Item 1. Description of Business
Corporate Background Information
BIO-RESPONSE conducted an initial public offering of its Common Stock in September, 1979 pursuant to a Form S-2 Registration Statement under the Securities Act of 1933 (the "Securities Act"). In connection with an application to list its Common Stock on the NASDAQ system, the Company also registered its Common Stock pursuant to Section 12(g) of the Securities Exchange Act of 1934 (the "Exchange Act"). The Company remained current with respect to its reporting obligations under the Exchange Act until 1990.
After pursuing its business for several years, BIO-RESPONSE filed a voluntary petition under Chapter 11 of the Bankruptcy Act on September 14, 1989. This proceeding was filed in with the U.S. Bankruptcy Court for the Northern District of California and designated as Case # 4-89-04159 N-3. On September 15, 1995 the Company's case under Chapter 11 was closed by an order of the Court. As a result of the Bankruptcy, the Company has no assets, liabilities, management or ongoing operations and has not engaged in any business activities for well over a half of a decade.
During the pendancy of the Bankruptcy, the Company did not file franchise tax returns with and pay the required franchise taxes to the State of Delaware. As a result, the Company's corporate charter was revoked by order of the Secretary of State of the State of Delaware on August 30, 1991. Similarly, the Company did not file with the SEC either (a) the regular reports that are required of all companies that have securities registered under the Exchange Act, or (b) a certification on Form 15 terminating its registration under the Exchange Act. As a result, the Company remained a Registrant under the Exchange Act but was seriously delinquent in its SEC reporting obligations. According to Bloomberg, the last published quotation for the Company's Common Stock was posted by M. H. Meyerson & Co., Inc., one of the Company's market makers, on October 15, 1996. At this time, the published quote was $0.03 bid and $0.10 asked. The Company continues to be quoted on the OTCBB, but there is no active trading.
In 1996, acting in its capacity as a Stockholder of the Company, and without first receiving any consent, approval or authorization of any officer, director or other Stockholder of the Company, Capston effected a renewal, revival and restoration of the Company's certificate of incorporation pursuant to Section 312 of the General Corporation Law of the State of Delaware. In general, Section 312 provides that any corporation may "procure an extension, restoration, renewal or revival of its certificate of incorporation, together with all the rights, franchises, privileges and immunities and subject to all of its duties, debts and liabilities which had been secured or imposed by its original certificate of incorporation" upon compliance with certain procedural requirements.
After reviewing the applicable files, Capston determined that the only debt of the Company that was "secured or imposed by its original certificate" was the obligation of BIO-RESPONSE to pay its Delaware taxes. Therefore, Capston paid all past due franchise taxes on behalf of the Company and then filed a Certificate of Renewal, Revival, Extension and Restoration of the Company's Certificate of Incorporation on behalf of the Company under the authority granted by Section 312(h). The total out-of-pocket costs paid by Capston incurred in connection with the restoration of the Company's charter was $450. This Certificate was filed in the office of the Secretary of State of the State of Delaware on December 26, 1996. and at the date of this report the Company is lawfully incorporated, validly existing and in good standing under the laws of the State of Delaware.
Operations
The Company has no assets, liabilities, management or ongoing operations and has not engaged in any business activities. In July of 1997, the Stockholders overwhelmingly voted for the adoption and implementation of a Plan presented by Capston and Ms. Fonner, (sole director) whereby the Company was restructured as a "public shell" for the purpose of effecting a business combination transaction with a suitable privately-held company that has both business history and operating assets.
Capston and Ms. Fonner believes the Company offers owners of a suitable privately-held company the opportunity to acquire a controlling ownership interest in a public company at substantially less cost than would otherwise be required to conduct an initial public offering. Nevertheless, neither is aware of any empirical statistical data that would independently confirm or quantify their beliefs concerning the perceived value of a merger or acquisition transaction for the owners of a suitable privately-held company. The owners of any existing business selected for a business combination with the Company will incur significant costs and expenses, including the costs of preparing the required business combination agreements and related documents, the costs of preparing a Current Report on Form 8-K describing the business combination transaction and the costs of preparing the documentation associated with any future reporting under the Exchange Act and registrations under the Securities Act.
