Item 1. Business
Business Development
History
On March 3, 2000, the board of directors of our former parent corporation, Draco Holding Corporation, unanimously approved the formation of Jump'n Jax, Inc., a Utah corporation ("Jump'n Jax")(“the Company”), as a wholly-owned subsidiary of Draco. Jump'n Jax operated its business of leasing inflatable balloon bounce-houses for parties and outdoor activities in Southern Utah.
From its formation in March 2000, Jump'n Jax consistently incurred operating losses, with only a few exceptions where it showed nominal profits. We financed ongoing operations through various loans and contributions made by two persons who then served as officers of the Company, Messrs. Clissold and Moulton.
On January 1, 2006, the board of directors elected to officially cease our bounce house operations. This decision was due, in part, to the lack of profitability of the operations and the resignation of the primary bounce house operator. We are deemed to have re-entered the development stage on January 1, 2006.
On October 26, 2006, we completed the acquisition of MedaCure International, Inc., a Nevada corporation located in Salt Lake City, Utah (“MedaCure”). The acquisition was consummated pursuant to an agreement entered into on June 22, 2006, whereby we agreed to merge our newly created, wholly-owned subsidiary, CuraTech Acquisitions, Inc., with and into MedaCure with MedaCure being the surviving entity as our wholly owned subsidiary.
Prior to completion of the acquisition, on October 4, 2006 we effected a 4 shares for 1 share forward stock split of our issued and outstanding shares of common stock and changed our corporate name to CuraTech Industries, Inc. As a result of the forward stock split, our outstanding shares of common stock increased from 807,602 shares to 3,230,408 shares. We have also changed our corporate domicile from the State of Utah to Nevada.
Under the terms of the merger agreement, we issued an aggregate of approximately 12,342,239 shares of our common stock, post-split, to the stockholders of MedaCure. MedaCure is now a wholly-owned subsidiary of the Company. Also, we have added to our board of directors three new directors nominated by MedaCure.
Business of MedaCure International, Inc.
MedaCure was organized as a Nevada corporation by Shirlee Dastrup on April 25, 2006 for the purpose of acquiring, developing and marketing a certain health supplement that is believed to enhance and build-up the body’s natural immune system defenses in both humans and animals. Initially, MedaCure intends to commence commercial marketing of its supplement primarily outside the U.S. Initial marketing in the U.S. will primarily be to the veterinarian market for use in treating animals. MedaCure is also looking at the possibility of initiating a collaboration and partnering program that will focus on developing business alliances designed to generate sales, applications and marketing opportunities.
MedaCure acquired its product pursuant to a purchase agreement in May 2006 from the inventor, Dr. William Stacey. Under the terms of the agreement, MedaCure acquired all formulas, recipes and manufacturing and marketing rights relating to the product in consideration for $150,000 and 537,500 shares of MedaCure common stock. Dr. Stacey will serve as a consultant MedaCure’s business and the further development and eventual manufacturing and marketing of the product.
Presently the Company and its subsidiary, MedaCure, maintain their joint office at 6337 Highland Drive, # 1053, Salt Lake City, Utah 84121, and its telephone number is (801) 616-2355. Management intends to consider establishing corporate headquarters, manufacturing base and laboratory facilities in Orem, Utah, located just south of Salt Lake City.
Product
The MedaCure supplement is manufactured using a variety of components that are either natural or previously FDA approved ingredients. The combination of the components has not been approved by the FDA. The Company believes that the supplement is applicable to both humans and animals and can cause the body’s immune system to re-awaken from a state of suppression that can occur due to numerous factors including genetic predisposition, types of foods a person eats and environmental contamination. The Company also believes that the supplement can modulate the body’s immune system allowing the system to better fight diseases naturally by attacking infections from pathogens (disease producing organisms).
The immune system is a complex network of specialized organs, glands and cells that, when working properly, protect the body from pathogens such as virus, bacteria, fungus and other foreign tissues. The MedaCure supplement is based on the theory that certain chemicals found on the surface of the T4 lymphocyte (a “helper” white blood cell) attract pathogens. Activation of the T4 is critical to the activation of the immune response. Activation takes place when the T4 cell recognizes the antigen displayed by the invading pathogen. An antigen is the substance to which the body reacts by producing antibodies. The function of the T4 is to act as a control for the rest of the immune system. Once activated, the T4 cell produces immune proteins that in turn activate the “killer” cells. The T4 directs and coordinates these other killer cells of the immune system that do the actual killing of the specific antigen producing pathogen and protects the body. This is done by chemical signals passed from one cell to another or chemical signals released into the blood stream.
Once infected by a pathogen, the T4 no longer sends out the proper signals to stimulate other cells. The pathogen is attracted to the very spot where the T4 receives messages from other cells. These spots are called "receptors." As the disease progresses, more and more T4 lymphocytes are infected and can no longer receive messages that tell it the body is infected. Slowly the body's ability to fight off infection declines.
The Company believes that the MedaCure product increases the number of cells that kill infected cells and increases the number of cells that protect the bodies from infection. The supplement is designed to break the attraction the pathogen has for the T4 lymphocyte receptor site. Once the T4 is free of the pathogen it can again send the proper signals to the other cells of the immune system.
MedaCure’s supplement can be used by both humans and animals. In humans, it can be taken intraveneously (IV), sublingually, orally or by topical cream. IV application requires FDA approval, for which MedaCure has not yet applied. The Company has arranged for manufacturing its product in capsule form through a third party manufacturer.
Manufacturing
The Company has arranged for a third party manufacturer known as ProPac Labs to manufacture the Company’s product in capsule form. The first 85,000 capsules were manufactured by the third party manufacturer for the Company in November 2008. Another 700,000 capsules have been manufactured during 2009.
Warehousing
The company is now searching for a suitable warehouse location in Utah County, State of Utah in which to store the Company’s MedaCure product as it is manufactured. The Company is searching for warehouse space of approximately 3,000 square feet. The Company anticipates leasing the space from a third party once suitable warehouse space is located for the Company.
Marketing
The Company has not yet commenced sales of its MedaCure product. The Company anticipates that sales of the MedaCure product may commence in the second quarter of 2009.
The Company plans to sell the MedaCure product to both the health and medical industries as well as the veterinarian industry. Initially, MedaCure will concentrate on the veterinary market in foreign countries and then in the U.S. The Company intends to use direct selling efforts through pharmaceutical sales personnel, exhibits, Internet web site, presentations at trade shows, scientific meetings, medical conferences, as well as through networks built up through existing product sales and distributor relationships. MedaCure is currently negotiating to establish a network of distributors to promote and market its product. At present, we are negotiating with two groups of potential distributors. The Company also intends to establish a collaboration and partnering programs that will focus on developing business alliances designed to generate sales, applications and marketing opportunities.
The Company's initial marketing strategy will focus on establishing distributors for a licensing fee. Those territories on which the Company will concentrate will include North America (which includes United States and Canada) and Mexico. As business warrants and funds are available, the Company intends to expand its marketing into South America, Europe and other parts of the world.
Intellectual Property and Patent Protection
MedaCure has filed a patent application relating to the MedaCure product with the U.S. Patent and Trademark Office. The application is presently pending. The Company intends to aggressively defend and expand its intellectual property and technology by pursuing patent and/or copyright protection in the future as deemed necessary. The Company also filed its PCT application for international protection in July 2008, and that application is pending. We intend to pursue comprehensive intellectual property coverage in the United States and in the most relevant foreign markets in anticipation of future commercialization opportunities. MedaCure also intends to rely on trade secrets, common law trademark rights and trademark registrations, and will continue to protect its intellectual property via non-disclosure agreements, license agreements and limited information distribution.
Facilities
The Company currently occupies office facilities in Salt Lake City, Utah consisting of approximately 500 square feet of office space. Management is presently looking for a warehouse facility, most likely in Utah County, Utah. Once it locates an appropriate warehouse facility, the Company will most likely move its principal offices to that location. Management believes that it will locate and secure an acceptable facility in the second or third quarters of 2009. It is estimated that the Company will need a facility of at least 3,000 square feet.
Employees
The Company presently has three full time employees and one consultant, but anticipates adding employees as it establishes its warehouse facility. The Company’s employees are not members of any union, nor have they entered into any collective bargaining agreements, nor is it anticipated in the near future. It is believed that MedaCure’s relationship with its employees is good.
Plan of Operations
In November 2008, we engaged a third party manufacturer to begin manufacturing the MedaCure product. A total of 785,000 capsules have been manufactured to date. Our next priority will be to establish new facilities for our corporate headquarters and to warehouse the product. Management is seeking a 3,000 square foot facility that can be leased on a long-term basis. The facility will also handle shipping of product. We have not selected a final site, but we are searching for one in Utah County.
Contemporaneous with selecting the site for our headquarters and warehouse, we will be creating a distribution network that will focus on initiating a collaboration and partnering program and developing business alliances designed to generate sales, applications and marketing opportunities. At present, we are negotiating with two groups of potential distributors. We anticipate that during the next 12 months we will hire approximately 10-15 persons, 3-5 for administrative duties, and 7-10 for sales and marketing.
1.
We estimate that during the next 12 months we will need approximately $500,000 to establish our warehouse facility, establish a sales and distribution network, and begin selling activities. We anticipate that the source of these funds will be from the private sale of securities and/or other financing activities conducted by our officers and directors. We anticipate that we will be able to raise approximately $500,000 during 2009.
Competition
The health and supplement industry is highly competitive and is marked by rapid changes and new products. Other competitors and potential competitors include several large national and international companies involved in the health and supplement business. Most existing and potential competitors have greater financial resources, larger market share, and larger production and technology research capability, which may enable them to establish a stronger competitive position than we have, in part through greater marketing opportunities. If we fail to address competitive developments quickly and effectively, we will not be able to grow our business or remain a viable entity.
Research and Development
The Company has not incurred any research and development expenses in the fiscal years ended December 31, 2008 and 2007. The Company has no present plans to incur research and development expenses in the current year.
Sources and Availability of Raw Materials
Raw materials used in the manufacturing of the MedaCure product are available from many sources.
Government Regulations
MedaCure’s supplement and its related promotional and marketing activities are subject to extensive governmental regulation by numerous domestic and foreign governmental agencies and authorities, including the FDA, the FTC, the Consumer Product Safety Commission, the United States Department of Agriculture, state attorneys general and other state regulatory agencies, and similar government agencies in each country in which we intend to operate. These regulations can limit our ability to import products into new markets and can delay introductions of new products into existing markets as we attempt to comply with the registration and approval process for our products.
MedaCure’s product may be strictly regulated in certain markets in which the Company intends to operate. These markets have varied regulations that apply to and distinguish nutritional health supplements from “drugs” or “pharmaceutical products.” For example, the FDA of the United States under the Federal Food, Drug and Cosmetic Act regulates the product. The Federal Food, Drug and Cosmetic Act has been amended several times with respect to nutritional supplements, most recently by the Nutrition Labeling and Education Act and the Dietary Supplement Health and Education Act. The Dietary Supplement Health and Education Act establishes rules for determining whether a product is a dietary supplement. Under this statute, dietary supplements are regulated more like foods than drugs, are not subject to the food additive provisions of the law, and are generally not required to obtain regulatory approval prior to being introduced to the market. None of this limits, however, the FDA’s power to remove an unsafe substance from the market. In the event a product, or an ingredient in a product, is classified as a drug or pharmaceutical product in any market, we would generally not be able to distribute that product in that market through our distribution channel because of strict restrictions applicable to drug and pharmaceutical products.
