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Institutional Equity Holdings Inc/NV – ‘10KSB’ for 12/31/99

On: Friday, 6/23/00, at 3:39pm ET · For: 12/31/99 · Accession #: 1018375-0-12 · File #: 0-27720 · Correction: This Filing was Deleted by the SEC on 7/5/00. `®`

  As Of                Filer                Filing    For·On·As Docs:Size              Issuer               Agent

 6/23/00  Inst’l Equity Holdings Inc/NV     10KSB      12/31/99    2:41K                                    Revere Fin’l Gp Inc/FA

Annual Report — Small Business — Form 10-KSB
Filing Table of Contents

Document/Exhibit                   Description                      Pages   Size 

 1: 10KSB       Bioaqua Systems, Inc.                                 23     82K 
 2: EX-27       Financial Data Schedule                                1      7K

10KSB — Bioaqua Systems, Inc.

10KSB 1st Page of 23 TOC ↑Top Previous Next ↓Bottom Just 1st
 
 U.S. SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 FORM 10-KSB

 ANNUAL REPORT UNDER SECTION 13 OR 15 (d) OF THE
 SECURITIES EXCHANGE ACT OF 1934

 For the fiscal year ended December 31, 1999

Commission file number 1-15046

BIO-AQUA SYSTEMS, INC.
----------------------
(Name of Small Business Issuer in its Charter)

 Florida 65-026233
 -------------------
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)

 350 East Las Olas Blvd., Suite 1700, Fort Lauderdale, Florida 33301
 -------------------------------------------------------------------
 (Address of Principal Executive Offices) (Zip Code)

 (954)766-7879
 (Issuer's Telephone Number)

 Securities registered under Section
 12(b) of the Act:

Class A Common Stock, $.0001 par value and Class A Common Stock Warrants
------------------------------------------------------------------------
(Title of Class)

Securities registered under Section 12(g) of the
Exchange Act: 

                                  None

Check  whether the issuer (1) filed all reports  required to be filed by Section
13 or 15 (d) of the  Exchange Act during the past 12 months (or for such shorter
period that the registrant was required to file such reports),  and (2) has been
subject to such filing requirements for the past 90 days. Yes [ ] No [X]        

Check if there is no disclosure of delinquent  filers in response to Item 405 of
Regulation S-B contained in this form, and no disclosure  will be contained,  to
the best of the  registrant's  knowledge,  in  definitive  proxy or  information
statements  incorporated  by  reference  in Part III of this Form  10-KSB or any
amendment to this Form 10-KSB. [ ]                                              

State issuer's revenues for its most recent fiscal year. $5,598,354             

State the  aggregate  market  value of the voting  stock held by  non-affiliates
computed by reference  to the price at which the stock was sold,  or the average
bid and asked  prices of such stock,  as of a specified  date within the past 60
days. $3,159,992.25 as of June 20, 2000.                                        

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(APPLICABLE ONLY TO CORPORATE REGISTRANTS)

State the number of shares outstanding of each of the issuer's classes of common
equity,  as of the latest  practicable  date:  June 20, 2000;  936,294 Shares of
Class A Common Stock and 1,700,000 Shares of Class B Common Stock.              

 DOCUMENTS INCORPORATED BY REFERENCE

- None -                                                                        

Transitional Small Business Disclosure Format (Check One)                       

Yes              No   X                                                         
--------        -------                                                 

This  special  financial  report is filed  under  Rule  15d-2 of the  Securities
Exchange Act of 1934.  The report  contains only  financial  statements for year
ended December 31, 1999.                                                        

6071-0100 284476.1                                                              

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                                  FINANCIAL STATEMENTS

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BIO-AQUA SYSTEMS, INC.

 COMBINED FINANCIAL STATEMENTS

DECEMBER 31, 1999 AND 1998

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INDEPENDENT AUDITORS' REPORT

Board of Directors                                                              
Bio-Aqua Systems, Inc.                                                          
Fort Lauderdale, Florida                                                        

We have audited the accompanying  combined  balance sheets of Bio-Aqua  Systems,
Inc. (the "Company") as of December 31, 1999 and 1998, and the related  combined
statements  of income,  stockholders'  equity and cash flows for the years ended
December  31,  1999  and  1998.  These  combined  financial  statements  are the
responsibility of the Company's management.  Our responsibility is to express an
opinion on these combined financial statements based on our audits.             

We  conducted  our  audits  in  accordance  with  generally   accepted  auditing
standards. Those standards require that we plan and perform the audits to obtain
reasonable assurance about whether the combined financial statements are free of
material  misstatement.  An audit includes examining,  on a test basis, evidence
supporting the amounts and disclosures in the combined financial statements.  An
audit also includes  assessing the accounting  principles  used and  significant
estimates  made by  management,  as well as  evaluating  the  overall  financial
statement  presentation.  We believe that our audits provide a reasonable  basis
for our opinion.                                                                

The  combined  financial  statements  give  retroactive  effect  to the tax free
exchange  of  shares  between  the  Company  and  Tepual,  S.A.,  which  will be
effectuated  at the time of the closing of a public  offering  of the  Company's
stock,  which has been  accounted for as a combination  of entities under common
control as described in Note 1 to the combined financial  statements.  Generally
accepted accounting principles prescribe giving effect to a consummated business
combination in financial statements that do not include the date of consummation
as if the business combination occurred for the periods presented.  In addition,
they will become the  historical  combined  financial  statements of the Company
after financial statements covering the date of consummation of the business are
issued.                                                                         

In our opinion,  the combined  financial  statements  referred to above  present
fairly, in all material  respects,  the financial  position of Bio-Aqua Systems,
Inc. as of December 31, 1999 and 1998, and the results of its operations and its
cash  flows for the years  then  ended in  conformity  with  generally  accepted
accounting  principles  applicable  after financial  statements are issued for a
period which includes the date of consummation of the business combination.     

