the SDI 2002 Stock Option Plan for purposes of Sections
162(m) and 422 of the Internal Revenue Code;
5. To amend our bylaws to effect a change in our fiscal year end
from October 31 to a calendar year end or December 31.
6. To ratify the actions of our officers and directors for the last
fiscal year and for the period from the fiscal year end through
the date of this special shareholder meeting.
7. To transact any other business as may properly come before the
meeting or at any adjournment thereof.
Our board of directors has fixed the close of business on May 31, 2002
as the record date for determining stockholders entitled to notice of, and
to vote at, the meeting. Only stockholders of record at the close of
business on May 31, 2002 will be entitled to notice of, and to vote at, the
special meeting of stockholders. A list of stockholders eligible to vote
at the meeting will be available for inspection at the meeting and for a
period of 10 days prior to the meeting during regular business hours at our
corporate headquarters, 1725 East Warm Springs Road, Suite 10, Las Vegas,
Nevada 89119.
1
All of our stockholders are cordially invited to attend the meeting in
person. Whether or not you expect to attend the special meeting of
stockholders, your proxy vote is important. To assure your representation
at the meeting, please sign and date the enclosed proxy card and return it
promptly in the enclosed envelope, which requires no additional postage if
mailed in the United States. Should you receive more than one proxy
because your shares are registered in different names or addresses, each
proxy should be signed and returned to assure that all your shares will be
voted. You may revoke your proxy at any time prior to the meeting. If you
attend the meeting and vote by ballot, your proxy will be revoked
automatically and only your vote at the meeting will be counted.
YOUR VOTE IS IMPORTANT
IF YOU ARE UNABLE TO BE PRESENT PERSONALLY, PLEASE MARK, SIGN AND DATE THE
ENCLOSED PROXY, WHICH IS BEING SOLICITED BY THE BOARD OF DIRECTORS, AND
RETURN IT PROMPTLY IN THE ENCLOSED ENVELOPE.
By order of the board of directors,
RONALD ROBINSON
President
July 9, 2002
2
BOOK CORPORATION OF AMERICA
1725 EAST WARM SPRINGS ROAD, STE. 10
LAS VEGAS, NEVADA 89119
PROXY STATEMENT
GENERAL
SOLICITATION OF PROXIES. This proxy statement is being furnished to
the stockholders of Book Corporation of America, a Utah corporation, in
connection with the solicitation of proxies by our board of directors for
use at our special meeting of stockholders to be held at 10:00 a.m., local
time, on July 23, 2002, or at any adjournment thereof. A copy of the
notice of meeting accompanies this proxy statement. It is anticipated that
the mailing of this proxy statement will commence on or about July 11,
2002.
COST OF SOLICITATION. We will bear the costs of soliciting proxies.
In addition to the use of the mails, certain directors or officers of our
company may solicit proxies by telephone, telegram, facsimile, cable or
personal contact. Upon request, we will reimburse brokers, dealers, banks
and trustees, or their nominees, for reasonable expenses incurred by them
in forwarding proxy material to beneficial owners of shares of our Common
Stock.
OUTSTANDING VOTING SHARES. Only stockholders of record at the close of
business on May 31, 2002, the record date for the meeting, will be entitled
to notice of and to vote at the meeting. On the record date, we had
2,349,540 outstanding shares of Common Stock, par value $.005 per share,
which are our only securities entitled to vote at the meeting, each share
being entitled to one vote.
VOTE REQUIRED FOR APPROVAL. Shares of Common Stock will vote with
respect to each proposal. Under our Bylaws, Proposals 1, 2, 3, 4, 5, 6 and
7 each require the affirmative vote of a majority of the votes eligible to
be voted by holders of shares represented at the Special Meeting in person
or by proxy. With respect to Proposal 3 votes may be cast by a stockholder
in favor of the nominee or withheld. With respect to Proposals 1, 2, 4, 5,
6 and 7 votes may be cast by a stockholder in favor or against the
Proposals or a stockholder may elect to abstain. Since votes withheld and
abstentions will be counted for quorum purposes and are deemed to be
present for purposes of the respective proposals, they will have the same
effect as a vote against each matter.
Under the NASD Rules of Fair Practice, brokers who hold shares in
street name have the authority, in limited circumstances, to vote on
certain items when they have not received instructions from beneficial
owners. A broker will only have such authority if (i) the broker holds the
shares as executor, administrator, guardian, trustee or in a similar
representative or fiduciary capacity with authority to vote or (ii) the
broker is acting under the rules of any national securities exchange of
which the broker is also a member. Broker abstentions or non-votes will be
counted for purposes of determining the presence or absence of a quorum at
the meeting. Abstentions are counted in tabulations of the votes cast on
proposals presented to stockholders, but broker non-votes are not counted
for purposes of determining whether a proposal has been approved
1
VOTING YOUR PROXY. Proxies in the accompanying form, properly
executed and received by our company prior to the Special Meeting and not
revoked, will be voted as directed. In the absence of direction from the
stockholder, properly executed proxies received prior to the Special
Meeting will be voted FOR Proposals 1, 2, 3, 4, 5, 6 and 7. You may revoke
your proxy by giving written notice of revocation to our Secretary at any
time before it is voted, by submitting a later-dated proxy or by attending
the Special Meeting and voting your shares in person. Stockholders are
urged to sign and date the enclosed proxy and return it as promptly as
possible in the envelope enclosed for that purpose.
PROPOSAL ONE:
APPROVE A RESOLUTION OF THE BOARD OF DIRECTORS
TO CHANGE OUR DOMICILE FROM UTAH TO NEVADA
You are being asked to approve a resolution of the board of directors
to change our domicile from Utah to Nevada.
