Nevada
(State
of incorporation)
|
88-0429812
(IRS Employer ID Number) |
PART
I
|
||
|
|
Page
|
Item 1. | Business |
3
|
Item 2. | Property |
9
|
Item 3. | Proceedings |
9
|
Item 4. | Submission of Matters to a Vote of Security Holders |
10
|
PART
II
|
||
Item 5. | Market for Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities |
10
|
Item 6. | Risk Factors |
11
|
Item 7. | Management's Discussion and Analysis or Plan of Operations |
16
|
Item 8. | Financial Statements and Supplementary Data |
19
|
Item 9. | Changes in and Disagreements With Accountants on Accounting and Financial isclosure |
19
|
Item 9A. | Controls and Procedures |
20
|
Item
9B.
|
Other Information |
20
|
PART
III
|
||
Item 10. | Directors, Executive Officers, Promoters and Control Persons |
21
|
Item 11. | Executive Compensation |
23
|
Item 12. | Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters |
23
|
Item 13. | Certain Relationships and Related Transactions |
24
|
Item 14 | Exhibits |
24
|
Item 15. | Principal Accountant Fees and Services |
24
|
Item 15. | Subsequent Events |
24
|
PART
IV
|
||
Signatures |
28
|
|
Index to Exhibits |
29
|
|
· |
No
Borders remittance services via Closed and Open (ATM/POS) Cards
at a cost
which is below what customers are now charged by competitors (when
adding
the foreign exchange rate charged)
|
· |
Low
cost telephony services including domestic and international long
distance
|
· |
No
Borders open system debit cards issued by financial institutions
within
the US
|
· |
Payroll
/ Direct Deposit /ACH Card services
|
· |
Direct
payment of bills by cardholders
|
· |
Low
cost telephony services including voice mail, follow-me roaming,
phone-to-phone money transfer
|
· |
No
Borders open system debit cards issued by financial institutions
outside
the US
|
· |
Low
cost financial services and commercial products offered by No Borders
alliance partners and accessed through the No Borders cards and
noboNET
platform, such a, airline tickets, health insurance outside of
the US and
discount medical programs in the US, mortgages, small business
loans and
product purchase financing.
|
· |
Affiliations
with existing remittance merchants with loyal customers;
|
· |
The
acquisition of, or affiliation with, existing licensed remittance
companies with affiliated networks of remittance merchants;
|
· |
Affiliations
with credit unions, micro finance institutions and banking institutions;
|
· |
Affiliations
with hometown associations and other community, sports and religious
organizations comprised of immigrants from specific areas outside
of the
US, issuing Affinity Debit Cards for distribution to the constituents
of
these associations and groups;
|
· |
Agreements
with card issuing banking institutions outside of the United States
providing No Borders with added resources to facilitate the disbursement
and marketing of U.S. bank issued cards to those in the U.S sending
funds
to the cardholders and/or to those maintaining bank accounts in
the
foreign country.
|
· |
Agreements
with various foreign government agencies to facilitate the disbursement
of
bank issued debit cards in that country to residents within specific
regions of the applicable country and at the same time provide
resources
to facilitate the marketing and disbursement of U.S. bank issued
debit
cards to those in the U.S. who send funds to those receiving cards
from or
maintaining accounts at the foreign banks.
|
· |
Agreements
to distribute prepaid stored value and debit cards through current
distributors of pre-paid telephone cards to retail outlets;
|
· |
Agreements
to distribute prepaid debit cards through existing direct bill
pay
outlets;
|
· |
Agreements
with Employers to distribute payroll cards to their employees.
|
· |
Remittance
transactions through existing merchants affiliated with No Borders
directly or through merchants affiliated with remittance companies
acquired by No Borders.
|
· |
Remittance
transactions through remittance companies deploying the No Borders’s
noboNET platform via a license.
|
· |
Remittance
transactions through debit cards distributed via the various other
channels described above;
|
· |
Transaction
and monthly service fees attributed to the activation and use of
the No
Borders’ U.S. bank issued debit cards (such as fees charged for loading
funds, purchases at POS terminals, domestic card to card transfers,
balance inquiries, ATM withdrawals);
|
· |
Processing
fees and transaction fees attributed to the use of foreign bank
issued
debit cards linked to the No Borders noboNET platform;.
