UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K/A
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): May 27, 2005
MARKETSHARE RECOVERY, INC.
(Exact name of registrant as specified in its charter)
Delaware 0-15807 31-1190725
-------- ------- ----------
(State of Incorporation) (Commission File Number) (IRS Employer
Identification No.)
33 South Service Road, Suite 111
Jericho, NY 11753
(Address of Principal Executive Offices)
(516) 750-9733
--------------
(Registrant's telephone number, including area code)
95 Broadhollow Road, Suite 101
Melville, NY 11747
------------------
(former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of the
following provisions:
|_| Written communications pursuant to Rule 425 under the Securities Act
(17 CFR 230.425)
|_| Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17
CFR 240.14a-12)
|_| Pre-commencement communications pursuant to Rule 14d-2(b) under the
Exchange Act (17 CFR 240.24d-2(b))
|_| Pre-commencement communications pursuant to Rule 13e-4(c) under the
Exchange Act (17 CFR 240.23e-4(c))
We are filing this amendment to file financial statements and pro forma
financial information Descriptive Memorandum related to our recent acquisition
of bioMETRX Technologies, Inc.
Item 2.01 Completion of Acquisition or Disposition of Assets
Introduction
On May 27, 2005, we completed the merger ("Merger") of MarketShare Merger Sub,
Inc., a wholly owned subsidiary of the Company ("Merger Sub") with bioMetrx,
Technologies, Inc., a Delaware corporation ("bioMetrx") pursuant to the
Agreement and Plan of Merger dated April 27, 2005, by and among the Company
Merger Sub and bioMetrx ("Merger Agreement").
The Transactions
On June 1, 2005 (the "Effective Date"), Merger Sub, our wholly owned subsidiary,
filed a Merger Certificate completing the acquisition of bioMetrx, a previously
unaffiliated Delaware corporation. The consideration for the Merger was
14,218,424 restricted shares of our common stock and the issuance of
approximately 182,026 stock options to the holders of corresponding instruments
in bioMetrx. The Merger was completed according to the terms of the Merger
Agreement. Simultaneously with the Merger, certain of our stockholders
surrendered 2,208,521 shares of our common stock which was cancelled and
returned to the status of authorized and unissued. In addition, 300,000 shares
of our common stock were deposited by these stockholders into escrow to cover
contingent liability, if any. Our shares of common sock were issued in reliance
upon Section 4(2) and 4(6) of the Securities Act of 1933, as amended (the
"Act"). As a result of the Merger, bioMetrx was merged into Merger Sub and
became our wholly owned subsidiary.
Since we had no meaningful operations immediately prior to the Merger, the
Merger will be treated as a reorganization of bioMetrx via a reverse merger with
the MarketShare Recovery, Inc. for accounting purposes.
The 14,000,000 shares and the shares issuable upon the exercise of 402,500 stock
options issued as part of the Merger to the former bioMetrx stockholders
represent approximately 90% of total outstanding post-merger stock.
Founded in 2001, bioMetrx, Technologies, Inc. is developing a line of home
security products under the trade name SmartTouch(TM) which includes
biometrically enabled thermostats, garage/gate openers, central station keypads,
and residential door locks. More detailed information is furnished pursuant to
Item 7.01 below.
Item 9.01 Financial Statements and Exhibits
The Financial Statement required by Item 310 of Regulation S-B is stated in U.S.
dollars and are prepared in accordance with U.S. Generally Accepted Accounting
Principles. The following financial statements pertaining to bioMetrx, Inc. are
filed as an amendment to this report.
2
(a) Financial Statements of bioMETRX Technologies, Inc.
o Report of Independent Registered Public Accounting Firm
o Balance Sheets as of December 31, 2004 and March 31, 2005
(unaudited).
o Statement of operations for the years ended December 31, 2004 and
2003 and the period from February 1, 2001 (inception) to March 31,
2005 unaudited and three months ended March 31, 2005 (unaudited).
o Statements of cash flows for the years ended December 31, 2004 and
2003 and the period from February 1, 2001 (inception) to March 31,
2005 unaudited and for the three months ended March 31, 2005
(unaudited).
o Statements of changes in stockholders' equity for the period from
February 1, 2001 (inception) to December 31, 2004 and for the three
months ended March 31, 2005 (unaudited).
o Notes to Financial Statements
(b) Pro Forma Financial Information
o Unaudited pro forma condensed consolidated balance sheet as of March
31, 2005.
o Notes to pro forma condensed consolidated financial statements.
3
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
MARKETSHARE RECOVERY, INC.
By: /s/ Mark Basile
---------------------------------
Mark Basile, CEO
Dated: August 31, 2005
4
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
The Board of Directors and Stockholders
bioMetrx Technologies, Inc.
We have audited the accompanying balance sheet of bioMetrx Technologies, Inc.(A
Development Stage Company) ("the Company") as of December 31, 2004, and the
related statements of operations, changes in stockholders' deficit and cash
flows for the years ended December 31, 2004 and 2003 and for the period August
1, 2001 (inception) to December 31, 2004. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audits.
We conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. The Company is not required to
have, nor were we engaged to perform, an audit of its internal control over
financial reporting. Our audit included consideration of internal control over
financial reporting as a basis for designing audit procedures that are
appropriate in the circumstances, but not for the purpose of expressing an
opinion on the effectiveness of the Company's internal control over financial
reporting. Accordingly, we express no such opinion. Also, an audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of bioMetrx Technologies, Inc. as
of December 31, 2004 and the results of its operations and its cash flows for
the years ended December 31, 2004 and 2003 and for the period August 1, 2001
(inception) to December 31, 2004 in conformity with accounting principles
generally accepted in the United States of America.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note 1 to the
financial statements, the Company is a development stage company whose
operations have generated recurring losses and cash flow deficiencies for the
years ended December 31, 2004 and 2003. In addition, as of December 31, 2004 the
Company has a significant working capital deficit and stockholders' deficit.
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 described in
Note 1. The financial statements do not include any adjustments that might
result from the outcome of this uncertainty.
/s/ Wolinetz, Lafazan & Company, P.C.
WOLINETZ, LAFAZAN & COMPANY, P.C.
Rockville Centre, New York
August 11, 2005
BIOMETRX TECHNOLOGIES, INC.
(A Development Stage Company)
BALANCE SHEET
MARCH 31, 2005
December 31, 2004 (UNAUDITED)
----------------- --------------
ASSETS
Current Assets:
Cash $ 31,111 $ 299,354
Restricted Cash -- 275,000
Loans Receivable- Stockholder/Officer 302,028 231,404
Due from Related Party -- 75,000
-------------- --------------
Total Current Assets 333,139 880,758
Other Assets:
Security Deposit -- 2,860
-------------- --------------
TOTAL ASSETS $ 333,139 $ 883,618
============== ==============
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current Liabilities:
Payroll Taxes Payable $ 26,634 $ 40,989
Accrued Expenses 85,374 73,426
Accrued Compensation - Stockholder/Officers 780,000 835,000
Commissions Payable -- 105,000
-------------- --------------
Total Current Liabilities 892,008 1,054,415
-------------- --------------
TOTAL LIABILITIES 892,008 1,054,415
-------------- --------------
Commitments and Contingencies
Stockholders' Deficit:
Common Stock, $.001 par value;
20,000,000 shares authorized,
9,540,999 shares issued and
outstanding as of December 31,
2004 and 11,070,999 shares
issued and outstanding as of March 31, 2005 9,541 11,071
Additional Paid-In Capital 1,015,209 1,713,679
Deferred Compensation (6,250) (91,667)
Deficit Accumulated During the Development Stage (1,577,369) (1,803,880)
-------------- --------------
Total Stockholders' Deficit (558,869) (170,797)
-------------- --------------
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT $ 333,139 $ 883,618
============== ==============
The accompanying notes are an integral part of these financial statements.
BIOMETRX TECHNOLOGIES, INC.
(A Development Stage Company)
STATEMENT OF OPERATIONS
FOR THE PERIOD
FEBRUARY 1, 2001
FOR THE YEAR FOR THE YEAR THREE MONTHS ENDED THREE MONTHS ENDED (INCEPTION) TO
ENDED ENDED MARCH 31, 2004 MARCH 31, 2005 MARCH 31, 2005
DECEMBER 31, 2003 DECEMBER 31, 2004 (UNAUDITED) (UNAUDITED) (UNAUDITED)
----------------- ----------------- ------------------ ------------------ ----------------
REVENUES $ -- $ -- $ -- $ -- $ --
----------- ----------- ----------- ----------- -----------
Expenses:
General and
Administrative
Expenses 414,053 581,306 123,179 179,566 1,180,509
Research and
Development
Expenses 27,066 128,575 59 32,362 190,038
Compensatory Element
of Stock Issuances 85,417 58,333 14,583 14,583 433,333
----------- ----------- ----------- ----------- -----------
TOTAL EXPENSES 526,536 768,214 137,821 226,511 1,803,880
----------- ----------- ----------- ----------- -----------
NET LOSS $ (526,536) $ (768,214) $ (137,821) $ (226,511) $(1,803,880)
=========== =========== =========== =========== ===========
The accompanying notes are an integral part of these financial statements.
BIOMETRX TECHNOLOGIES, INC.