POTENTIAL EFFECTS OF CHANGING DOMICILE FROM UTAH TO NEVADA
We believe that changing our domicile from Utah to Nevada will allow
us to avail ourselves of the full advantages of the Nevada Revised Statutes
as well as other tax advantages of doing business in Nevada, such as no
state income tax. The change in domicile may change the way in which we
take actions requiring shareholder approval without holding a shareholders'
meeting. Because we were incorporated prior to July 1, 1992, and have not
elected otherwise, the Utah Revised Business Corporation Act requires that
we obtain written consent from all of our shareholders prior to taking any
action requiring shareholder approval without holding a shareholders'
meeting. Nevada corporate law provides that we can take actions requiring
shareholder approval by obtaining written consent of the majority of shares
entitled to vote on any action without holding a shareholders' meeting. In
other words, if we become a Nevada corporation we will be able to take
actions requiring shareholder approval without holding a shareholder
meeting, so long as we obtain written approval of the action by the
shareholder(s) holding at least 50.1% of the shares entitled to vote on the
action rather than having to obtain the written approval of 100% of our
shareholders.
Of course, the Utah Revised Business Corporation Act provides that we
can call a shareholder meeting and ask our shareholders to approve an
amendment to our Articles of Incorporation that would allow us to opt out
of the unanimous written consent requirement in Utah. If such a proposal
were approved by the majority of our common shares at the meeting, we could
amend our Articles of Incorporation to allow us to take actions requiring
shareholder approval by obtaining written consent of a majority of our
common shares rather than all of the shares. Once our Utah Article of
Incorporation were amended, there would be no difference between being a
Nevada corporation or a Utah corporation in this respect.
2
As REIT Consultants, LLC currently owns approximately 85% of our
issued and outstanding Common Stock, by voting in favor of such an
amendment, REIT Consultants LLC could approve such a change to our Utah
Articles of Incorporation. Ronald Robinson, our President, is the manager
of REIT Consultants, LLC and may be deemed to have voting control of shares
held in the name of REIT Consultants, LLC.
Moreover, if we become a Nevada corporation we could take actions
requiring shareholder approval solely by obtaining the written consent of
REIT Consultants, LLC and without holding a shareholders' meeting or
soliciting proxies or consent of any of our other shareholders.
Other than as discussed herein, we believe there are no other
material changes in shareholders' rights in the Nevada Revised Statute
compared to the Utah Revised Business Corporation Act.
PROCEDURE FOR CHANGING DOMICILE
Nevada law provides that to change the domicile of a foreign
corporation to Nevada, the corporation must merge with a Nevada
corporation. Subject to the approval of proposals one and two of this
proxy we will: form and merge with a Nevada corporation for the purpose of
effecting the change in domicile; file Articles of Incorporation with the
state of Nevada creating a Nevada corporation; enter into an Agreement and
Plan of Merger with the newly formed Nevada corporation; and file a
Certificate of Merger with both Utah and Nevada. Immediately following the
merger, the Nevada corporation would be the surviving entity and the
separate existence of the Utah corporation would cease. The change of
domicile would become effective upon the filing date of the Certificate of
Merger with the state of Nevada. The form of Articles of Incorporation and
Bylaws of the proposed Nevada corporation, the Agreement and Plan of
Merger, and Certificate of Merger are attached to this proxy statement as
Annex A.1, Annex A.2, Annex B and Annex C respectively.
VOTE REQUIRED
The affirmative vote of the holders of a majority of the outstanding
shares of our Common Stock is requested to approve the proposal to change
our domicile from Utah to Nevada.
OUR BOARD RECOMMENDS THAT OUR STOCKHOLDERS APPROVE THE BOARD OF
DIRECTORS RESOLUTION TO EFFECT A CHANGE OF DOMICILE FROM UTAH TO
NEVADA AS SET FORTH ABOVE.
3
PROPOSAL TWO:
AMEND OUR ARTICLES OF INCORPORATION TO
EFFECT (a) A NAME CHANGE, (b) TO CHANGE THE PAR
VALUE ON OUR COMMON STOCK TO $.001
AND (c) TO AUTHORIZE 50,000,000 SHARES OF PREFERRED
STOCK AT A PAR VALUE OF $.01
=
You are being asked to vote to authorize our board of directors to
amend our Articles of Incorporation to change the name of the corporation
to Secured Diversified Investment, Ltd., or such other name as may be
available, to change the par value of the Common Stock from $.005 to $.001,
and to authorize 50,000,000 shares of Preferred Stock at a par value of
$.01 per share, with the designation of rights, preferences and privileges
of said preferred shares to be set by the board of directors.
REASONS FOR THE AMENDMENTS TO OUR ARTICLES OF INCORPORATION
By changing our name we believe we will better reflect our business
plan to acquire assets and/or merge with businesses. We believe this new
name will improve our marketability from a financial and public relations
standpoint. By changing the par value on our Common Stock to $.001 we
believe our par value will be the same as similar companies.
Finally, we believe that having Preferred Stock will greatly increase
our ability to attract and complete acquisitions and/or mergers in order to
enhance our business plan. In April 2002, we entered into a non-binding
letter of intent with Seashore Diversified Investment Company ("Seashore"),
a Maryland corporation, to negotiate the possible acquisition of real
estate holdings from Seashore in exchange for restricted shares of our
Preferred and/or Common Stock. Seashore is a real estate investment trust
and is in the business of acquiring, selling and managing real estate
holdings. Neither Seashore, nor any of its officers or directors is a
related party to us or to our officer and director.
Pursuant to the terms of the letter of intent, we have agreed to
attempt to negotiate a definitive agreement with Seashore setting forth the
specific terms for the acquisition of real estate holdings by us. Our
intent is to primarily acquire partial interests in a number of income
producing properties throughout the United States. Given that Seashore is
continously buying and selling real estate, and the fact that we have not
negotiated the specific terms of a definitive agreement, it is impossible
to know what properties, if any, we may acquire from Seashore. We have
been waiting to negotiate the terms of a definitive agreement until such
time as we obtain shareholder approval to authorize the establishment of
Preferred Shares to assure we have the ability to perform any agreement
that might be reached with Seashore.