|
· |
Fees
derived from the sale of all other services and products via the
debit
cards managed through the No Borders’ noboNET platform;
|
· |
Set-up
and other fees from licensees of the No Borders noboNET
platform;
|
· |
Development
fees paid by third parties to modify the No Borders noboNET platform
for
use in foreign countries and to interface with various financial
institutions; and
|
· |
Dividends
from ownership interests in foreign
entities.
|
|
HIGH
|
LOW
|
|||||
Fiscal Year 2005 | |||||||
First
Quarter
|
$ | .84 | $ | .17 | |||
Second
Quarter
|
$ | .28 | $ | .11 | |||
Third
Quarter
|
$ | .35 | $ | .06 | |||
Fourth
Quarter
|
$ | .12 | $ | .06 | |||
Fiscal Year 2004 | |||||||
Fourth
Quarter *
|
$ | 2.50 | $ | .40 |
o
|
our
status as a development stage company with a limited operating
history and
no revenues to date, which may make risk-averse investors more
inclined to
sell their shares on the market more quickly and at greater discounts
than
would be the case with the shares of a seasoned issuer in the
event of
negative news or lack of progress;
|
o
|
announcements
of new products by us or our competitors;
|
o
|
the
timing and development of our products;
|
o
|
general
and industry-specific economic conditions;
|
o
|
actual
or anticipated fluctuations in our operating results;
|
o
|
our
capital commitments; and
|
o
|
the
loss of any of our key management personnel.
|
(i)
|
control
of the market for the security by one or a few broker-dealers
that are
often related to the promoter or issuer;
|
(ii)
|
manipulation
of prices through prearranged matching of purchases and sales
and false
and misleading press releases;
|
(iii)
|
boiler
room practices involving high-pressure sales tactics and unrealistic
price
projections by inexperienced sales persons;
|
(iv)
|
excessive
and undisclosed bid-ask differential and markups by selling
broker-dealers; and
|
(v)
|
the
wholesale dumping of the same securities by promoters and broker-dealers
after prices have been manipulated to a desired level, along
with the
resulting inevitable collapse of those prices and with consequent
investor
losses.
|
Name
|
Age
|
Position
Held
|
Raul
Hinojosa-Ojeda
|
48
|
Chairman,
President/Director
|
Robert
M Rosenfeld
|
64
|
Acting
CEO/Director
|
Randy
Gutierrez
|
48
|
Consultant
-Operations/Technology
|
Guillermo
Rodriguez
|
35
|
Consultant
-- Sales Manager
|
Jorge
Hinojosa
|
45
|
Vice
President, Business Development
|
Paule
Cruz Takash
|
49
|
Director
|
o
|
had
any bankruptcy petition filed by or against any business of which
such
person was a general partner or executive officer, either at
the time of
the bankruptcy or within two years prior to that time,
|
o
|
been
convicted in a criminal proceeding and none of our directors
or executive
officers is subject to a pending criminal proceeding,
|
o
|
been
subject to any order, judgment, or decree, not subsequently reversed,
suspended or vacated, of any court of competent jurisdiction,
permanently
or temporarily enjoining, barring, suspending or otherwise limiting
his
involvement in any type of business, securities, futures, commodities
or
banking activities, or
|
o
|
been
found by a court of competent jurisdiction (in a civil action),
the
Securities and Exchange Commission or the Commodity Futures Trading
Commission to have violated a federal or state securities or
commodities
law, and the judgment has not been reversed, suspended, or vacated.
|
COMPENSATION--2005
|
|||
|
PAYABLE
|
PAID
|
DEFERRED
|
RM
ROSENFElD
|
$5,000/Mo.
|
00
|
$60,000
(3)
|
Acting
CEO
|
|||
RAUL
HINOJOSA
|
$5,000/Mo.
|
00
|
$60,000
(3)
|
President
|
|||
JORGE
HINOJOSA
|
|||
VP
Bus Dev
|
$10,000/Mo.
|
$50,000
|
$70,000
(1)
|
WILLIE
RODRIQUEZ
|
|||
Consultant
- Sales Mgr
|
$10,000/Mo.
|
$71,000
|
$49,000
(2)
|
RANDY
GUTIERREZ
|
$10,0000/Mo.