Most existing major markets also regulate product claims and advertising regarding the types of claims and representations that can be made regarding the efficacy of products, particularly dietary supplements. Accordingly, these regulations can limit the Company’s ability to inform consumers of the full benefits of its product. For example, in the United States, the Company is unable to make any claim that its supplement will diagnose, cure, mitigate, treat or prevent disease. The Dietary Supplement Health and Education Act permits only substantiated, truthful and non-misleading statements of nutritional support to be made in labeling, such as statements describing general well-being resulting from consumption of a dietary ingredient or the role of a nutrient or dietary ingredient in affecting or maintaining a structure or a function of the body. In addition, all product claims must be substantiated.
Item 1A.
Item 1A. Risk Factors
You should carefully consider the risks and uncertainties described below and other information in this report. If any of the following risks or uncertainties actually occur, our business, financial condition and operating results, would likely suffer. Additional risks and uncertainties, including those not yet identified or that we currently believe are immaterial, may also adversely affect our business, financial condition or operating results.
Risks Relating to Our Business as a Result of the MedaCure Acquisition
We will require additional financing to proceed with our business activities. There can be no assurance that financing will be available on terms beneficial to us, or at all.
MedaCure was recently formed and has only a very limited operating history. We estimate that we will need financing of approximately $500,000 during the next 12 months to proceed with our anticipated business activities. If we need to raise additional capital by selling equity or equity-linked securities, these securities would dilute the ownership percentage of our existing stockholders. Also, these securities could have rights, preferences or privileges senior to those of our common stock. If we raise additional capital by issuing debt securities, those securities may contain covenants that restrict us in terms of how we operate our business, which could also affect the value of our common stock. Without additional funding, we may not be able to achieve profitable operations, which would most likely have a material negative impact on our business and future prospects. There can be no assurance that we will be able to raise future capital on terms that will be reasonable and beneficial to us, or at all.
MedaCure has a limited operating history and has not recorded revenues or operating profits since its inception. Continuing losses may exhaust our capital resources and force us to discontinue operations.
MedaCure was incorporated in April 2006, has a limited operating history and has continually incurred net losses since inception. Jump’n Jax, Inc., now known as CuraTech Industries, Inc., has been in operation since March 2000, but has realized only nominal revenues in recent years and has a net stockholders’ equity of only $163,353 as of December 31, 2008. The potential for us to generate future profits depends on many factors, including the following:
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our ability to secure adequate funding to complete research and development and to commercially market MedaCure’s product;
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the size and timing of any future customer orders, milestone achievement, product delivery and customer acceptance, if required;
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success in developing, maintaining and enhancing strategic relationships with potential customers;
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our ability to protect our intellectual property;
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actions by competitors towards the development and marketing of products that will compete directly with ours;
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the costs of maintaining and expanding operations; and
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our ability to attract and retain a qualified work force.
There can be no assurance that we will achieve any of the foregoing factors or realize profitability in the immediate future, or at any time.
If we cannot achieve commercial application of MedaCure’s product, we may not achieve profitability.
The development of a market for MedaCure’s product is dependent on the creation and implementation of a successful marketing plan and the acceptance of the product in the marketplace. This development may be impacted by many factors including, but not limited to the following:
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existence of competing products and emergence of new products;
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inability to finalize a successful marketing strategy;
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lack of acceptance of MedaCure’s product; and
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inability to adjust to changes in the marketplace and to keep pace with with competitors.
If we fail to develop adequate market for MedaCure’s product or if we are unable to successfully compete with other existing and new products, we may not achieve profitability.
Certain government regulations concerning approval of MedaCure’s product may negatively impact our business following the acquisition of MedaCure.
It may be necessary for MedaCure’s product to be approved by one or more agencies of the Federal government, including the Food and Drug Administration. Government regulations concerning the product and its use by humans may be burdensome and costly and could negatively impact our business. Although we believe the product does not require FDA approval for the initial application in the U.S. for animal treatment, we do not know the extent to which any such regulations may impact the product or our business. Any new regulation may increase costs and could reduce our potential to be profitable following completion of the merger.
The industry in which MedaCure operates is highly competitive and could affect our results of operations, which would make profitability even more difficult to achieve and sustain.
The health and supplement industry is highly competitive and is marked by rapid changes and new products. Other competitors and potential competitors include several large national and international companies involved in the health and supplement business. Most existing and potential competitors have greater financial resources, larger market share, and larger production and technology research capability, which may enable them to establish a stronger competitive position than we have, in part through greater marketing opportunities. If we fail to address competitive developments quickly and effectively, we will not be able to grow our business or remain a viable entity.
Our business could be adversely affected by any adverse economic developments in the health and supplement industry and/or the economy in general.
We depend on the perceived initial demand for the MedaCure product in the U.S. and foreign markets in the treatment of animals. Therefore, our business is susceptible to downturns in the health and supplement industry and the economy in general. Any significant downturn in the market or in general economic conditions would likely hurt our business.
If we fail to keep up with changes affecting the MedaCure product and the markets that we will ultimately offer the product, we will become less competitive and thus adversely affect future financial performance.
In order to remain competitive and serve its potential effectively, we must respond on a timely and cost-efficient basis to changes in health and supplement products in general, industry standards and procedures and customer preferences. Management believes that to remain competitive, we will need to continuously develop new products and applications for existing products. In some cases these changes may be significant and the cost to comply with these changes may be substantial. We cannot assure you that we will be able to adapt to any changes in the future or that we will have the financial resources to keep up with changes in the marketplace. Also, the cost of adapting to any changes in MedaCure’s product may have a material and adverse effect on our operating results.
Our business could be adversely affected by local, state, national, international laws or regulations.
Our future success depends in part on laws and regulations that exist, or are expected to be enacted around the world. These laws and regulations could negatively affect our business and anticipated revenues. We cannot guarantee a positive outcome in direction, timing, or scope of laws and regulations that may be enacted which will affect our business.
Our future success depends on retaining our existing key employees and hiring and assimilating new key employees. The loss of key employees or the inability to attract new key employees could limit our ability to execute our growth strategy, resulting in lost sales and a slower rate of growth.
Our future success depends in part on our ability to retain our key employees including its executive officers. Although following the acquisition we expect to have employment agreements with these executives, each executive may be able to terminate his or her agreement at any time. We anticipate obtaining in the futures "key man" insurance for one or more of our key executives. It would be difficult for us to replace any one of these individuals. In addition, as we grow we may need to hire additional key personnel. We may not be able to identify and attract high quality employees or successfully assimilate new employees into our existing management structure.
We may be unable to protect our intellectual property adequately or cost effectively, which may cause us to lose market share or reduce prices.
Our future success depends in part on our ability to protect and preserve proprietary rights related to MedaCure’s product. We cannot assure you that we will be able to prevent third parties from using our intellectual property rights and technology without our authorization. Although we have not obtained any patents on our product yet, we are pursuing a patent application related to our Medacure product which is now pending. We may in the future file for patent protection for our product and will also rely on trade secrets, common law trademark rights and trademark registrations. We will also employ confidentiality and work for hire, development, assignment and license agreements with employees, consultants, third party developers, licensees and customers. However, these measures afford only limited protection and may be flawed or inadequate. Also, enforcing intellectual property rights could be costly and time-consuming and could distract management’s attention from operating business matters.
Our intellectual property may infringe on the rights of others, resulting in costly litigation.
In recent years, there has been significant litigation in the United States involving patents and other intellectual property rights. In particular, there has been an increase in the filing of suits alleging infringement of intellectual property rights, which pressure defendants into entering settlement arrangements quickly to dispose of such suits, regardless of their merits. Other companies or individuals may allege that we infringe on their intellectual property rights. Litigation, particularly in the area of intellectual property rights, is costly and the outcome is inherently uncertain. In the event of an adverse result against future rights we may acquire, we could be liable for substantial damages and we may be forced to discontinue our use of the subject matter in question or obtain a license to use those rights or develop non-infringing alternatives. Any of these results would increase our cash expenditures, adversely affecting our financial condition.
We may not be able to manage any future growth effectively, which could adversely affect our operations and financial performance.
The ability to manage and operate our business as we execute our development and growth strategy will require effective planning. Possible future growth could strain our management and internal resources and cause other problems that could adversely affect our financial performance. We expect that our efforts to grow will place a significant strain on personnel, management systems, infrastructure and other resources. Our ability to manage future growth effectively will also require us to successfully attract, train, motivate, retain and manage new employees and continue to update and improve our operational, financial and management controls and procedures. If we do not manage our growth effectively, our operations could be adversely affected, resulting in slower growth and a failure to achieve or sustain profitability.
Being a public company involves increased administrative costs, which could result in lower net income and make it more difficult for us to attract and retain key personnel.
As a public company, we incur significant legal, accounting and other expenses that MedaCure did not incur as a private company. In addition, the Sarbanes-Oxley Act of 2002 as well as new rules subsequently implemented by the SEC, have required changes in corporate governance practices of public companies. We expect that these new rules and regulations will increase our legal and financial compliance costs and make some activities more time consuming. For example, in connection with being a public company, we may have to create several board committees, implement additional internal controls and disclose controls and procedures, retain a transfer agent and financial printer, adopt an insider trading policy and incur costs relating to preparing and distributing periodic public reports in compliance with our obligations under securities laws. These new rules and regulations could also make it more difficult for us to attract and retain qualified executive officers and members of our board of directors, particularly to serve on our audit committee.
Risks Relating to Ownership of Our Common Stock
We cannot assure you that there will be an active trading market for our common stock and it could be difficult for holders of our common stock to liquidate their shares.
Our common stock is quoted on the OTC Bulletin Board. The price of our shares has been volatile, our shares are thinly traded, and liquidation of a person’s holdings may be difficult. Thus, holders of our common stock may be required to retain their shares for a long period of time.
We do not anticipate paying dividends in the foreseeable future, which could make our stock less attractive to potential investors.
We anticipate that we will retain any future earnings and other cash resources for future operation and development of our business and do not intend to declare or pay any cash dividends in the foreseeable future. Any future payment of cash dividends will be at the discretion of our board of directors after taking into account many factors, including our operating results, financial condition and capital requirements. Corporations that pay dividends may be viewed as a better investment than corporations that do not.
Future sales or the potential for sale of a substantial number of shares of our common stock could cause our market value to decline and could impair our ability to raise capital through subsequent equity offerings.
Sales of a substantial number of shares of our common stock in the public markets, or the perception that these sales may occur, could cause the market price of our common stock to decline and could materially impair our ability to raise capital through the sale of additional equity securities.
It may be difficult for a third party to acquire us, and this could depress our stock price.
Under Nevada corporate law, we are permitted to include or exclude certain provisions in our articles of incorporation and/or by-laws that could discourage information contests and make it more difficult for you and other stockholders to elect directors and take other corporate actions. As a result, these provisions could limit the price that investors are willing to pay in the future for shares of our common stock. For example:
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Without prior stockholder approval, the board of directors has the authority to issue one or more classes of preferred stock with rights senior to those of common stock and to determine the rights, privileges and inference of that preferred stock;
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Under Nevada law, we are not required to provide for, and our by-laws do not provide for, cumulative voting in the election of directors, which would otherwise allow less than a majority of stockholders to elect director candidates; and
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Stockholders cannot call a special meeting of stockholders.