By its terms, the letter of intent automatically terminates on June
30, 2002. If we are unable to execute a definitive agreement prior to that
time, we may seek to extend the letter of intent if we believe doing so is
in the best interest of our shareholders. We do not know if Seashore has
any interest in extending the termination date of the letter of intent.
4
RESULTS OF THE AMENDMENTS TO OUR ARTICLES OF INCORPORATION
Name Changes and changes to par value of common stock require the
obtaining of a new CUSIP number and a new stock symbol, which are assigned
by the CUSIP Service Bureau and the NASD respectively. Although the par
value on the Common Stock would change to $.001, the total authorized,
issued and outstanding Common Stock would remain unchanged. Finally, our
company would be authorized to issue up to 50,000,000 shares of Preferred
Stock with a par value of $.01 with the rights, preferences and privileges
of said preferred shares to be set by our board of directors.
POSSIBLE DILUTION RESULTING FROM AUTHORIZATION OF PREFERRED SHARES
We currently have 100,000,000 shares of authorized capital stock. By
voting in favor of Proposal Two, you are voting to increase our authorized
capital stock by an additional 50,000,000 shares or 50%. While we have no
present obligation to issue Preferred Stock, and have not yet designated
any rights or preferences for these shares, if we issue Preferred Stock in
the future you could potentially suffer substantial dilution. If we issue
Preferred Stock you could suffer dilution in the book value of your shares
if the Preferred Stock is sold at prices lower than the price at which you
purchased your Common Stock. Moreover, if the Board of Directors in
setting the rights, preferences and privileges of the Preferred Stock
determines to grant voting rights to the holders of Preferred Stock, you
could suffer dilution in the percentage of your voting interest in company
matters. Similarly, the Board could grant other rights to the future
holders of Preferred Stock which could be superior to your rights and
holders of Common Stock.
POSSIBLE ANTI-TAKEOVER EFFECTS OF AUTHORIZING PREFERRED STOCK
Although we have no such present intent, Preferred Stock could be used
to discourage unsolicited acquisition proposals. For example, a business
combination could be impeded by the issuance of a series of Preferred Stock
containing class voting rights that would enable the holder or holders of
such series to block any such transaction. Alternatively, a business
combination could be facilitated by the issuance of a series of Preferred
Stock having sufficient voting rights to provide a required percentage vote
to the stockholders. In addition, under some circumstances, the issuance
of Preferred Stock could adversely affect the voting power and other rights
of the holders of the Common Stock. Although our Board of Directors is
required to make any determination to issue any such stock based on its
judgement as to the best interests of our stockholders, it could act in a
manner that would discourage an acquisition attempt or other transaction
that some, or a majority, of the stockholder might believe to be in their
best interest or in which stockholders might receive a premium for their
stock over prevailing market prices.
PROCEDURE FOR EFFECTING AMENDMENTS TO THE ARTICLES OF INCORPORATION
Provided that proposals one and two of this proxy are approved, the
form of amendments will be set forth in the Articles of Incorporation
(Annex A.1) to be filed with the state of Nevada and will become effective
upon the filing of the Certificate of Merger (Annex B). If proposal one is
not approved and proposal two is approved, then the form of amendment to
our Articles of Incorporation will be filed with the state of Utah as set
forth and attached to this proxy statement as Annex D, and the amendments
will become effective upon the filing of the amendment to our Articles of
Incorporation with the state of Utah.
5
The exchange of certificates is not required. Our transfer agent,
however, will act as the exchange agent for purposes of implementing any
exchange of stock certificates for those who wish to do so. No new
certificates will be issued to any stockholder until the stockholder has
surrendered the stockholder's outstanding certificate(s) together with the
properly completed and executed letter of transmittal to the exchange
agent. Until surrender, each certificate representing shares before the
name change and change in par value will continue to be valid and will
represent the same number of shares with the old par value. Stockholders
should not destroy any stock certificate. Stockholders desiring new
certificate reflecting the name change and the change of par value to the
Common Stock will be required to bear the costs of the exchange.
NO DISSENTERS' RIGHTS
No dissenters' rights are available under the Utah Revised Business
Corporation Act or under our Articles of Incorporation or Bylaws to any
stockholder who dissents from this proposal.
FINANCIAL STATEMENTS
Following you will find our most recent audited financial statements
for the fiscal years ending October 31, 2001 and October 30, 2000, as well
as, our unaudited financial statement for our first fiscal quarter ended
January 31, 2002.
Book Corporation of America
(A Development Stage Company)
Financial Statements
January 31, 2002,
October 31, 2001
and
October 31, 2000
6
/Letterhead/
Accountant's Report
--------------------
Board of Directors
Book Corporation of America
(A Development Stage Company)
We have reviewed the accompanying balance sheet of Book Corporation of
America, (a Utah Corporation) as of January 31, 2002, and the related
statements of income, retained earnings and cash flows for the period then
ended, in accordance with Statements on Standards for Accounting and Review
Services issued by the American Institute of Certified Public Accountants.
All information included in these financial statements is the representation
of the management of Book Corporation of America.
A review consists principally of inquiries of company personnel and
analytical procedures applied to financial data. It is substantially less in
scope than an audit in accordance with generally accepted auditing standards,
the objective of which is the expression of an opinion regarding the
financial statements taken as a whole. Accordingly, we do not express such
an opinion.
Based on our review, we are not aware of any material modifications that
should be made to the accompanying January 31, 2002 financial statements in
order to be in conformity with generally accepted accounting principles, in
the United States of America.
The financial statements for the year ended October 31, 2001 and 2000 were
audited by us, and we expressed an unqualified opinion on them in our report
dated December 31, 2001, but we have not performed any auditing procedures
since that date.