|
$5,000
|
$55,000
|
Consultant
- COO
|
|||
Functiona
July-Dec 2005
|
|||
Name
and Address of Beneficial
Owners
|
Shares
of Common
Stock
|
Percentage
|
RAUL
HINOJOSA-OJEDA
|
9,345,140
(1)
|
4.9%
|
RM
ROSENFELD
|
7,800,000
(2)
|
4.1%
|
Randy
Gutierriz
|
580,000
|
,3%
|
Infospan
Inc
|
95,945,339
(3)
|
50.2%
|
2,449,860
(4)
|
1.3%
|
|
Guillermo
Rodriguez
|
630,000
(5)
|
.3%
|
Total
-individuals serving In management capacity
|
20,805,000 (6) |
10.9%
|
(five
persons)
|
|
|
2005
|
|
2004
|
|||||
Audit
Fees
|
$
|
_____
|
$
|
_____
|
|||
Audit
Related Fees
|
|||||||
All
Other Fees
|
$
|
-0- |
$
|
-0-
|
Report
of Independent Registered Public Accounting Firm
|
F-1
|
Balance
Sheets
|
F-2
|
Statements
of Operations
|
F-4
|
Statement
of Changes in Stockholders’ Equity
|
F-5
|
Statements
of Cash Flows
|
F-7
|
Notes
to Financial Statements
|
F-8
|
|
2005
|
2004
|
|||||
Current
assets:
|
|||||||
Cash
|
$
|
2,039
|
$
|
-
|
|||
Total
current assets
|
2,039
|
-
|
|||||
Fixed
assets:
|
|||||||
Computers
|
37,434
|
35,197 | |||||
Leasehold
improvements
|
-
|
4,200
|
|||||
Accumulated
depreciation
|
(20,417
|
)
|
(8,708
|
)
|
|||
Total
fixed assets, net
|
17,017
|
30,689
|
|||||
Deferred
financing costs, net (Note 4)
|
285,020
|
- | |||||
Minority
interest (Note 9)
|
3,730,769 | - | |||||
Deposits
|
- |
64,800
|
|||||
License
|
- |
25,000
|
|||||
Total
assets
|
|||||||
$
|
4,034,845
|
$
|
120,489
|
||||
2005
|
2004
|
||||||
Current
liabilities:
|
|||||||
Bank
overdraft
|
$ | 8,492 | $ | 17,205 | |||
Accounts
payable
|
45,388 | 17,276 | |||||
Accrued
rent
|
371,148 | - | |||||
Late
registration fees payable (Note 7 and
9)
|
359,000 | - | |||||
Notes
payable related party (Note
6)
|
248,120 | 200,000 | |||||
Interest
payable
|
133,164 | - | |||||
Notes
payable (Note 6)
|
565,000 | - | |||||
Total
current liabilities
|
1,730,312 | 234,481 | |||||
Commitments and contingencies (Note 8) | - | - | |||||
Stockholders’ deficit: | |||||||
Common
stock, 200,000,000 shares
authorized,
|
|||||||
par
value $0.001, 169,542,359 and 48,886,686
shares
|
|||||||
issued
and outstanding at December 31, 2005
and
|
|||||||
2004,
respectively
|
169,542 | 48,887 | |||||
Common
stock subscribed not issued, 2,405,000
shares
|
244,990 | - | |||||
Additional paid in capital | 18,768,538 | 3,639,826 | |||||
Deficit
accumulated during development stage
|
(16,878,537 | ) | (3,802,705 | ) | |||
Total
stockholders’ equity (deficit)
|
2,304,533 | (113,992 | ) | ||||
Total
liabilities and stockholders’ equity (deficit)
|
$ | 4,034,845 | $ | 120,489 |
2005
|
|
2004
|
Cumulative
From Inception (October 25, 2002) Through December 31,
2005
|
|||||||
Revenues
|
$
|
-
|
-
|
-
|
||||||
Expenses: | ||||||||||
Marketing
and sales
|
|
12,692 | 12,462 | 25,154 | ||||||
General
and administrative
|
4,328,507
|
3,452,583
|
8,118,750
|
|||||||
Total
expenses
|
4,341,199
|
3,465,045
|
8,143,904
|
|||||||
Loss from operations | 4,341,199 | 3,465,045 | 8,143,904 | |||||||
Other expense | ||||||||||
Abandonment