SPEAR, SAFER, HARMON & CO.                                                      

Miami, Florida                                                                  
May 12, 2000                                                                    

 F-2

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BIO-AQUA SYSTEMS, INC.

 Combined Balance Sheets

December 31, 1999 and 1998

 A S S E T S

                                                                [Download Table]


                                            1999                      1998          
Current Assets:                                                                     
                                          ------------------------------------------
                                                                                    

    Cash                              $        102,621          $        136,489    
    Accounts receivable (Note 2)             2,239,870                 2,981,674    
    Other receivables                          242,937                    69,082    
    Inventory                                  594,283                   761,869    
    Income taxes receivable (Note 3)           120,122                    52,231    
    Offering costs                             303,496                        -     
    Other current assets (Note 4)              405,947                   183,325    
                                      ----------------          ----------------    

           Total Current Assets              4,009,276                 4,184,670    
                                      ----------------          ----------------    

Property and Equipment, net (Note 5)           752,854                   984,676    
                                      ----------------          ----------------    

Other assets (Note 6)                        1,564,179                   524,645    
                                      ----------------          ----------------    

                                      $      6,326,309          $      5,693,991    
                                      ================          ================    


The  accompanying  notes  are an  integral  part  of  these  combined  financial
statements.                                                                     

 F-3

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BIO-AQUA SYSTEMS, INC.

 Combined Balance Sheets (Continued)

December 31, 1999 and 1998

LIABILITIES AND STOCKHOLDERS' EQUITY

                                                        [Enlarge/Download Table]


                                                                                   1999                      1998       
Current Liabilities:                                                                                                    
                                                                        ------------------------------------------------
                                                                                                                        

   Accounts payable                                                          $        952,962          $        990,749 
   Obligations with banks (Note 7):                                                                                     
     Lines-of-credit                                                                2,194,123                 1,525,968 
     Current portion                                                                   80,743                   158,603 
   Notes payable (Note 8)                                                             644,415                   124,775 
   Bridge loan payable (Note 11)                                                      150,000                        -  
   Accrued expenses and other current liabilities (Note 9)                            211,137                   399,638 
   Due to stockholder                                                               1,300,000                        -  
                                                                             ----------------          ---------------  

         Total Current Liabilities                                                  5,533,380                 3,199,733 
                                                                             ----------------          ---------------- 

Long-Term Liabilities:                                                                                                  
   Obligations with banks, excluding current                                                                            
     portion (Note 7)                                                                 378,161                   478,813 
                                                                             ----------------          ---------------- 

Stockholders' Equity:                                                                                                   
   Class A common stock, $.0001 par value; 20,000,000 shares authorized,  86,294                                        
    shares issued and outstanding                                                                                       

    at December 31, 1999 (none in 1998)                                                     9                        -  
   Class B common stock, $.0001 par value; 2,000,000                                                                    
    shares authorized; 1,700,000 shares issued and                                                                      
    outstanding                                                                           170                       170 
   Preferred stock, $.0001 par value; 5,000,000 shares                                                                  
    authorized; no shares issued and outstanding                                           -                         -  
   Additional paid-in capital                                                         529,444                   411,331 
   Retained earnings                                                                  377,752                 1,662,100 
   Accumulated other comprehensive income                                            (492,607)                  (58,156)
                                                                             ----------------          ---------------- 

         Total Stockholders' Equity                                                   414,768                 2,015,445 
                                                                             ----------------          ---------------- 

                                                                             $      6,326,309          $      5,693,991 
                                                                             ================          ================ 


The  accompanying  notes  are an  integral  part  of  these  combined  financial
statements.                                                                     

 F-4

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BIO-AQUA SYSTEMS, INC.

 Combined Statements of Income

Years Ended December 31, 1999 and 1998

                                                        [Enlarge/Download Table]


                                           ------------------------  ------------------------
                                                     1999                      1998          
                                                                                             

Revenues                                       $      5,598,354          $      6,873,512    
Cost of Operations                                    3,807,789                 4,853,553    
                                               ----------------          ----------------    

Gross Profit                                          1,790,565                 2,019,959    

General and Administrative Expenses                   1,572,512                 1,555,661    
                                               ----------------          ----------------    

Income from Operations                                  218,053                   464,298    
                                               ----------------          ----------------    

Other Income (Expenses):                                                                     
   Other, net                                           237,815                    24,060    
   Interest expense                                    (440,216)                 (280,266)   
   Loss on investment in related parties                     -                    (23,082)   
   Gain on sale of property and equipment                    -                     54,963    
                                               ----------------          ----------------    

                                                       (202,401)                 (224,325)   
                                               ----------------          ----------------    

Net Income                                     $         15,652          $        239,973    
                                               ================          ================    

Earnings Per Common Share - Basic              $           0.01          $           0.14    
                                               ================          ================    

Weighted Average Common                                                                      

  Shares Outstanding                                  1,763,088                 1,700,000    
                                               ================          ================    

The  accompanying  notes  are an  integral  part  of  these  combined  financial
statements.                                                                     

 F-5

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BIO-AQUA SYSTEMS, INC.