The accompanying financial statements have been prepared assuming the Company
will continue as a going concern. As discussed in Note #6 to the financial
statements, the Company has an accumulated deficit and a negative net worth
at January 31, 2002. These factors raise substantial doubt about the
Company's ability to continue as a going concern. Management's plans in
regard to these matters are also discussed in Note #6. The financial
statements do not include any adjustments that might result from the outcome
of this uncertainty.
/S/ Bierwolf, Nilson & Associates
Bierwolf, Nilson & Associates
June 13, 2002
7
Book Corporation of America
(A Development Stage Company)
Balance Sheet
For the Period Ended January 31, 2002
and the Fiscal Years Ended October 31
<Table>
<Caption>
January 31, October 31, October 31,
2002 2001 2000
----------- ----------- -----------
(Unaudited)
Assets
Current Assets $ - $ - $ -
- -------------- ----------- ----------- -----------
Total Assets $ - $ - $ -
=========== =========== ===========
Liabilities & Stockholders' Equity
Current Liabilities
- -------------------
Accounts Payable $ 47,877 $ 37,336 $ 16,107
Taxes Payable 450 450 200
----------- ----------- -----------
Total Current Liabilities 48,327 37,786 16,307
Stockholders' Equity
- --------------------
Common Shares 100,000,000 Authorized;
$0.005 Par Value 2,349,540 Shares
Issued & Outstanding 11,748 11,748 11,748
Paid In Capital 3,041,711 3,041,711 3,041,711
Accumulated Deficit (3,101,786) (3,091,245) (3,069,766)
----------- ----------- -----------
Total Stockholders' Equity (48,327) (37,786) (16,307)
----------- ----------- -----------
Total Liabilities &
Stockholders' Equity $ - $ - $ -
=========== =========== ===========
</Table>
See accompanying notes to financial statements.
8
Book Corporation of America
(A Development Stage Company)
Statements of Operations
For the Period Ended January 31, 2002 and
the Fiscal Years Ended October 31, and
Accumulated for the Period November 22, 1978 (Inception)
to January 31, 2002
<Table>
<Caption>
January 31, October 31, October 31,
2002 2001 2000 Accumulated
----------- ----------- ----------- -----------
(Unaudited)
Revenues $ - $ - $ - $ 250,000
- -------- ----------- ----------- ----------- -----------
Expenses
- --------
Administrative Expenses 10,541 21,229 3,611 49,324
Depreciation - - - 200,000
Production Costs - - - 132,448
Write Down of Film Inventory - - - 2,563,500
Write Off of Investments
& Other Assets - - - 200,247
Bad Debt - - - 200,000
Failed Offering Costs - - - 5,917
----------- ----------- ----------- -----------
Total Expenses 10,541 21,229 3,611 3,351,436
----------- ----------- ----------- -----------
Net Loss from
Operations (10,541) (21,229) (3,611) (3,101,436)
Income Tax Expense - 250 100 350
----------- ----------- ----------- -----------
Net Loss $ (10,541) $ (21,479) $ (3,711) $(3,101,786)
=========== =========== =========== ===========
Net Loss Per Share $ (0.00) $ (0.00) $ (0.00)
Shares Outstanding 2,349,540 2,349,540 2,349,540
</Table>
See accompanying notes to financial statements.
9
Book Corporation of America
(A Development Stage Company)
Statements of Cash Flows
For the Period Ended January 31, 2002 and
the Fiscal Years Ended October 31, and
Accumulated for the Period November 22, 1978 (Inception)
to January 31, 2002
<Table>
<Caption>
January October October
31, 2002 31, 2001 31, 2000 Accumulated
---------- ---------- ---------- ------------
(Unaudited)
Cash Flows from Operating Activities
- ------------------------------------
Net Loss $ (10,541) $ (21,479) $ (3,711) $(3,101,786)
Adjustments to Reconcile Net Loss to
Net Cash Used by Operating
Activities;
Depreciation - - - 200,000
Noncash Transactions;
Write Down of Film Inventory - - - 2,593,500
Changes in Operating Assets
& Liabilities;
Increase in Accounts Payable 10,541 21,479 3,711 48,327
---------- ---------- ---------- -----------
Net Cash Used by Operating
Activities - - - (259,959)
Cash Flows from Investing Activities - - - -
- ------------------------------------ ---------- ---------- ---------- ------------
Cash Flows from Financing Activities
- ------------------------------------
Proceeds from the Sale of Common
Stock - - - 127,500
Contributed Capital - - - 60,517
Debt to Equity Conversion - - - 71,942
---------- ---------- ---------- ------------
Net Cash Provided by Financing
Activities - - - 259,959
---------- ---------- ---------- ------------
Increase (Decrease) in Cash - - - -
Cash at Beginning of Period - - - -
---------- ---------- ---------- ------------
Cash at End of Period $ - $ - $ - $ -
========== ========== ========== ============
Disclosure of Significant Operating Activities:
- -----------------------------------------------
Interest $ - $ - $ - $ -
Taxes - - - -
Significant Noncash Transactions:
- ---------------------------------
Acquisition of Films and Videos
Cassette as Contributed Capital - - - 2,447,000
Acquisition of Property & Equipment - - - 200,000
</Table>
See accompanying notes to financial statements.
10
Book Corporation of America
(A Development Stage Company)
Notes to Financial Statements
January 31, 2002
NOTE #1 - Organization
- ----------------------
The Company was incorporated under the laws of the state of Utah on November
22, 1978. The Company amended its Articles of Incorporation, authorizing
100,000,000 shares of common stock having a par value of $0.005 per share.
The Articles of Incorporation grants the Company unlimited power to engage in
and to do any lawful act concerning any and all lawful businesses for which
corporations may be organized. The Company currently seeks to license films
to television and to engage in market-by-market exploitation of the films it
holds in its film inventory.
In accordance with FASB 7 the Company is considered to be a development stage
company.
