UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
WASHINGTON,
D.C. 20549
x
ANNUAL
REPORT PURSUANT
TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE
ACT OF 1934
For
the Fiscal Year Ended December 31, 2007
OR
o
TRANSITION
REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE
ACT OF 1934
For
the
transition period from
N/A
to
N/A
Commission
File Number:
000-33073
Genesis
Holdings, Inc.
(Name
of
small business issuer as specified in its charter)
Nevada
|
20-2775009
|
State
of Incorporation
|
IRS
Employer Identification
No.
|
15849
N. 71
st
Street, Suite 226
Scottsdale,
AZ 85254
(Address
of principal executive offices)
Registrant's
telephone number, including Area Code:
(623)
465-2763
Securities
registered pursuant to Section 12(b) of the Act:
None
Securities
registered pursuant to Section 12(g) of the Act:
Common
Stock, $0.001 Par Value
Check
whether the Registrant (1) has filed all reports required to be filed by Section
13 or 15(d) of the Securities Exchange Act of 1934 during the past 12 months
(or
for such shorter period that the Registrant was required to file such reports)
and (2) has been subject to such filing requirements for the past 90
days.
YES
x
NO
o
Check
if
disclosure of delinquent filers in response to Item 405 of Regulation S-B is
not
contained in this form, and no disclosure will be contained, to the best of
the
Registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-KSB or any amendment
to
this Form 10-KSB.
x
Indicate
by check mark whether the registrant is a shell company (as defined in Rule
12b-2 of the Exchange Act).
Yes
o
No
x
Registrant’s
revenues for the most recent fiscal year were $ 1,134,855
State
the
aggregate market value of the voting and non-voting common equity held by
non-affiliates computed by reference to the price at which the common equity
was
sold,
or
the
average bid and asked price of such common equity,
based
on
the closing price of such stock on March 5, 2008, was approximately
$1,390,113.
FORWARD-LOOKING
STATEMENT DISCLAIMER
Management's
Discussion and Analysis of Financial Condition and the Results of Operations
and
other sections of this report contain "Forward-Looking Statements" about
prospects for the future, such as our ability to generate sufficient working
capital, our ability to launch and implement new services and offerings and
our
ability to generate sufficient funds to meet our cash requirements. We wish
to
caution readers that the assumptions which form the basis for forward-looking
statements with respect to, or that may impact earnings for years after December
31, 2007, include many factors that are beyond our ability to control or
estimate precisely. These risks and uncertainties include, but are not limited
to, completing development of the voice-enabled payment authorization technology
of our newly acquired and wholly-owned subsidiary BioAuthorize, Inc., the
potential of technological changes which would adversely affect the need for
our
services, availability of merchants and consumers that wish to purchase our
service and product offerings, acceptance of new services by the marketplace
and
changes in economic or political conditions, such as inflation or fluctuations
in interest rates. Parties are cautioned not to rely on any such forward-looking
statements or judgments in this report.
This
Annual Report contains certain forward-looking statements that involve risks
and
uncertainties. These statements relate to our future plans, objectives,
expectations and intentions. These statements may be identified by the use
of
words such as "expects," "anticipates," "intends," "plans," "estimates,"
"should," "will," "could," "may" and similar expressions. Our actual results
could differ materially from those discussed in these statements. Factors that
could contribute to such differences, include, but are not limited to, those
discussed above and elsewhere in this Annual Report. These forward-looking
statements are subject to certain risks and uncertainties that could cause
actual results to differ materially from those reflected in these
forward-looking statements. Factors that might cause such a difference include,
but are not limited to, those discussed in the section entitled
"Management's
Discussion and Analysis of Financial Condition and Results of Operations, Risk
Factors That May Affect Our Results of Operations and Financial
Condition"
and
elsewhere in this report. We undertake no obligation to publicly update any
forward-looking statements for any reason, even if new information becomes
available or other events occur in the future.
PART
I
ITEM
1. DESCRIPTION OF BUSINESS.
Overview
Genesis
Holdings, Inc. (the "Company") was incorporated in Nevada on May 25, 1999 as
part of the reorganization of Diagnostic International, Inc. which had filed
a
petition under Chapter 11 of the United States Bankruptcy Code. At that time
and
until July 1, 2006, the Company had no operations and was considered a
development stage company as defined in FASB No. 7. The Company was formed
specifically to be a publicly held reporting corporation for the purpose of
either merging with or acquiring an operating company with assets and some
operating history. 980,226 shares of common stock of the Company were issued
to
certain and various creditors of Diagnostic International, Inc. pursuant to
the
Plan of Reorganization confirmed by the Bankruptcy Court on May 25, 1999.
Genesis Holdings was formerly known as AABB, Inc., and this name change took
effect on September 5, 2006.
Larry
Don
Bankston, one of our directors, is a partner of the Bankston Third Family
Limited Partnership which was the sole member of Genesis Land Development,
LLC
("Genesis Land") prior to the acquisition of Genesis Land by the Company on
July
1, 2006. In that transaction the Company issued 19 million shares of its common
stock to the Bankston Third Family Limited Partnership in exchange for 100%
of
the ownership interests of Genesis Land. As part of that transaction, Genesis
Land Developments, LLC merged into AABB Acquisition Sub, Inc., a Nevada
corporation that changed its name post-merger to Genesis Land, Inc.
Genesis
Land Development, LLC was organized in Texas on September 8, 2003 for the
purpose of developing a 55.509 acre tract of land within the Dallas, Texas
metropolitan area. Genesis Land acquired the land from Larry Don Bankston whose
family partnership was also a founding member of Genesis Land on September
30,
2003, at which time the land was valued at $744,634. Genesis Land obtained
a
$3,625,000 loan from a local bank and a promissory note in the original
principal amount of $417,000 to
improve
the land and develop it into 172 residential lots known as Bankston Meadows.
Genesis Land began selling finished lots on or around July, 2005.
The
lots
sold in Bankston Meadows have been sold to Wall Homes, Inc. under an Agreement
of Purchase and Sale between Genesis Land and Wall Homes, dated June 3, 2005.
This agreement provides for the sale of 171 lots to Wall Homes at $38,500 per
lot, with a 6% price increase each year commencing on June 13, 2006. Without
the
price increase, the total purchase price for all 171 lots would be $6,583,500.
The first closing under the agreement occurred on July 11, 2005, when Wall
Homes
purchased 60 lots at $38,500 per lot. On January 13, 2006, Wall Homes purchased
28 lots at $38,500 per lot and in July 2006 Wall Homes purchased an additional
28 lots at $40,810 per lot. Subsequent closings are scheduled to occur every
six
months, with 26 lots to be purchased at each closing until all 171 lots have
been purchased. The agreement with Wall Homes was extended until January 2,
2008
and subsequently extended again with a final closing of the remaining 26 lots
expected to occur on or before April 1, 2008. As of September 30, 2007, the
Company had received payments for 145 lots. As of September 30, 2007, the
Company received a deposit of $173,000 for the future purchase of lots.
As
part
of the agreement, Wall Homes was granted a right of first refusal to purchase
up
to half of the lots in any future phases of the Bankston Meadows development
on
terms identical to those in the existing agreement, except that the price of
the
lots will be the lower of the price provided in the existing agreement plus
10%
or the price at which the lots in Phase II of Bankston Meadows will be available
for purchase in the open market. Genesis Land has not acquired any land to
use
for any future phases of the Bankston Meadows development, although there is
vacant land adjacent to the development that is owned by unrelated parties.
We
do not anticipate that any additional land will be acquired.
Genesis
Land obtained a Land Development Loan from Texas Bank in the principal amount
of
$3,625,000 dated October 1, 2003, and the proceeds of this loan were used to
develop the land into the finished lots being sold to Wall Homes. As of the
date
of this report, this loan, which was secured by the land, has been fully repaid
by Genesis Land using proceeds from the sale of the lots. Genesis Land also
had
a promissory note from Texas Bank, which was funded October 13, 2004 and was
also secured by the land. Genesis Land repaid this note in full on January
13,
2006.
To
complete development of Bankston Meadows, Genesis retained Rainier Construction
as its general contractor. The property was re-zoned from agricultural to
single-family residential use, and an engineer was retained to develop the
plats
for the lots. Genesis’ contractor graded the lots, put in water and sewer lines,
installed storm drains and constructed streets, including installation of
lighting and street signs. The total cost for the development process was
approximately $2.5 million, and no further development costs are expected to
be
incurred.
The
only
additional costs associated with the ownership of the lots are fees which will
be due upon the sale of the lots and real estate taxes and similar ownership
expenses which will arise until the lots are fully divested. Genesis has a
$2
million liability insurance policy in place covering the property.
In
fiscal
2006 and 2007, the Company’s sole operating company was its wholly owned
subsidiary Genesis Land. All income and expense of the Company have been derived
from operations of Genesis Land.
Recent
Developments
Acquisition
of BioAuthorize, Inc.