The Plan is approved by the Stockholders. The Company is fully reactivated and ready to be used as a corporate vehicle to seek, investigate and, if the results of such investigation warrant, effect a business combination with a suitable privately-held company or other business opportunity presented to it by persons or firms that seek the perceived advantages of a publicly held corporation. The business operations proposed in the Plan are sometimes referred to as a "blind pool" because Stockholders will not ordinarily have an opportunity to analyze the various business opportunities presented to the Company, or to approve or disapprove the terms of any business combination transaction that may be negotiated by Capston and Ms. Fonner on behalf of the Company. Consequently, the Company's potential success will be heavily dependent on the efforts and abilities of Ms. Fonner, Capston and its consultants and legal advisors, who have virtually unlimited discretion in searching for, negotiating and entering into a business combination transaction. Ms. Fonner and Capston have had limited experience in the proposed business of the Company. Although Ms. Fonner and Capston believes that the Company will be able to enter into a business combination transaction during 1998, there can be no assurance as to how much time will elapse before a business combination is effected, if ever. The Company is not restrict its search to any specific business, industry or geographical location, and the Company may participate in a business venture of virtually any kind or nature.
Capston, Ms. Fonner, legal advisers and consultants anticipate that the selection of a business opportunity for the Company will be complex and extremely risky. Because of general economic conditions, rapid technological advances being made in some industries, and shortages of available capital, Capston believes that there are numerous privately-held companies seeking the perceived benefits of a publicly traded corporation. Such perceived benefits may include facilitating debt financing or improving the terms on which additional equity or may be sought, providing liquidity for the principals of the business, creating a means for providing incentive stock options or similar benefits to key employees, providing liquidity for all stockholders and other factors.
Potential business opportunities may occur in many different industries and at various stages of development, all of which will make the task of comparative investigation and analysis of such business opportunities extremely difficult and complex. Capston, Ms. Fonner, legal advisers and consultants anticipate that the Company will be able to participate in only one business venture. This lack of diversification should be considered a substantial risk inherent in the Plan because it will not permit the Company to offset potential losses from one venture against gains from another. Moreover, due to the Company's lack of any meaningful financial, managerial or other resources, Capston. Ms. Fonner, legal advisers and consultants believe the Company will not be viewed as a suitable business combination partner for either developing companies or established business that are in need of substantial additional capital.
Acquisition of Opportunities
In implementing a particular business combination transaction, the Registrant may become a party to a merger, consolidation, reorganization, joint venture, franchise or licensing agreement with another corporation or entity. It may also purchase stock or assets of an existing business. After the consummation of a business combination transaction, it is likely that the present Stockholders of the Registrant will only own a small minority interest in the combined companies. In addition, as part of the terms of the acquisition transaction, all of the Registrant's officers and directors will ordinarily resign and be replaced by new officers and directors without a vote of the Stockholders. Capston does not intend to obtain the approval of the Stockholders prior to consummating any acquisition other than a statutory merger that requires a Stockholder vote. Capston and its officers, directors and consultants do not intend to sell any shares held by them in connection with a business acquisition until after the completion of the acquisition occurs, and then, only in an orderly manner.
It is anticipated that any securities issued in a business combination transaction will be issued in reliance on exemptions from registration under applicable Federal and state securities laws. In some circumstances, however, as a negotiated element of a business combination, the Registrant may agree to register such securities either at the time the transaction is consummated or at some specified time thereafter. The issuance of substantial additional securities and their potential sale into any trading market that may develop may have a depressive effect on such market. While the actual terms of a transaction to which the Registrant may be a party cannot be predicted, it may be expected that the parties to the business transaction will find it desirable to avoid the creation of a taxable event and thereby structure the acquisition in a so called "tax free" reorganization under Sections 368(a)(1) or 351 of the Internal Revenue Code of 1986, as amended (the "Code") In order to obtain tax free treatment under the Code, it may be necessary for the owners of the acquired business to own 80% or more of the voting stock of the surviving entity. In such event, the stockholders of the Registrant would retain less than 20% of the issued and outstanding shares of the combined companies, which could result in significant dilution in the equity of such stockholders. The Registrant intends to structure any business combination in such manner as to minimize Federal and state tax consequences to the Registrant and any target company.