NOTE #2 - Significant Accounting Policies
- -----------------------------------------
A. The Company uses the accrual method of accounting.
B. Revenues and directly related expenses are recognized in the period in
which the sales are finalized with customers.
C. The Company considers all short term, highly liquid investments, that
are readily convertible to known amounts within ninety days as cash
equivalents. The Company currently has no cash equivalents.
D. Basic Earnings Per Shares are computed by dividing income available to
common stockholders by the weighted average number of common shares
outstanding during the period. Diluted Earnings Per Share shall be
computed by including contingently issuable shares with the weighted
average shares outstanding during the period. When inclusion of the
contingently issuable shares would have an antidilutive effect upon
earnings per share no diluted earnings per share shall be presented.
E. As a licensor of films to television or other markets the Company shall
recognize revenues on the dates of the exhibition for both percentage
and flat fee engagements. Revenues from license agreements that meet
the requirements of FASB 53 shall be recognized when the license period
begins.
F. Costs to produce a film shall be capitalized as film costs inventory and
shall be amortized using the individual film forecast computation
method.
G. Operating expenses and all type of income are recognized in the period
in which the activities occur.
H. Depreciation: The cost of property and equipment is depreciated over the
estimated useful lives of the related assets. The cost of leasehold
improvements is amortized over the lesser of the length of the lease of
the related assets for the estimated lives of the assets. Depreciation
and amortization is computed on the straight line method.
11
Continued
Book Corporation of America
(A Development Stage Company)
Notes to Financial Statements
January 31, 2002
NOTE #3 - Non Cash Investing and Non Cash Financing Activities
- --------------------------------------------------------------
In 1988, the Company issued 200,000 shares of its common stock to a related
entity for assets valued at historical cost of $200,000.
The Company currently holds in its film inventory, films contributed to the
Company by principal stockholders. In the year ended October 31, 1999, the
Company wrote off 100% of the cost of these films, because it has no plans to
aggressively market the films.
NOTE #4 - Public Stock Offering
- -------------------------------
In 1979, the Company conducted an intrastate public offering of its common
stock shares and issued 15,000,000 pre split, 300,000 post split shares for
net proceeds of $127,500.
NOTE #5 - Income Taxes and Net Operating Loss Carryforwards
- -----------------------------------------------------------
The Company has incurred losses that can be carried forward to offset future
earnings if provisions of the Internal Revenue Codes are met. These losses
for the fiscal years ended October 31, are as follows:
<Table>
<Caption>
Year of Loss Expiration
Loss Amount Date
- -------------------------------------------------------
1987 $ 6,666 2002
1988 -
1989 -
1990 217,129 2005
1991 11,224 2006
1992 11,236 2007
1993 11,248 2008
1994 10,390 2009
1995 10,262 2010
1996 17,597 2011
1997 8,788 2017
1998 10,417 2018
1999 36,115 2019
2000 3,711 2020
2001 21,479 2021
</Table>
The Company has adopted FASB 109 to account for income taxes. The Company
currently has no issues that create timing differences that would mandate
deferred tax expense. Net operating losses would create possible tax assets
in future years. Due to the uncertainty as to the utilization of net
operating loss carryforwards an evaluation allowance has been made to the
extent of any tax benefit that net operating losses may generate.
Continued
12
Book Corporation of America
(A Development Stage Company)
Notes to Financial Statements
January 31, 2002
NOTE #5 - Income Taxes and Net Operating Loss Carryforwards
- -----------------------------------------------------------
<Table>
<Caption>
October 31, October 31,
2001 2000
----------- -----------
Current Tax Asset Value of Net Operating
Loss Carryforwards at Current Prevailing
Federal Tax Rate $ 127,929 $ 170,999
Evaluation Allowance at 100%
Net Tax Assets (127,929) (170,999)
----------- -----------
Current Income Tax Expenses $ - $ -
Deferred Tax Expenses - -
</Table>
NOTE #6 - Going Concern
- -----------------------
The Company has sustained continued losses and currently has liabilities in
excess of current assets. In addition, the Company has no revenue producing
activities and is dependent upon its officers to provide its cash
requirements. These factors indicate considerable doubt as to the Company's
ability to continue as a going concern.
The Company's management seeks to raise additional capital by additional
investment from outsiders in the Company's common stock.
NOTE #7 - Related Party Transactions
- ------------------------------------
The Company's principal shareholders contributed nine films to the Company
for licensing and distribution. These films have been valued at historical
cost or a discounted fair market value of $2,407,000. In 1999, the films
were revalued to $-0- each because the Company has been unable to market
them.
Additionally, the Company's President contributed 412 NTSC 3/4 inch format
master video cassettes. These cassettes were valued at a historical cost of
$40,000 and were revalued to have no current value.
NOTE #8 - Motion Picture Rights and Screen Plays
- ------------------------------------------------
The Company holds the motion picture rights to thirty-six screen plays, three
novels, two short stories and fifty story titles and synopses. These rights
and screen plays have been recorded at net asset value to reflect predecessor
value and provisions of FASB 53 limiting such assets to a three year life.
13
VOTE REQUIRED
The affirmative vote of the holders of a majority of the outstanding
shares of our Common Stock is required to approve the proposed amendments to
effect a name change of the corporation, to change the par value of the
Common Stock and to authorize 50,000,000 shares of $.01 par value preferred
shares.
OUR BOARD RECOMMENDS THAT OUR STOCKHOLDERS VOTE "FOR" THE APPROVAL OF
THE PROPOSED AMENDMENT TO EFFECT THE NAME CHANGE OF THE CORPORATION TO
SECURED DIVERSIFIED INVESTMENT, LTD.,TO CHANGE THE PAR VALUE ON OUR
COMMON STOCK TO $.001 AND TO AUTHORIZE 50,000,000 SHARES OF PREFERRED
STOCK AT A PAR VALUE OF $.01
PROPOSAL THREE:
ELECTION OF DIRECTORS
The current Board of Directors contains one member and two
vacancies. Following the director election held at the Special Meeting
the Board of Directors will continue to consist of one member and two
vacancies. It is anticipated that the two remaining vacancies will be
filled in accordance with the provisions set forth in our bylaws.