 Combined Statements of Stockholders' Equity

                                                        [Enlarge/Download Table]


                                    Class A  Class B       Additional                        Accumulated Other            Total     
                               -----------------  -----------------  ---------------------  ----------------  --------------------- 
                                    Common   Common          Paid-in       Retained             Comprehensive          Stockholders'
                                     Stock------------  ---------------------  ---------------------  -------  ---------------------
                                             Stock           Capital        Earnings                Income                 Equity   
                                                                                                                                    

Balance at December 31, 1997    $   -      $  170      $   411,331       $ 1,422,127          $     (93,002)        $    1,740,626  

Net income                          -           -             -              239,973                     -                 239,973  

Translation adjustment              -           -             -                   -                  34,846                 34,846  
                              ---------   ----------   --------------    --------------          -------------         -------------

Balance at December 31, 1998        -         170          411,331         1,662,100                (58,156)             2,015,445  

Issuance of common stock            9          -           118,113               -                      -                 118,122   

Net income                          -          -              -              15,652                     -                  15,652   

Distribution to stockholder         -          -              -          (1,300,000)                    -              (1,300,000)  

Translation adjustment              -          -              -                  -                (434,451)              (434,451)  
                              ---------   ----------    --------------  -------------          -------------         -------------- 

Balance at December 31, 1999  $    9      $   170     $  529,444        $   377,752           $   (492,607)        $      414,768   
                                ========  ==========   ==============         ==============          =============   ==============


The  accompanying  notes  are an  integral  part  of  these  combined  financial
statements.                                                                     

 F-6

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BIO-AQUA SYSTEMS, INC.

 Combined Statements of Cash Flows

Years Ended December 31, 1999 and 1998

                                                        [Enlarge/Download Table]


                                                                                   1999                      1998       

-------------------------------------------------------------------------------------------------------------------     
                                                                                                                        

Cash Flows from Operating Activities:                                                                                   
   Net income                                                                $         15,652          $        239,973 
   Adjustments to reconcile net income to net cash                                                                      
    provided by (used in) operating activities:                                                                         
     Depreciation                                                                     259,602                   227,732 
     Loss on investment in related party                                                   -                     23,082 
     Gain on sale of property and equipment                                                -                    (54,963)
     Changes in assets and liabilities:                                                                                 
       Decrease (increase) in:                                                                                          
         Accounts receivable                                                          741,804                (1,398,403)
         Other receivables                                                           (173,855)                   (3,436)
         Inventory                                                                    167,586                  (463,923)
         Income taxes receivable                                                      (67,891)                   82,718 
         Other current assets                                                        (222,622)                   65,953 
       Increase (decrease) in:                                                                                          
         Accounts payable                                                             (37,787)                  696,726 
         Accrued        expenses        and        other        current              (188,501)                   90,218 
                                                                             ----------------          ---------------- 
liabilities                                                                                                             

Net Cash Provided by (Used in) Operating Activities                                   493,988                  (494,323)
                                                                             ----------------          ---------------- 

Cash Flows from Investing Activities:                                                                                   
   Acquisition of property and equipment                                              (27,780)                 (195,761)
   Proceeds from sale of property and equipment                                            -                    431,919 
   Other assets                                                                    (1,039,534)                 (463,103)
                                                                             ----------------          ---------------- 

Net Cash (Used in) Provided by Investing Activities                                (1,067,314)                 (226,945)

                                                                             ----------------          ---------------- 


The  accompanying  notes  are an  integral  part  of  these  combined  financial
statements.                                                                     

 F-7

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BIO-AQUA SYSTEMS, INC.

 Combined Statements of Cash Flows (Continued)

Years Ended December 31, 1999 and 1998

                                                        [Enlarge/Download Table]


                                                                                   1999                      1998       

-------------------------------------------------------------------------------------------------------------------     
                                                                                                                        

Cash Flows from Financing Activities:                                                                                   
   Net proceeds under lines-of-credit                                        $        668,155           $       332,630 
   Net proceeds from related parties                                                       -                    250,672 
   Proceeds from bridge loans                                                         150,000                        -  
   Costs of public offering                                                          (185,374)                       -  
   Proceeds of long-term debt                                                         519,640                   236,161 
   Payments of long-term debt                                                        (178,512)                  (25,720)
                                                                             ----------------           --------------- 

Net Cash Provided by Financing Activities                                             973,909                   793,743 
                                                                             ----------------           --------------- 

Effect of Exchange Rate Changes on Cash                                              (434,451)                   34,846 
                                                                             ----------------           --------------- 

(Decrease) Increase in Cash                                                           (33,868)                  107,321 

Cash - Beginning of Year                                                              136,489                    29,168 
                                                                             ----------------           --------------- 

Cash - End of Year                                                           $        102,621           $       136,489 
                                                                             ================           =============== 

Supplemental Disclosure of Cash Flow Information:                                                                       
   Cash paid during the year for interest                                    $        389,808           $       280,266 

Supplemental Disclosure of Non-Cash Financing Activities:                                                               
   Issuance of Class A common stock in connection                                                                       
     with offering                                                                    118,122                        -  
   Declaration of dividends payable to shareholder                                  1,300,000                        -  


The  accompanying  notes  are an  integral  part  of  these  combined  financial
statements.                                                                     

 F-8

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BIO-AQUA SYSTEMS, INC.

Notes to Combined Financial Statements (Continued)

BIO-AQUA SYSTEMS, INC.