As part of the Registrant's investigation of potential business opportunities, Capston and its officers, directors and consultants will ordinarily meet personally with management and key personnel, may visit and inspect material facilities, obtain independent analysis or verification of certain information provided, check reference of management and key personnel, and take other reasonable investigative measures, to the extent of the Registrant's limited resources and Capston's limited expertise. The manner in which the Registrant participates in an opportunity will depend on the nature of the opportunity, the respective needs and desires of the Registrant and other parties and the relative negotiating strength of the Registrant and such other management.
With respect to any business combination negotiations, Capston will ordinarily focus on the percentage of the Registrant which target company stockholders would acquire in exchange for their ownership interest in the target company. Depending upon, among other things, the target company's assets and liabilities, the Registrant's stockholders will in all likelihood only own a small minority interest in the combined companies upon completion of the business combination transaction. Any business combination effected by the Registrant can be expected to have a significant dilutive effect on the percentage of shares held by the Registrant's current Stockholders.
Upon completion of a business combination transaction, there can be no assurance that the combined companies will have sufficient funds to undertake any significant development, marketing and manufacturing activities. Accordingly, the combined companies may be required to either seek additional debt or equity financing or obtain funding from third parties, in exchange for which the combined companies might be required to issue a substantial equity position. There is no assurance that the combined companies will be able to obtain additional financing on terms acceptable to the combined companies.
It is anticipated that the investigation of specific business opportunities and the negotiation, drafting and execution of relevant agreements, disclosure documents and other instruments will require substantial management time and attention and substantial costs for accountants, attorneys and others. If a decision is made not to participate in a specific business opportunity the costs incurred in the related investigation would not be recoverable. Furthermore, even if an agreement is reached for the participation in a specific business opportunity, the failure to consummate that transaction may result in the loss of the Registrant of the related costs incurred.
Item 2.
Item 2. Description of Property
As a result of its 1989 Bankruptcy, the Company has no assets, liabilities, or ongoing operations. The Company had no operations during the year ended December 31, 1998 and no material assets or liabilities as of December 31, 1998.
Item 3.
Item 3. Legal Proceedings
Not Applicable
Item 4.
Item 4. Submission of matters to a vote of Security Holders
Not Applicable
PART II
Item 5.
Item 5. Market for Registrant's Common Equity
As of December 31, 1998, there has been no active trading in the Issuer's common stock for over five years. The Issuer does have market makers, but does not have any active trading. The ask and bid are constantly below $.25. The Company's trading symbol is BRSP and trades on the OTCBB.
Item 6.
Item 6. Management Discussion and Analysis of Financial Condition and Results of Operations.
Results of Operations
Since July of 1997, the Company has been actively seeking an acquisition of assets, property or business that may benefit the Company and its stockholders. While these efforts have not resulted in a suitable business combination transaction, the Company's experience during this period confirms that demand for well-structured public shells is strong. Over this time period, the Company has evaluated a number of potential acquisition candidates. In each case, however, the Company has rejected as unsuitable because of several reasons. The most predominant ones were capital structure, lack of audited statements and inadequate working capital. In some cases, the Company was rejected for unknown reasons. However, Capston continues to seek for a qualified candidate.
Financial Condition
As a result of its 1989 Bankruptcy, the Company has no assets, liabilities, or ongoing operations and has not engaged in any business activities since September 1989. The Company had no operations during the year ended December 31, 1998 and no material assets or liabilities as of December 31, 1998. Stockholder approved the Plan whereby the Company will be restructured as a "public shell" for the purpose of effecting a business combination transaction with a suitable privately-held company that has both business history and operating assets, although there can be no assurance that management will be successful in its efforts to negotiate such a transaction.
Plan of Operation.
The Company has not engaged in any material operations or had any revenues from operations since its bankruptcy. The Company's plan of operation for the next twelve months is to continue to seek the acquisition of assets, property or business that may benefit the Company and its stockholders. Because the Company has no resources, management anticipates that to achieve any such acquisition, the Company will be required to issue shares of its common stock as the sole consideration for such acquisition.