The following person, who is currently a member of the board of
directors, has been nominated as a director for one year and until his
successor is chosen and qualified.
=Ronald Robinson. Age 70. For the last five years, Mr. Robinson has
been principally engaged as a licensed real estate broker in both
California and Nevada where he has been licensed for at least forty
years. Mr. Robinson served in the US Air Force during the Korean War,
obtained an undergraduate degree in business from the College of Los
Angeles and later an LLB law degree from McGeorge College. Mr. Robinson
does not currently sit on any other boards of directors.
Management does not expect that the nominee will become unavailable
for election as a director, but, if for any reason that should occur
prior to the Special Meeting, the person named in the proxy will vote
for such substitute nominee, if any, as may be recommended by
Management.
There were no material transactions between our company and any of
our officers, directors or the nominee for election as director, any
stockholder holding more than 5% of our Common Stock or any relative or
spouse of any of the foregoing persons.
VOTE REQUIRED
Approval of the nominee for election to the Board of Directors will
require the affirmative vote of a majority of the votes entitled to be
cast by the holders of the outstanding shares of Common Stock
represented at the Special Meeting in person or by proxy. The proxies
which are executed and returned will be voted (unless otherwise
directed) for the election as director the foregoing nominee.
14
THE BOARD RECOMMENDS A VOTE "FOR" THE NOMINEE
LISTED ABOVE
=Security Ownership of Directors and Executive Officers
The following table sets forth the beneficial ownership of our
Common Stock as of May 31, 2002, for each director and nominee, the
President, the other executive officers, and for all directors and
executive officers as a group.
- ---------------------------------------------------------------------
Options Currently
Exercisable
Name Common Stock or within 60 days
- ---------------------------------------------------------------------
Ronald Robinson 2,000,000* 0
All directors and executive officers as a group ( 1 )
- ---------------------------------------------------------------------
*Although Ronald Robinson does not hold any Common Stock in his
name, he may be deemed a beneficial owner of stock held by REIT
Consultants, LLC because he is the manager of the LLC and may have
investment power.
=Security Ownership of Certain Beneficial Owners
As of May 31, 2002, our records and other information made
available by outside sources indicated that the following stockholders
were beneficial owners of more than five percent of our outstanding
shares of Common Stock.
- ---------------------------------------------------------------------
Name Shares Percent of Class
- ---------------------------------------------------------------------
REIT Consultants, LLC 2,000,000* 85%
1775 East Warm Springs Road, Ste. 10
Las Vegas, Nevada 89119
- ---------------------------------------------------------------------
* As previously mentioned, Ronald Robinson is the manager of REIT
Consultants, LLC, a Nevada limited liability company, and may have
investment power over the shares held by REIT Consultants, LLC, and
therefore, may be deemed to be a beneficial owner.
Meetings and Committees of the Board of Directors
The board of directors currently has no standing Committees.
During 2001 there were six meetings of the board of directors. All
directors attended 75% of the meetings of the board of directors.
Compensation of Directors
To date, no director has received any compensation for his services
on the board of directors. We currently have not adopted any type of
director compensation plan.
15
PROPOSAL FOUR
ADOPT THE SDI 2002 STOCK OPTION PLAN
DESCRIPTION OF SDI CORPORATION 2002 STOCK OPTION PLAN
Provided that proposal one and two of this proxy are approved, we
desire to adopt the SDI 2002 Stock Option Plan (the "Plan") attached
hereto as Annex E. Under the Plan, our key employees, advisors and
consultants (including directors and officers who are employees) may be
granted options to purchase shares of our Common Stock.
The Plan permits the granting of 500,000 shares of Common Stock at
a price equal to one hundred percent (100%) of the fair market value of
the Common Stock on the date that the option is granted provided,
however, that the price shall not be less than the par value of the
Common Stock which is subject to the option. Further, no Incentive
Stock Option may be granted to an employee owning Common Stock having
more than 10% of the voting power of the Company unless the option price
for such employee's option is at least 110% of the fair market value of
the Common Stock subject to the option at the time the option is granted
and the option is not exercisable after the expiration of five years
from the date of granting. The par value of our Common Stock is
presently $.005 per share but in this proxy statement there is a vote to
change the par value on the Common Stock to $.001 per share. No option
may be granted under the Plan after the tenth anniversary of the
adoption of the Plan. Unless otherwise specified by the board of
directors, options granted under the Plan are Incentive Stock Options
under the provisions and subject to the limitations of Section 422 of
the Internal Revenue Code.
ADMINISTRATION OF THE PLAN
The Plan shall be administered by the board of directors until such
time as a Compensation Committee is appointed. Subject to the
provisions of the Plan, the board of directors determine the employees
who will receive options under the Plan, the number of shares subject to
each option and the terms of those options, and interprets the Plan and
makes such rules of procedure as the board of directors may deem proper.
Upon the granting of any option, the optionee must enter into a
written agreement with us setting forth the terms upon which the option
may be exercised. Such an agreement will set forth the length of the
term of the option and the timing of its exercise as determined by our
board of directors. The Compensation Committee, or if there is none,
our board of directors, in its sole discretion will determine the
vesting schedule and exercise dates of any equity security granted under
the Plan at the time each grant is made. No equity security granted
under the plan shall be exercisable within six months of the date of
grant without approval of our the Compensation Committee or our board of
directors. In no event shall the length of an option extend beyond ten
years from the date of its grant. An optionee may exercise an option by
delivering payment to us in cash.
16
Under the Plan, if the employment of any person to whom an option
has been granted is terminated for any reason other than the death or
disability of the optionee, the option shall automatically terminate.