(A Development Stage Company)
STATEMENT OF CASH FLOWS
FOR THE
PERIOD
THREE MONTHS THREE MONTHS FEBRUARY 1,
FOR THE FOR THE ENDED ENDED 2001 (INCEPTION)
YEAR ENDED YEAR ENDED MARCH 31, MARCH 31, TO MARCH 31,
DECEMBER 31, DECEMBER 31, 2004 2005 2005
2003 2004 (UNAUDITED) (UNAUDITED) (UNAUDITED)
------------ ------------ ------------ ------------ ----------------
Cash Flows from Operating Activities:
Net Loss (526,536) (768,214) (137,821) (226,511) (1,803,880)
Adjustment to reconcile net loss
to net cash provided by (used) in
operating activities:
Compensatory Element of Stock
Issuances 85,417 58,333 14,583 14,583 433,333
Increase (Decrease) In
operating assets and liabilities:
Security Deposit -- -- -- (2,860) (2,860)
Payroll Taxes Payable 10,428 16,206 9,180 14,355 40,989
Accrued Expenses -- 85,374 -- (11,948) 73,426
Accrued Compensation -
Stockholder/Officers 360,000 420,000 105,000 105,000 885,000
----------- ----------- ----------- ----------- -----------
Net Cash Provided by (Used) in
Operating Activities (70,691) (188,301) (9,058) (107,381) (373,992)
----------- ----------- ----------- ----------- -----------
Financing Activities:
Restricted Cash -- -- -- (275,000) (275,000)
Merger Related Advances -- -- -- (75,000) (75,000)
Proceeds of Loans -- 25,000 25,000 -- 25,000
Proceeds (Payments) of Loans Receivable-
Stockholder (165,381) (142,704) (24,564) 20,624 (281,404)
Repayments of Loans -- (25,000) -- -- (25,000)
Proceeds from Sales of Common Stock 231,250 362,000 6,000 705,000 1,304,750
----------- ----------- ----------- ----------- -----------
Net Cash provided by
Investing Activities 65,869 219,296 6,436 375,624 673,346
----------- ----------- ----------- ----------- -----------
Net Increase (Decrease) in Cash (4,822) 30,995 (2,622) 268,243 299,354
Cash, Beginning 4,938 116 116 31,111 --
----------- ----------- ----------- ----------- -----------
Cash, Ending $ 116 $ 31,111 $ (2,506) $ 299,354 $ 299,354
=========== =========== =========== =========== ===========
Supplemental Cash Flow Information:
Cash Paid During the Period for:
Interest $ -- $ -- $ -- $ -- $ --
=========== =========== =========== =========== ===========
Income Taxes $ -- $ -- $ -- $ -- $ --
=========== =========== =========== =========== ===========
Supplemental Disclosures of Cash Flow
Information:
Non Cash Financing Activities:
Common Stock Issed as Commissions on
Sale of Common Stock $ 234,500 $ 208,750 $ 1,250 $ -- $ 443,250
=========== =========== =========== =========== ===========
Accrued Commissions on Sales of
Sales of Common Stock $ -- $ -- $ -- $ 105,000 $ 105,000
=========== =========== =========== =========== ===========
Application of Loans Receivable
- Officer Against
Accrued Compensation $ -- $ -- $ -- $ 50,000 $ 50,000
=========== =========== =========== =========== ===========
The accompanying notes are an integral part of these financial statements.
BIOMETRX TECHNOLOGIES, INC.
(A Development Stage Company)
STATEMENT OF STOCKHOLDERS' EQUITY (DEFICIT)
FOR THE PERIOD FEBRUARY 1, 2001 (INCEPTION) TO MARCH 31, 2005
Deficit
Accumulated
Additional During the
Common Stock Paid- In Development Deferred
Shares Amount Capital Stage Compensation Total
--------- ------ ---------- ----------- ------------ ---------
BALANCE, FEBRUARY 1, 2001 -- $ -- $ -- $ -- $ -- $ --
Shares issued pursuant to initial capitalization 6,000,000 6,000 (4,500) -- -- 1,500
Common Stock issued for services
valued at $.25 per share. 1,099,999 1,100 273,900 -- -- 275,000
Net loss for the year ended December 31, 2001 -- -- -- (275,046) -- (275,046)
--------- ------ ---------- ----------- ------------ ---------
BALANCE, December 31, 2001 7,099,999 7,100 269,400 (275,046) -- 1,454
Common Stock issued at $.25 per share. 20,000 20 4,980 -- -- 5,000
Net loss for the year ended December 31, 2002 -- -- -- (7,573) -- (7,573)
--------- ------ ---------- ----------- ------------ ---------
BALANCE, December 31, 2002 7,119,999 7,120 274,380 (282,619) -- (1,119)
Common Stock issued at $.25 per share. 925,000 925 230,325 -- -- 231,250
Common Stock issued for services. 300,000 300 149,700 -- (112,500) 37,500
Common Stock issued as commissions
on sales of common stock. 518,000 518 (518) -- -- --
Amortization of deferred compensation. -- -- -- -- 47,917 47,917
Net loss for the year ended December 31, 2003 -- -- -- (526,536) -- (526,536)
--------- ------ ---------- ----------- ------------ ---------
BALANCE, December 31, 2003 8,862,999 8,863 653,887 (809,155) (64,583) (210,988)
The accompanying notes are an integral part of these financial statements.
BIOMETRX TECHNOLOGIES, INC.