On
February 18, 2008, the Company entered into a share exchange with BioAuthorize,
Inc., a Colorado corporation (“BioAuthorize”), whereby BioAuthorize became a
wholly-owned subsidiary of the Company. Under the provisions of the Share
Exchange Agreement (the “Agreement”) dated February 18, 2008, the Company issued
20,000,000 shares of its common stock in exchange for all of the outstanding
capital stock of BioAuthorize, and the five (5) former BioAuthorize shareholders
now own approximately 80% of the outstanding shares of the Company’s common
stock on a fully diluted basis. The BioAuthorize shareholders who received
shares of the Company’s common stock in the share exchange are Yada Schneider,
G. Neil Van Wie, Gerald B. Van Wie, Soliton, LLC and Members Only Financial,
Inc. There are no agreements among the former BioAuthorize shareholders
regarding their holdings of the Company’s common stock. Yada Schneider, G. Neil
Van Wie and Gerald B. Van Wie, the directors and officers of BioAuthorize,
received approximately 60.54% of the outstanding shares of the Company’s common
stock on a fully diluted basis. The shares of the Company’s common stock were
issued to the five (5) accredited investors in reliance upon an exemption from
registration afforded under Section 4(2) of the Securities Act of 1933, as
amended, for transactions not involving a public offering and in reliance upon
exemptions from registration under applicable state securities
laws.
Pursuant
to other requirements of the share exchange, Jason Pratte resigned as a director
of the Company and as the Chief Executive Officer, Chief Financial Officer,
President, Secretary and Treasurer of the Company effective February 18, 2008.
Yada Schneider was appointed as a director of the Company and as the President
and Chief Executive Officer of the Company effective February 18, 2008. In
addition, effective February 18, 2008 G. Neil Van Wie was appointed as Vice
President and Chief Financial Officer of the Company, and Gerald B. Van Wie
was
appointed Vice President, Chief Operating Officer and Chief Technical Officer
of
the Company. Currently, these are the only employees of the
Company.
Under
a
post-closing condition of the share exchange, Larry Don Bankston and Lenny
Amado, presently directors of the Company, will resign from the Board of
Directors, and G. Neil Van Wie and Gerald B. Van Wie are to be appointed to
the
Board.
Also
no
later than March 31, 2008, the Company will transfer all interests in its
wholly-owned real estate subsidiary, Genesis Land, to the Bankston Third Family
Limited Partnership in exchange for 16,780,226 shares of common stock of the
Company owned by the Bankston Third Family Limited Partnership under provisions
of a share exchange agreement between the Company, Genesis Land, and Bankston
Third Family Limited Partnership dated February 18, 2008 (the “Genesis Land
Agreement”). On February 18, 2008, the Bankston Third Family Limited Partnership
delivered the 16,780,226 shares of common stock to the Company pursuant to
provisions of the Genesis Land Agreement.
The
share
exchange was intended to qualify as a tax deferred reorganization under Section
368(a) of the Internal Revenue Code of 1986, as amended, and to be accounted
for
on a purchase basis. Neither the Company nor any of its affiliates,
directors, or officers or any affiliate of any of the Company’s directors or
officers had any material relationship with the holders of securities of
BioAuthorize at or before the completion of the share exchange.
The
Business of BioAuthorize
With
the
acquisition of BioAuthorize and the disposition of Genesis Land, the Company
will focus its business operations on the development and growth of the
BioAuthorize business. BioAuthorize is a
hi-tech
biometric technology company delivering voice-enabled payment authorization
services to the payment processing industry.
Founded
in March 2006, the company is a Colorado corporation with its home office in
Scottsdale, Arizona.
BioAuthorize
redefines payment processing by coupling a new financial instrument with a
patent-pending payment solution. Lines of credit will be issued to
qualified consumers that can be used at participating merchants that utilize
the
voice-enabled
payment authorization services
.
BioAuthorize employs the latest technologies to enable automated biometric
identification for payment authorization. Consumers and merchants benefit
from the low cost, convenience, and security delivered by this service.
BioAuthorize is continuing its efforts to complete development and
implementation of its new consumer lending program along with its innovative
payment processing solution, providing a better way to process financial
transactions.
Summary
of the Invention of BioAuthorize
BioAuthorize
has a present invention related to the field of biometrically identifying a
consumer for use in connection with the processing of an electronically
generated invoice. Specifically, this invention is focused on processing
electronic payments between a consumer and a merchant. Types of payments
suitable for the present invention are credit card, debit card, electronic
check, electronic funds transfer, or any other method wherein the payment method
is intangible and capable of electronic processing. The present invention
provides a merchant the ability to generate invoices for any type of goods
or
services and to specify to a consumer at least one payment type acceptable
to
the merchant. Additionally, the present invention enables a consumer to provide
payment information for an invoice from any computing device which can access
the Internet. Furthermore, with the method of the present invention, sensitive
consumer information, such as identifying or financial information, is afforded
maximum security by reducing the sources to which the information is shared
to
only one source, which source is referred to herein as a Biometric Invoice
Payment System (BIPS).
Description
of Related Art Including Information Disclosed Under 37 CFR 1.97 and 37 CFR
1.98
Biometric identification devices and methods are known in the prior art. Among
the common biometric identification means are fingerprints, palm prints, voice
prints, retinal scans and the like. BioAuthorize uses prior art biometric
identification devices, methods and systems through the use of various US
Patents which include a tokenless, biometric identification system.
The
object of the present invention is to protect a consumer from identity theft.
This objective is accomplished by the method of the present invention by
eliminating the requirement for a consumer to pass repeatedly his sensitive
information, comprising personal information, financial data and the like,
to a
merchant website. In the present invention, a consumer need supply this
information to only a single secure entity, a Biometric Invoice Payment System
(“BIPS”).
Another
object of the present invention is to provide a consumer with the ability to
authenticate his identity and to provide payment for a merchant invoice from
any
biometrically enabled device that has Internet connectivity.
The
method of the present invention for biometric authorization of an electronic
payment between a consumer and a merchant, comprises the steps of: (1) a
consumer enrollment step, wherein a consumer enrolls with a Biometric Invoice
Payment System (“BIPS”) at least one bid biometric sample, consumer
identification information and consumer shipping information; further wherein
the biometric sample, consumer identification information and consumer shipping
information are used to generate and assign a unique digital identification
number, or consumer index number, to the consumer (The consumer index number
is
created by the method of the present invention and assigned to a consumer during
enrollment. The consumer index number is used within the method of the present
invention as an identification match factor to correlate the consumer’s
biometric sample to the consumer’s identification information, and is not
necessarily made known to the consumer); (2) an invoice submittal step, wherein
an electronic invoice is created by a merchant and submitted to said BIPS;
further wherein the electronic invoice is used to generate an invoice identifier
by said BIPS; (3) a consumer notification step, wherein a consumer is notified
by said BIPS that an invoice is pending for the consumer and said BIPS provides
to the consumer said invoice identifier; (4) a consumer authentication step,
wherein a consumer submits a comparator bid biometric sample to said BIPS for
identification and authentication; further wherein said BIPS compares said
comparator bid biometric sample with said enrolled bid biometric sample for
identification and authorization of the consumer; (5) an invoice retrieval
step,
wherein an invoice is retrieved from said BIPS by a consumer; (6) an invoice
disposition step, wherein a consumer disposes of the invoice by an action
consisting of approval or rejection; (7) a payment authorization step, wherein
a
consumer chooses a financial instrument for payment of said invoice; further
wherein the consumer provides to said BIPS a financial instrument choice and
requisite information for use of the financial instrument; and (8) an invoice
payment processing step, wherein said BIPS uses said invoice identifier and
said
financial instrument requisite information to process payment from a consumer
to
a merchant.
The
method of the present invention further comprises identification information
submitted by a consumer during said enrollment step further enrolls data
elements selected from a group comprising a consumer personal identification
code (which may be selected from a group comprising a personal identification
number, or a consumer password, which password may be any alpha, numeric, or
alphanumeric combination), a consumer first name, a consumer last name, a
consumer social security number, a consumer birth date, or a consumer secret
question and answer. Also further comprises a bid biometric sample submitted
by
a consumer during said enrollment step further enrolls a bid biometric sample
selected from a group comprising a consumer fingerprint, a consumer facial
scan,
a consumer retinal image, a consumer iris scan, or a consumer voice
print.
The
method of the present invention further comprises
a)
an
invoice identifier which consists of data elements selected from a group
comprising a merchant invoice amount, a merchant identifier, a merchant invoice
number, or a merchant financial account,
b)
a
consumer authentication step which requires a consumer to specify a consumer
personal identification code,
a
means
to capture a consumer bid biometric sample during a consumer enrollment step
and
to transmit the bid biometric sample to a BIPS.
c)
a
means to capture a consumer bid biometric sample during a consumer
authentication step and to transmit the bid biometric sample to a
BIPS.
d)
an
invoice display step, wherein the invoice is displayed for a consumer with
a
display means.
e)
the
selection of a financial instrument from a payment construct group comprising
a
credit instrument, a debit instrument, an automatic clearing house instrument,
an electronic check instrument, a bank draft instrument, a loyalty card
instrument, a prepaid card instrument, a reward card instrument, or an
electronic funds transfer instrument.
In
an
alternative embodiment of the present invention, in an invoice submittal step,
an electronic invoice is created by a merchant and submitted to the BIPS;
further wherein the electronic invoice is used to generate an invoice identifier
by the BIPS and
in
a
consumer notification step, a consumer is notified by a merchant that an invoice
is pending for the consumer and the merchant provides to the consumer the
invoice identifier generated by the BIPS.