loss (Note 8)
|
460,623 | - | 460,623 | |||||||
Impairment
of goodwill (Note 9)
|
7,901,172 | - | 7,901,172 | |||||||
Interest
expense
|
372,838
|
- |
372,838
|
|||||||
Loss
before income taxes
|
(13,075,832)
|
(3,465,045)
|
(16,878,537)
|
|||||||
Income taxes (Note 5) |
-
|
-
|
-
|
|||||||
Net
loss
|
$
|
(13,075,832
|
)
|
$
|
(3,465,045
|
)
|
$
|
(16,878,537
|
)
|
|
Net
loss per share - basic and diluted
|
$
|
(0.18
|
)
|
$
|
(0.08
|
)
|
||||
Weighted
average number of stock outstanding - basic and diluted
|
72,142,308
|
45,249,436
|
|
Deficit
|
||||||||||||||||||
Common
Stock
|
Accumulated
|
||||||||||||||||||
Stock
|
Additional
|
During
|
|||||||||||||||||
Stock
|
Common
|
Subscribed
|
Paid-In
|
Development
|
|||||||||||||||
Issued
|
Stock
|
Not
Issued
|
Capital
|
Stage
|
Total
|
||||||||||||||
Common
stock outstanding, October 25, 2002
|
-
|
$ |
-
|
$ |
-
|
$ |
-
|
$ |
-
|
$ |
-
|
||||||||
Initial
shares issues
|
525
|
-
|
-
|
-
|
-
|
||||||||||||||
Net
loss
|
-
|
-
|
-
|
-
|
-
|
-
|
|||||||||||||
Balance
at December 31, 2002
|
525
|
-
|
-
|
-
|
-
|
-
|
|||||||||||||
Capital
contributed
|
-
|
10,000
|
-
|
-
|
-
|
10,000
|
|||||||||||||
Net
loss
|
-
|
-
|
-
|
-
|
(337,660
|
) |
(337,660
|
) | |||||||||||
Balance,
December 31, 2003
|
525
|
10,000
|
-
|
-
|
(337,660
|
) |
(327,660
|
) | |||||||||||
Notes
payable converted to stock and shares sold
|
475
|
2,418,998
|
-
|
-
|
-
|
2,418,998
|
|||||||||||||
Reverse
acquisition
|
44,870,686
|
(2,384,126
|
) |
-
|
2,384,126
|
-
|
-
|
||||||||||||
Common
stock issued for services
|
4,015,000
|
4,015
|
-
|
1,255,700
|
-
|
1,259,715
|
|||||||||||||
Net
loss
|
-
|
-
|
-
|
-
|
(3,465,045
|
) |
(3,465,045
|
) | |||||||||||
Balance
at December 31, 2004
|
48,886,686
|
48,887
|
-
|
3,639,826
|
(3,802,705
|
) |
(113,992
|
) |
|
Deficit
|
||||||||||||||||||
Common
Stock
|
Accumulated
|
||||||||||||||||||
Stock
|
Additional
|
During
|
|||||||||||||||||
Stock
|
Common
|
Subscribed
|
Paid-In
|
Development
|
|||||||||||||||
Issued
|
Stock
|
Not
Issued
|
Capital
|
Stage
|
Total
|
Common
stock issued for cash
|
7,334,231
|
7,334
|
-
|
692,656
|
-
|
699,990
|
|||||||||||||
Common
stock issued for services
|
11,475,895
|
11,476
|
-
|
1,673,236
|
-
|
1,684,712
|
|||||||||||||
Common
stock issued for settlement payment
|
750,000
|
750
|
-
|
104,250
|
-
|
105,000
|
|||||||||||||
Common
stock issued in connection with penalty payments
|
1,181,208
|
1,181
|
-
|
281,993
|
-
|
283,174
|
|||||||||||||
Common
stock issued in connection with payments of loan
guarantees
|
3,495,000
|
3,495
|
-
|
311,055
|
-
|
314,550
|
|||||||||||||
Intrinsic
value of beneficial conversion features of notes
|
-
|
-
|
-
|
330,000
|
-
|
330,000
|
|||||||||||||
Warrants
issued
|
-
|
-
|
-
|
200,000
|
-
|
200,000
|
|||||||||||||
Common
stock subscribed
|
-
|
-
|
244,990
|
-
|
-
|
244,990
|
|||||||||||||
Common
stock issued for ASI acquisition
|
474,000
|
474
|
-
|
118,026
|
-
|
118,500
|
|||||||||||||
Common
stock issued for Infospan acquisition
|