During the next twelve months, the Company's only foreseeable cash requirements will relate to maintaining the Company in good standing or the payment of expenses associated with reviewing or investigating any potential business venture, which are anticipated to be advanced by Capston as loans to the Company. Because the Company has not identified any such venture as of the date of this Registration Statement, it is impossible to predict the amount of any such loans. However, any loans from Capston will be on terms no less favorable to the Company than would be available from a commercial lender in an arm's length transaction. As of the date of this Annual Report on Form 10-K, the Company has not found any acquisition to date.
Management anticipates that Capston, will advance minor administrative expenses up to approximately $50,000. In the event that additional funding is required in order to keep the Company in good standing and/or to review or investigate any potential merger or acquisition candidate, the Company may attempt to raise such funding through a private placement of its common stock to accredited investors.
At the present time, management has no plans to offer or sell any securities of the Company. However, at such time as the Company may decide to engage in such activities, management may use any legal means of conducting such offer or sale, including registration with the appropriate federal and state regulatory agencies and any registration exemptions that may be available to the Company under applicable federal and state laws.
Because the Company is not currently making any offering of its securities, and does not anticipate making any such offering in the foreseeable future, management does not believe that Rule 419 promulgated by the Securities and Exchange Commission under the Securities Act of 1933, as amended, concerning offerings by blank check companies, will have any effect on the Company or any activities in which it may engage in the foreseeable future.
Item 7.
Item 7. Financial Statements.
For the information called for by this Item, see the Financial Statements attached.
Item 8.
Item 8. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure.
The Registrant's financial statements for the years ended December 31, 1989 were audited by the firm of TOUCHE ROSS & Co., Certified Public Accountants. As a result of the bankruptcy proceedings discussed elsewhere herein, the Registrant did not prepare financial statements for the years ended December 31,1990 through December 31, 1996. In connection with the revival and restoration of the Company's certificate of incorporation, the firm of Want & Ender, Certified Public Accountants was retained to audit the Registrant's balance sheet for the year ended December 31, 1996 and to serve as the Registrant's auditor in the future. During the fiscal year ended 1990, and the subsequent periods preceding the appointment of Want & Ender, CPAs, there were no known reportable disagreements between the Registrant and the firm of TOUCHE ROSS & Co., Certified Public Accountants, on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure.
PART III
Item 9.
Item 9. Directors and Executive Officers of the Registrant
Ms. Sally Fonner, age 50, the president and sole stockholder of Capston, performs the duties of President, Secretary, Treasurer and Sole Director of the Registrant. Ms. Fonner term of office is anticipated be no more than two years or until permanent management can be located, whichever should occur first in time. Ms. Fonner's sole purpose is to seek out qualified new operations and management. Ms. Fonner shall seek re-election at the annual meeting in 1999 if a business combination has not been completed.
Item 10.
Item 10. Executive Compensation.
Ms. Fonner is the sole officer and director of the Registrant and has received no monetary compensation for services performed during her tenure. Further, no future monetary compensation agreement between Ms. Fonner and the Registrant is contemplated. Notwithstanding the foregoing, the Ms. Fonner was approved by the stockholders in a Special Meeting, to have compensation of 200,000 shares of stock, not subject to the reverse split approved by stockholders in the same meeting. To avoid administrative complexity associated with effecting a reverse split and requiring the stockholder to change certificates twice, Management has elected to defer the issuance of stock to Capston, Ms. Fonner or her designees until an acquisition is completed or it is deemed necessary to do so.
Item 11.
Item 11. Security Ownership of Certain Beneficial Owners and Management
The following table presents certain information regarding the beneficial ownership of the Company's equity securities at February 28, 1998 by (i) each person known by the Company to own beneficially more than 5% of the outstanding shares of Common Stock, (ii) each of the Company's directors and officers, and (iii) all directors and officers as a group.
Number of Shares Percent of Name Beneficially Owned (1) Class
Eli S. Jacobs ................. 2,975,218 32.4% 375 Park Avenue New York, New York 10022
Executive Life Insurance Co ... 3,157,891 12.5% 11444 West Olympic Boulevard Los Angeles, California 90064
Elliott Associates, L.P. ...... 1,000,526 9.8% 110 E. 59th Street New York, New York 10022
Capston Network Company ....... 2,000 .0002% 1612 N. Osceola Avenue Clearwater, Florida 34615
All directors and officers as a a group ....................... 2,000 .0002%
The above information, with the exception of Capston Network Company, is taken from the last filed 10-K dated June 30, 1989. Capston has no information, which would lead them to change the above data.