Products
and Services
The
services and products offerings that we anticipate will be available with the
BioAuthorize technology are not yet available as efforts continue to complete
the development and implementation of the technology necessary for such
offerings. A prototype of the voice-enabled payment authorization and processing
technology has been completed. However, a number of additional actions must
be
taken before the prototype is ready for beta testing. (Beta testing is necessary
to confirm that the BioAuthorize technology functions in actual practice the
way
it was conceived to function.) The additional tasks to be completed include:
(1)
web enrollment of consumers and merchants and completion of account management
web interface development; (2) integration with a credit reporting agency;
(3)
back office billing and integration of consumer enrollment; (4) payment
processing infrastructure (moving money to merchants); and (5) establishment
of
consumer lending capability by developing a relationship with a consumer lending
company. Assuming proper capitalization for completing these tasks and having
a
consumer-lending source in place, we anticipate, but can make no assurances,
that completion of these tasks could occur within a 90-day period.
BioAuthorize’s
technology addresses at least two distinct problems associated with e-commerce
today. BioAuthorize is disturbed by the growth in cyber-crime, including
identity theft and credit card fraud. BioAuthorize is also concerned with the
high transaction costs that merchants incur today in order to process
traditional credit transactions.
E-commerce
is growing at a staggering rate. With the growth in e-commerce has come an
even
higher growth in the proliferation
of
cyber-crime.
Current
internet security technology has proven to be ineffective in the prevention
of
cyber-crime. Past attempts to reduce fraud have been too costly to implement.
Victims
of identity theft suffer emotionally and financially. Some consumers avoid
e-commerce altogether because of the risk of identity theft.
Merchants
also suffer from cyber-crime. Due to the inherent risks associated with “card
not-present transactions,” e-commerce merchants pay the highest interchange
rate. Merchants are also responsible for charge-backs associated with fraudulent
transactions.
Banking
institutions are losing substantial dollars every year due to fraudulent
transactions. Conceding that such losses are a cost of doing business, the
banking community plans for fraud in financial terms by allocating money to
cover this loss in their operating budgets.
Conducting
safe and effective e -commerce requires a highly secure and cost-effective
method for authorizing and authenticating e-commerce financial transactions
today.
The
technologies that have been implemented do little to ensure that the purchase
is
authentic and/or authorized. B
ioAuthorize
technology is expected to deliver a biometric-focused technology solution to
provide this much needed capability.
Marketing
Strategy
The
services and product offerings that BioAuthorize expects to deliver once
development and implementation are completed should provide a lower cost, more
convenient, and more secure alternative for merchants and consumers. Additional
capital investments in physical infrastructure, or in new electronic components,
are not required in order to take advantage of the BioAuthorize payment
solution. Also, both merchants and consumers should find it easy to use
this expedited payment process. Finally, the use of the service and
product offerings are expected to provide real protection against identity
theft
and credit card fraud.
As
merchants will drive consumer adoption of this new payment option, BioAuthorize
will focus initial marketing efforts on merchants that make sales online and
later focus will be on point-of-sale merchants. Merchants will be attracted
to
BioAuthorize’s payment option because of the low transaction fees.
BioAuthorize
will develop a marketing mix for its product and service offerings, ensuring
that these offerings are packaged for efficient reception in the marketplace,
priced appropriately, and ready to take to market. Finally, sales strategies
per
target market segment will be delivered along with all necessary personal
selling tools.
Initial
inquiries with various merchants, although limited in quantity and scope,
indicate a ready market for BioAuthorize’s voice-enabled payment authorization
and processing service. This solution can be integrated into online, as well as
retail point of sale, merchant applications. BioAuthorize has contacted several
merchants across segments of these key markets regarding their interest in
participating in a beta test program with the
prototype
of the voice-enabled payment authorization and processing technology
.
The
responses have been favorable. (Again, no beta test can commence until the
additional tasks regarding the prototype, as set forth above, are completed.)
Competition
and Market Factors
BioAuthorize
competition includes companies that do payment processing, consumer lending,
and/or biometric authentication. The closest competitor from a technology
perspective is VoicePay, a company based in the United Kingdom which is focused
on the European market. The closest competitor from a business model perspective
would be national banks who have acquired credit card payment processors.
Examples include JP Morgan Chase and its Paymentech program. Many of these
competitors have more significant relationships, greater financial resources
and
longer histories of successful operations in payment processing which may make
it difficult for us to compete.
Operational
Strategy
Outsourcing
is a key strategy throughout the early period to reduce overhead and capital
acquisition costs, while minimizing time to market. Core business administrative
capabilities have also been outsourced including payroll, human resources,
legal
and similar functions. Company benefits, including health insurance & life
insurance benefits, are now being offered to employees, which are expected
to
assist efforts to recruit new personnel. Accounting, Product Engineering, Core
IT, and Client Services are not expected to be outsourced.
Currently, BioAuthorize employs three (3) individuals.
Government
Regulation and Environmental Matters
During
our development of properties, we have been required to obtain local
governmental permitting and approval of our development plans including planning
and zoning and city council approval of plats and engineering drawings for
each
jurisdiction where the properties are located. Control of this process may
often
be beyond our control. The length of time necessary to obtain required permits
and approvals affects the carrying costs of unimproved property acquired for
the
purpose of development and construction. In addition, the continued
effectiveness of permits already granted is subject to factors such as changes
in policies, rules and regulations and their interpretation and application.
Several governmental authorities have imposed impact fees as a means of
defraying the cost of providing certain governmental services to developing
areas. We do not believe the governmental approval processes discussed above
will have a material adverse effect on our development activities, and indeed
all developers in a given market face the same fees and restrictions. There
can
be no assurance, however, that these and other restrictions will not adversely
affect us in the future.
With
the
disposition of Genesis Land scheduled to occur no later than March 31, 2008,
we
have eliminated our land development business and expect to focus all our
efforts on the development and implementation of the BioAuthorize technology.
Therefore the governmental regulation and environmental matters that relate
to
our past real estate development activities are not expected to be factors
to be
considered in our future.
With
regard to the BioAuthorize voice-enabled payment authorization and processing
technology, the consumer lending function is subject to federal and state
governmental regulation. In addition, we must adhere to regulations related
to
privacy of consumer information. We believe that compliance with these laws,
regulations and rules in the context of our anticipated service and product
offerings will be manageable. However, our failure to comply with any or all
of
these requirements will have a material adverse effect on our business.
Risk
Factors
I.
Risk Factors That May Affect Our Results of Operations and Financial
Condition
You
should carefully consider the following risk factors before making an investment
decision. If any of the following risks actually occur, our business, financial
condition or results of operations could be materially adversely affected.
In
such cases, the trading price of our common stock could decline and you may
lose
all or a part of your investment.
We
Have A Limited History of Profitability And In The Near Term Do Not Expect
to
Maintain Profitability
For
the
past two years we have experienced profitable operations due entirely to sales
of residential lots in the Bankston Meadows subdivision in the greater Dallas,
Texas metropolitan area to Wall Homes. All sales under the contract with Wall
Homes are scheduled to be completed as of April 1, 2008, and we will not receive
additional revenues from sales under such contract. In addition, upon completion
of the disposition of our wholly owned real estate subsidiary, Genesis Land,
through the share exchange with the Bankston Third Family Limited Partnership
which is scheduled to occur no later than March 31, 2008, we do not anticipate
conducting any additional real estate development activities or real estate
investment as a substantive part of our business. Through our acquisition of
BioAuthorize, we will focus our business operations on continued development
and
growth of the offering of our payment processing solution. Currently,
BioAuthorize has no sales and we can make no assurances as to when BioAuthorize
may generate sales. As a result, we do not anticipate any revenues or profits
until such time that BioAuthorize is successful in selling services and product
offerings developed with its voice-enabled payment authorization and processing
technology.
We
May Face Challenges Integrating the Business of BioAuthorize Following the
Share
Exchange
We
have
only recently completed the acquisition of BioAuthorize and have not yet
experienced any of the anticipated benefits or opportunities from that
acquisition. The business of BioAuthorize is very different from the real estate
development activities conducted through Genesis Land.
The
strategies of the service offerings, the opportunities of new and expanded
markets, the development of additional revenue streams, the enhanced ability
to
raise capital following the acquisition of BioAuthorize all have had limited
success to date or are unproven. The BioAuthorize voice-enabled payment
authorization and processing technology needs additional development and
implementation, and there are currently no service or product offerings which
are complete and ready for the commercial marketplace. The decision to acquire
BioAuthorize was based upon a number of factors, which include but are not
limited to, the perceived demand for the service offerings in the payment
processing marketplace based upon initial test marketing and the advanced stage
of development of the voice-enabled payment authorization and processing
technology. No assurances can be made that these anticipated benefits will
be
realized.
Our
Common Stock Is Subject To Penny Stock Regulation
Our
shares are subject to the provisions of Section 15(g) and Rule 15g-9 of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), commonly
referred to as the "penny stock" rule. Section 15(g) sets forth certain
requirements for transactions in penny stocks and Rule 15g-9(d)(1) incorporates
the definition of penny stock as that used in Rule 3a51-1 of the Exchange Act.
The Commission generally defines penny stock to be any equity security that
has
a market price less than $5.00 per share, subject to certain exceptions.