95,945,339
|
95,945
|
-
|
11,417,496
|
-
|
11,513,441
|
|||||||||||||
Net
loss
|
-
|
-
|
-
|
-
|
(13,075,832
|
)
|
(13,075,832
|
)
|
|||||||||||
Balance
at December 31, 2005
|
169,542,359
|
$
|
169,542
|
$
|
244,990
|
$
|
18,768,538
|
$
|
(16,878,537
|
)
|
$
|
2,304,533
|
For
the Year Ended December 31, 2005
|
For
the Year Ended December 31, 2004
|
Cumulative
From Inception (October 25, 2002) Through December 31,
2005
|
||||||||
Cash
flows from operating activities:
Net
loss
Adjustments
to reconcile net loss to net cash used
in
operating activities:
Stock
issued for services and fees
Impairment
of goodwill
Depreciation
and amortization
Loss
on disposal of assets
Changes
in operating assets and liabilities:
Deposits
Bank
overdraft
Accounts
payable
Accrued
rent
Late
registration fees payable
Interest
payable
|
$
|
(13,075,832)
2,337,436
7,901,172
50,573
63,285
64,800
(8,713)
28,112
371,148
359,000
133,164
|
$
|
(3,465,045)
1,259,715
-
8,708
35,650
(64,800)
17,205
11,406
-
(3,030)
-
|
$
|
(16,878,537)
3,591,091
7,901,172
59,281
98,935
(10,039)
8,492
45,388
374,178
359,000
136,194
|
||||
Net
cash used in operating activities
|
(1,775,855
|
)
|
(2,200,191
|
)
|
(4,314,845
|
)
|
||||
Cash
flows from investment activities:
|
||||||||||
Acquisition
(disposal)of assets
|
(30,206
|
)
|
(54,358
|
)
|
(120,214
|
)
|
||||
Net
cash used in investment activities
|
(30,206
|
)
|
(54,358
|
)
|
(120,214
|
)
|
||||
Cash
flows from financing activities:
Stockholder
loan borrowings
Stockholder
loan payments
Subscribed
stock
Issuance
of common stock
Issuance
of notes payable
Capital
contributed
|
-
-
244,990
699,990
863,120
-
|
-
(32,989)
-
2,038,998
200,000
-
|
152,418
(152,418)
244,990
2,738,988
1,443,120
10,000
|
|||||||
Net
cash provided by financing activities
|
1,808,100
|
2,206,009
|
4,437,098
|
|||||||
Net
increase (decrease) in cash
Cash,
beginning of period
|
2,039
-
|
(48,540)
48,540
|
2,039
-
|
|||||||
Cash,
end of period
|
$
|
2,039
|
$
|
-
|
$
|
2,039
|
||||
Supplemental
disclosures of cash flow information:
|
||||||||||
Interest
paid
|
$
|
-
|
$
|
-
|
$
|
-
|
||||
Taxes
paid
|
$
|
-
|
$
|
-
|
$
|
-
|
a.
|
permits
fair value remeasurement for any hybrid financial instrument that
contains
an embedded derivative that otherwise would require
bifurcation;
|
b.
|
clarifies
which interest-only strips and principal-only strips are not subject
to
the requirements of Statement 133;
|
c.
|
establishes
a requirement to evaluate interests in securitized financial assets
to
identify interests that are freestanding derivatives or that are
hybrid
financial instruments that contain an embedded derivative requiring
bifurcation;
|
d.
|
clarifies
that concentrations of credit risk in the form of subordination
are not
embedded derivatives; and
|
e.
|
amends
Statement 140 to eliminate the prohibition on a qualifying special-purpose
entity from holding a derivative financial instrument that pertains
to a
beneficial interest other than another derivative financial
instrument.