Trading in our shares is subject to certain "penny stock” regulation which could have a negative effect on the price of our shares in the public trading market.
Public trading of our common stock on the OTCBB is subject to certain provisions, commonly referred to as the penny stock rule, promulgated under the Securities Exchange Act of 1934. A penny stock is generally defined to be any equity security that has a market price less than $5.00 per share, subject to certain exceptions. If our stock is deemed to be a penny stock, trading in our stock will be subject to additional sales practice requirements on broker-dealers. These may require a broker dealer to:
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make a special suitability determination for purchasers of penny stocks;
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receive the purchaser's written consent to the transaction prior to the purchase; and
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deliver to a prospective purchaser of a penny stock, prior to the first transaction, a risk disclosure document relating to the penny stock market.
Consequently, penny stock rules restrict the ability of broker-dealers to trade and/or maintain a market in our common stock. Also, many prospective investors may not want to get involved with the additional administrative requirements, which may have a material adverse effect on the trading of our shares.
Item 1B.
Item 1B. Unresolved Staff Comments
Not applicable.
Item 2.
Item 2. Properties
In March of 2008 we purchased a residential property in North Carolina for the sum of $230,862. We intend to use this property as an east coast headquarters for our operations, or to sell the property for a profit, if the real estate market so dictates. We currently occupy office facilities in Salt Lake City, Utah consisting of approximately 500 square feet of office space. Management is presently looking for a warehouse facility, most likely in Utah County, Utah. Once we locate an warehouse facility, we will most likely move our principal offices to that location. Management believes that we will locate and secure an acceptable facility in the second or third quarter 2009. It is estimated that we will need a facility of approximately 3,000 square feet.
Item 3.
Item 3. Legal Proceedings
There are no material pending legal proceedings to which we or our subsidiary is a party or to which any of our property is subject and, to the best of our knowledge, no such action against us is contemplated or threatened.
Item 4.
Item 4. Submission of Matters to a Vote of Security Holders
No matter was submitted to a vote of our security holders, through the solicitation of proxies or otherwise, during the fourth quarter of the fiscal year covered by this report.
PART II
Item 5.
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
Market Information
Our common stock is currently included on the OTC Bulletin Board under the symbol “CUTC.OB”. The shares are thinly traded and a limited market presently exists for the shares. The following table describes, for the respective periods indicated, the prices of the Company common stock in the over-the-counter market, based on inter-dealer bid prices, without retail mark-up, mark-down or commissions and may not necessarily represent actual transactions. The quotations have been provided by market makers in common stock and/or Pink Sheets LLC.
Based on its trading price, our common stock is considered a “penny stock” for purposes of federal securities laws, and therefore has been subject to certain regulations, which are summarized below.
The Securities Enforcement and Penny Stock Reform Act of 1990 requires special disclosure relating to the market for penny stocks in connection with trades in any stock defined as a “penny stock.” Specifically, Rules 15g-1 through 15g-9 under the Securities Exchange Act of 1934 (the “Exchange Act”) impose sales practice and disclosure requirements on NASD broker-dealers who make a market in a “penny stock.” Securities and Exchange Commission regulations generally define a penny stock to be an equity security that has a market price of less than $5.00 per share and is not listed on The NASDAQ SmallCap Stock Market or a major stock exchange. These regulations affect the ability of broker-dealers to sell the Company’s securities and also may affect the ability of purchasers of the Company’s common stock to sell their shares in the secondary market.
Under the penny stock regulations, a broker-dealer selling penny stock to anyone other than an established customer or “accredited investor,” generally, an individual with net worth in excess of $1,000,000 or an annual income exceeding $200,000, or $300,000 together with his or her spouse, must make a special suitability determination for the purchaser and must receive the purchaser’s written consent to the transaction prior to sale, unless the broker-dealer or the transaction is otherwise exempt. In addition, the penny stock regulations require the broker-dealer to deliver, prior to any transaction involving a penny stock, a disclosure schedule prepared by the Commission relating to the penny stock market, unless the broker-dealer or the transaction is otherwise exempt. A broker-dealer is also required to disclose commissions payable to the broker-dealer and the registered representative and current quotations for the securities. Finally, a broker-dealer is required to send monthly statements disclosing recent price information with respect to the penny stock held in a customer’s account and information with respect to the limited market in penny stocks.
As long as the penny stock regulations apply to the Company’s stock, it may be difficult to trade such stock because compliance with the regulations can delay and/or preclude certain trading transactions. Broker-dealers may be discouraged from effecting transactions in the Company’s stock because of the sales practice and disclosure requirements for penny stock. This could adversely affect the liquidity and/or price of the Company’s common stock, and impede the sale of the Company’s stock.
Stockholders
We have approximately 226 holders of record of our common stock as of March 26, 2009. This number does not take into consideration stockholders whose shares are held by broker-dealers, financial institutions or other nominees.
Dividend Policy
We have never declared or paid cash dividends or made distributions in the past and do not anticipate paying cash dividends or making distributions in the
foreseeable future. We currently intend to retain and invest future earnings to finance operations. There are no material restrictions limiting, or that are likely to limit, The Company’s ability to pay dividends on our securities, except for any applicable limitations under Nevada corporate law.
Equity Compensation Plans
The Company has not approved any compensation plans under which equity securities of the Company are authorized for issuance.
Recent sales of unregistered securities
During the fiscal year ended December 31, 2008, the Company has not sold any shares of its common stock without registration under the Securities Act of 1933, except for the following:
During 2008, the Company received a total of $580,900 in cash from a total of seven investors for which the Company is obligated to issue 580,900 shares of its common stock. The shares were sold at $1.00 per share. As of December 31, 2008 the shares had not been issued. The Company expects that certificates representing the shares sold in 2008 will be issued in second quarter 2009.
In each transaction, the shares were issued without registration pursuant to Section 4(2) of the Securities Act of 1933 and/or Rule 506 of Regulation D for a transaction not involving any public offering. The certificates representing the shares will be given a restricted legend.
For information concerning sales of shares of the Company's common stock by the Company which were not registered under the Securities Act of 1933 during the fiscal years ended December 31, 2006 and December 31, 2007, please refer to the Company's annual reports on Form 10-KSB for the fiscal years ended December 31, 2006 and December 31, 2007, respectively, and to the Company’s quarterly reports on Form 10-QSB or 10-Q for the quarters ended March 31, 2006 and 2007, June 30, 2006 and 2007 and September 30, 2006 and 2007.
Item 6.
Item 6. Selected Financial Data
A smaller reporting company is not required to provide the information specified by this item.
Item 7.
Item 7. Management's Discussion and Analysis of Financial Condition and Reseults of Operations
The following plan of operation should be read in conjunction with the financial statements and accompanying notes and the other financial information appearing elsewhere in this periodic report. The Company’s fiscal year end is December 31.
This report and the exhibits attached hereto contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. The forward-looking statements include, without limitation, statements as to management’s good faith expectations and beliefs, which are subject to inherent uncertainties which are difficult to predict and may be beyond the ability of the Company to control. Forward-looking statements are made based upon management’s expectations and belief concerning future developments and their potential effect upon the Company. There can be no assurance that future developments will be in accordance with management’s expectations or that the effect of future developments on the Company will be those anticipated by management.
The words “believes,” “expects,” “intends,” “plans,” “anticipates,” “hopes,” “likely,” “will,” and similar expressions identify such forward-looking statements. Such forward-looking statements involve known and unknown risks, uncertainties and other important factors that could cause the actual results, performance or achievements of the Company, or industry results, to differ materially from future results, performance or achievements expressed or implied by such forward-looking statements.
These risks and uncertainties, many of which are beyond the Company’s control, include (i) the sufficiency of existing capital resources and our ability to raise additional capital to fund cash requirements for future operations; (ii) uncertainties involved in the decision to acquire an existing business opportunity or to embark on a start up venture; (iii) the ability of the Company to achieve sufficient revenues from the operation of a business opportunity; and (iv) general economic conditions. Although we believe the expectations reflected in these forward-looking statements are reasonable, such expectations may prove to be incorrect.
Readers are cautioned not to place undue reliance on these forward-looking statements which reflect management’s view only as of the date of this report. The Company undertakes no obligation to publicly release the result of any revisions to these forward-looking statements which may be made to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events, conditions or circumstances.
The following information should be read in conjunction with the financial statements and notes thereto appearing elsewhere in this Form 10-K.
Plan of Operation
Following the formation of the Company in March 2000, the Company operated its business of inflatable balloon bounce-houses for parties and outdoor activities in Southern Utah until approximately January 2006, when the Board of directors elected to cease bounce house operations due, in part, to the lack of profitability and the resignation of the primary bounce house operator.
Following the completion of the acquisition of MedaCure on October 26, 2006, we have become engaged in the developing and marketing of MedaCure’s health supplement that is believed to enhance and build-up the body’s natural immune system defenses in both humans and animals. In November 2008, we engaged a third party manufacturer to begin manufacturing the MedaCure product. A total of 785,000 capsules have been manufactured to date. Our next priority will be to establish new facilities for our corporate headquarters and to warehouse the product. Management is seeking a 3,000 square foot facility that can be leased on a long-term basis. The facility will also handle shipping of product. We have not selected a final site, but we are searching for one in Utah County.
Contemporaneous with selecting the site for our headquarters and warehouse, we will be creating a distribution network that will focus on initiating a collaboration and partnering program and developing business alliances designed to generate sales, applications and marketing opportunities. At present, we are negotiating with two groups of potential distributors. We anticipate that during the next 12 months we will hire approximately 10-15 persons, 3-5 for administrative duties, and 7-10 for sales and marketing.
We estimate that during the next 12 months we will need approximately $500,000 to establish our warehouse facility, establish a sales and distribution network, and begin selling activities. We anticipate that the source of these funds will be from the private sale of securities and/or other financing activities conducted by our officers and directors. We anticipate that we will be able to raise approximately $500,000 during 2009.
Inflation
In the opinion of management, inflation has not and will not have a material effect on our operations in the immediate future. Management will continue to monitor inflation and evaluate the possible future effects of inflation on our business and operations.
Results of Operations
For Fiscal Years Ended December 31, 2007 and December 31, 2008.
Revenues
Revenues from continuing operations for the years ended December 31, 2008 and 2007 were both $-0-. This lack of revenues was due primarily to the fact that our business pertaining to the Medacure subsidiary has not yet been sufficiently developed. We anticipate that we will begin to generate revenues in the second quarter of 2009.
Expenses
Total operating expenses for the period ending December 31, 2007 were $558,666 which consisted of $245,937 of general and administrative expenses, $250,000 of officer compensation, $61,367 of consulting expenses and $1,362 in depreciation. General and administrative expenses decreased $1,370,442 from the $1,616,379 of general and administrative expenses incurred during the fiscal year ended December 31, 2007, and consulting expenses decreased $1,857,561 from the $1,918,928 of consulting expenses incurred in the fiscal year ended December 31, 2007. The decrease in general and administrative expenses is largely due to a charge of $3,153,000 for the issuance of 2,690,000 shares of the Company’s common stock for services rendered during the fiscal year ended December 31, 2007, with no similar expense incurred during the fiscal year ended December 31, 2008. Lincoln Dastrup was paid a salary of $250,000 during the fiscal year ended December 31, 2008 compared to no salary paid to him during the fiscal year ended December 31, 2007.