(A Development Stage Company)
STATEMENT OF STOCKHOLDERS' EQUITY (DEFICIT)
FOR THE PERIOD FEBRUARY 1, 2001 (INCEPTION) TO MARCH 31, 2005
Deficit
Accumulated
Additional During the
Common Stock Paid-In Development Deferred
Shares Amount Capital Stage Compensation Total
---------- ------- ----------- ------------ ------------ ---------
Common Stock issued $.25 per share. 108,000 108 26,892 -- -- 27,000
Common Stock issued $1.00 per share. 335,000 335 334,665 -- -- 335,000
Common Stock issued as commissions
on sales of common stock. 235,000 235 (235) -- -- --
Amortization of deferred compensation. -- -- -- -- 58,333 58,333
Net loss for the year ended December 31, 2004 -- -- -- (768,214) (768,214)
---------- ------- ----------- ------------ ------------ ---------
BALANCE, December 31, 2004 9,540,999 9,541 1,015,209 (1,577,369) (6,250) (558,869)
---------- ------- ----------- ------------ ------------ ---------
Common Stock issued $.40 per share. 500,000 500 199,500 -- -- 200,000
Common Stock issued $.50 per share. 850,000 850 424,150 -- -- 425,000
Common Stock issued $1.00 per share. 80,000 80 79,920 -- -- 80,000
Common Stock issued for services. 100,000 100 99,900 -- (100,000) --
Amortization of deferred compensation. -- -- -- -- 14,583 14,583
Commissions on sales of common stock. -- -- (105,000) -- -- (105,000)
Net loss for the quarter ended March 31, 2005 -- -- -- (226,511) -- (226,511)
---------- ------- ----------- ------------ ------------ ---------
BALANCE, March 31, 2005 (Unaudited) 11,070,999 $11,071 $1,713,679 $(1,803,880) $(91,667) $(170,797)
========== ======= =========== ============ ============ =========
The accompanying notes are an integral part of these financial statements.
BIOMETRX TECHNOLOGIES, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
(Information as of March 31, 2005 and for the three months ended March 31, 2005
and 2004 is unaudited)
NOTE 1- ORGANIZATION AND NATURE OF OPERATIONS
Organization- The Company was incorporated with the name "M2 Extreme Sports
Centers, Inc." in the State of Delaware on February 1, 2001. On November 8, 2001
the Company's certificate of incorporation was amended to change the Company's
name to "Biostat Technologies S.P.A., Inc." and 1500 shares of no par common
voting stock issued to the sole shareholder for $1.00 per share. On April 1,
2002 the Company's certificate of Incorporation was amended to:
1) Change the Company's name to "Biometrx Technologies, Inc.
2) Increase the total number of shares that the corporation is
authorized to issue to 10,000,000 common shares, each with a par
value of $.001.
3) Authorize a 4000 to 1 split of then outstanding common shares
In December 2004, the Board of Directors authorized an increase of the Company's
common stock from 10,000,000 to 20,000,000 shares, each having a par value of
$.001.
Nature of Operations- The Company is a developer of proprietary biometrics-based
products for the home security and electronics market, located on Long Island,
New York.
The Company is focused on developing a line of home security products called
smartTouchtm which includes biomedical enabled residential door locks, central
station alarm keypads, thermostats and garage/ gate openers. Its products
utilize fingerprints recognition technology designed to augment or replace
conventional security methods such as keys, keypads, and PIN numbers. The
Company develops market- specific products in home security which it plans
either be licensed or sold through manufacturers/ retailers worldwide when
deemed commercially viable.
Unaudited Interim Financial Statements - The accompanying unaudited financial
statements have been prepared in accordance with generally accepted accounting
principles for interim financial information and pursuant to the rules and
regulations of the Securities and Exchange Commission ("SEC"). The accompanying
financial statements for the interim period are unaudited and reflect all
adjustments (consisting only of normal recurring adjustments) which are, in the
opinion of management, necessary for a fair presentation of the financial
position and operating results for the periods presented. Certain information
and footnote disclosures normally included in financial statements prepared in
accordance with accounting principles generally accepted in the United States of
America have been condensed or omitted. These financial statements should be
read in conjunction with the accompanying audited financial statements for the
years ended December 31, 2004 and 2003 and notes thereto contained herein. The
results of operations for the three months ended March 31, 2005 are not
necessarily indicative of the results for the full fiscal year ending December
31, 2005.
1
BIOMETRX TECHNOLOGIES, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
(Information as of March 31, 2005 and for the three months ended March 31, 2005
and 2004 is unaudited)
NOTE 2- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Use of Estimates- The preparation of financial statements in conformity in
conformity with accounting principles generally accepted in the United States of
America requires management to make estimates and assumptions that affect the
reported amounts of assets and liabilities and disclosure of contingent assets
and liabilities at the date of the financial statements and the reported amounts
of revenues and expenses during the reporting period. Actual results could
differ from those estimates.
Advertising Costs - Advertising costs are expensed as incurred. Advertising
expenses for the years ended December 31, 2004 and 2003 was $4,484 and $1,830,
respectively.
Income Taxes - The Company accounts for income taxes in accordance with
Statement of Financial Accounting Standards No. 109 "Accounting for Income
Taxes". SFAS No. 19 requires the Company to provide a net deferred tax asset or
liability equal to the expected future tax benefit or expense of temporary
reporting differences between book and tax accounting methods and any available
operating loss or tax credit carry forwards.
Research and Development - Research and development costs are expensed as
incurred.