Notes to Combined Financial Statements

Years ended December 31, 1999 and 1998

NOTE 1  -  ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES          

     Organization  -  Bio-Aqua  Systems,  Inc.,  (the  "Company"),  is a Florida
corporation  incorporated  in  ------------  March 1999 as a holding  company to
acquire Tepual, S.A., a Chilean corporation.  Tepual, S.A. is in the business of
research and  development  of production and control  systems  related to animal
nutrition.  The Company provides  brokerage services and technical advice in the
production of meals for feed for  aquaculture,  poultry and cattle  farming.  In
addition, the Company researches poultry vaccines.                              

     Basis of  Presentation  -  Subsequent  to December  31,  1998,  the Company
entered into an agreement to acquire 99.9% of the issued and outstanding  common
stock of Tepual,  S.A., in exchange for 1,700,000 shares of Class B common stock
which became  effective as of the closing of the initial public  offering of the
Company's  stock  (see Note 13).  In order to comply  with  Chilean  law and the
requirements  of the Central  Bank of Chile for foreign  investments,  two stock
purchase  agreements  will be  effectuated  at the  time of the  closing  of the
initial public offering of the Company's stock whereby (i) Atik, S.A.  ("Atik"),
a Chilean  corporation  and Flagship  Import Export LLC  ("Flagship"),  a Nevada
limited  liability  company,  shall purchase  1,699,900 shares of Class B common
stock and, (ii) the Company shall purchase Atik and Flagship's 99.9% interest in
Tepual,  S.A.  and  Tepual,  S.A.  shall then  become a majority  owned  (99.9%)
subsidiary of the Company.  The substance of this  transaction is an exchange of
shares  between the Company and Atik and Flagship  which is  accounted  for as a
combination  of entities under common  control.  Generally  accepted  accounting
principles  prescribe  giving effect to a consummated  business  combination  in
financial  statements  that do not  include the date of  consummation  as if the
business  combination  occurred at the beginning of the first period  presented.
Accordingly,  the combined  financial  statements for all periods presented have
been prepared  assuming the  acquisition by the Company took place on January 1,
1998, that the Company was incorporated on that date, and the exchange of shares
was  effectuated  at that time.  Because the Company was not formed  until March
1999,  historical  and proforma  financial  statements  are not included  herein
because  the  assets,  liabilities,  revenues  and  expenses  and net  income of
Bio-Aqua  Systems,  Inc. are not material to the  information  presented.  These
financial statements will become the historical combined financial statements of
the Company after financial  statements covering the date of consummation of the
business combination are issued.                                                

     Functional  Currency - The  financial  statements  have been  translated in
accordance  with the provisions  set forth in Statement of Financial  Accounting
Standards No. 52, from Chilean pesos (the  functional  currency) into US dollars
(the reporting currency). The exchange rates used at December 31, 1999 and 1998,
respectively,  was  530.07  pesos to U.S.  $1 and 531.11  pesos to U.S.  $1. The
weighted  average  exchange rate used for the years ended  December 31, 1999 and
1998 was 515.08 pesos to U.S. $1 and 465.98 pesos to U.S. $1, respectively.     

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NOTE 1  -  ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES          

(Continued)                                       

     Revenue Recognition - The Company earns revenues  principally from the sale
of different types of meals (fish, feather, and krill) used in the production of
animal feed as well as its automatic fish meal processing  control  system.  The
Company also researches vaccines and other types of meals for its customers.  In
the case of meal sales,  revenue is  recognized at the point of sale of goods to
its customers. Revenue associated with research services are recognized when the
services are performed.                                                         

     Revenue from contracts to install  automatic control devices are recognized
upon completion of the installation.                                            

     Royalty  income in included in other income and is  recognized on the basis
of terms specified in contractual agreements, normally as earned.               

     Concentrations  of Credit Risk - Financial  instruments  which  potentially
subject the Company to concentrations of credit risk consist principally of cash
and trade  receivables.  The Company  places its cash with high  credit  quality
financial  institutions.  A significant  portion of the  Company's  sales are to
several large  customers and, as such,  the Company is directly  affected by the
well-being of those  customers.  However,  the credit risk associated with trade
receivables is mitigated due to the Company's  customer base and ongoing control
procedures which monitor the credit worthiness of customers.  Historically,  the
Company has not experienced losses on trade receivables. Therefore, no allowance
for bad debts is deemed necessary. At December 31, 1999 and 1998,  approximately
20% of the Company's  consolidated  accounts  receivable was attributable to one
customer.                                                                       
     Inventory - Inventory consists primarily of fish,  feather,  and krill meal
and is stated  at the  lower of cost or  market.  Cost is  determined  using the
weighted average method (first-in, first-out).                                  

     Property  and  Equipment - Property  and  equipment  are  recorded at cost.
Depreciation  is provided on the  straight-line  method  based on the  estimated
useful life of the asset ranging from three to ten years.                       

     Software  Development  Cost - The  Company  develops  and  manufacturers  a
computerized  process to facilitate the production of the highest nutrient level
in fish meal. In accordance with Statement of Financial Accounting Standards No.
86,  "Accounting  for the  Costs of  Computer  Software  to be Sold,  Leased  or
Otherwise  Marketed," the Company  expensed all research and  development  costs
associated with the  development of software  products used in the processing of
fish meal.  Initial costs were charged to  operations  as research  prior to the
development  of a detailed  program  design or a working  model.  Costs incurred
subsequent to the  development  of a working model were  immaterial and thus not
capitalized.  Research  and  development  costs of  approximately  $672,000  and
$581,000 for the years  ending  December  31, 1999 and 1998,  respectively,  are
charged to operations and included in general and administrative expenses.      