Rule
3a51-1
provides that any equity security is considered to be penny stock unless that
security is: registered and traded on a national securities exchange meeting
specified criteria set by the Commission; authorized for quotation on the NASDAQ
Stock Market; issued by a registered investment company; excluded from the
definition on the basis of price (at least $5.00 per share) or the registrant's
net tangible assets; or exempted from the definition by the Commission. Since
our shares are deemed to be "penny stock", trading in the
shares
will be subject to additional sales practice requirements on broker/dealers
who
sell penny stock to persons other than established customers and accredited
investors.
The
Liquidity Of Our Common Stock Is Seriously Limited And There Is A Limited Market
For Our Common Stock
Our
stock
is currently being traded on the NASDAQ Over-The-Counter Bulletin Board, and
the
liquidity of our common stock is limited. The Bulletin Board is a limited market
and subject to substantial restrictions and limitations in comparison to the
NASDAQ system. Any broker/dealer that makes a market in our stock or other
person that buys or sells our stock could have a significant influence over
its
price at any given time.
II.
Risks Associated with Our Current Stage of Business
Management
May Not Run the Company in a Profitable Manner and If It Does Not You May Lose
Your Entire Investment:
Two
members of our executive management team founded and developed the voice-enabled
payment authorization and processing technology held by BioAuthorize but our
management has limited experience in our proposed area of operation. Our success
will depend upon the abilities of our management to successfully manage the
day-to-day operations of our business. In addition, our officers and directors
have limited experience in the evaluation of businesses for the purposes of
conducting acquisitions or mergers that may be considered by the
Company.
We
Have a Limited Operating History in the Payment Processing Industry and
Therefore, Predicting Our Future Performance is Difficult:
Genesis
Holdings, Inc. was formed on May 25, 1999, but until recently has had no
operations. In July 2006 Genesis Holdings entered into a Merger Agreement with
Genesis Land, whereby we acquired Genesis Land as a subsidiary in exchange
for
19 million shares of common stock of Genesis Holdings issued to the Bankston
Third Family Limited Partnership, the sole equity holder of Genesis Land. As
a
result of the Genesis Land acquisition, we entered into the business of land
development through Genesis Land. With the disposition of Genesis Land scheduled
to occur no later than March 31, 2008, we do not anticipate conducting future
real estate development activities. With the recent acquisition of BioAuthorize,
our efforts will be focused on further development and growth of the
voice-enabled payment authorization and processing technology. Only a prototype
of the voice-enabled payment authorization and processing technology exists
which is untested and unproven as a viable commercial service or product.
Because of its limited operating history, it will be difficult to predict or
evaluate future revenues or profitability of the Company.
We
May Not Have Access to Sufficient Capital to Pursue Further Development of
the
BioAuthorize Business and Technology and Therefore Would Be Unable to Achieve
Our Planned Future Growth:
We
intend
to pursue a growth strategy that includes development of the BioAuthorize
business and technology. Currently we have limited capital which is insufficient
to pursue our plans for development and growth. Our ability to implement our
growth plans will depend primarily on our ability to obtain additional private
or public equity or debt financing. We are currently seeking additional capital.
Such financing may not be available at all, or we may be unable to locate and
secure additional capital on terms and conditions that are acceptable to us.
Our
failure to obtain additional capital will have a material adverse effect on
our
business.
We
Depend Upon Key Management Personnel and the Loss of Any of Them Would Seriously
Disrupt Our Operations:
In
the
share exchange with BioAuthorize, the five (5) shareholders of BioAuthorize
now
hold approximately 80% of our outstanding shares of common stock and the there
(3) members of our management team hold approximately 60.54% of our outstanding
shares of common stock. We have a new management team which has great control
over the Company and its operations. The management team under the guidance
of
our Board of Directors is responsible for managing the Company and its
wholly-owned subsidiary, BioAuthorize. Our future success, including
particularly the implementation of our growth strategy, is substantially
dependent on the active participation of Yada Schneider, Gerald B. Van Wie
and
G. Neil Van Wie. The loss of their services together or individually could
seriously disrupt our business operations and cause our business to fail.
Two
of
our directors have full time employment outside the Company and will be
available to participate in management decisions only on an "as needed" basis.
None of our directors have entered into written employment agreements with
us
and none is expected to do so in the foreseeable future. In the event of
competing demands for their time, these two outside directors may grant priority
to their full time positions rather than to us.
Our
Controlling Shareholders May Exert Considerable Influence Over Elections and
Other Decisions:
As
of the
date of this report, our management team, Yada Schneider, Gerald B. Van Wie
and
G. Neil Van Wie beneficially own approximately 60.54% of the outstanding shares
of our common stock. Mr. Schneider and Gerald Van Wie are the founders of
BioAuthorize and Neil Van Wie is the father of Gerald Van Wie. Although there
is
no formal agreement between these individuals as to how they may vote the shares
beneficially owned by each, it is conceivable that they will vote their shares
consistent with one another. As a result, these shareholders are able to
effectively control matters requiring the approval by shareholders of the
Company, including the election of directors. This concentration of ownership
in
a few shareholders may also have the effect of delaying or preventing a change
in control of the Company.
Our
Lack of Diversification In Our Business Subjects Investors to a Greater Risk
of
Losses:
Since
the
acquisition of BioAuthorize, all of our efforts are focused on the development
and growth of that business and its technology in an unproven area. Although
the
payment processing marketplace is substantial, we can make no assurances that
the marketplace will accept the service and product offerings of our
voice-enabled payment authorization and processing technology once those service
and product offerings are developed.
III.
Risks
Related to Investment in a Technology Company
Although
the Company does not presently intend to develop any technology services and
products or other operations directly, it does intend to pursue product
offerings of the voice-enabled payment authorization and processing technology
through its current wholly-owned subsidiary, BioAuthorize. The risks inherent
to
BioAuthorize or its product offerings will affect the value of the Company’s
shares. Accordingly, you should consider the risks associated with the
investment in any company actively engaged in technology services or products,
including the following:
The
Service and Product Offering of BioAuthorize Need Additional Testing and
Development and May Not Be Accepted in the Marketplace
The
services and products offerings that we anticipate will be available with the
BioAuthorize technology are not yet available as efforts continue to complete
the development and implementation of the technology necessary for such
offerings. A prototype of the voice-enabled payment authorization and processing
has been completed but it is untested and unproven in a commercial
context.
We have
contacted several merchants across segments of these key markets regarding
their
interest in participating in a beta test program with the
prototype
of the voice-enabled payment authorization and processing technology
.
The
responses have been favorable but no engagements or agreements have been signed
with any party for the beta test program.
No
sales
have been made and the anticipated service and product offerings need additional
testing and development before being launched and released for sales to
merchants and consumers. We do not anticipate that the time schedule for
additional testing and development will exceed three (3) months once we have
obtained sufficient capital and established a relationship with a consumer
lending company. However, no assurance can be made that testing and development
will be completed on this schedule. The service and product offerings have
not
been proven to be acceptable in the marketplace. They are widely untested with
only data from sample test markets providing any indication of interest. The
payment processing market is sizable but we make no assurances that this will
translate into sales of or revenue from the BioAuthorize service and product
offerings.
Our
Business Will Be Negatively Affected If We Do Not Keep Pace With the Latest
Technology Development in Payment Processing Trends and Merchant and Consumer
Preferences:
The
payment processing industry is subject to change by both merchants and
consumers. If we are unable to respond successfully to these developments or
do
not respond in a timely or cost-effective way, our business and operating
results will be seriously harmed. Our success will depend, in part, on our
ability to offer services and products of payment processing that keep pace
with
continuing changes in evolving industry standards and changing merchant and
consumer preferences. No assurances can be made that voice-enabled payment
authorization and processing if initially accepted in the marketplace will
remain a competitive solution in the marketplace. In addition, we must recruit
and retain professionals who are apprised of the preferences in each market
segment we pursue.
Management
Has Limited Experience With Managing a Technology Growth Company and May Not
Manage the Business or Current or Future Service and Product Offerings
Successfully:
Management
of the Company has substantial experience in business, finance, and management
within a technology environment. However, because BioAuthorize has only been
operating for a short period of time, a limited record of performance is
available to measure the skill of management in developing the technology of
BioAuthorize into successful services and product offerings. Past performance
and experience in the technology arena by management is no indication of the
return this Company will produce. The loss of one or more of our officers and
directors may result in a material adverse effect on the Company.
Our
Payment Processing Solutions Will Be Subject To Vigorous Competition From
Competing Companies and Technologies, Which May Reduce Our
Earnings:
Current
competition in the payment processing field includes national banks and
financial companies such as JP Morgan Chase and Paymentech. None of these
companies has the same or similar technology but each is well established with
a
significant customer base and longstanding relationships with merchants and
consumers comprising the target market for our service and product offerings.
In
addition, each of these companies has substantially more financial resources,
and no assurances can be made that we can successfully lure their customers
to
our service and product offerings. New competitors in the field include VoicePay
which has reasonably similar technology but has focused its efforts on the
European market. It is unclear what effect, if any, the competition from
VoicePay will have on our business.
Additional
Information
Genesis
files reports and other materials with the Securities and Exchange Commission.