Net Losses
We reported a net loss of $558,666, or $0.03 per share, for the year ended December 31, 2008, a decrease of $2,974,123 from the net loss of $3,532,789, or $0.22 per share, reported for the year ended December 31, 2007. The decreases in net loss for the year ended December 31, 2008 was largely a result of the substantial decreases in general and administrative expenses and consulting expenses, as explained above, partially offset by a $250,000 increase in officer compensation paid in 2008.
Liquidity and Capital Resources
At December 31, 2008, we had cash on hand of $8,305, fixed assets of $4,087 and a real estate investment of $230,862. We believe that current cash on hand is not sufficient to satisfy our cash requirements for the next thirty days. We estimate that we will need approximately $500,000 for our business plan in the next 12 months. Due to the fact that our limited operations have not generated cash flow sufficient to cover ongoing business expenses and/or we purchase additional equipment, we may have to rely on our directors, or on outside sources, to provide additional funds. However, we have no agreements with anyone to provide future funds to our Company. If our directors are unable to provide future funding, if the need arises, we may have to look at alternative sources of funding. Presently we are attempting to raise funds through a private placement of our shares of common stock. We do not have any firm commitments from third parties to provide funding, and there is no assurance that such funds will be available or, that even if they are available, that they will be available on terms that will be acceptable to us. In the event we are unable to secure necessary future funding, we may have to curtail our business or cease operations completely.
At December 31, 2008, we had total assets of $243,254 and stockholders' equity of $163,353.
The Company’s current assets are not sufficient to conduct its plan of operation over the next twelve (12) months. The Company anticipates that it may need to raise approximately $500,000 from equity or debt financing arrangements to meet the Company’s expenses in the next twelve (12) months. We have no current commitments or arrangements with respect to, or immediate sources of funding. Further, no assurances can be given that funding will be available to us on acceptable terms. Although, our major shareholder or a company controlled by him would be the most likely source of new funding in the form of loans or equity placements in the near future, no commitments have been made for future investment and the Company has no agreement formal or otherwise. The Company’s inability to obtain funding, if required, would have a material adverse affect on its plan of operation.
All of the Company’s liabilities are current liabilities due within the next year.
The Company expects to hire 10-15 employees in the next 12 months.
Capital Expenditures
The Company expended no amounts on capital expenditures during the year ended December 31, 2008 or during the year ended December 31, 2007. The Company has no current plans for capital expenditures.
Critical Accounting Policies
In the notes to the audited consolidated financial statements for the year ended December 31, 2008, included in this Form 10-K, the Company discusses those accounting policies that are considered to be significant in determining the results of operations and its financial position. The Company believes that the accounting principles utilized by it conform to accounting principles generally accepted in the United States of America.
The preparation of financial statements requires Company management to make significant estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses. By their nature, these judgments are subject to an inherent degree of uncertainty. On an on-going basis, the Company evaluates estimates. The Company bases its estimates on historical experience and other facts and circumstances that are believed to be reasonable, and the results form the basis for making judgments about the carrying value of assets and liabilities. The actual results may differ from these estimates under different assumptions or conditions.
Going Concern
The Company’s auditors expressed substantial doubt as to the Company’s ability to continue as a going concern as a result of recurring losses, lack of revenue-generating activities and a deficit accumulated during the development stage in the amount of $4,672,088 as of December 31, 2008. The Company’s ability to continue as a going concern is subject to the ability of the Company to realize a profit from operations and /or obtain funding from outside sources. Since the Company has no revenue generating operations, our plan to address the Company’s ability to continue as a going concern over the next twelve months includes obtaining additional funding from the sale of our securities. Although we believe that we will be able to obtain the necessary funding to allow the Company to remain a going concern through the methods discussed above, there can be no assurances that such methods will prove successful.
Net Operating Loss
We have accumulated approximately $1,030,046 of net operating loss carryforwards as of December 31, 2008, which may be offset against taxable income and income taxes in future years. The use of these losses to reduce future income taxes will depend on the generation of sufficient taxable income prior to the expiration of the net operating loss carryforwards. The carry-forwards expire in the year 2028. In the event of certain changes in control, there will be an annual limitation on the amount of net operating loss carryforwards which can be used. No tax benefit has been reported in the financial statements for the year ended December 31, 2008 because there is a 50% or greater chance that the carryforward will not be used. Accordingly, the potential tax benefit of the loss carryforward is offset by a valuation allowance of the same amount.
Forward Looking and Cautionary Statements
This report, including the sections entitled "Business," "Risk Factors" and "Management's Discussion and Analysis or Plan of Operations" contains forward-looking statements. These statements relate to future events or our future financial performance and involve known and unknown risks and uncertainties. These factors may cause our company's or our industry's actual results, levels of activity, performance or achievements to be materially different from those expressed or implied by the forward- looking statements. These risks and other factors include those listed under "Risk Factors" and elsewhere in this report. In some cases, you can identify forward-looking statements by terminology such as "may," "will" "should," "expects," "intends," "plans," anticipates," "believes," "estimates," "predicts," "potential," "continue," or the negative of these terms or other comparable terminology.
You should be aware that a variety of factors could cause actual results to differ materially from the anticipated results or other matters expressed in forward-looking statements. These risks and uncertainties, many of which are beyond our control, include:
*
the sufficiency of existing capital resources and our ability to raise additional capital to fund cash requirements for future operations;
*
uncertainties following any successful acquisition or merger related to the future rate of growth of our business and acceptance of our products and/or services;
*
volatility of the stock market, particularly within the technology sector; and
*
general economic conditions.
Although we believe the expectations reflected in these forward-looking statements are reasonable, such expectations cannot guarantee future results, levels of activity, performance or achievements.
You are cautioned that any forward-looking statements are not guarantees of future performance and are subject to risks and uncertainties. Actual results may differ materially from those included within the forward-looking statements as a result of various factors. Cautionary statements in the risk factors section and elsewhere in this report identify important risks and uncertainties affecting our future, which could cause actual results to differ materially from the forward-looking statements made in this report.
Recent Accounting Pronouncements
In June 2008, the FASB issued FASB Staff Position EITF 03-6-1, Determining Whether Instruments Granted in Share-Based Payment Transactions Are Participating Securities, (“FSP EITF 03-6-1”). FSP EITF 03-6-1 addresses whether instruments granted in share-based payment transactions are participating securities prior to vesting, and therefore need to be included in the computation of earnings per share under the two-class method as described in FASB Statement of Financial Accounting Standards No. 128, “Earnings per Share.” FSP EITF 03-6-1 is effective for financial statements issued for fiscal years beginning on or after December 15, 2008 and earlier adoption is prohibited. We are not required to adopt FSP EITF 03-6-1; neither do we believe that FSP EITF 03-6-1 would have material effect on our consolidated financial position and results of operations if adopted.
In May 2008, the Financial Accounting Standards Board (“FASB”) issued SFAS No. 163, “Accounting for Financial Guarantee Insurance Contracts-and interpretation of FASB Statement No. 60”. SFAS No. 163 clarifies how Statement 60 applies to financial guarantee insurance contracts, including the recognition and measurement of premium revenue and claims liabilities. This statement also requires expanded disclosures about financial guarantee insurance contracts. SFAS No. 163 is effective for fiscal years beginning on or after December 15, 2008, and interim periods within those years. SFAS No. 163 has no effect on the Company’s financial position, statements of operations, or cash flows at this time.
In May 2008, the Financial Accounting Standards Board (“FASB”) issued SFAS No. 162, “The Hierarchy of Generally Accepted Accounting Principles”. SFAS No. 162 sets forth the level of authority to a given accounting pronouncement or document by category. Where there might be conflicting guidance between two categories, the more authoritative category will prevail. SFAS No. 162 will become effective 60 days after the SEC approves the PCAOB’s amendments to AU Section 411 of the AICPA Professional Standards. SFAS No. 162 has no effect on the Company’s financial position, statements of operations, or cash flows at this time.
In March 2008, the Financial Accounting Standards Board, or FASB, issued SFAS No. 161, Disclosures about Derivative Instruments and Hedging Activities-an amendment of FASB Statement No. 133. This standard requires companies to provide enhanced disclosures about (a) how and why an entity uses derivative instruments, (b) how derivative instruments and related hedged items are accounted for under Statement 133 and its related interpretations, and (c) how derivative instruments and related hedged items affect an entity’s financial position, financial performance, and cash flows. This Statement is effective for financial statements issued for fiscal years and interim periods beginning after November 15, 2008, with early application encouraged. The Company has not yet adopted the provisions of SFAS No. 161, but does not expect it to have a material impact on its financial position, results of operations or cash flows.
In December 2007, the SEC issued Staff Accounting Bulletin (SAB) No. 110 regarding the use of a "simplified" method, as discussed in SAB No. 107 (SAB 107), in developing an estimate of expected term of "plain vanilla" share options in accordance with SFAS No. 123 (R), Share-Based Payment. In particular, the staff indicated in SAB 107 that it will accept a company's election to use the simplified method, regardless of whether the company has sufficient information to make more refined estimates of expected term. At the time SAB 107 was issued, the staff believed that more detailed external information about employee exercise behavior (e.g., employee exercise patterns by industry and/or other categories of companies) would, over time, become readily available to companies. Therefore, the staff stated in SAB 107 that it would not expect a company to use the simplified method for share option grants after December 31, 2007. The staff understands that such detailed information about employee exercise behavior may not be widely available by December 31, 2007. Accordingly, the staff will continue to accept, under certain circumstances, the use of the simplified method beyond December 31, 2007. The Company currently uses the simplified method for “plain vanilla” share options and warrants, and will assess the impact of SAB 110 for fiscal year 2009. It is not believed that this will have an impact on the Company’s financial position, results of operations or cash flows.
In December 2007, the FASB issued SFAS No. 160, Noncontrolling Interests in Consolidated Financial Statements-an amendment of ARB No. 51. This statement amends ARB 51 to establish accounting and reporting standards for the noncontrolling interest in a subsidiary and for the deconsolidation of a subsidiary. It clarifies that a noncontrolling interest in a subsidiary is an ownership interest in the consolidated entity that should be reported as equity in the consolidated financial statements. Before this statement was issued, limited guidance existed for reporting noncontrolling interests. As a result, considerable diversity in practice existed. So-called minority interests were reported in the consolidated statement of financial position as liabilities or in the mezzanine section between liabilities and equity. This statement improves comparability by eliminating that diversity. This statement is effective for fiscal years, and interim periods within those fiscal years, beginning on or after December 15, 2008 (that is, January 1, 2009, for entities with calendar year-ends). Earlier adoption is prohibited. The effective date of this statement is the same as that of the related Statement 141 (revised 2007). The Company will adopt this Statement beginning March 1, 2009. It is not believed that this will have an impact on the Company’s financial position, results of operations or cash flows.