Fair Value of Financial Instruments - The carrying value of the Company's
financial instruments, including cash and cash equivalents, loans receivable,
accounts payable and accrued expenses approximated fair value because of the
short maturity of these instruments.
Recently-Enacted Accounting Standards - Statement of Financial Accounting
Standards ("SFAS") No. 146, "Accounting for Costs Associated with Exit or
Disposal Activities", SFAS No. 147, "Acquisitions of Certain Financial
Institutions - an Amendment of FASB Statements No. 72 and 144 and FASB
Interpretation No. 9", SFAS No. 148, " Accounting for Stock-Based Compensation -
Transition and Disclosure - an Amendment of FASB Statement No. 123", SFAS No.
149, "Amendment of Statement 33 on Derivative Instruments and Hedging
Activities", and SFAS No. 150, "Accounting for Certain Financial Instruments
with Characteristics of both Liabilities and Equity", were recently issued. SFAS
No. 146, 147, 148, 149 and 150 have no current applicability to the Company or
their effect on the financial statements would not have been significant.
2
BIOMETRX TECHNOLOGIES, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
(Information as of March 31, 2005 and for the three months ended March 31, 2005
and 2004 is unaudited)
NOTE 2- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Recently-Enacted Accounting Standards (Continued) - In December 2004, the
Financial Accounting Standards Board ("FASB") issued Statement No. 123R)"SFAS
123R") "Share Based Payment, "a revision of Statement No. 123, "Accounting for
Stock Based Compensation." This standard requires the Company to measure the
cost of employee services received in exchange for equity awards based on grant
date fair value of the awards. The Company is required to adopt SFAS 123R
effective January 1, 2006. The standard provides for a prospective application.
Under this method, the Company will begin recognizing compensation cost for
equity based compensation for all new or modified grants after the date of
adoption.
In addition, the Company's policy will be to recognize the unvested portion of
the grant date fair value of awards issued prior to the adoption based on the
fair values previously calculated for disclosure purposes. At December 31, 2004,
the Company had no unvested options.
In December 2004, the FASB issued SFAS No. 153, "Exchanges of Non-monetary
Assets," ("SFAS 153"). SFAS 153 amends Accounting Principles Board ("APB")
Opinion No. 29, Accounting for Non-monetary Transactions," to require exchanges
of non-monetary assets are accounted for at fair value, rather than carryover
basis. Non-monetary exchanges that lack commercial substance are exempt from
this requirement.
SFAS 153 is effective for non-monetary exchanges entered into in fiscal years
beginning after June 15, 2005. The Company does not routinely enter into
exchanges that could be considered non-monetary; accordingly the Company does
not expect adoption of SFAS 153 to have a material impact on the Company's
financial statements.
In January 2003, the FASB issued Interpretation No. 46, "Consolidation of
Variable Interest Entities - an Interpretation of Accounting Research Bulletin
No. 51" (FIN No. 46"). This interpretation provides guidance related to
identifying variable interest entities (previously known generally as special
purpose entities or SPEs) and determining whether such entities should be
consolidated. Certain disclosures are required when FIN No. 46 becomes effective
if it is reasonably possible that a company will consolidate or disclose
information about a variable interest entity when it initially applies FIN No.
46. This interpretation must be applied immediately to variable interest
entities created or obtained after January 31, 2003. For those variable interest
entities created or obtained on or before January 31, 2003, the Company must
apply the provisions of FIN No. 46 for the year ended December 31, 2003. FIN No.
46 did not apply to the Company's financial position or results of operations.
3
BIOMETRX TECHNOLOGIES, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
(Information as of March 31, 2005 and for the three months ended March 31, 2005
and 2004 is unaudited)
NOTE 3 - GOING CONCERN
The Company has incurred net losses of $768,214 and $526,536 during the years
ended December 31, 2004 and 2003, respectively. In addition, the Company had a
working capital deficiency of $558,869 and a stockholders' deficiency of
$558,869 at December 31, 2004. These factors raise substantial doubt about the
Company's ability to continue as a going concern.
There can be no assurance that sufficient funds required during the next year or
thereafter will be generated from operations or that funds will be available
from external sources such as debt or equity financings or other potential
sources. The lack of additional capital resulting from the inability to generate
cash flow from operations or to raise capital from external sources would force
the Company to substantially curtail or cease operations and would, therefore,
have a material adverse effect on its business. Furthermore, there can be no
assurance that any such required funds, if available, will be available on
attractive terms or that they will not have a significant dilutive effect on the
Company's existing stockholders.
The accompanying financial statements do not include any adjustments related to
the recoverability or classification of asset-carrying amounts or the amounts
and classification of liabilities that may result should the Company be unable
to continue as a going concern.
During the year ended December 31, 2004, the Company relied on issuance of
common stock for its financing needs through private placements by raising an
aggregate of $362,000 through Private Placements of the Company's common stock.
The Company is attempting to address its lack of liquidity by raising additional
funds from the private sale of debt or equity securities or some combination
thereof. During the quarter ended March 31, 2005 the Company raised an aggregate
of $705,000 through private placements of the Company's common stock.