These documents may be inspected and copied at the Commission’s Public Reference
Room at 100 F Street, N.E., Washington, D.C., 20549. You can obtain information
on the operation of the Public Reference Room by calling the Commission at
1-800-SEC-0330. You can also get copies of documents that the Company files
with
the Commission through the Commission’s Internet site at
www.sec.gov
.
ITEM
2. DESCRIPTION OF PROPERTY.
The
Company does not currently own any property, although its subsidiary Genesis
Land owns the approximately 9 acre parcel consisting of 26 lots in the Dallas,
Texas metropolitan area. This property is expected to be sold to Wall Homes
under the Agreement of Purchase and Sale dated June 3, 2005 with Genesis Land
no
later than April 1, 2008. The property was acquired as undeveloped acreage
for
development of residential lots, and these lots are held primarily for income.
Acquisition of undeveloped acreage and development of residential lots through
Genesis Land has been our primary business. However, the disposition of Genesis
Land, which is expected to occur no later than March 31, 2008, will end our
focus on real estate acquisition and development. See,
“Description
of Business”
for
additional discussion and description of our development plans and the general
competitive conditions of the residential real estate marketplace in the Dallas,
Texas metropolitan area as well as our expected plans for BioAuthorize and
its
voice-enabled payment authorization and processing technology.
Our
principal administrative offices are located at 15849 N. 71
st
Street,
Suite 226, Scottsdale, AZ 85254-2179 under a lease agreement which terminates
in
January 2009. Since the Company is incorporated in Nevada it is required to
maintain a resident office in that state in which corporate documents are
available. The resident office is located at 1000 E. William St., Suite 204,
Carson City, NV 89701. No activities take place in the resident office. All
other activities have been consolidated to the facilities described
above.
ITEM
3. LEGAL PROCEEDINGS
The
Company is not involved in any claims and legal actions except for routine
litigation that is incident to the business.
ITEM
4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
The
Company submitted no matters to a vote of its security holders during the fiscal
year ended December 31, 2007.
PART
II
ITEM
5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS.
The
Company’s common stock is traded in the over-the-counter market, and quoted in
the National Association of Securities Dealers Inter-dealer Quotation System
(“Electronic Bulletin Board) and can be accessed on the Internet at
www.otcbb.com under the symbol “GENH.”
At
December 31, 2007, there were 21,780,226 shares of the Company’s common stock
outstanding, and there were approximately 1175 shareholders of record of the
Company’s common stock
.
The
following table sets forth, for the periods indicated, the high and low bid
quotations for the Company’s common stock. These quotations represent
inter-dealer quotations, without adjustment for retail markup, markdown or
commission and may not represent actual transactions. There were no trades
of
the Company’s common stock in the years ended December 31, 2007 and
2006.
Periods
|
|
High
|
|
Low
|
|
Fiscal
Year 2007
|
|
|
|
|
|
First
Quarter (January - March 2007)
|
|
$
|
.00
|
|
$
|
.00
|
|
Second
Quarter (April - June 2007)
|
|
$
|
.00
|
|
$
|
.00
|
|
Third
Quarter (July - September 2007)
|
|
$
|
.00
|
|
$
|
.00
|
|
Fourth
Quarter (October - December 2007)
|
|
$
|
.00
|
|
$
|
.00
|
|
Fiscal
Year 2006
|
|
|
|
|
|
|
|
First
Quarter (January - March 2006)
|
|
$
|
.00
|
|
$
|
.00
|
|
Second
Quarter (April - June 2006)
|
|
$
|
.00
|
|
$
|
.00
|
|
Third
Quarter (July - September 2006)
|
|
$
|
.00
|
|
$
|
.00
|
|
Fourth
Quarter (October - December 2006)
|
|
$
|
.00
|
|
$
|
.00
|
|
There
are
no outstanding warrants or options to purchase, or securities convertible into,
shares of our common stock. The Company has never paid dividends on any of
its
common stock shares. The Company does not anticipate paying dividends at any
time in the foreseeable future and any profits will be reinvested in the
Company’s business. The Company’s Transfer Agent and Registrar for the common
stock is
Island
Stock Transfer, 100 Second Ave South, Suite 104N, St. Petersburg, FL 33701,
telephone (727) 289-0010.
We
have
never declared any cash dividends on our common stock. We currently intend
to
retain future earnings, if any, to finance the expansion of our business. As
a
result, we do not anticipate paying any cash dividends in the foreseeable
future.
The
Company has not adopted any equity compensation plans.
Sales
of Unregistered Securities
|
|
Stock
issued
|
|
Cash
|
|
Stock
issued
|
|
Quarter
Ended
|
|
for
Cash
|
|
Received
|
|
for
Services
|
|
|
|
|
|
|
|
|
|
Year
Ended December 31, 1999
|
|
|
|
|
$
|
—
|
|
|
980,226
|
|
Year
Ended December 31, 2006
|
|
|
|
|
$
|
—
|
|
|
20,800,000
|
|
Year
Ended December 31, 2007
|
|
|
—
|
|
$
|
—
|
|
|
—
|
|
On
May
25, 1999, the Company issued 980,226 shares of common stock to the creditors
of
Diagnostic International, Inc. in accordance with the Final Decree in the
Chapter 11 Bankruptcy reorganization. No value was assigned to the shares
issued.
On
January 1, 2006, the Company issued 1,800,000 shares to William Lane, RD
Bickerstaff, Laura Poulson, and Heritage West Capital in exchange for consulting
services provided by William Lane, RD Bickerstaff, Laura Poulson, and Heritage
West Capital pursuant to Consulting Agreements of even date therewith. The
offer
and sale of such shares of our common stock were effected in reliance on the
exemptions for sales of securities not involving a public offering, as set
forth
in Rule 506 promulgated under the Securities Act and in Section 4(2) of the
Securities Act. A legend was placed on the certificates representing each such
security stating that it was restricted and could only be transferred if
subsequent registered under the Securities Act or transferred in a transaction
exempt from registration under the Securities Act.
On
July
1, 2006, the Company issued 19,000,000 shares to the Bankston Third Family
Limited Partnership as part of the Company’s acquisition of Genesis Land. The
offer and sale of such shares of our common stock were effected in reliance
on
the exemptions for sales of securities not involving a public offering, as
set
forth in Rule 506 promulgated under the Securities Act and in Section 4(2)
of
the Securities Act. A legend was placed on the certificates representing each
such security stating that it was restricted and could only be transferred
if
subsequent registered under the Securities Act or transferred in a transaction
exempt from registration under the Securities Act.
On
February 18, 2008, the Company issued 20,000,000 shares of its common stock
in
exchange for all of the outstanding capital stock of BioAuthorize, and the
five
(5) former BioAuthorize shareholders now own approximately 80% of the
outstanding shares of the Company’s common stock on a fully diluted basis. The
shares of the Company’s common stock were issued to the five (5) accredited
investors in reliance upon an exemption from registration afforded under Section
4(2) of the Securities Act of 1933, as amended, for transactions not involving
a
public offering and in reliance upon exemptions from registration under
applicable state securities laws.
ITEM
6. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF
OPERATION.
Management's
Discussion and Analysis of Financial Condition and Results of Operations
discusses our consolidated financial statements that have been prepared in
accordance with accounting principles generally accepted in the United States
of
America. The preparation of these financial statements requires
us
to
make estimates and assumptions that affect the reported amount of assets and
liabilities at the date of the financial statements, the disclosures of
contingent assets and liabilities as of the date of the financial statements
and
the reported amounts of revenues and expenses during the reporting period.
On an
on—going basis, we evaluate our estimates and judgments, including those related
to revenue recognition, bad debt and credit allowances for accounts receivable
and impairment of long—lived assets. We base our estimates and judgments on
historical experience and on various other factors that are believed to be
reasonable under the circumstances. The result of these estimates and judgments
form the basis for making conclusions about the carrying value for assets and
liabilities that are not readily apparent from other sources. Actual results
may
differ from these estimates under different assumptions or conditions; changes
in these estimates as a result of future events may have a material effect
on
Genesis Holdings' financial condition. The SEC suggests that all registrants
list their most "critical accounting policies" in Management's Discussion and
Analysis, and ours are set forth below. A critical accounting policy is one
which is both important to the portrayal of the company's financial condition
and results and requires managements' most difficult, subjective or complex
judgments, often as a result for the need to make estimates about the effect
of
matters that are inherently uncertain. Management believes the following
critical accounting policies affect its more significant judgments and estimates
in the preparation of its consolidated financial statements. These policies
include, but are not limited to, revenue recognition and bad debt and credit
reserves.
Critical
Accounting Policies
Stock
Based Compensation
In
December 2004, the FASB issued a revision of SFAS No. 123 ("SFAS No. 123(R)")
that requires compensation costs related to share-based payment transactions
to
be recognized in the statement of operations. With limited exceptions, the
amount of compensation cost will be measured based on the grant-date fair value
of the equity or liability instruments issued. In addition, liability awards
will be re-measured each reporting period. Compensation cost will be recognized
over the period that an employee provides service in exchange for the award.
SFAS No. 123(R) replaces SFAS No. 123 and is effective as of the beginning
of
January 1, 2006. Based on the number of shares and awards outstanding as of
December 31, 2005 (and without giving effect to any awards which may be granted
in 2006), we do not expect our adoption of SFAS No. 123(R) in January 2006
to
have a material impact on the financial statements.