In December 2007, the FASB, issued FAS No. 141 (revised 2007), Business Combinations.’ This Statement replaces FASB Statement No. 141, Business Combinations, but retains the fundamental requirements in Statement 141. This Statement establishes principles and requirements for how the acquirer: (a) recognizes and measures in its financial statements the identifiable assets acquired, the liabilities assumed, and any noncontrolling interest in the acquiree; (b) recognizes and measures the goodwill acquired in the business combination or a gain from a bargain purchase; and (c) determines what information to disclose to enable users of the financial statements to evaluate the nature and financial effects of the business combination. This statement applies prospectively to business combinations for which the acquisition date is on or after the beginning of the first annual reporting period beginning on or after December 15, 2008. An entity may not apply it before that date. The effective date of this statement is the same as that of the related FASB Statement No. 160, Noncontrolling Interests in Consolidated Financial Statements. The Company will adopt this statement beginning March 1, 2009. It is not believed that this will have an impact on the Company’s financial position, results of operations or cash flows.
In February 2007, the FASB issued SFAS No. 159, The Fair Value Option for Financial Assets and Liabilities-Including an Amendment of FASB Statement No. 115. This standard permits an entity to choose to measure many financial instruments and certain other items at fair value. This option is available to all entities. Most of the provisions in FAS 159 are elective; however, an amendment to FAS 115 Accounting for Certain Investments in Debt and Equity Securities applies to all entities with available for sale or trading securities. Some requirements apply differently to entities that do not report net income. SFAS No. 159 is effective as of the beginning of an entity’s first fiscal year that begins after November 15, 2007. Early adoption is permitted as of the beginning of the previous fiscal year provided that the entity makes that choice in the first 120 days of that fiscal year and also elects to apply the provisions of SFAS No. 157 Fair Value Measurements. The Company adopted SFAS No. 159 beginning March 1, 2008. The adoption of this pronouncement did not have an impact on the Company’s financial position, results of operations or cash flows.
In September 2006, the FASB issued SFAS No. 157, Fair Value Measurements This statement defines fair value, establishes a framework for measuring fair value in generally accepted accounting principles (GAAP), and expands disclosures about fair value measurements. This statement applies under other accounting pronouncements that require or permit fair value measurements, the Board having previously concluded in those accounting pronouncements that fair value is the relevant measurement attribute. Accordingly, this statement does not require any new fair value measurements. However, for some entities, the application of this statement will change current practice. This statement is effective for financial statements issued for fiscal years beginning after November 15, 2007, and interim periods within those fiscal years. Earlier application is encouraged, provided that the reporting entity has not yet issued financial statements for that fiscal year, including financial statements for an interim period within that fiscal year. The Company adopted this statement March 1, 2008. The adoption of this pronouncement did not have an impact on the Company’s financial position, results of operations or cash flows.
Item 7A.
Item 7A. Quantitative and Qualitative Disclosures about Market Risk
A smaller reporting company is not required to provide the information specified by this item.
Item 8.
Item 8. Financial Statements and Supplementary Data
Financial statements for the fiscal years ended December 31, 2008 and 2007 have been examined to the extent indicated in their reports by Moore & Associates, Chartered, independent certified public accountants and have been prepared in accordance with generally accepted accounting principles. The aforementioned financial statements are included below.
CURATECH INDUSTRIES, INC.
FINANCIAL STATEMENTS
December 31, 2008
MOORE & ASSOCIATES, CHARTERED
ACCOUNTANTS AND ADVISORS
PCAOB REGISTERED
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors
CuraTech Industries, Inc.
(A Development Stage Company)
We have audited the accompanying balance sheets of CuraTech Industries, Inc. (a development stage company) as of December 31, 2008 and 2007, and the related statements of operations, stockholders’ equity and cash flows for the years ended December 31, 2008 and 2007, and since inception on April 25, 2006 through December 31, 2008. 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 standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement. 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 CuraTech Industries, Inc. (a development stage company) as of December 31, 2008, and the related statements of operations, stockholders’ equity and cash flows for the years ended December 31, 2008 and 2007, and since inception on April 25, 2006 through December 31, 2008 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 2 to the financial statements, the Company has not established revenues sufficient to cover its operating costs, which raises substantial doubt about its ability to continue as a going concern. Management’s plans concerning these matters are also described in Note 2. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
/s/ Moore & Associates Chartered
Moore & Associates Chartered
Las Vegas, Nevada
April 15,
6490 West Desert Inn, Las Vegas, NV 89146 (702) 253-7511 Fax (702) 253-7501
The accompanying notes are an integral part of these financial statements.
CURATECH INDUSTRIES, INC.
(A Development Stage Company)
Statements of Operations
The accompanying notes are an integral part of these financial statements.
The accompanying notes are an integral part of these financial statements.
The accompanying notes are an integral part of these financial statements.
The accompanying notes are an integral part of these financial statements.
CURATECH INDUSTRIES, INC.
(A Development Stage Company)
Notes to the Financial Statements
December 31, 2008 and 2007
NOTE 1 -SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
a. Organization
Curatech Industries, Inc. (The Company) was incorporated as a Utah Corporation in March 2000 under the name Jump’n Jax, Inc. The Company was in the business of recreation equipment rentals until December 31, 2005, at which time the Company ceased equipment rental activities. In October 2006, the Company consummated an agreement to acquire Medacure International, Inc., a Nevada corporation. Pursuant to this Agreement, the Company changed its state of domicile from Utah to Nevada, and changed its corporate name to Curatech Industries, Inc. The Company is currently in the business of developing and marketing proprietary health supplements.
b. Accounting Method
The financial statements are prepared using the accrual method of accounting. The Company has elected a calendar year-end.
c. Estimates
The preparation of financial statements 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.
d. Revenue Recognition
The Company earned zero revenues during the period ended December 31, 2008. Appropriate revenue recognition principles will be established once revenue-generating operations commence.
e. Provision for Taxes
Deferred taxes are provided on a liability method whereby deferred tax assets are recognized for deductible temporary differences and operating loss and tax credit carry forwards and deferred tax liabilities are recognized for taxable temporary differences. Temporary differences are the differences between the reported amounts of assets and liabilities and their tax bases. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized. Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment.
At December 31, 2008, the Company had net operating loss carry forwards of approximately $1,030,046 that may be offset against future taxable income through 2028. No tax benefit has been reported in the December 31, 2008 financial statements since the potential tax benefit is offset by a valuation allowance of the same amount. Due to the change in ownership provisions of the Tax Reform Act of 1986, net operating loss carry forwards for Federal income tax reporting purposes are subject to annual limitations. Should change in ownership occur, net operating loss carry forwards may be limited as to use in future years.
CURATECH INDUSTRIES, INC.
(A Development Stage Company)
Notes to the Financial Statements
December 31, 2008 and 2007
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
f. Cash and Cash Equivalents
For the purpose of the statement of cash flows, the Company considers all highly liquid investments purchased with a maturity of three months or less to be cash equivalents.
g. Provision for Taxes
Net deferred tax assets consist of the following components as of December 31, 2008 and 2007:
The income tax provision differs from the amount of income tax determined by applying the U.S. federal and state income tax rates of 39% to pretax income from continuing operations for the period ended December 31, 2008 and 2007 due to the following:
h. Fixed Assets
Property and equipment are recorded at cost, less accumulated depreciation. Depreciation on equipment is determined using the straight-line method over the estimated useful lives (usually between three and five years) of the assets. The following is a summary of the Company’s major categories of fixed assets:
Depreciation expense for was $1,362 and $1,362 for the years ended December 31, 2008 and 2007, respectively.
CURATECH INDUSTRIES, INC.
(A Development Stage Company)
Notes to the Financial Statements
December 31, 2008 and 2007
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
i. Basic Loss Per Share
The computation of basic loss per share of common stock is based on the weighted average number of shares outstanding during the period. The Company has no common stock equivalents outstanding as of December 31, 2008 and 2007.
j. Advertising Costs
The Company’s policy regarding advertising is to expense advertising when incurred. The Company had not incurred any advertising expense as of December 31, 2008 and 2007.
k. Stock-based Compensation
The Company adopted SFAS No. 123-R effective January 1, 2006 using the modified prospective method. Under this transition method, stock compensation expense includes compensation expense for all stock-based compensation awards granted on or after January 1,2006, based on the grant-date fair value estimated in accordance with the provisions of SFAS No. 123-R.
NOTE 2 - GOING CONCERN
The Company's financial statements are prepared using generally accepted accountingprinciples in the United States of America applicable to a going concern which contemplates the realization of assets and liquidation of liabilities in the normal course of business. The Company has not yet established an ongoing source of revenues sufficient to cover its operating costs and allow it to continue as a going concern. The ability of the Company to continue as a going concern is dependent on the Company obtaining adequate capital to fund operating losses until it becomes profitable. If the Company is unable to obtain adequate capital, it could be forced to cease operations.
In order to continue as a going concern, the Company will need, among other things, additional capital resources. Management's plans to obtain such resources for the Company include (1) obtaining capital from management and significant shareholders sufficient to meet its minimal operating expenses, and (2) seeking out and completing a merger with an existing operating company. However, management cannot provide any assurances that the Company will be successful in accomplishing any of its plans.
The ability of the Company to continue as a going concern is dependent upon its ability to successfully accomplish the plans described in the preceding paragraph and eventually secure other sources of financing and attain profitable operations. The accompanying financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.
CURATECH INDUSTRIES, INC.
(A Development Stage Company)
Notes to the Financial Statements
December 31, 2008 and 2007
NOTE 3 - RECENT ACCOUNTING PRONOUNCEMENTS
In June 2008, the FASB issued FASB Staff Position EITF 03-6-1, Determining Whether Instruments Granted in Share-Based Payment Transactions Are Participating Securities, (“FSP EITF 03-6-1”). FSP EITF 03-6-1 addresses whether instruments granted in share-based payment transactions are participating securities prior to vesting, and therefore need to be included in the computation of earnings per share under the two-class method as described in FASB Statement of Financial Accounting Standards No. 128, “Earnings per Share.” FSP EITF 03-6-1 is effective for financial statements issued for fiscal years beginning on or after December 15, 2008 and earlier adoption is prohibited. We are not required to adopt FSP EITF 03-6-1; neither do we believe that FSP EITF 03-6-1 would have material effect on our consolidated financial position and results of operations if adopted.
In May 2008, the Financial Accounting Standards Board (“FASB”) issued SFAS No. 163, “Accounting for Financial Guarantee Insurance Contracts-and interpretation of FASB Statement No. 60”. SFAS No. 163 clarifies how Statement 60 applies to financial guarantee insurance contracts, including the recognition and measurement of premium revenue and claims liabilities. This statement also requires expanded disclosures about financial guarantee insurance contracts. SFAS No. 163 is effective for fiscal years beginning on or after December 15, 2008, and interim periods within those years. SFAS No. 163 has no effect on the Company’s financial position, statements of operations, or cash flows at this time.
In May 2008, the Financial Accounting Standards Board (“FASB”) issued SFAS No. 162, “The Hierarchy of Generally Accepted Accounting Principles”. SFAS No. 162 sets forth the level of authority to a given accounting pronouncement or document by category. Where there might be conflicting guidance between two categories, the more authoritative category will prevail. SFAS No. 162 will become effective 60 days after the SEC approves the PCAOB’s amendments to AU Section 411 of the AICPA Professional Standards. SFAS No. 162 has no effect on the Company’s financial position, statements of operations, or cash flows at this time.