There can be no assurance that the Company will be able to raise the additional
funds it requires.
NOTE 4 - RESTRICTED CASH
Restricted cash represents cash held in escrow by corporate counsel in
connection with the sale of common stock and in contemplation of the proposed
merger. Such restricted cash should be released after satisfaction of certain
requirements of the merger agreement (see Note 10).
4
BIOMETRX TECHNOLOGIES, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
(Information as of March 31, 2005 and for the three months ended March 31, 2005
and 2004 is unaudited)
NOTE 5 - STOCKHOLDERS' DEFICIT
The Company was incorporated with the name "M2 Extreme Sports Centers, Inc." in
the State of Delaware on February 1, 2001. On November 8, 2001 the Company's
certificate of incorporation was amended to change the Company's name to
"Biostat Technologies S.P.A., Inc." and 1500 shares of no par common voting
stock issued to the sole shareholder for $1.00 per share. On April 1, 2002 the
Company's certificate of Incorporation was amended to:
1) Change the Company's name to "Biometrx Technologies, Inc.
2) Increase the total number of shares that the corporation is
authorized to issue to 10,000,000 common shares, each with a par
value of $.001.
3) Authorize a 4000 to 1 split of then outstanding common shares
In December 2004, the Board of Directors authorized an increase of the Company's
common stock from 10,000,000 to 20,000,000 shares, each having a par value of
$.001.
During November 2001 the Company issued 1,099,999 shares of common stock valued
at $275,000 ($.25 per share) for services rendered.
During December 2002 the Company sold 20,000 shares of common stock for $5,000
($.25 per share).
During 2003 the Company 925,000 shares of common stock for $231,250 ($.25 per
share).
During 2003 the Company issued 300,000 shares of common stock valued at $150,000
($.50 per share) for services pursuant to consulting agreements.
During 2003 the Company issued 140,000 shares of common stock valued at $140,000
($1 per share) as commissions on sales of common stock.
During 2003 the Company issued 378,000 shares of common stock valued at $94,500
($.25 per share) as commissions on sales of common stock.
During 2004 the Company sold 108,000 shares of common stock for $27,000 ($.25
per share).
During 2004 the Company sold 335,000 shares of common stock for $335,000 ($1 per
share).
During 2004 the Company issued 200,000 shares of common stock valued at $200,000
($1 per share) as commissions on sales of common stock.
During 2004 the Company issued 35,000 shares of common stock valued at $8,750
($.25 per share) as commissions on sales of common stock.
5
BIOMETRX TECHNOLOGIES, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
(Information as of March 31, 2005 and for the three months ended March 31, 2005
and 2004 is unaudited)
NOTE 5 - STOCKHOLDERS' DEFICIT (Continued)
During the quarter ended March 31, 2005 the Company sold 500,000 shares of
common stock for $200,000 ($.40 per share).
During the quarter ended March 31, 2005 the Company sold 850,000 shares of
common stock for $425,000 ($.50 per share).
During the quarter ended March 31, 2005 the Company sold 80,000 shares of common
stock for $80,000 ($1 per share).
During the quarter ended March 31, 2005 the Company issued 100,000 shares of
common stock valued at $100,000 ($1 per share) for services pursuant to
consulting agreements.
NOTE 6- RELATED PARTY TRANSACTIONS
Officer/shareholder advances - These advances are non-interest bearing,
unsecured, and payable on demand. These advances were made to the Company's CEO
and majority stockholder.
Due from Related Party - This amount represents funds advanced in connection
with the Company's proposed merger (see Note 10).
NOTE 7 - INCOME TAXES
The Company accounts for income taxes in accordance with Statement of Financial
Accounting Standards No.109, "Accounting for Income Taxes". SFAS No.109 requires
the Company to provide a net deferred tax asset or liability equal to the
expected future tax benefit or expense of temporary reporting differences
between book and tax accounting methods and any available operating loss or tax
credit carry-forwards. At December 31, 2004, the Company has an available net
operating loss carry-forward of approximately $1,407,000, which may be applied
against future taxable income, if any, thru 2024. Certain significant changes in
ownership of the Company may restrict the future utilization of these loss
carry-forwards.
The tax effects of temporary differences that gave rise to the deferred tax
assets and deferred tax liabilities at December 31, 2004 were primarily
attributable to net operating loss carry forwards.
6
BIOMETRX TECHNOLOGIES, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
(Information as of March 31, 2005 and for the three months ended March 31, 2005
and 2004 is unaudited)
NOTE 7 - INCOME TAXES (Continued)
At December 31, 2004 the Company had provided a 100% valuation allowance for the
deferred tax assets, because the ultimate realizations of those assets are
uncertain.
At December 31, 2004, the Company had a deferred tax asset of approximately
$401,000 representing the benefit of its net operating loss carry forwards. The
Company has not recorded a tax benefit because realization of the tax benefit is
uncertain and therefore a valuation allowance has been fully provided against
the deferred tax asset. The difference between the Federal Statutory rate of 34%
and the Company's effective tax rate of 0% is due to an increase in the
valuation allowance of approximately $169,000 and $136,000 in 2004 and 2003,
respectively.