FSP
FAS
123(R)-5 was issued on October 10, 2006. The FSP provides that instruments
that
were originally issued as employee compensation and then modified, and that
modification is made to the terms of the instrument solely to reflect an equity
restructuring that occurs when the holders are no longer employees, then no
change in the recognition or the measurement (due to a change in classification)
of those instruments will result if both of the following conditions are met:
(a) There is no increase in fair value of the award (or the ratio of intrinsic
value to the exercise price of the award is preserved, that is, the holder
is
made whole), or the antidilution provision is not added to the terms of the
award in contemplation of an equity restructuring; and (b) All holders of the
same class of equity instruments (for example, stock options) are treated in
the
same manner. The provisions in this FSP shall be applied in the first reporting
period beginning after the date the FSP is posted to the FASB website. The
Company has adopted SP FAS No. 123(R)-5 but it did not have a material impact
on
its consolidated results of operations and financial condition.
Accounting
Policies and Estimates
The
preparation of our financial statements in conformity with accounting principles
generally accepted in the United States of America requires our management
to
make certain 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.
Our
management periodically evaluates the estimates and judgments made. Management
bases its estimates and judgments on historical experience and on various
factors that are believed to be reasonable under the circumstances. Actual
results may differ from these estimates as a result of different assumptions
or
conditions.
As
such,
in accordance with the use of accounting principles generally accepted in the
United States of America, our actual realized results may differ from
management’s initial estimates as reported. A summary of significant accounting
policies are detailed in notes to the financial statements which are an integral
component of this filing.
Revenues
The
Company recognizes revenue based upon the sale of land parcels. The Company
sold
one parcel of land consisting of 26 lots in the year ended December 31, 2007.
The
Company has adopted the Securities and Exchange Commission’s Staff Accounting
Bulletin (SAB) No. 104, which provides guidance on the recognition, presentation
and disclosure of revenue in financial statements.
Inventory
of Fully Developed Residential Lots Held For Sale
The
inventory of fully developed residential lots held for sale is carried at the
lower of cost or market. The cost of the lots is approximately $27,000 per
lot
and the market value is estimated at $38,500 per lot as determined by the
Agreement of Purchase and Sale between Genesis Land and Wall Homes. Cost
includes land, construction costs including hard and soft cost, capitalized
interest, capitalized property taxes and loan costs.
Sales
and Profit Recognition
In
accordance with statement of financial accounting standard (“SFAS”) No. 66,
“Accounting for Sales of Real Estate,” development land sales will be recognized
at closing when sufficient down payments have been obtained, possession and
other attributes of ownership have been transferred to the buyer and the Company
has no significant continuing involvement. The costs of acquiring and developing
land are accumulated and will be charged to cost of sales as the related
inventories are sold.
Long-Lived
Assets
Statement
of Financial Accounting Standards No. 144. “Accounting for the Impairment of
Long-Lived Assets and for Long-Lived Assets to be Disposed,” requires that
long-lived assets be reviewed for impairment whenever events or changes in
circumstances indicate that the historical cost carrying value of an asset
may
no longer be appropriate. The Company assesses recoverability of the carrying
value of an asset by estimating the future net cash flows expected to result
from the asset, including eventual disposition. If the future net cash flows
are
less than the carrying value of the asset, an impairment loss is recorded equal
to the difference between the asset’s carrying value and fair value. This
standard did not have a material effect on the Company’s results of operations,
cash flows or financial position.
Disclosures
About Fair Value of Financial Instruments
The
Company estimates that the fair value of financial instruments at December
31,
2007 and 2006 as defined in FASB No.107, does not differ materially from the
aggregate carrying values of its financial instruments recorded in the
accompanying balance sheet. The estimated fair value amounts have been
determined by the Company using available market information and appropriate
valuation methodologies.
Overview
Real
Estate Development Activities
Through
our wholly-owned subsidiary, Genesis Land, we have been involved in the
development of 171 residential lots comprising the Bankston Meadows subdivision
located in the Dallas, Texas metropolitan area. Bankston Meadows consists of
approximately 55 acres and 172 lots. Our activities include obtaining the
required governmental approvals for zoning, permitting and developing the
subdivision and construction of the necessary improvements along with utility,
street and signage infrastructure for the subdivision. We then seek to sell
platted lots in the subdivision to homebuilders. On June 3, 2005 we entered
into
an Agreement of Purchase and Sale with Wall Homes for the sale of 171 lots
in
the Bankston Meadows subdivision.
Recent
Acquisition
On
February 18, 2008, we completed a share exchange with BioAuthorize, Inc., a
Colorado corporation (“BioAuthorize”), whereby BioAuthorize became a
wholly-owned subsidiary of the Company. Also as contemplated in the share
exchange with BioAuthorize, no later than March 31, 2008 we expect to transfer
all interests in our wholly-owned real estate subsidiary, Genesis Land, to
the
Bankston Third Family Limited Partnership in exchange for 16,780,226 shares
of
common stock of the Company owned by the Bankston Third Family Limited
Partnership under provisions of a share exchange agreement between the Company,
Genesis Land, and Bankston Third Family Limited Partnership dated February
18,
2008 (the “Genesis Land Agreement”). Upon the closing of the Genesis Land
Agreement, we will no longer conduct real estate development activities as
in
the past, and the operations and operating activities of the Company are
expected to occur through our wholly-owned subsidiary, BioAuthorize. See,
”Description
of Business”
above
for additional discussion of BioAuthorize and its technology.
Planned
Sources of Future Revenue
With
our
move away from real estate development activities, we anticipate the development
of additional revenue streams through the service and product offerings of
the
voice-enabled payment authorization and processing technology being developed
by
our wholly-owned subsidiary BioAuthorize.
RESULTS
OF OPERATIONS
Fiscal
Year End December 31, 2007, Compared to Fiscal Year End December 31,
2006
|
|
|
|
|
|
Statement
of Operations Data
|
|
Years
Ended
December
31,
|
|
Years
Ended
December
31,
|
|
|
|
|
|
|
|
|
|
2007
|
|
2006
|
|
|
|
|
|
|
|
Revenues
|
|
$
|
1,134,855
|
|
$
|
2,334,919
|
|
Cost
of Sales
|
|
|
(719,643
|
)
|
|
(1,546,579
|
)
|
Operating
and Other Expenses
|
|
|
(355,203
|
)
|
|
(351,684
|
)
|
|
|
|
|
|
|
|
|
Net
Income
|
|
$
|
60,009
|
|
$
|
436,656
|
|
|
|
|
|
|
|
|
|
Balance
Sheet Data:
|
|
|
|
|
|
|
|
|
|
|
Years
Ended
|
|
|
Years
Ended
|
|
|
|
|
December
31,
|
|
|
December
31,
|
|
|
|
|
|
|
|
|
|
|
|
|
2007
|
|
|
2006
|
|
|
|
|
|
|
|
|
|
Current
Assets
|
|
$
|
1,375,026
|
|
$
|
1,509,396
|
|
Total
Assets
|
|
|
1,375,026
|
|
|
1,509,396
|
|
Current
Liabilities
|
|
|
314,385
|
|
|
469,909
|
|
Non
Current Liabilities
|
|
|
—
|
|
|
|
|
Total
Liabilities
|
|
|
314,385
|
|
|
469,909
|
|
Working
Capital (Deficit)
|
|
|
1,060,641
|
|
|
1,039,487
|
|
Shareholders'Equity
(Deficit)
|
|
$
|
1,060,641
|
|
$
|
1,039,487
|
|
|
|
|
|
|
|
|
|
Revenues
Revenues
for Fiscal 2007 decreased to $1,134,855 from $2,334,919 during Fiscal 2006,
a
49% reduction. This decrease in revenue is directly the result of fewer sales
of
residential lots through Genesis Land. In 2006, 53 lots were sold for $24,060.21
per lot while in 2007, 27 lots were sold at $24,060.21 per lot. All sales have
been made to a single purchaser, Wall Homes.
Cost
of Sales
Cost
of
sales for the year ended fiscal 2007 decreased to $719,643 as compared to fiscal
2006 of $1,546,579, a 47% reduction. This decrease is a direct result of a
reduced sales volume of residential lots.
Selling,
General and Administrative Expense
Consolidated
selling, general and administrative expenses for the fiscal 2007 increased
slightly to $355,203 as compared to fiscal 2006 of $351,684. This modest
increase is attributed to the Company's increase in legal and accounting
expenses related to the acquisition of BioAuthorize.
Interest
expense for fiscal 2007 decreased to $54,924 as compared to fiscal 2006 of
$66,533. This decrease is a result of paying off the outstanding loans made
by
one of our directors, Larry Don Bankston, during the six months ended June
30,
2007.
The
net
income for fiscal 2007 decreased to $60,009 as compared to fiscal 2006 net
income of $436,656. The decrease is primarily due to the reduction in the sale
of residential lots without any corresponding reduction in selling, general
and
administrative expenses.
LIQUIDITY
AND CAPITAL RESOURCES
Our
principal capital requirements are to fund operations and capital expenditures
which have been made exclusively through our wholly owned real estate subsidiary
Genesis Land. With the disposition of Genesis Land we will no longer be able
to
fund any of our capital requirements from the operations of Genesis Land.