In March 2008, the Financial Accounting Standards Board, or FASB, issued SFAS No. 161, Disclosures about Derivative Instruments and Hedging Activities-an amendment of FASB Statement No. 133. This standard requires companies to provide enhanced disclosures about (a) how and why an entity uses derivative instruments, (b) how derivative instruments and related hedged items are accounted for under Statement 133 and its related interpretations, and (c) how derivative instruments and related hedged items affect an entity’s financial position, financial performance, and cash flows. This Statement is effective for financial statements issued for fiscal years and interim periods beginning after November 15, 2008, with early application encouraged. The Company has not yet adopted the provisions of SFAS No. 161, but does not expect it to have a material impact on its financial position, results of operations or cash flows.
In December 2007, the SEC issued Staff Accounting Bulletin (SAB) No. 110 regarding the use of a "simplified" method, as discussed in SAB No. 107 (SAB 107), in developing an estimate of expected term of "plain vanilla" share options in accordance with SFAS No. 123 (R), Share-Based Payment. In particular, the staff indicated in SAB 107 that it will accept a company's election to use the simplified method, regardless of whether the company has sufficient information to make more refined estimates of expected term. At the time SAB 107 was issued, the staff believed that more detailed external information about employee exercise behavior (e.g., employee exercise patterns by industry and/or other categories of companies) would, over time, become readily available to companies. Therefore, the staff stated in SAB 107 that it would not expect a company to use the simplified method for share option grants after December 31, 2007. The staff understands that such detailed information about employee exercise behavior may not be widely available by December 31, 2007. Accordingly, the staff will continue to accept, under certain circumstances, the use of the simplified method beyond December 31, 2007. The Company currently uses the simplified method for “plain vanilla” share options and warrants, and will assess the impact of SAB 110 for fiscal year 2009. It is not believed that this will have an impact on the Company’s financial position, results of operations or cash flows.
CURATECH INDUSTRIES, INC.
(A Development Stage Company)
Notes to the Financial Statements
December 31, 2008 and 2007
NOTE 3 - RECENT ACCOUNTING PRONOUNCEMENTS (Continued)
In December 2007, the FASB issued SFAS No. 160, Noncontrolling Interests in Consolidated Financial Statements-an amendment of ARB No. 51. This statement amends ARB 51 to establish accounting and reporting standards for the noncontrolling interest in a subsidiary and for the deconsolidation of a subsidiary. It clarifies that a noncontrolling interest in a subsidiary is an ownership interest in the consolidated entity that should be reported as equity in the consolidated financial statements. Before this statement was issued, limited guidance existed for reporting noncontrolling interests. As a result, considerable diversity in practice existed. So-called minority interests were reported in the consolidated statement of financial position as liabilities or in the mezzanine section between liabilities and equity. This statement improves comparability by eliminating that diversity. This statement is effective for fiscal years, and interim periods within those fiscal years, beginning on or after December 15, 2008 (that is, January 1, 2009, for entities with calendar year-ends). Earlier adoption is prohibited. The effective date of this statement is the same as that of the related Statement 141 (revised 2007). The Company will adopt this Statement beginning March 1, 2009. It is not believed that this will have an impact on the Company’s financial position, results of operations or cash flows.
In December 2007, the FASB, issued FAS No. 141 (revised 2007), Business Combinations.’ This Statement replaces FASB Statement No. 141, Business Combinations, but retains the fundamental requirements in Statement 141. This Statement establishes principles and requirements for how the acquirer: (a) recognizes and measures in its financial statements the identifiable assets acquired, the liabilities assumed, and any noncontrolling interest in the acquiree; (b) recognizes and measures the goodwill acquired in the business combination or a gain from a bargain purchase; and (c) determines what information to disclose to enable users of the financial statements to evaluate the nature and financial effects of the business combination. This statement applies prospectively to business combinations for which the acquisition date is on or after the beginning of the first annual reporting period beginning on or after December 15, 2008. An entity may not apply it before that date. The effective date of this statement is the same as that of the related FASB Statement No. 160, Noncontrolling Interests in Consolidated Financial Statements. The Company will adopt this statement beginning March 1, 2009. It is not believed that this will have an impact on the Company’s financial position, results of operations or cash flows.
In February 2007, the FASB issued SFAS No. 159, The Fair Value Option for Financial Assets and Liabilities-Including an Amendment of FASB Statement No. 115. This standard permits an entity to choose to measure many financial instruments and certain other items at fair value. This option is available to all entities. Most of the provisions in FAS 159 are elective; however, an amendment to FAS 115 Accounting for Certain Investments in Debt and Equity Securities applies to all entities with available for sale or trading securities. Some requirements apply differently to entities that do not report net income. SFAS No. 159 is effective as of the beginning of an entity’s first fiscal year that begins after November 15, 2007. Early adoption is permitted as of the beginning of the previous fiscal year provided that the entity makes that choice in the first 120 days of that fiscal year and also elects to apply the provisions of SFAS No. 157 Fair Value Measurements. The Company adopted SFAS No. 159 beginning March 1, 2008. The adoption of this pronouncement did not have an impact on the Company’s financial position, results of operations or cash flows.
CURATECH INDUSTRIES, INC.
(A Development Stage Company)
Notes to the Financial Statements
December 31, 2008 and 2007
NOTE 3 - RECENT ACCOUNTING PRONOUNCEMENTS (Continued)
In September 2006, the FASB issued SFAS No. 157, Fair Value Measurements This statement defines fair value, establishes a framework for measuring fair value in generally accepted accounting principles (GAAP), and expands disclosures about fair value measurements. This statement applies under other accounting pronouncements that require or permit fair value measurements, the Board having previously concluded in those accounting pronouncements that fair value is the relevant measurement attribute. Accordingly, this statement does not require any new fair value measurements. However, for some entities, the application of this statement will change current practice. This statement is effective for financial statements issued for fiscal years beginning after November 15, 2007, and interim periods within those fiscal years. Earlier application is encouraged, provided that the reporting entity has not yet issued financial statements for that fiscal year, including financial statements for an interim period within that fiscal year. The Company adopted this statement March 1, 2008. The adoption of this pronouncement did not have an impact on the Company’s financial position, results of operations or cash flows.
NOTE 4 - COMMON STOCK TRANSACTIONS
On April 28, 2006, the Company issued an aggregate of 11,495,633 shares of common stock to various individuals, each of whom was an officer and/or director of the Company on the date of issuance, in exchange for an aggregate of $10,700 in cash.
On May 12, 2006, the Company issued an aggregate of 578,000 shares of common stock to two unrelated individuals, as partial payment for Immune Response Therapy assets.
On May 15, 2006, the Company issued 268,606 shares of common stock to an unrelated third party in exchange for $150,000 in cash. Of this amount, $55,000 remained uncollected as of December 31, 2008, and has been recorded as stock subscriptions receivable.
During the year ended December 31, 2007 the Company issued 317,552 shares of common stock for cash and subscriptions receivable at $1.50 per share. In addition, the Company issued 1,800,000 shares of common stock for services rendered at $1.01 per share.
During the year ended December 31, 2008, the Company received a total of $580,900 in cash for which the Company is to issue common stock at $1.00 per share, at such time as the private placement can be finalized and the shares appropriately authorized. In addition, the Company cancelled 1,800,000 previously issued shares of common stock.
NOTE 5 - REAL ESTATE INVESTMENT
During the first quarter of 2008 the Company purchased a residential property in North Carolina for $230,862. Management’s goal is to sell this property for a profit in 2009.
CURATECH INDUSTRIES, INC.
(A Development Stage Company)
Notes to the Financial Statements
December 31, 2008 and 2007
NOTE 6 - AGREEMENT AND PLAN OF MERGER
On October 26, 2006, the Company entered into an Acquisition Agreement with Jump’n Jax, Inc. (“Jump’n Jax”). The acquisition was consummated pursuant to an agreement entered into on June 22, 2006, whereby the Company agreed to merge into Jump’n Jax’s newly created, wholly-owned subsidiary, CuraTech Acquisitions, Inc., with the Company being the surviving entity as Jump’n Jax’s wholly owned operating subsidiary.
Prior to completion of the acquisition on October 4, 2006, the Jump’n Jax completed a forward stock split, on a four shares for one share basis. In addition, Jump’n Jax changed its corporate name to CuraTech Industries, Inc. As a result of the forward stock split, Jump’n Jax’s outstanding shares of common stock increased from 807,602 shares to 3,230,408 shares. The Company also changed its corporate domicile from the State of Utah to Nevada. Additionally, per the terms of the Merger Agreement the Jump’n Jax issued an aggregate of 12,342,239 shares of its common stock, post-split, to the stockholders of the Company. Also, the Company added three new directors, each nominated by MedaCure, to its Board of Directors. Upon completion of the Acquisition, approximately 58.9% of the Company’s common stock is beneficially owned together by the Dastrup family. Accordingly, this group has the capability to substantially control the vote on all significant matters pertaining to the Company without the approval of shareholders.
The Company accounted for this transaction as a reverse-acquisition, with MedaCure presented as the accounting acquirer. Therefore, the historical financial statements presented herein reflect only those of MedaCure, the accounting acquirer, since its inception on April 25, 2006. The reverse-acquisition is presented as a recapitalization of Medacure. Accordingly, the historical stockholders’ equity (deficit) of MedaCure prior to the acquisition transaction has been retroactively restated pursuant to SFAS 141.
From the consummation of the Merger Agreement, the Company has begun the development and bringing to market a certain health supplement that is intended to enhance and build-up the body’s natural immune system defenses. The Company intends to commence commercial marketing of its supplement in the near future primarily outside the U.S. Initial marketing in the U.S. will primarily be to the veterinarian market for use in treating animals. The Company also intends to initiate a collaboration and partnering program that will focus on developing business alliances designed to generate sales, applications and marketing opportunities.
NOTE 7 - ASSET PURCHASE AGREEMENT
On May 15, 2006 the Company entered into an Asset Purchase Agreement whereby the Company acquired certain exclusive proprietary Immune Response Therapy (“IRT”) products and technologies from Dr. William and Freida Stacey, in exchange for $150,000 in cash and 537,500 shares of the Company’s common stock. The shares in this transaction have been valued at $0.60 per share, or $322,500, bringing the total value of the consideration paid by the Company for the IRT assets to $472,500.
To the date of these financial statements, the Company has yet to realize significant revenues from the utilization of the IRT assets. The Company’s management continues to focus its business strategy on the utilization of the IRT assets. However, due to the fact that no significant revenues have been generated from the IRT assets, the Company fully impaired the IRT assets during the year ended December 31, 2006. Accordingly, the Company recognized an asset impairment expense of $472,500 during the period ended December 31, 2006, and carries a zero balance on the IRT assets as of December 31, 2008.
CURATECH INDUSTRIES, INC.
(A Development Stage Company)
Notes to the Financial Statements
December 31, 2008 and 2007
NOTE 8 - RELATED PARTY TRANSACTIONS
During 2008, the Company converted cash advances to an officer of $74,005 plus accrued interest of $3,880 into compensation expense, pursuant to the officer’s employment agreement.
Prior to 2008, the Company’s officers contributed their services without compensation. The Company recorded an expense of $7,000 for these services during the year ended December 31, 2007.
NOTE 9 - SUBSEQUENT EVENTS
On March 31, 2009, the Company issued 50,000 shares of common stock at $0.32 per share to a third party as compensation for consultation services rendered in the amount of $16,000.
Item 9.