F - 10

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NOTE 1  -  ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES          

(Continued)                                       

     Income Taxes - Deferred tax assets and  liabilities  are recognized for the
future income tax consequences attributable to differences between the financial
statement  carrying  amounts  of  existing  assets  and  liabilities  and  their
respective  tax bases.  Deferred tax assets and  liabilities  are measured using
enacted  tax rates  expected  to apply to  taxable  income in the years in which
those temporary  differences are expected to be recovered or settled. The effect
on deferred tax assets and liabilities of a change in tax rates is recognized in
income in the period that includes the enactment date.                          

     Foreign Operations - As the Company operates almost exclusively  outside of
the United  States,  one must be aware of the  potential  for both  economic and
political change in the business environment,  different than that of the United
States.  The  success  of the  Company  depends on the  success  of its  foreign
operations and a stable economic and political environment of those countries.  

     Comprehensive  Income - During  1998,  the  Company  adopted  Statement  of
Financial  Accounting  Standards  ("SFAS")  No.  130,  "Reporting  Comprehensive
Income".  SFAS 130  establishes  new  rules for the  reporting  and  display  of
comprehensive  income and its components,  including but not limited to, foreign
currency translation  adjustments.  The adoption of this statement had no impact
on the Company's net income or shareholders' equity.                            

     Total  comprehensive  income  for 1999  and  1998,  respectively,  includes
cumulative translation adjustments of approximately $400,000 and $60,000.       

     Earnings (Loss) Per Common Share - Basic - Earnings (loss) per common share
- basic is  calculated  using the weighted  average  number of common shares and
dilutive  potential  common  stock  outstanding  during the year.  The number of
shares  used in the per share  computations  were  1,763,088  and  1,700,000  at
December 31, 1999 and 1998, respectively.  Potential common stock, when included
in the computation of dilutive earnings per share, was anti-dilutive at December
31, 1999 and 1998.                                                              

     Recent   Pronouncements  -  In  February  1998,  the  Financial  Accounting
Standards  Board  issued  Statement of Financial  Accounting  Standards  No. 132
"Employers'  Disclosures About Pensions and Other  Postretirement  Benefits - An
Amendment of FASB  Statements No. 87, 88, and 106" which is effective for fiscal
years  beginning  after  December  15,  1997.  SFAS  No.  132  revises  only the
employers'  disclosures about pension and other postretirement benefit plans; it
does not change the measurement or recognition of such plans.  Since the Company
does  not have  such  plans,  there  is no  impact  to the  Company's  financial
reporting or presentation due to the adoption of SFAS No. 132.                  

F - 11

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NOTE 1  -  ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES          

(Continued)                                       

     In June 1998, the Financial  Accounting Standards Board issued Statement of
Financial  Accounting  Standards No. 133 "Accounting for Derivative  Instruments
and Hedging  Activities"  which is effective for fiscal periods  beginning after
June 15, 2000. The Company does not expect a material  impact upon its financial
reporting or presentation due to the adoption of SFAS No. 133.                  

     In October 1998, the Financial  Accounting Standards Board Issued Statement
of  Financial  Accounting  Standards  No. 134  "Accounting  for  Mortgage-Backed
Securities  Retained After the Securitization of Mortgage Loans Held for Sale by
a Mortgage Banking  Enterprise"  which is effective for the first fiscal quarter
beginning after December 15, 1998. There is no impact to the Company's financial
reporting or presentation due to the adoption of SFAS No. 134.                  

     In February 1999, the Financial Accounting Standards Board Issued Statement
of Financial  Accounting  Standards No. 135  "Recission of FASB Statement No. 75
and Technical  Corrections"  which is effective for financial  statements issued
after February 15, 1999. There is no impact to the Company's financial reporting
or presentation due to the adoption of SFAS No. 135.                            

     Estimates - The  preparation  of financial  statements in  conformity  with
generally accepted  accounting  principles requires management to make estimates
and assumptions  that affect certain  reported amounts of assets and liabilities
and disclosure of contingent assets and liabilities at the date of the financial
statements  and the  reported  amounts  of  revenues  and  expenses  during  the
reporting period. Actual results could differ from those estimates.             

NOTE 2  -  RELATED PARTY TRANSACTIONS                                           

     During 1998, the Company earned royalty income of approximately $9,000 from
an affiliated company (none in 1999).                                           

     During  1999 and  1998,  the  Company  made  advances  to  other  companies
affiliated by common ownership. As of December 31, 1999 and 1998,  approximately
$358,000 and $187,000,  respectively,  were due from these affiliates, which are
included in accounts receivable on the accompanying balance sheets.             

NOTE 3  - INCOME TAXES                                                          

     In Chile, the Company is subject to income taxes at a statutory rate of 15%
of taxable income,  as defined.  For the years ended December 31, 1999 and 1998,
the Company had no taxable income due to various credits and incentives provided
by the government of Chile. In addition,  the Company made estimated  income tax
payments during those years which will be refunded.  The resulting receivable is
included in current assets in the accompanying                                  
balance sheets.                                     