Currently, our cash on hand and expected cash flow is not substantial enough
to
sustain the Company for more than ninety (90) days. We are actively and
aggressively seeking additional capital but no assurance can be made that we
will obtain additional capital or that additional capital may be obtained on
terms and conditions that are acceptable to us.
The
Company’s operating capital requirements have been funded primarily through bank
borrowings, residential lot development sales by Genesis Land and from funding
received through loans made by one of our directors, Larry Don Bankston. All
sales of residential lots have been made to one purchaser, Wall Homes.
Cash
provided by operating activities for the fiscal year 2007 was $977,662 compared
to $2,052,251 for fiscal year 2006, a result of reduced residential lot sales.
The Company had a reduction in investment of fully development residential
lots
of $718,682 as compared to $1,577,334 for fiscal 2006. The Company has an
unrealized loss on marketable securities of ($38,855).
Cash
used
in investing activities was ($711,941) for fiscal 2007. The Company invested
its
profits generated during fiscal 2006 year in marketable securities during fiscal
year 2007.
Cash
used
in financing activities was ($266,622) for fiscal 2007 as compared to
($2,090,417) for fiscal 2006. Financing activities consisted primarily of the
repayment of bank loans for the development of residential lots that have been
sold by the Company throughout 2006 and 2007.
Bank
Loan
On
October 1, 2005, the Company received a land development loan for $3,625,000
from Texas Bank. The loan bore interest at 8.25% per year and was paid in full
during 2006 with proceeds from the sale of residential lots to Wall
Homes.
On
October 13, 2004, the Company received a $417,000 loan from Texas Bank for
purposes of the Company’s real estate development activities. This loan bore
interest at 8.25% per year and was paid in full in 2006.
Director
Loan
From
January 28, 2005 through April 29, 2005 the Company received funds in seven
transactions totaling approximately $300,000 from an affiliated entity that
is
controlled by one of the Company's directors, Larry Don Bankston. The loans
bore
interest at 7% per year, and as of June 30, 2007 the Company had repaid all
loans made by Mr. Bankston.
Other
Considerations
There
are
numerous factors that affect the business and the results of its operations.
Sources of these factors include general economic and business conditions,
federal and state regulation of business activities, the level of demand for
product services, the level and intensity of competition in the electronic
transaction processing industry, and the ability to develop new services based
on new or evolving technology and the market's acceptance of those new services,
the Company’s ability to timely and effectively manage periodic product
transitions, the services, customer and geographic sales mix of any particular
period, and our ability to continue to improve our infrastructure including
personnel and systems to keep pace with the Company’s anticipated rapid
growth.
ITEM
7. FINANCIAL STATEMENTS
GENESIS
HOLDINGS, INC.
TABLE
OF CONTENTS
|
|
Page
|
|
|
|
|
|
INDEPENDENT
REGISTERED PUBLIC ACCOUNTING FIRM:
|
|
|
F-2
|
|
Jewett
Schwartz Wolfe & Associates
|
|
|
|
|
|
|
|
|
|
CONSOLIDATED
FINANCIAL STATEMENTS:
|
|
|
|
|
Consolidated
Balance Sheet at December 31, 2007 and 2006
|
|
|
F-3
|
|
|
|
|
|
|
Consolidated
Statements of Operations for the years ended
|
|
|
|
|
December
31, 2007 and 2006
|
|
|
F-4
|
|
|
|
|
|
|
Consolidated
Statements of Stockholders’ Equity for the years ended
|
|
|
|
|
December
31, 2007 and 2006
|
|
|
F-5
|
|
|
|
|
|
|
Consolidated
Statements of Cash Flows for the years ended
|
|
|
|
|
December
31, 2007 and 2006
|
|
|
F-6
|
|
|
|
|
|
|
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
|
|
|
F-7
|
|
REPORT
OF
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To
the
Board of Directors and Stockholders of
GENESIS
HOLDINGS, INC.
We
have
audited the accompanying consolidated balance sheet of Genesis Holdings, Inc.
and Subsidiary as of December 31, 2007, and the related consolidated statements
of operations, changes in shareholders' deficiency and cash flows for the year
then ended. These consolidated 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 audit in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we
plan
and perform the audit to obtain reasonable assurance about whether the
consolidated financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the consolidated 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 provided a reasonable basis for our
opinion.
In
our
opinion, the consolidated financial statements referred to above present fairly,
in all material respects, the financial position of Genesis Holdings, Inc.
and
Subsidiaries, as of December 31, 2007, and the results of their operations
and
their cash flows for the period then ended in conformity with accounting
principles generally accepted in the United States of America.
JEWETT,
SCHWARTZ, WOLFE & ASSOCIATES
Hollywood,
Florida
March
25,
2008
2514
HOLLYWOOD BOULEVARD, SUITE 508 ● HOLLYWOOD, FLORIDA 33020 ● TELEPHONE (954)
922-5885 ● FAX (954) 922-5957
MEMBER
-
AMERICAN INSTITUTE OF CERTIFIED PUBLIC ACCOUNTANTS ● FLORIDA INSTITUTE OF
CERTIFIED PUBLIC ACCOUNTANTS
PRIVATE
COMPANIES PRACTICE SECTION OF THE AICPA ● REGISTERED WITH THE PUBLIC COMPANY
ACCOUNTING OVERSIGHT BOARD OF THE SEC
GENESIS
HOLDINGS, INC.
|
CONSOLIDATED
BALANCES SHEETS
|
FOR
YEARS ENDED DECEMBER 31,
2007
|
ASSETS:
|
|
|
|
|
|
|
|
CURRENT
ASSETS
|
|
|
|
Cash
|
|
$
|
9,877
|
|
Investment
in marketable securities
|
|
|
673,086
|
|
Investment
in residential lots held for sale
|
|
|
692,063
|
|
Total
current assets
|
|
|
1,375,026
|
|
|
|
|
|
|
TOTAL
ASSETS
|
|
$
|
1,375,026
|
|
|
|
|
|
|
LIABILITIES
AND STOCKHOLDERS' EQUITY:
|
|
|
|
|
|
|
|
|
|
CURRENT
LIABILITIES:
|
|
|
|
|
Accounts
payable
|
|
$
|
87,574
|
|
Accrued
expenses and other liabilities
|
|
|
226,811
|
|
Total
current liabilities
|
|
|
314,385
|
|
|
|
|
|
|
Total
liabilities
|
|
|
314,385
|
|
|
|
|
|
|
COMMITMENTS
AND CONTINGENCIES
|
|
|
|
|
|
|
|
|
|
STOCKHOLDERS'
EQUITY:
|
|
|
|
|
Common
stock, $.001 par value, 25,000,000 shares authorized,
|
|
|
|
|
21,780,226
issued and outstanding as of December 31, 2007
|
|
|
21,780
|
|
Additional
paid in capital
|
|
|
581,051
|
|
Accumulated
income
|
|
|
496,665
|
|
Accumulated
other comprehensive loss
|
|
|
(38,855
|
)
|
Total
stockholders' equity
|
|
|
1,060,641
|
|
|
|
|
|
|
TOTAL
LIABILITIES AND STOCKHOLDERS' EQUITY
|
|
$
|
1,375,026
|
|
The
accompanying notes are an integral part of these consolidated financial
statements.
GENESIS
HOLDINGS, INC.
|
CONSOLIDATED
STATEMENT OF OPERATIONS
|
FOR
THE YEARS ENDED DECEMBER 31, 2007 AND
2006
|
|
|
2007
|
|
2006
|
|
REVENUES:
|
|
|
|
|
|
|
|
Sale
of lots
|
|
$
|
1,134,855
|
|
$
|
2,334,919
|
|
|
|
|
|
|
|
|
|
COST
OF SALES
|
|
|
719,643
|
|
|
1,546,579
|
|
GROSS
PROFIT
|
|
|
415,212
|
|
|
788,340
|
|
|
|
|
|
|
|
|
|
OPERATING
EXPENSES:
|
|
|
|
|
|
|
|
General
and administrative expenses
|
|
|
297,668
|
|
|
222,677
|
|
OPERATING
INCOME
|
|
|
117,544
|
|
|
565,663
|
|
|
|
|
|
|
|
|
|
OTHER
(INCOME) AND EXPENSES
|
|
|
|
|
|
|
|
Interest
expense
|
|
|
54,924
|
|
|
66,533
|
|
Interest
Income
|
|
|
(20,594
|
)
|
|
-
|
|
Gain
on investments
|
|
|
(9,107
|
)
|
|
-
|
|
Total
other expense
|
|
|
25,223
|
|
|
66,533
|
|
|
|
|
|
|
|
|
|
INCOME
BEFORE INCOME TAXES
|
|
|
92,321
|
|
|
499,130
|
|
|
|
|
|
|
|
|
|
Provision
for income taxes
|
|
|
32,312
|
|
|
62,474
|
|
|
|
|
|
|
|
|
|
NET
INCOME
|
|
$
|
60,009
|
|
$
|
436,656
|
|
|
|
|
|
|
|
|
|
Other
comprehensive income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unrealized
(loss) on marketable securities net of taxes
|
|
$
|
(38,855
|
)
|
$
|
-
|
|
|
|
|
|
|
|
|
|
Net
comprehensive (loss) income
|
|
$
|
21,154
|
|
$
|
436,656
|
|
|
|
|
|
|
|
|
|
NET
INCOME PER SHARE:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
and diluted:
|
|
$
|
0.00
|
|
$
|
0.02
|
|
|
|
|
|
|
|
|
|
Weighted
average of number of shares outstanding
|
|
|
21,780,226
|
|
|
21,780,226
|
|
The
accompanying notes are an integral part of these consolidated financial
statements.