If the termination is by reason of retirement, the optionee may exercise
such portion of the option as has vested, within three months of
termination or within the remaining term of the option, whichever is
shorter. If the optionee dies while employed by us or our
subsidiaries, or during a period after termination of employment in
which the optionee could exercise an option, the optionee's beneficiary
may exercise the option within one year of the date of the optionee's
death but in no event may the option be exercised later than the date on
which the option would have expired if the optionee had lived. If the
termination is by reason of disability, the optionee may exercise the
option, in whole or in part, at any time within one year following such
termination of employment but in no event may the option be exercised
later than the date on which the option would have expired had the
optionee not become disabled.
FEDERAL INCOME TAX CONSEQUENCES
With respect to the tax effects of non-qualified stock options,
since the options granted under the Plan do not have a "readily
ascertainable fair market value" within the meaning of the Federal
income tax laws, an optionee of an option will realize no taxable income
at the time the option is granted. When a non-qualified stock option is
exercised, the optionee will generally be deemed to have received
compensation, taxable at ordinary income tax rates, in an amount equal
to the excess of the fair market value of the shares of Common Stock of
the Company on the date of exercise of the option over the option price.
The Company will withhold income and employment taxes in connection with
the optionee's recognition of ordinary income as a result of the
exercise by an optionee of a non-qualified stock option. The Company
generally can claim an ordinary deduction in the fiscal year of the
Company which includes the last day of the taxable year of the optionee
which includes the exercise date or the date on which the optionee
recognizes income. The amount of such deduction will be equal to the
ordinary income recognized by the optionee. When stock acquired through
the exercise of a non-qualified stock option is sold, the difference
between the optionee's basis in the shares and the sale price will be
taxed to the optionee as a capital gain (or loss).
With respect to the tax effects of Incentive Stock Options, the
optionee does not recognize any taxable income when the option is
granted or exercised. If no disposition of shares issued to an optionee
pursuant to the exercise of an Incentive Stock Option is made by the
optionee within two years after the date the option was granted or
within one year after the shares were transferred to the optionee, then
(a) upon sale of such shares, any amount realized in excess of the
option price (the amount paid for the shares) will be taxed to the
optionee as long-term capital gain and any loss sustained will be a
long-term capital loss and (b) no deduction will be allowed to the
Company for Federal income tax purposes. The exercise of an Incentive
Stock Option will give rise to an item of tax preference that may result
in alternative minimum tax liability for the optionee.
17
If shares of Common Stock acquired upon the exercise of an
Incentive Stock Option are disposed of prior to the expiration of the
two year and one year holding periods described above (a "Disqualifying
Disposition") generally (a) the optionee will realize ordinary income in
the year of disposition in an amount equal to the excess (if any) of the
fair market value of the shares at exercise (or, if less, the amount
realized upon the sale of such shares) over the option price thereof,
and (b) the Company will be entitled to deduct such amount, subject to
applicable withholding requirements. Any further gain realized will be
taxed as short-term or long-term capital gain and will not result in any
deduction by the Company. A Disqualifying Disposition will eliminate
the item of tax preference associated with the exercise of the Incentive
Stock Option.
CHANGES IN PLAN
The Plan may be terminated, suspended, or modified at any time by
the board of directors, but no amendment increasing the maximum number
of shares for which option may be granted (except to reflect a stock
split, stock dividend or other distribution), reducing the option price
of outstanding options, extending the period during which options may be
granted, otherwise materially increasing the benefits accruing to
optionees or changing the class of persons eligible to be optionees
shall be made without first obtaining approval by a majority of the
shareholders of the Company. No termination, suspension or modification
of the Plan shall adversely affect any right previously acquired by the
optionee or other beneficiary under the Plan.
Options granted under the Plan may not be transferred other than by
will or by the laws of descent and distribution and, during the
optionee's lifetime may be exercised only by the optionee. All of the
Options previously issued under the prior plan remain unchanged and
outstanding.
VOTE REQUIRED
The approval of the SDI 2002 Stock Option Plan requires the
affirmative vote of a majority of the shares of Common Stock of our
company voting in person or by proxy on the amendment. If the proposal
is not approved by shareholders, it will not become effective.
THE BOARD RECOMMENDS A VOTE "FOR" PROPOSAL FOUR ADOPTING THE SDI
2002 STOCK OPTION PLAN
PROPOSAL FIVE:
TO AMEND OUR BYLAWS TO EFFECT A CHANGE IN OUR FISCAL YEAR END FROM
OCTOBER 31 TO THAT OF A CALENDAR YEAR END OR DECEMBER 31
REASONS FOR THE CHANGE IN FISCAL YEAR
We believe changing our fiscal year to a calendar year end would
bring us in line with the industry. We would have the standard year end
and our quarters would be on the standard quarterly ends. In addition,
we are considering qualifying for REIT tax status, and if we were to
pursue REIT tax status, we would be required to have a calendar year
end. Although we have not committed to pursue REIT tax status, in order
to keep the REIT option open we desire to have a calendar year end.
18
PROCEDURE FOR CHANGING FISCAL YEAR END
Our fiscal year end is set forth in our bylaws. To effect a change
in fiscal year end, we would amend our bylaws to set forth the new
fiscal year end.
VOTE REQUIRED
Although we are not required to have shareholder approval to
change our fiscal year end, we desire to obtain the affirmative vote of
a majority of the shares of Common Stock of the Company voting in person
or by proxy on the amendment. If the amendment is not approved by
shareholders, it may not become effective.
THE BOARD RECOMMENDS A VOTE "FOR" PROPOSAL FIVE TO AMEND OUR BYLAWS
TO CHANGE OUR FISCAL YEAR END FROM OCTOBER 31 TO A CALENDAR YEAR
END OR DECEMBER 31
=
PROPOSAL SIX:
TO RATIFY THE ACTIONS OF OUR OFFICERS AND DIRECTORS
We recommend that shareholders ratify the actions of our officers
and directors for the last fiscal year and for the time period from the
fiscal year end through the date of the special shareholder meeting.