NOTE 8 - CONCENTRATIONS CREDIT RISK
Financial instruments that potentially subject the Company to significant
concentrations of credit risk consist principally of cash and cash equivalents.
The Company maintains cash balances at financial institutions which exceed the
Federal Deposit Insurance Corporation's limit of $100,000 at times during the
year.
NOTE 9 - COMMITMENTS AND CONTINGENCIES
In December 2002 the Company entered into a five year employment agreement with
Mark Basile (CEO and a significant stockholder) for a base annual salary of
$360,000 per year. Accrual of compensation may be converted into shares of the
Company's common stock at $.50 cents per share, which can be exercised at
anytime after each twelve months of service, but in no event, shall cash
compensation be less than $60,000 per annum. The Company paid cash salaries of
$60,000, $0 and $50,000 for the years ended December 31, 2004 and 2003 and the
three months ended March 31, 2005, respectively.
In January 2004, the Company entered into a four year employment agreement with
Steven Kang (Engineer and a stockholder) for a base annual salary of $120,000
per year. The agreement has the same terms as the above, except, that in no
event, shall cash compensation be less than $20,000 per annum. The Company paid
cash salaries of $0 and $15,000 for the year ended December 31, 2004 and the
three months ended March 31, 2005, respectively.
7
BIOMETRX TECHNOLOGIES, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
(Information as of March 31, 2005 and for the three months ended March 31, 2005
and 2004 is unaudited)
NOTE 10 - SUBSEQUENT EVENTS
In April 2005 the Company entered into a consulting agreement with Steven
Horowitz and Arnold Kling, for general financial consulting services in
connection with potential merger and fund raising activities. In connection with
this agreement the Company issued 500,000 shares of common stock valued at $1
per share.
The Company issued 700,000 shares of common stock valued at $.50 cents per share
to Mark Basile/CEO for accrued payroll owed him. The Company issued 240,000
shares of common stock valued at $.50 cents per share to Steven Kang for accrued
payroll owed him.
The Company entered into a Finder's Fee Agreement on March 11, 2005 whereby the
Company will compensate the Finder 15% cash for funds raised by the Finder and
shares of the Company's common stick equal to 15% of the amount of the financing
attained by the Finder.
In April 2005 the Company entered into two short term research and development
agreements aggregating $220,000.
On June 1, 2005 the Company merged with and into a subsidiary of Marketshare
Recovery, Inc., ("Marketshare"), a publicly owned corporation. The merger will
be treated as a reorganization of the Company (reverse merger) for accounting
purposes pursuant to which the Company is treated as the continuing entity
although Marketshare is the legal acquirer. The aggregate amount of shares of
Marketshare common stock issuable to the shareholders of the Company pursuant to
the merger represented approximately 90% of Marketshare's issued and outstanding
common stock after the merger and related cancellation of outstanding shares by
certain former insiders.
On June 1, 2005 the Company entered into employment agreements with a new Chief
Financial Officer and a new Chief Operating Officer. Each agreement is for a an
inititial six month term and calls a for base salary of $18,000 for services on
a part-time basis. If after the initial term the Company elects to continue the
officer on a full time basis, the annual salaries will increase to $80,000 for
the Chief Financial Officer and $90,000 for the Chief Operating Officer. The
employment agreements also provide for discretionary bonuses and other
employment related benefits. Both agreements also call for the granting of stock
options to purchase 100,000 shares at $.10 per share of Marketshare's common
stock at various times through the term of the agreement. Both agreements have
an initial term of one year with an additional one year extension.
On July 5, 2005 the Board of Directors of Marketshare resolved to the following
common stock and stock option issuances:
o 750,000 shares of common stock to an employee; 500,000 shares
immediately and 250,000 shares on the second anniversary of his four
year employment contract (see Note 9).
o 750,000 common stock purchase options, exercise price $.50 per
share, to an employee (see above).
o 750,000 common stock purchase options, exercise price $.50 per
share, to the Company's CEO.
8
MARKETSHARE RECOVERY, INC. AND SUBSIDIARIES
PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2005
(UNAUDITED)
NOTES TO UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS
The following Unaudited Pro Forma Consolidated Financial Statements of
Marketshare Recovery, Inc. and Subsidiaries ("Marketshare") and bioMetrx
Technologies, Inc. ("bioMetrx") give effect to the merger between Marketshare
and bioMextrx under the purchase method of accounting prescribed by Accounting
Principles Board Opinion No. 16, Business Combinations. The acquisition of
bioMetrx by Marketshare has been accounted for as a reverse acquisition under
the purchase method for business combinations. The combination of the two
companies is recorded as a recapitalization of bioMetrx pursuant to which
bioMetrx is treated as the continuing entity. In connection with the
acquisition, Marketshare will acquire all of the outstanding capital stock of
bioMetrx to which bioMetrx will merge with and into Marketshare Merger Sub,
Inc., a wholly owned subsidiary of Marketshare. At the effective time of the
merger, Marketshare will acquire bioMetrx in exchange for 14,218,424 shares of
Marketshare's common stock and the issuance of 182,029 common stock purchase
warrants to the holders of corresponding instruments of bioMetrx ("the Merger").