(1) Unless otherwise indicated, each person or group has sole voting and investment power with respect to all listed shares.
The Company knows of no arrangements that will result in a change in control at a date after this Annual Report on Form 10-KSB, however, the Issuer's proposed Proxy Statement will provide for significant stock compensation to certain individuals selected by Capston in the event that the plan of reorganization described therein is approved by the Stockholders.
Item 12.
Item 12. Certain Relationships and Related Transactions
No officer, director or family member of an officer or director has engaged in any material transaction with the issuer since the beginning of the Issuer's most recent fiscal year.
Item 13.
Item 13. Exhibits and Reports on Form 8-K.
Financial statements filed with this report:
Independent Auditor's report for December 31, 1997 and December 31, 1998. Balance Sheet of December 31, 1997 and December 31, 1998. Statements of Income for December 31, 1997 and December 31,1998. Shareholders Equity for December 31, 1997 and December 31, 1998.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
Bio-Response, Inc.
Date: May 1st, 1999 By________/s/____________ Sally Fonner, Director President and Chief Financial Officer
Pursuant to the requirements of the Securities Exchange Act of 1934 this report has been signed below by the following person on behalf of the Registrant and in the capacities and on the date indicated.
Date: May 1st, 1999 By_________/s/____________ Sally Fonner, Director President and Chief Financial Officer
386 PARK AVENUE SOUTH SUITE 1618 NEW YORK, NY TEL 212.684.2414 FAX 212.684.5433 EMAIL WECPAPC@SPRYNET.COM
WANT & ENDER CPA, P.C.
CERTIFIED PUBLIC ACCOUNTANTS
MARTIN ENDER, CPA STANLEY Z. WANT, CPA, CFP
Independent Auditor's Report
To the Shareholders and Board of Directors BIO-RESPONSE, INC.
We have audited the accompanying consolidated balance sheet of BIO-RESPONSE, INC. (A Dormant State Company) at December 31, 1998 and December 31, 1997 and the related consolidated statements of operations, shareholders' equity/(deficit), and cash flows for the years then ended. 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 audit.
We have conducted our audit in accordance with generally accepted auditing standards. These standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit also 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 our audit provides a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of BIO-RESPONSE, INC. (A Dormant State Company) at December 31, 1998 and the results of its operations and its cash flows for the years then ended in conformity with generally accepted accounting principles.
/s/
Martin Ender Want & Ender CPA, P.C. Certified Public Accountants
New York, NY April 30, 1999
BIO-RESPONSE, INC. ( A Dormant State Company) Consolidated Balance Sheets December 31, 1998 and 1997
1998 1997
ASSETS
Organization Cost ......................... 0 0
Total Assets .............................. 0 0
LIABILITIES AND STOCKHOLDERS' EQUITY
STOCKHOLDERS' EQUITY Common Stock, par value $.004 per share; 20,000,000 shares authorized; 9,176,554 shares issued and outstanding .. 00 Additional Paid in Capital ................ 45,030 41,945 Net Profit/(Loss) ......................... (45,030) (41,945)
Total Stockholders' Equity ................ 0 0
Total Liabilities and Stockholders' Equity 0 0
See accompanying notes to financial statements
BIO-RESPONSE, INC. (A Dormant State Company) Consolidated Statements of Operations For the Year Ended December 31, 1998 and 1997
1998 1997
Revenues ................... $ 0 $ 0
Expenses Administrative Expenses .... 45,030 41,945
Net Income/Loss for the year $(45,030) $(41,945)
See accompanying notes to financial statements.