F - 12

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NOTE 3  - INCOME TAXES  (Continued)                                             

         The following is a reconciliation of the statutory tax rates:

                                                        [Enlarge/Download Table]
                                                                                                                   

                                                                                   1999                 1998       

-------------------------------------------------------------------------------------------------------------------
              Statutory tax rate                                                       15%                  15%    
              Benefit of credits and incentives from government                       (15)                 (15)    
                                                                               ----------           ----------     

              Effective tax rate                                                        0%                   0%    
                                                                               ==========           ==========     

              The  Company  was not liable for U.S.  income  taxes for the years
              ended  December  31,  1999 and 1998,  because  all  earnings  were
              generated  by  the  Chilean   subsidiary   and  no  earnings  were
              repatriated to the Company for these reporting periods. Therefore,
              no deferred tax assets or liabilities  are  attributable  to these
              years other than those  reported by the subsidiary in its regional
              operations.  A deferred tax liability  was  recognized at December
              31,  1998 for  approximately  $74,000,  and is included in accrued
              expenses and other current liabilities.  No deferred tax liability
was recognized at December 31, 1999.                

NOTE 4  -  OTHER CURRENT ASSETS                                                 

          Other current assets consist of the following at December 31,:

                                                        [Enlarge/Download Table]
                                                                                                                   

                                                                               1999                      1998      

-------------------------------------------------------------------------------------------------------------------
              Prepaid expenses                                          $      100,040             $        8,325  
              Advances to suppliers                                            246,300                    175,000  
              Bridge loan financing                                             59,607                         -   
                                                                        --------------             -------------   

                                                                        $      405,947             $      183,325  
                                                                        ==============             ==============  


F - 13

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NOTE 5  -  PROPERTY AND EQUIPMENT                                               

Property and equipment consists of the following as of December 31,:  

                                                        [Enlarge/Download Table]
                                                                                                                   

                                                                           1999                      1998          

-------------------------------------------------------------------------------------------------------------------
              Furniture and fixtures                                  $       155,032          $        154,928    
              Machinery and equipment                                       1,536,188                 1,508,512    
              Buildings and improvements                                      238,053                   238,053    
              Land                                                             39,511                    39,511    
              Other                                                            95,531                    95,531    
              Vehicles                                                         94,446                    94,446    
                                                                      ---------------          ----------------    

                                                                            2,158,761                 2,130,981    

              Less accumulated depreciation                                (1,405,907)               (1,146,305)   
                                                                      ---------------          ----------------    

                                                                      $       752,854          $        984,676    
                                                                      ===============          ================    

     Depreciation expense was $259,602 and $227,732 for the years ended December
31, 1999 and 1998, respectively.                                                

NOTE 6  -  OTHER ASSETS                                                         

              The Company has advanced approximately  $1,550,000 and $500,000 to
              a  fishing  vessel  company  as of  December  31,  1999 and  1998,
respectively, (see Note 10).                        

NOTE 7  - OBLIGATIONS WITH BANKS                                                

            Obligations with banks consist of the following at December 31,:

                                                        [Enlarge/Download Table]
                                                                                                                        

                                                                                       1999                    1998     

-------------------------------------------------------------------------------------------------------------------     
              Lines-of-credit with monthly, semiannual and                                                              
               annual maturity dates and interest rates ranging                                                         
               from 9% to 13.8% APR.; fully collateralized by                                                           
               a personal guarantee from a stockholder and                                                              
               certain assets of the Company.  Currency:                                                                
               Chilean Pesos and UF                                             $    2,194,123            $    1,525,968
                                                                                ==============            ==============

F - 14

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NOTE 7  - OBLIGATIONS WITH BANKS (Continued)                                    

     Long-term debt consists of the following at December 31,:

                                                        [Enlarge/Download Table]
                                                                                                                        

                                                                                       1999                    1998     

-------------------------------------------------------------------------------------------------------------------     
              Note payable to bank with  maturity date in January 2005 and fully                                        
               collateralized  by a personal  guarantee  from a stockholder  and                                        
               certain assets of the Company, bearing interest                                                          

               at 13.7%.  Currency:  Chilean Pesos and UF                        $      458,904           $     637,416 

              Less:  Current portion                                                    (80,743)               (158,603)
                                                                                 --------------           ------------- 

                                                                                 $      378,161           $     478,813 
                                                                                 ==============           ============= 

     Interest  rates on all of these loans are based on the Asociacion de Bancos
y Entidades Financieras,  (T.A.B.) rate, which represents a daily average of the
interest  paid by  banks on its  deposits.  The  rate is then  adjusted  upwards
approximately  1.5% for the banks  profit,  and then an  additional  1.0% - 1.7%
reflecting the individual risk of the bank on the individual  loan. There are no
covenants or restrictions imposed on the aforementioned  obligations with any of
the banks involved.                                                             

              The UF (Unidad de Fomento) is an indexed unit of account expressed
in pesos and adjusted according to inflation (CPI). 

Future maturities of long-term debt are as follows: 

Year Ending                                       

December 31,                                        

           2000                                    $        80,743
           2001                                             84,777
           2002                                             89,179
           2003                                             93,984
           2004                                             99,226
           2005                                             10,995
                                                           ---------------

                                                   $       458,904

F - 15

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NOTE 8  -  NOTES PAYABLE                                                        

              Notes payable consist of various short-term loans bearing interest
              at rates ranging from 12% to 14% per annum.  The notes are secured
              by   approximately   $274,000   of   accounts   receivable,    and
shareholders' personal guarantees.                  