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
None.
Item 9A.
Item 9A. Controls and Procedures
The Company’s president acts both as the Company’s chief executive officer and chief financial officer and is responsible for establishing and maintaining disclosure controls and procedures for the Company.
Evaluation of disclosure controls and procedures.
Under the supervision and with the participation of management, Lincoln M. Dastrup, acting as our chief executive officer and chief financial officer, evaluated the effectiveness of the design and operation of our disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934 (“Exchange Act”), as of December 31, 2008. Based on this evaluation, our chief executive officer and chief financial officer concluded that, as of the end of the period covered by this report, our disclosure controls and procedures were effective to ensure that the information required to be disclosed by us in the reports we submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the applicable rules and forms and that such information was accumulated and communicated to our chief executive officer and chief financial officer, in a manner that allowed for timely decisions regarding required disclosure.
Management’s Annual Report on Internal Control Over Financial Reporting
Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Rules 13a-15(f) and 15d-15(f) of the Exchange Act. Our internal control system was designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes, in accordance with generally accepted accounting principles. Because of inherent limitations, a system of internal control over financial reporting may not prevent or detect misstatements. Therefore, even those systems determined to be effective can provide only reasonable, not absolute, assurance of achieving their control objectives. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate due to change in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
Our management, including our principal executive officer and principal accounting officer, conducted an evaluation of the effectiveness of our internal control over financial reporting using the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control -Integrated Framework. Based upon this evaluation, our management, including the Chief Executive Officer and Principal Financial Officer, has concluded that our internal controls over financial reporting were effective as of December 31, 2008.
During the quarter ended December 31, 2008, there has been no change in our internal controls over financial reporting (as defined in Rules 13a-15 and 15d-15 under the Exchange Act) that has materially affected, or is reasonably likely to materially affect, our internal controls over financial reporting.
This annual report does not include an attestation report of the Company’s registered public accounting firm regarding internal control over financial reporting. Management’s report was not subject to attestation by the Company’s registered public accounting firm pursuant to temporary rules of the SEC that permit the Company to provide only the management’s report in this annual report.
Item 9B.
Item 9B. Other Information
Not applicable.
PART III
Item 10.
Item 10. Directors, Executive Officers and Corporate Governance
Identification of directors and executive officers
The following persons serve as directors and executive officers of the Company as of December 31, 2008.
All directors hold office until the next annual meeting of stockholders and until their successors have been duly elected and qualified. There are no agreements with respect to the election of directors. We have not compensated directors for service on the board of directors or any committee thereof, but directors are entitled to be reimbursed for expenses incurred for attendance at meetings of the board and any committee of the board. Officers are appointed annually by the board and each executive officer serves at the discretion of the board. We do not have any standing committees.
Currently, there is no arrangement, agreement or understanding between management and non-management stockholders under which non-management stockholders may directly or indirectly participate in or influence the management of our affairs. Present management openly accepts and appreciates any input or suggestions from stockholders. However, the board is elected by the stockholders and the stockholders have the ultimate say in who represents them on the board. There are no agreements or understandings for any officer or director to resign at the request of another person and none of the current offers or directors are acting on behalf of, or will act at the direction of any other person.
The business experience of each of the persons listed above during the past five years is as follows:
Lincoln Dastrup. Mr. Dastrup has served as a director and as CEO and CFO of the Company since October 2006. Mr. Dastrup has over 26 years of experience in investment banking, corporate development, management, marketing and manufacturing with public companies. Since 1995, he has been semi-retired and primarily manages his personal investments. In 1989, Mr. Dastrup co-founded CIMETRIX Incorporated, an international robotics firm. Mr. Dastrup served as the President and CEO of CIMETRIX until 1995. In 1986 Mr. Dastrup founded Corporate Funding, a venture capital firm. Prior to that Mr. Dastrup was the founder, President and CEO of Barron, Marshal, & Kaman, a New York based investment banking firm, and members of the New York Stock Exchange. In 1979 Mr. Dastrup was a co-founder of Universal Fashions Originals, a company engaged in the business of clothing manufacturing and design. In 1980, Universal Fashions merged with an over-the-counter public company. After the merger, Mr. Dastrup served as a director, executive vice-president and president of its wholly-owned subsidiary, Classic Covers, Inc. Since 1980, Mr. Dastrup has participated in over 14 mergers and acquisitions and has financed seven companies.
Linda L. Dastrup. Mrs. Dastrup has served as a director and as Treasurer of the Company since October 2006. Mrs. Dastrup has over 20 years of experience in corporate development, management and manufacturing with public companies. Since 1995, she has been semi-retired and primarily manages her personal investments. In 1989, Mrs. Dastrup co-founder CIMETRIX Incorporated, an International robotics firm. Mrs. Dastrup was a key contributor to the original buy/sale and royalty agreement of CIMETRIX Incorporated. She served as an executive officer of CIMETRIX for over 5 years. Prior to that Mrs. Dastrup was a Director and Treasurer of Barron, Marshal, & Kaman, a New York based Investment Banking firm, and members of the New York Stock Exchange. In 1979 Mrs. Dastrup was a co-founder of Universal Fashions Originals, a Company engaged in the business of clothing manufacturing and design. In 1980 Universal Fashions merged with an over-the-counter public Company. Mrs. Dastrup’s responsibilities included that of all manufacturing and design. Mrs. Dastrup is the wife of Lincoln Dastrup.
Jarom L. Dastrup. Mr. Dastrup has servied as a director and as Executive Vice President and Secretary of the Company since October 2006. Mr. Dastrup has over 5 years of experience in corporate development, and administration. Since 2005, Mr. Dastrup has been a private money advisor and manager. In 2006 Mr. Dastrup was co-founder and Manager of Vastmann Investment Partners, LLC, a private equity fund. Currently Mr. Dastrup is responsible for all client relations, client accounts, client investments, and all company finances. Prior to that Mr. Dastrup managed a portfolio of stocks, options, and futures. In 2002 Mr. Dastrup was a partner in and managed The Iceberg Drive-In, a Utah based fast food restaurant. Mr. Dastrup graduated from Utah Valley State College where he received his Bachelor Degree in Business Management. Mr. Dastrup is the son of Lincoln and Linda Dastrup.
Significant employees
Curatech Industries, Inc. and its subsidiary have no present employees who are expected to make a significant contribution to the Company’s business other than the Company’s current officers and directors. It is expected that current members of management will be the only persons whose activities will be material to the Company’s operations.
Family relationships
There are no family relationships between any directors or executive officers of the Company and/or the officers, directors or managers of its subsidiary, MedaCure, either by blood or by marriage, except for the following: Lincoln Dastrup and Linda L. Dastrup are husband and wife. Jarom Dastrup is their son.
Involvement in certain legal proceedings
During the past five years, no present or former director, person nominated to become a director, executive officer, promoter or control person of the Company:
(1) was a general partner or executive officer of any business which filed a petition in bankruptcy or against which any bankruptcy petition was filed, either at the time of the bankruptcy or two years prior to that time;
(2) was convicted in a criminal proceeding or named subject to a -pending criminal proceeding (excluding traffic violations and other minor offenses);
(3) was subject to any order, judgment or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction, permanently or temporarily enjoining, him from or otherwise limiting his involvement in the following activities:
(i) Acting as a futures commission merchant, introducing broker, commodity trading advisor, commodity pool operator, floor broker, leverage transaction merchant, any other person regulated by the Commodity Futures Commission, or an associated person of any of the foregoing, or as an investment adviser, underwriter, broker or dealer in securities, or as an affiliated person, director or employee of any investment company, bank, savings and loan association or insurance company, or engaging in or continuing any conduct or practice in connection with such activity;
(ii) Engaging in any type of business practice; or
(iii) Engaging in any activity in connection with the purchase or sale of any security or commodity or in connection with any violation of Federal or State securities laws or Federal commodities laws; or
(4) was the subject of any order, judgment or decree, not subsequently reversed, suspended or vacated, of any Federal or State authority barring, suspending or otherwise limiting for more than 60 days the right of such person to engage in any activity described in paragraph (3)(i) above, or to be associated with persons engaged in any such activity; or
(5) was found by a court of competent jurisdiction in a civil action or by the Securities and Exchange Commission to have violated any Federal or State securities law, and the judgment in such civil action or funding by the Commission has not been subsequently reversed, suspended, or vacated; or
(6) was found by a court of competent jurisdiction in a civil action or by the Commodity Futures Trading Commission to have violated any Federal commodities law, and the judgment in such civil action or finding by the Commodity Futures Trading Commission has not been subsequently reversed, suspended or vacated.
Section 16(a) beneficial ownership reporting compliance
Based solely upon a review of Forms 3 and 4 furnished to the Company under Rule 16a-3(d) during its most recent fiscal year, the Company knows of no person who was a director, officer, beneficial owner of more than ten percent of any class of equity securities of the Company registered pursuant to Section 12 ("Reporting Person") that failed to file on a timely basis any reports required to be furnished pursuant to Section 16(a) during the most recent fiscal year.
Code of Ethics
We have recently adopted a Code of Ethics that applies to our principal executive officer, principal financial officer, principal accounting officer or controller, and persons performing similar functions. A copy of the Code of Ethics is attached to this Annual Report as Exhibit 14.1.
Audit Committee and Financial Expert
At the present time, our Board of Directors serves as our audit committee. We do not presently have a financial expert on our Board of Directors. None of our directors is independent.
Nominating Committee
The Company does not have a standing nominating committee or a committee performing similar functions. Due to the Company's size, it is difficult to attract individuals who would be willing to accept membership on the Company's Board of Directors. Therefore, the full Board of Directors would participate in nominating candidates to the Board of Directors. The Company did not have an annual meeting of shareholders in the past fiscal year.
Other Committees
We presently do not have a compensation committee, executive committee of our Board of Directors, stock plan committee or any other committees.
Item 11.
Item 11. Executive Compensation
Cash Compensation
The following table shows compensation earned during fiscal 2008 and 2007 by the Chief Executive Officer and by any other executive officers whose compensation during one of the two fiscal years totaled $100,000 or more The information in the table includes salaries, bonuses, stock options granted, restricted stock awards granted and other miscellaneous compensation. We presently have no long term compensation benefits.
SUMMARY COMPENSATION TABLE
________________
(1) The Company issued 1,000,000 shares of its common stock, valued at $1.01 per share, to The Dastrup Family Trust in 2007 for services rendered. In 2008, the Dastrup Family Trust returned all 1,000,000 shares to the Company’s stock transfer agent to be canceled, for no consideration. The 1,000,000 shares were canceled in 2008.
Columns have been omitted from the Summary Compensation Table above for option awards, non-equity incentive plan compensation and changes in pension value and nonqualified deferred compensation earnings since there were none.
Except as described above, no cash compensation, deferred compensation or long-term incentive plan awards were issued or granted to the Company’s management during the fiscal years ended December 31, 2008 or 2007. Except as described above, no other officers or directors were paid any salaries or compensation during the years ended December 31, 2008 or 2007. Further, no member of the Company’s management has been granted any option or stock appreciation rights. Accordingly, no tables relating to such items have been included within this Item 11.
There are no present plans whereby the Company will issue any of its securities to management, promoters, their affiliates or associates in consideration of services rendered or otherwise, except as described herein.