|
|
|
|
2005
|
2004
|
|||
Deferred
financing costs
Less:
accumulated amortization of fees
|
$
|
330,000
(44,980
|
)
|
$
|
-
-
|
||
Net
deferred financing costs
|
$
|
285,020
|
$
|
-
|
2005
|
2004
|
||||||
Deferred tax assets: | |||||||
Net
operating loss carry-forward
|
$ | 5,319,000 | $ | 476,000 | |||
Accrued
expenses
|
365,000 | - | |||||
Valuation allowance |
(5,684,000
|
) |
(476,000
|
) | |||
Net
deferred tax assets
|
$
|
-
|
$
|
-
|
|
|
|
2005
|
|
2004
|
||
Statutory
federal tax benefit rate
|
34.00
|
%
|
34.00
|
%
|
|||
Statutory
state tax benefit rate
|
5.83
|
% |
0.00
|
% | |||
39.83 | % | 34.00 | % | ||||
Valuation
allowance
|
(39.83
|
%)
|
(34.00
|
%)
|
|||
Effective
income tax rate
|
0.00
|
%
|
0.00
|
%
|
Warrants
outstanding
|
Weighted
average
exercise
price
|
||||
Balance
at December 31, 2004
Granted
Exercised
Cancelled
|
-
10,000,000
-
-
|
|
$
|
-
10,000,000
-
-
|
|
Balance
at December 31, 2005
|
|
10,000,000
|
|
$
|
992,246
|
Exercise
Prices
|
Number
Outstanding and
Exercisable
|
Weighted
Average
Remaining
Contractual
Life
(Years)
|
Weighted
Average
Exercise
Price
Outstanding
and
Exercisable
|
|||
$0.10
|
1,000,000
|
1.73
|
$0.10
|
|||
1,000,000
|
1.73
|
$0.10
|
For
the Year Ended December 31, 2005
|
For
the Year Ended December 31, 2004
|
Cumulative
From
Inception
(October
25, 2002) to December 31, 2005
|
||||||
Common
stock issued for financing
|
$
|
283,174
|
|
$
|
-
|
|
$
|
283,174
|
Common
stock issued for services
|
$
|
1,684,712
|
|
$
|
1,259,715
|
|
$
|
2,944,427
|
Common
stock issued for beneficial conversion feature
|
$
|
530,000
|
|
$
|
-
|
|
$
|
530,000
|
Common
stock issued for license settlement
|
$
|
105,000
|
|
$
|
-
|
|
$
|
105,000
|
Common
stock issued for payment of note
|
$
|
250,000
|
|
$
|
-
|
|
$
|
250,000
|
Common
stock issued for guarantee of note payable
|
$
|
314,550
|
|
$
|
-
|
|
$
|
314,550
|
Common
stock issued for ASI acquisition
|
$
|
118,500
|
|
$
|
-
|
|
$
|
118,500
|
Common
stock issued for Infospan acquisition
|
$
|
11,513,441
|
|
$
|
-
|
|
$
|
11,513,441
|
NO BORDERS, INC. | ||
|
|
|
Date: January 9, 2007 | By: | /s/ Raul Hinojosa-Ojeda |
Raul Hinojosa-Ojeda
President
|
Signature
|
Title
|
Date
|
||
/s/ Robert M. Rosenfeld | ||||
Robert M. Rosenfeld |
Chief
Financial
Officer and President and Director
(Principal
Executive Officer and Principal Accounting Officer)
|
January 9, 2007 | ||
/s/
Paula Cruz Tekash
|
||||
Paula Cruz Tekash |
Director | January 9, 2007 | ||
/s/
Robert M. Rosenfeld
|
||||
|
Director,
Acting Chief Executive
|
January 9, 2007 |
Exhibit
No.
|
Description
|
3.1(1)
|
Amended
and Restated Articles of Incorporation
|
3.2(1)
|
Amended
Bylaws
|
3.3(2)
|
Certificate
of Amendment
|
21
|
Subsidiaries
of the Registrant
|
31.1
|
Certification
of Chief Executive Officer, as required by Rule 13a-14(a) or
Rule
15d-14(a) of the Securities Exchange Act of 1934
|
31.2
|
Certification
of Chief Financial Officer, as required by Rule 13a-14(a) or
Rule
15d-14(a) of the Securities Exchange Act of 1934
|
32
|
Certification
of Chief Executive Officer and Chief Financial Officer, as required
by
Section 1350 of Chapter 63 of Title 18 of the United States Code
(18
U.S.C. 1350)
|