NOTE 9 - ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES                         

              Accrued  expenses  and other  current  liabilities  consist of the
following at December 31,:                                                      

                                                        [Enlarge/Download Table]
                                                                                                                   

                                                                            1999                    1998           

-------------------------------------------------------------------------------------------------------------------
              Salaries and employee related payables                   $      101,152         $      120,925       
              Sales and other taxes payable                                    48,885                 87,367       
              Deferred taxes                                                       -                  73,932       
              Other                                                            61,100                117,414       
                                                                       --------------         --------------       

                                                                       $      211,137         $      399,638       
                                                                       ==============         ==============       

NOTE 10 - COMMITMENTS AND CONTINGENCIES                                         

              Operating Leases - The Company leases various offices in Santiago,
              Chile  pursuant to  operating  leases.  Rent expense for the years
              ended  December 31, 1999 and 1998 totaled  approximately  $114,000
and $110,000, respectively.                         

          Future minimum rental payments under the lease are as follows:

               Year Ending                                        Annual
                 December 31,                                     ------------
-----------------                                 
                                                                Payments

                 2000                                   $        102,000
                                                              ================

              Commercial  Agreement - During 1998,  the Company  entered into an
              agreement  with Kelor  Trading  Ltd.  ("Kelor")  a fishing  vessel
              company,  for the  exclusive  rights to  Kelor's  krill  products.
              Pursuant to the  agreement,  the Company has  committed to advance
              Kelor up to  $2,000,000  for its  exploration.  In  return,  Kelor
              agrees to pay the Company the  following;  (i) a 3%  commission of
              sales,  (ii) $20 per ton of krill  meal sold and (iii) 5% of krill
         oil produced on board by the Company's technological package.
F - 16

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NOTE 10 - COMMITMENTS AND CONTINGENCIES (Continued)                             

     As of  December  31,  1999 and 1998,  the  Company  advanced  approximately
$1,550,000  and  $500,000,  respectively,  to Kelor  which is  included in other
assets on the accompanying 1999 and 1998 combined balance sheets. This agreement
is due within 18 months with  interest at an annual rate of 13.5%.  For the year
ended December 31, 1999, the Company  recorded  interest income of approximately
$150,000 in the accompanying combined statements of                             
income.                                             

     In order to finance  these  advances to Kelor,  the  Company  had  borrowed
approximately $1,500,000 during 1999 from its available bank line-of-credit. The
Company  expects  that  during  the year  2000,  Kelor will repay all the monies
advanced under this agreement to the Company.                                   

NOTE 11 - OTHER MATTERS                                                         

     Royalty Agreements - In June 1998, the Company and a non-profit corporation
(CECS)  entered into a 10-year  agreement with  R-Biopharm  GMBH  (Biopharm),  a
German company,  in which the Company and CECS has agreed to provide  technology
it  possesses  with  respect to a red-tide  detection  kit. In exchange for this
technology,  the Company and CECS will receive  12.5%  royalties of net sales of
the detection kit.  Biopharm did not pay any amounts during 1999 but is expected
to pay a minimum of $15,000 for each remaining  year under the agreement.  Sales
of this red tide  detection  kit are  expected to begin in the first  quarter of
2000. The royalties,  including the minimum payments,  will be shared 60% by the
Company and 40% by CECS.                                                        

     Under a separate  agreement,  dated June 20, 1998, between Inual (a company
related  through  common  ownership)  and  Biopharm,  Inual has agreed to supply
Biopharm  with all toxins and  conjugates  necessary  to  produce  the  red-tide
detection test kit. This agreement  provides that Inual shall receive  royalties
of 12.5% of the net sales of the test kit for 10 years dated from the  execution
of the agreement. Biopharm did not pay any royalties during 1999 but is expected
to pay a minimum of $15,000 for each remaining  year under the  agreement.  This
payment  constitutes  minimum  royalties  against  the  12.5% of net sales on an
annual basis.  In addition to this 12.5% royalty,  Inual shall receive  $400,000
from Biopharm in consideration  for supplying  Biopharm with a customer list for
the future  potential  sales of the test kit. This payment is due two years from
the date of the  agreement.  Inual  transferred  this contract to the Company in
July 1999 and the Company shall receive 100% of its benefits.                   

     Bridge  Loan - In April and May 1999,  the  Company  entered  into  several
bridge loans  totaling  $150,000 with  investors  which were used for short-term
operations. These loans are evidenced by promissory notes bearing interest at 8%
per year.  The Company is  obligated to repay these notes the earlier of (i) the
closing  date of the  aforementioned  initial  public  offering,  or (ii)  dates
ranging from October 30, 1999 to January 15, 2001. As additional  consideration,
the  investors  received  35,294 shares of Class A common stock valued at $3 per
share.  The Company  has  capitalized  these  costs which are  included in other
current  assets and are being  amortized  over the term of the  loans.  Interest
expense relating to these loans amounted to approximately $50,000 for the       
year ended December 31, 1999.                       

F - 17

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NOTE 11 - OTHER MATTERS (Continued)                                             

     Trademarks  - In June  1999,  the  Company  entered  into an  agreement  to
purchase  the  outstanding  common  stock of Profeed,  Inc.,  an entity  related
through common control,  upon completion of the initial public offering ("IPO").
Profeed's sole assets consist of the Tepual and Inual  trademarks and has had no
other  activity  since its  inception.  The Company  will  purchase  Profeed for
$1,300,000,  of which  $400,000 will be paid out of the proceeds of the IPO. The
balance  will be paid either  from sales of  products  sold under the Tepual and
Inual brands, third party financing, or other working capital.                  