The aggregate amount of shares of common stock issuable to the shareholders of
bioMetrx pursuant to the Merger, represents 91% of the issued and outstanding
shares of the Marketshare's common stock. These pro forma consolidated financial
statements are presented for illustrative purposes only. The pro forma
adjustments are based upon available information and assumptions that management
believes are reasonable. The Unaudited Pro Forma Consolidated Financial
Statements do not purport to represent what the results of operations or
financial position of Marketshare would actually have been if the Merger had in
fact occurred on January 1, 2005, nor do they purport to project the results of
operations or financial position of Marketshare for any future period or as of
any date, respectively.
These Unaudited Pro Forma Consolidated Financial Statements do not give effect
to any restructuring costs or to any potential cost savings or other operating
efficiencies that could result from the Merger between Marketshare and bioMetrx.
MARKETSHARE RECOVERY, INC. & SUBSIDIARIES
PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
March 31, 2005
(Unaudited)
Marketshare Biometrx Pro Forma Adjustments Pro Forma
Recovery Inc. Technologies, Inc. Dr. Cr. Balances
------------- ------------------ --------- ----------- ----------
ASSETS
Current Assets:
Cash -- 299,354 3 25,000 324,354
Cash in Escrow 45,000 -- 45,000
Restricted Cash -- 275,000 275,000
Marketable Securities 6,545 -- 6,545
Due from Related Party -- 75,000 5 75,000 --
Loans Receivable- Stockholder -- 231,404 231,404
------------- ------------------ ----------
Total Current Assets 51,545 880,758 882,303
Other Assets:
Security Deposit -- 2,860 2,860
------------- ------------------ ----------
TOTAL ASSETS $ 51,545 $ 883,618 885,163
============= ================== ==========
LIABILITIES AND
STOCKHOLDERS' EQUITY
Current Liabilities:
Loan Payable- Stockholder 109,736 -- 109,736
Advances on Letter of Intent 75,000 -- 5 75,000 --
Accrued Expenses 180,940 73,426 254,366
Accrued Taxes Payable -- 40,989 40,989
Accrued Payroll -- 835,000 3 470,000 365,000
Commissions Payable -- 105,000 105,000
------------- ------------------ ----------
Total Current Liabilities 365,676 954,415 875,091
Stockholders' Deficit
Common Stock $.001 par value:
50,000,000 shares authorized:
3,806,221 shares issued and
outstanding
Common Stock $.001 par value:
20,000,000 shares authorized:
11,162,999 shares issued and
outstanding 3,806 11,071 2 2,208 1 14,218 15,816
4 12,576 3 1,505 --
Additional Paid-In-Capital 1,902,954 1,713,679 1 14,218 2 2,208 2,389,803
3 10,000 3 1,003,495
4 2,717,074 4 508,759
Deferred Compensation (Net) -- (91,667) (91,667)
Accumulated Deficit (2,220,891) (1,803,880) 3 500,000 4 2,220,891 (2,303,880)
------------- ------------------ ----------
Total Stockholders' Deficit (314,131) (170,797) 10,072
------------- ------------------ ----------
Total Liabilities and
Stockholders' Deficit $ 51,545 $ 883,618 3,826,076 3,826,076 885,163
============= ==================
MARKETSHARE RECOVERY, INC. AND SUBSIDIARIES
NOTES TO THE UNAUDITED PRO FORMA FINANCIAL STATEMENTS
The following adjustments to the unaudited pro forma consolidated financial
statements as of March 31, 2005 reflects the issuance of 14,218,424 shares of
the Company's common stock for the acquisition of all of the outstanding capital
stock of bioMetrx Technologies, Inc. ("bioMetrx") and that the transaction
occurred as of March 31, 2005:
1. To reflect the issuance of 1,505,000 shares of bioMetrx common stock
during the period April and May 2005.
2. To reflect the cancellation of 2,208,251 shares of the Company's
common stock.
3. To reflect the issuance of 14,218,424 shares of the Company's common
stock for the acquisition of all of the outstanding capital stock of
bioMetrx.
4. To reflect the recapitalization effect of the reverse merger. For
financial accounting purposes, the exchange of stock will be treated
as a recapitalization of Marketshare Recovery, Inc. with the former
shareholders of the Company retaining 1,597,700 or approximately 10%
of the outstanding stock.
5. To eliminate intercompany accounts.
1
Cash $ 25,000
Additional Paid-In Capital 10,000
Accrued Salaries 470,000
S,G & A Expenses 500,000
Common Stock $ 1,505
Additional Paid-In Capital 1,003,495
2
Common Stock 2,208
Additional Paid-In Capital 2,208
3
Additional Paid-In Capital 14,218
Common Stock 14,218
4
Common Stock - bioMetrx 12,576
Additional Paid-In Capital - bioMetrx 2,717,074
Accumulated Deficit - Marketshare 2,220,891
Additional Paid-In Capital - Marketshare 508,759
5
Advances on Letter of Intent 75,000
Due from Related Party 75,000