BIO-RESPONSE, INC. (A Dormant State Company) Consolidated Statement of Changes in Shareholders' Equity/(Deficit) For the years ended December 31, 1998 and 1997
1998 1997 Common Stock (9,176,554 SHARES ISSUED & OUTSTANDING) $ 0 $ 0 Additional Paid in Capital ............ 87,285 42,255
Balance January ....................... (42,255) (350)
Net Income/(Loss) for the year ........ (45,030) (41,945)
Balance December 31 ................... 0 0
See accompanying notes to financial statements
BIO-RESPONSE, INC. Statement of Cash Flows For the Period Ended December 31, 1998
Current Year Prior Year
12-31-98 12-31-97
Cash Flows from Operating Activities Net Income ..................................... $(45,030) $(41,945) Net Cash Provided (Used) By Operating Activities $(45,030) (41,945)
Cash Flows from Financing Activities ........... 0 0 Proceeds from Capston-Paid in Capital .......... 45,030 41,945 Net Cash Provided (Used) By Financing Activities 45,030 41,945
Net Increase (Decrease) in Cash ................ 0 0 Cash at Beginning of Period .................... 0 0 Cash at End of Period .......................... $ 0 $ 0
See accompanying notes to financial statements.
BIO-RESPONSE, INC. (A Dormant State Company)
December 31, 1998
Note 1. HISTORY OF THE COMPANY
BIO-RESPONSE, Inc., (A Dormant State Company), was incorporated on 1972, under the laws of the State of Delaware. The Company conducted an initial public offering of its Common Stock in January 1979 and in connection with an application to list its Common Stock on the NASDAQ system, the Company also registered its Common Stock pursuant to Section 12(g) of the Securities Exchange Act of 1934.
On September 14, 1989, the Company filed a voluntary petition under Chapter 11 of the Bankruptcy Act (Case No. 4-89-04159 N-3) in the U.S. Bankruptcy Court for the Northern District of California. On September 15, 1995, the Company's case under Chapter 11 was closed under court order. As a result of the bankruptcy case, all assets of the Company were overseen by the Trustee in Bankruptcy. The assets were sold and the Company ceased all operations. The Trustee in Bankruptcy effected an orderly liquidation of corporate assets and used the proceeds to repay the Company's creditors. On September 15, 1995 the Company's case under Chapter 11 was closed by an order of the Court and the Trustee in Bankruptcy was discharged. As a result of the Bankruptcy, the Company has no assets, liabilities, management or ongoing operations and has not engaged in any business activities for well over a half of a decade.
Note 2. RESTORATION OF CORPORATE STATUS
On June 10, 1996, acting in its capacity as the holder of 2000 shares (0.0002%) of the Company's common stock, and without first receiving the consent, approval or authorization of any other person associated with the Company, Capston Network Company effected a renewal, revival and restoration of the Company's certificate of incorporation pursuant to Section 312 of the General Corporation Law of Delaware. Thereafter, Capston filed a 10-K for the years ending December 31, 1990-1996, and a Proxy Statement seeking approval and ratification of its actions, along with authorization to seek a suitable business combination transaction. This proxy statement was ultimately distributed to the Company's stockholders and the proposals therein were approved by the holders of a majority of the Company's issued and outstanding shares.
Under the terms of the original Proxy Statement, Capston was authorized to seek a suitable business combination transaction on behalf of the Company and to submit the terms of any proposed business combination transaction to the Company's stockholders for their approval. Capston did not receive and was not entitled to receive any equity interest in the Company as a result of its actions prior to the date of the Proxy Statement. Moreover, Capston was not entitled to reimbursement for any expenses incurred by it on behalf of the Company except to the extent that the terms of a business combination transaction provided for the reimbursement of such expenses. However, because Sally Fonner is both the President of BIO-RESPONSE and Capston, prior Staff Accounting Bulletins require under generally accepted accounting principles the treatment of debiting the expenses with corresponding credit to paid-in capital. Future expenses of Capston or others will be treated this way. These expenses are actual cash expenditures and do not reflect any costs associated with the operation of Capston nor any personnel time or cost.
Note 3. FUTURE EXPENSES
Capston will continue to extend administrative expenses to keep BIO-RESPONSE current with its reporting requirements, keeping the Corporation in good standing, any required proxy solicitation or acquisition efforts. These amounts should not exceed $50,000 in out-of-pockets costs. In addition, as approved, and as a result of a suitable acquisition, additional fees paid for by issuance of equity position would be for: (i) Capston of 200,000 shares, (ii)up to 4,500,000 shares for an acquisition(s) and (iii) up to 5% of the acquisition for a finder's fee .