     As the above  transaction is between  related parties under common control,
the above  mentioned  assets must be  accounted  for at  historical  cost.  Such
amounts are immaterial and therefore, not reflected in the financial statements.
Due to the related  party  nature of this  transaction,  the  purchase  price of
$1,300,000 is recorded as a distribution and a liability, due to stockholder, in
the accompanying December 31, 1999 combined financial statements.               

     Rental and  Consulting  Agreement - In 1999,  the Company  entered  into an
agreement with an affiliate of one of the Company's directors to perform certain
services  including  acting as the U.S.  liaison,  renting  of office  space and
rendering  certain  financial,  advisory and consulting  services,  at an annual
payment of $30,000.                                                             

     Employment  Agreements  - In 1999,  the Company  entered  into a three year
agreement  with  the  Company's  President  and a two  year  agreement  with the
Company's Chief Financial  Officer.  Pursuant to the terms and conditions of the
employment agreements, the President shall receive an initial annual base salary
of $200,000 and the Chief Financial Officer shall receive an initial annual base
salary of  $100,000  commencing  on March 29, 2000 (the date the  Company's  IPO
became  effective).  In  addition  to the base  salaries,  they are  entitled to
receive various incentives and other  compensation  amounting up to $100,000 and
$20,000 as President and Chief Financial Officer, respectively.                 

     Stock Option Plan -  Subsequent  to year end, the Board of Directors of the
Company and a majority of the Company's shareholders adopted a Stock Option Plan
(the  "Plan").  The  Company  will  reserve a small  amount  of shares  (not yet
determined) of Class A common stock for issuance under the Plan. No options have
been issued to date.                                                            

NOTE 12 - INDUSTRY SEGMENT AND OPERATIONS BY GEOGRAPHIC AREAS                   

     The Company operates predominantly in one industry segment - that being the
production,  research, and development of animal nutrition and related products.
During 1999 and 1998, sales to the top five customers  amounted to approximately
57% and 65%, respectively, of total sales.                                      

     Customers  outside Chile are  worldwide,  but  primarily in South  America,
United  States,  Asia,  Europe and  Australia.  No single  country or geographic
region  is  significant  to the  overall  operations  of the  Company.  All  the
Company's assets are located within Chile.                                      

F - 18

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NOTE 13 - SUBSEQUENT EVENTS                                                     
     On March 29, 2000, the Securities and Exchange  Commission ("SEC") declared
effective the Company's  registration  statement in connection  with the initial
public offering  ("IPO") of the Company's  stock. A total of 425,000 units (each
unit  consisting  of 2 shares of Class A Common  Stock and 2  Redeemable  Common
Stock  Purchase  Warrants)  were  sold  at a  price  of  $10  per  unit  to  the
underwriters. The net proceeds raised in connection with the IPO were $3,697,500
after  underwriters  discounts of $552,500.  The proceeds will be used to reduce
bank debt and for  trading,  research  and  development,  marketing  and working
capital.                                                                        

F - 19

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SIGNATURES

         In accordance  with Section 13 of 15(d) of the Exchange Act of 1934, as
amended,  Bio-Aqua  caused  this  report  to be  signed  on  its  behalf  by the
undersigned on June 22, 2000.                                                   

                                          Bio-Aqua Systems, Inc.

                                         By: /s/Max Rutman

                                             ---------------------
                                         President and Chief Executive Officer

         In accordance  with the  requirements of the Exchange Act of 1934, this
report was signed by the  following  persons in the  capacities  and on the date
stated above.                                                                   

Signatures                                   Title            

/s/ Max Rutman                              President and Chief Executive     
---------------------------------------                                         
Max Rutman                                   Officer and Director (Principal    
                            Executive Officer)

/s/ Guillermo Quiroz                        Chief Financial Officer           

Guillermo Quiroz                             (Principal Financial and           
                             Accounting Officer)

/s/ Nestor Lagos                            Director                          
Nestor Lagos                                                                    

/s/ Sergio Vivanco                          Director                          
Sergio Vivanco

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Dates Referenced Herein and Documents Incorporated by Reference

		Referenced-On Page
This ‘10KSB’ Filing	Date	First	Last	Other Filings

	1/15/01	20
	12/31/00	18		10KSB40, NT 10-K
Deleted on:	7/5/00
Filed on:	6/23/00
	6/22/00	23
	6/20/00	1	2
	6/15/00	15
	5/12/00	5
	3/29/00	21	22
For Period End:	12/31/99	1	21	10-K, NTN 10Q
	10/30/99	20
	2/15/99	15
	12/31/98	4	20	10-K, NT 10-K
	12/15/98	15
	6/20/98	20
	1/1/98	12
	12/31/97	9		10-K
	12/15/97	14
				List all Filings

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Filing Submission 0001018375-00-000012 – Alternative Formats (Word / Rich Text, HTML, Plain Text, et al.)

Institutional Equity Holdings Inc/NV – ‘10KSB’ for 12/31/99

On: Friday, 6/23/00, at 3:39pm ET · For: 12/31/99 · Accession #: 1018375-0-12 · File #: 0-27720 · Correction: This Filing was Deleted by the SEC on 7/5/00. ®

Annual Report — Small Business — Form 10-KSBFiling Table of Contents

10KSB — Bioaqua Systems, Inc.

Dates Referenced Herein and Documents Incorporated by Reference

On: Friday, 6/23/00, at 3:39pm ET · For: 12/31/99 · Accession #: 1018375-0-12 · File #: 0-27720 · Correction: This Filing was Deleted by the SEC on 7/5/00. `®`

Annual Report — Small Business — Form 10-KSB
Filing Table of Contents