Compensation of directors
The Company has no arrangement for compensating its directors for their services as directors or for serving on any committees. However, directors may be compensated for services which they render as officers and/or as employees of the Company.
Employment contracts and termination of employment and change-in-control arrangements
There are no employment contracts, compensatory plans or arrangements, including payments to be received from the Company with respect to any executive officer of the Company which would in any way result in payments to any such person because of his or her resignation, retirement or other termination of employment with the Company or its subsidiary, any change in control of the Company or a change in the person's responsibilities following a change in control of the Company.
Nor are there any agreements or understandings for any director or executive officer to resign at the request of another person. None of the Company’s directors or executive officers is acting on behalf of or will act at the direction of any other person.
The Company may enter into employment agreements with some of its officers in the near future but no definite terms have been agreed to yet.
Compensation pursuant to plans; pension table
There were no stock awards, restricted stock awards, stock options, stock appreciation rights, long-term incentive plan compensation or similar rights granted to any of our officers or directors, except as described above. None of our officers or directors presently holds directly any stock options or stock purchase rights. We have no retirement, pension, profit sharing, or other plan covering any of our officers and directors.
We have adopted no formal stock option plans for our officers, directors and/or employees. We reserve the right to adopt one or more stock options plans in the future. Presently we have no plans to issue additional shares of our common or preferred stock or options to acquire the same to our officers, directors or their affiliates or associates.
Other compensation
None.
Compensation Committee Interlocks and Insider Participation
The Company has no compensation committee, and the function of the compensation committee is handled by the Board of Directors. Each of the directors of the Company also serves as an officer of the Company.
Compensation Committee Report
The Company has no compensation Committee, and the function of the compensation committee is handled by the Board of Directors. Each of the directors of the Company also serves as an officer of the Company. The Board of Directors approved the compensation paid to Lincoln Dastrup in 2008.
Item 12.
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
The following table sets forth the share holdings of those persons who are known to the Company to be the beneficial owners of more than five percent (5.0%) of the Company’s common stock and of the share holdings of the Company’s directors and executive officers as of March 26, 2009. Each of these persons has sole investment and sole voting power over the shares indicated, except as otherwise described below. Percentages are based on 17,580,199 shares issued and outstanding.
____________
(1)
Percentage ownership is based on 17,580,199 shares outstanding. Percentage is calculated for each individual listed based upon their beneficial ownership of shares, although ownership may be shared with others, such as the Dastrup Family Trust.
(2)
The Dastrup Family Trust is a family trust of which Lincoln Dastrup and Linda Dastrup are the trustees with voting and dispositive power over the trust.
(3)
Mr. Dastrup’s shares are held in the name of The Dastrup Family Trust, of which Mr. Dastrup is a trustee and, as indicated above, and which holds 6,936,673 shares.
(4)
Mrs. Dastrup’s shares are held in the name of The Dastrup Family Trust, of which Mrs. Dastrup is a trustee and, as indicated above, and which holds 6,936,673 shares.
(5)
Amount shown includes 886,667 shares that are owned by Vastmann Investment Partners, LLC, of which Jarom Dastrup owns a one-third interest, and over which he has voting and dispositive control.
(6)
Amount shown represents the holdings of The Dastrup Family Trust, of which Lincoln Dastrup and Linda Dastrup are trustees, Jarom Dastrup and Vastmann Investment Partners, LLC that is one-third owned by Jarom Dastrup.
All common shares held by the officers, directors and principal shareholders listed above are restricted or control securities and are subject to limitations on resale. The shares may be sold in compliance with the requirements of Rule 144, after a minimum six months holding period has been met.
Rule 13d-3 generally provides that beneficial owners of securities include any person who directly or indirectly has or shares, voting power and/or investment power with respect to such securities; and any person who has the right to acquire beneficial ownership of such security within 60 days.
Any securities not outstanding which are subject to options, warrants or conversion privileges exercisable within 60 days are treated as outstanding for the purpose of computing the percentage of outstanding securities owned by that person. But such securities are not treated as outstanding for the purpose of computing the percentage of the class owned by any other person.
Changes in control
There are no present arrangements or pledges of the Company’s securities, known to management, which may result in a change in control of the Company.
Securities Authorized for Issuance under Equity Compensation Plans
The Company has no equity compensation plans that have been approved by the Company’s security holders or the Board of Directors. There presently are no securities authorized for issuance under any equity compensation plans. There are no outstanding options, warrants or rights to acquire securities of the Company.
Item 13.
Item 13. Certain Relationships and Related Transactions, and Director Independence.
Transactions with management and others
During the past two fiscal years of the Company, and since then, there have been no material transactions or series of similar transactions to which the Company or any of our subsidiaries were or are to be a party, in which the amount involved exceeds the lesser of $120,000 or one percent of the average of the Company’s total assets at year end for the last two completed fiscal years, in which any related person (as defined in Item 404 of Regulation S-K) had a director or indirect material interest, except for the following:
(1) During the years ended December 31, 2008 and 2007 the Company has at various times made temporary loans and/or advances to the Company’s Chief Executive Officer. During 2008, the Company converted cash advances to an officer of $74,005 plus accrued interest of $3,880 into compensation expense, pursuant to the officer’s employment agreement.
(2) On December 15, 2007, the Company issued 1,000,000 shares of its common stock, valued at $1.01 per share, to The Dastrup Family Trust for services rendered to the Company. Lincoln M. Dastrup and Linda L. Dastrup are Trustees of The Dastrup Family trust. Mr. and Mrs. Dastrup and their five children are beneficiaries of the trust. During 2008, The Dastrup Family Trust returned all 1,000,000 shares to the Company for cancellation, for no consideration.
(3) Prior to 2008, the Company’s officers contributed their services without compensation. The Company recorded an expense of $7,000 for these services during the year ended December 31, 2007.
No other related party transactions are presently proposed.
Conflicts of Interest
Our public stockholders should be aware of the following potential conflicts of interest. Our officers and directors are not required to commit their full time to our affairs and, accordingly, they have conflicts of interest in allocating management time among various business activities.
Policies and Procedures for Review, Approval or Ratification of Transactions with Related Persons
Our board of directors reviews, and must approve any related person transactions before such transactions are engaged in by the Company. A related person means any person who is, or at any time since the beginning of our last fiscal year was, a director or executive officer of the Company or a nominee to become a director of the Company; any person who is know to be the beneficial owner of more than 5% of any class of our voting securities; any immediate family member of any of the foregoing persons, which means any child, stepchild, parent, stepparent, spouse, sibling, mother-in-law, father-in-law, son-in-law, daughter-in-law, brother-in-law, or sister-in-law of the director, executive officer, nominee or more than 5% beneficial owner, and any person (other than a tenant or employee) sharing the household of such director, executive officer, nominee or more than 5% beneficial owners; and any firm, corporation, or other equity in which any of the foregoing persons is employed or is a general partner or principal or is a similar position or in which such person has a 5% or greater beneficial ownership interest. Our board of directors reviews these related person transactions and considers all of the relevant facts and circumstances available to the board of directors, including (if applicable) but not limited to; the benefits to us; the availability of other sources of comparable products or services; the terms of the transaction; and the terms available to unrelated third parties or to employees generally. The board of directors may approve only those related person transactions that are in, or are not inconsistent with the best interests of us and of our stockholders, as the board of directors determines in good faith. At the beginning of each fiscal year, the board of directors will review any previously approved or ratified related person transactions that remain ongoing and have a remaining term of more than six months. The board of directors will consider all of the relevant facts and circumstances and will determine if it is in the best interests of us and our stockholders to continue, modify or terminate these related person transactions.
Independence of Directors
The Company currently does not have, and is not required to have, a majority of independent directors. Should the company decide to list on a securities exchange, we will be required to adhere to the independence requirements of that exchange. Our present directors are not independent because each of them currently serves as an officer of the Company.
Item 14.
Item 14. Principal Accounting Fees and Services
We do not have an audit committee and as a result our entire board of directors performs the duties of an audit committee. Our board of directors will approve in advance the scope and cost of the engagement of an auditor before the auditor renders audit and non-audit services. As a result, we do not rely on pre-approval policies and procedures.
Audit Fees
The aggregate fees billed by our independent auditors of record, Moore & Associates, for professional services rendered for the quarterly reviews of our financial statements during 2008 and for the audit of our annual financial statements included in our report on Form 10-K for the year ended December 31, 2008 were approximately $13,125. The aggregate fees billed by our independent auditors of record, Moore & Associates, for professional services rendered for the quarterly reviews of our financial statements during 2007 and for the audit of our annual financial statements included in our report on Form 10-KSB for the year ended December 31, 2007 were approximately $6,000.00.
Audit Related Fees
For the fiscal years ended December 31, 2008 and 2007, there were no fees billed for assurance and related services by Moore & Associates relating to the performance of the audit of our financial statements which are not reported under the caption "Audit Fees" above.
Tax Fees
For the fiscal years ended December 31, 2008 and 2007, there were no fees billed by Moore & Associates for tax compliance, tax advice and tax planning.
We do not use Moore & Associates for financial information system design and implementation. These services, which include designing or implementing a system that aggregates source data underlying the financial statements or generates information that is significant to our financial statements, are provided internally or by other service providers. We do not engage Moore & Associates to provide compliance outsourcing services.
The board of directors has considered the nature and amount of fees billed by Moore & Associates and believes that the provision of services for activities unrelated to the audit is compatible with maintaining Moore & Associates' independence.
Policy on Audit Committee Pre-Approval of Audit and Permissible Non-Audit Services of Independent Auditors
Our Board of Directors serves as our audit committee. The audit committee's policy is to pre-approve all audit and permissible non-audit services provided by the independent auditors. These services may include audit services, audit-related services, tax services, and other services. Pre-approval is generally provided for up to one year, and any pre-approval is detailed as to the particular service or category of services and is generally subject to a specific budget. The independent auditors and management are required to periodically report to the audit committee regarding the extent of services provided by the independent auditors in accordance with this pre-approval and the fees for the services performed to date. The audit committee may also pre-approve particular services on a case-by-case basis.
Item 15.
Item 15. Exhibits and Financial Statement Schedules
1. Financial Statements:
2. Financial Statement Schedule(s):
No financial statement schedules are filed herewith because (i) such schedules are not required or (ii) the information required has been presented in the aforementioned financial statements.
3. Exhibits:
The following Exhibits are filed as part of this report.
Exhibit No. Exhibit Name
2.1(1)
Agreement and Plan of Merger by and among Jump’n Jax, Inc., CuraTech Acquisitions, Inc. and MedaCure International, Inc., including Addendum
3.1(2)
Articles of Incorporation
3.2(2)
By-Laws
14.1
Code of Ethids
21.1(3)
List of Subsidiaries
31.1
Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2
Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1
Certificate of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32.2
Certificate of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
Summaries of all exhibits contained within this report are modified in their entirety by reference to these exhibits.
_________________
(1)
Exhibit 2.1 is incorporated by reference from the Company’s Form 8-K Current Report filed June 22, 2006 as Exhibit 2.1
(2)
Exhibit 3.1 and 3.2 are incorporated by reference from the Company’s SB-2 Registration Statement filed September 9, 2004 as Exhibits 3.1 and 3.2
(3)
Exhibit 21.2 is incorporated by reference from the Company’s Form 8-K Current Report filed December 21, 2006
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant, in the capacities and on the dates indicated.