=OTHER MATTERS
We know of no other matters that are to be presented for action at
the special meeting of stockholders other than those set forth above.
If any other matters properly come before the special meeting of
stockholders, the persons named in the enclosed proxy form will vote the
shares represented by proxies in accordance with their best judgment on
such matters.
=WHERE STOCKHOLDERS CAN FIND MORE INFORMATION
We file annual and quarterly reports with the Securities and
Exchange Commission. Stockholders may obtain,without charge, a copy of
the most recent Form 10-KSB (without exhibits) by requesting a copy in
writing or by telephone from us at the following address:
Book Corporation of America
Attention: Investor Relations
1725 East Warm Springs Road, Suite 10
Las Vegas, Nevada 89119
The exhibits to the Form 10-KSB are available upon
payment of charges that approximate reproduction costs. If you would
like to request documents, please do so by July 16, 2002, to receive
them before the special meeting of stockholders.
By order of the board of directors,
July 9, 2002 Ronald Robinson
President
19
STOCKHOLDERS ARE REQUESTED TO MARK, DATE AND SIGN THE ENCLOSED PROXY
AND RETURN IT IN THE ENCLOSED, SELF-ADDRESSED ENVELOPE.
NO POSTAGE IS REQUIRED IF MAILED IN THE UNITED STATES. YOUR PROMPT
RESPONSE WILL BE HELPFUL, AND YOUR COOPERATION WILL BE APPRECIATED.
Index of Annexes Attached to the Proxy Statement
ANNEX A.1 Articles of Incorporation of SDI, the new Nevada
corporation
ANNEX A.2 Bylaws of SDI, the new Nevada corporation
ANNEX B Agreement and Plan of Merger
ANNEX C Certificate of Merger
ANNEX D Amendment to Book Corporation of America Articles of
Incorporation
ANNEX E SDI Stock Option Plan
20
BOOK CORPORATION OF AMERICA
PROXY
The undersigned appoints Ronald Robinson with power of
substitution, to represent and to vote on behalf of the undersigned
all of the shares of Common Stock ("Common Stock"), of Book
Corporation of America, ("BCAM") which the undersigned is entitled to
vote at the special meeting of stockholders to be held at the offices
of Book Corporation of America, 1725 East Warm Springs Road, Suite 10,
Las Vegas, Nevada 89119, at 10:00 a.m., local time, on July 23, 2002,
and at any adjournments or postponements thereof, hereby revoking all
proxies heretofore given with respect to such stock, upon the
following proposals more fully described in the notice of, and joint
proxy statement and prospectus relating to, the meeting (receipt
whereof is hereby acknowledged).
THE BOARD OF DIRECTORS OF BOOK CORPORATION OF AMERICA RECOMMENDS A
VOTE "FOR" THE PROPOSALS DESCRIBED IN THE PROXY STATEMENT.
IF A PROXY IS SIGNED AND DATED BUT NOT MARKED, YOU WILL BE DEEMED TO
HAVE VOTED "FOR" THE PROPOSALS DESCRIBED IN THE PROXY STATEMENT.
1. To approve a resolution of our board of directors to change the
domicile of our corporation from Utah to Nevada:
|_| FOR |_| AGAINST |_| ABSTAIN
2a. Approval of the proposed amendment to the Articles of
Incorporation to effect a name change of our corporation to
Secured Diversified Investment, Ltd., or other such name as may
be available:
|_| FOR |_| AGAINST |_| ABSTAIN
2b. Approval of the proposed amendment to the Articles of
Incorporation to change the par value on the Common Stock of our
corporation from $.005 per share to $.001 per share:
|_| FOR |_| AGAINST |_| ABSTAIN
2c. Approval of the proposed amendment to the Articles of
Incorporation to authorize 50,000,000 shares of Preferred Stock
at a par value of $.01 per share, with the designation of rights,
preferences and privileges to be determined by our board of
directors:
|_| FOR |_| AGAINST |_| ABSTAIN
3. To elect the following director to our Board of Directors to
serve for a period of one year and until his successor shall be
elected and qualified:
Ronald Robinson |_| FOR |_| ABSTAIN
1
4. To adopt the SDI 2002 Stock Option Plan for purposes of Sections
162(m) and 422 of the Internal Revenue Code:
|_| FOR |_| AGAINST |_| ABSTAIN
5. To amend our bylaws to effect a change in our fiscal year
end from October 31 to a calendar year end or December 31:
|_| FOR |_| AGAINST |_| ABSTAIN
6. That the actions of our officers and directors for the last
fiscal year, and for the period from the fiscal year end through
the date of this special shareholder meeting, be and are hereby
ratified:
|_| FOR |_| AGAINST |_| ABSTAIN
7. To transact any other business as may properly come before
the meeting or at any adjournment thereof:
|_| FOR |_| AGAINST |_| ABSTAIN
This proxy, when properly executed, will be voted in the manner
directed herein by the undersigned stockholder. If you do not sign
and return this proxy card or attend the meeting and vote by ballot,
your shares cannot be voted. If you wish to vote in accordance with
the board of directors' recommendations, just sign where indicated.
You need not mark any boxes.
Please sign your name below exactly as it appears hereon. When
shares of Common Stock are held of record by joint tenants, both
should sign. When signing as attorney, executor, administrator,
trustee or guardian, please give full title as such. If a
corporation, please sign in full corporate name as its authorized
officer. If a partnership, please sign in partnership name as its
authorized person.
Dated: ______________, 2002
_______________________________ ______________________________
Signature (Title, if any) Signature if held jointly
PLEASE SIGN, DATE AND RETURN THIS PROXY PROMPTLY IN THE ENCLOSED
POSTAGE-PAID ENVELOPE. THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD
OF DIRECTORS.
2