GENESIS
HOLDINGS, INC.
|
CONSOLIDATED
STATEMENT OF CHANGES IN STOCKHOLDERS’ EQUITY
|
FOR
THE YEARS ENDED DECEMBER 31, 2007 AND
2006
|
|
|
|
|
|
|
|
|
|
|
Accumulated
|
|
|
|
|
|
Common
|
|
|
|
|
|
|
|
Other
|
|
|
|
|
|
Stock
|
|
|
|
Paid-in
|
|
Retained
|
|
Comprehensive
|
|
|
|
|
|
Shares
|
|
Amount
|
|
Capital
|
|
Earnings
|
|
Loss
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
DECEMBER
31, 2005
|
|
|
19,980,226
|
|
$
|
19,980
|
|
$
|
567,133
|
|
$
|
-
|
|
$
|
-
|
|
|
587,113
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common
stock issued for consulting services
|
|
|
1,800,000
|
|
|
1,800
|
|
|
13,200
|
|
|
-
|
|
|
-
|
|
|
15,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shareholder
expense
|
|
|
-
|
|
|
-
|
|
|
718
|
|
|
-
|
|
|
-
|
|
|
718
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
income
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
436,656
|
|
|
-
|
|
|
436,656
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
DECEMBER
31, 2006
|
|
|
21,780,226
|
|
$
|
21,780
|
|
$
|
581,051
|
|
$
|
436,656
|
|
$
|
-
|
|
$
|
1,039,487
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unrealized
losses on marketable securities
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
(38,855
|
)
|
|
(38,855
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
income
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
60,009
|
|
|
-
|
|
|
60,009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
DECEMBER
31, 2007
|
|
|
21,780,226
|
|
$
|
21,780
|
|
$
|
581,051
|
|
$
|
496,665
|
|
$
|
(38,855
|
)
|
$
|
1,060,641
|
|
The
accompanying notes are an integral part of these
consolidated financial statements
GENESIS
HOLDINGS, INC.
|
CONSOLIDATED
STATEMENTS OF CASH FLOWS
|
FOR
THE YEARS ENDED DECEMBER 31, 2007 AND
2006
|
|
|
2007
|
|
2006
|
|
CASH
FLOWS FROM OPERATING ACTIVITIES:
|
|
|
|
|
|
|
|
Net
lncome
|
|
$
|
60,009
|
|
$
|
436,656
|
|
Adjustments
to reconcile net income to net cash
|
|
|
|
|
|
|
|
used
in operating activities:
|
|
|
|
|
|
|
|
Issuance
of stock as consideration for services
|
|
|
-
|
|
|
15,000
|
|
Interest
paid by increase in notes payable
|
|
|
-
|
|
|
18,920
|
|
Changes
in operating assets and liabilities:
|
|
|
|
|
|
|
|
Investment
in fully developed residential lots
|
|
|
718,682
|
|
|
1,577,334
|
|
Accounts
receivables
|
|
|
82,603
|
|
|
(82,603
|
)
|
Prepaid
and other current assets
|
|
|
5,270
|
|
|
(5,270
|
)
|
Accounts
payable
|
|
|
(65,324
|
)
|
|
41,825
|
|
Accrued
expenses and other liabilities
|
|
|
38,911
|
|
|
50,389
|
|
Deposit
on sale of lots
|
|
|
173,000
|
|
|
-
|
|
Net
cash provided by operating activities
|
|
|
1,013,151
|
|
|
2,052,251
|
|
|
|
|
|
|
|
|
|
CASH
FLOWS FROM INVESTING ACTIVITIES:
|
|
|
|
|
|
|
|
Investment
in marketable securities
|
|
|
(711,941
|
)
|
|
-
|
|
Net
cash used in investing activities
|
|
|
(711,941
|
)
|
|
-
|
|
|
|
|
|
|
|
|
|
CASH
FLOWS FROM FINANCING ACTIVITIES:
|
|
|
|
|
|
|
|
Expenses
paid by stockholder
|
|
|
-
|
|
|
718
|
|
Repayment
of land development loans
|
|
|
-
|
|
|
(2,034,074
|
)
|
Note
payable affiliates
|
|
|
(266,622
|
)
|
|
(57,061
|
)
|
Net
cash used in financing activities
|
|
|
(266,622
|
)
|
|
(2,090,417
|
)
|
|
|
|
|
|
|
|
|
DECREASE
IN CASH
|
|
|
34,588
|
|
|
(38,166
|
)
|
CASH,
BEGINNING OF YEAR
|
|
|
10,778
|
|
|
48,944
|
|
CASH,
END OF YEAR
|
|
$
|
45,366
|
|
$
|
10,778
|
|
|
|
|
|
|
|
|
|
SUPPLEMENTAL
CASH FLOW INFORMATION:
|
|
|
|
|
|
|
|
|
|
|
2007
|
|
|
2006
|
|
Interest
paid
|
|
$
|
54,924
|
|
$
|
31,719
|
|
Taxes
paid
|
|
$
|
20,319
|
|
$
|
-
|
|
|
|
|
|
|
|
|
|
SCHEDULE
OF NON-CASH INVESTING AND
|
|
|
|
|
|
|
|
FINANCING
ACTIVITIES:
|
|
|
|
|
|
|
|
Consulting
services paid with common stock
|
|
$
|
-
|
|
$
|
15,000
|
|
Expenses
paid by stockholder and donated
|
|
$
|
-
|
|
$
|
718
|
|
Interest
paid by increase in notes payable
|
|
$
|
-
|
|
$
|
18,920
|
|
Non-cash
investment
|
|
$
|
838,855
|
|
$
|
-
|
|
The
accompanying notes are an integral part of these
consolidated financial statements
GENESIS
HOLDINGS, INC.
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
FOR
THE YEAR ENDED DECEMBER 31, 2007 and
2006
NOTE
1 -
DESCRIPTION OF BUSINESS
Genesis
Holdings, Inc. (the Company) was incorporated on May 25, 1999 in the state
of
Nevada. The Company was a holding company for subsidiary acquisitions. Genesis
Land Development, LLC was formed on September 8, 2003 in the state of Texas.
The
company is engaged in the business of developing vacant land into single family
residential lots.
On
July
1, 2006, the Company, which was formerly known as AABB, Inc., acquired all
of
the membership interests of Genesis Land Development, LLC, pursuant to a merger
agreement dated as of July 1, 2006, among AABB, Inc., AABB Acquisitions Sub,
Inc., certain shareholders and the members of Genesis Land Development, LLC.
The
Company acquired 100% of the ownership interest of Genesis Land Development,
LLC
from its sole member for 19,000,000 shares of the company’s common
stock.
For
accounting purposes, the acquisition is treated as a recapitalization rather
than a business combination. After the merger, AABB, Inc. changed its name
to
Genesis Holdings, Inc.,
and
Genesis Land Development, LLC ceased to exist as it was merged into the
Company’s wholly-owned subsidiary, Genesis Land, Inc
.
The
Company was considered a development stage company prior to its acquisition
of
Genesis Land Development, LLC.
NOTE
2 -
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The
Company prepares its financial statements in accordance with accounting
principles generally accepted in the United States of America. Significant
accounting policies are as follows:
Principles
of Consolidation
The
accompanying financial statements represent the consolidated financial position
and results of operations of the Company and include the accounts and results
of
operations of the Company and its wholly owned subsidiary. The accompanying
financial statements include the active entity of Genesis Holdings, Inc. and
Genesis Land, Inc.. Genesis Land, Inc. was the only active entity.
Use
of
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. These estimates and assumptions also affect the
reported amounts of revenues, costs and expenses during the reporting period.
Management evaluates these estimates and assumptions on a regular basis. Actual
results could differ from those estimates.
The
primary management estimates included in these financial statements are the
impairment reserves applied to various long-lived assets, allowance for doubtful
accounts for gateway access fees and licensing fees, and the fair value of
its
stock tendered in various non-monetary transactions.
Reclassification
Certain
prior period amounts have been reclassified to conform to December 31, 2007
presentations.
Cash
and Cash Equivalents
The
Company considers all highly liquid investments with an original maturity of
three months or less to be cash equivalents. At December 31, 2007, cash and
cash
equivalents include cash on hand and cash in the bank.
Property
and Equipment
Property
and equipment is recorded at cost and depreciated over the estimated useful
lives of the assets using principally the straight-line method. When items
are
retired or otherwise disposed of, income is charged or credited for the
difference between net book value and proceeds realized. Ordinary maintenance
and repairs are charged to expense as incurred, and replacements and betterments
are capitalized. The range of estimated useful lives used to calculate
depreciation for principal items of property and equipment are as follow:
Asset
Category
|
|
Depreciation/
Amortization Period
|
|
Computer
Equipment
|
|
|
3
Years
|
|
Office
equipment
|
|
|
5
Years
|
|
Income
Taxes
Provisions
for income taxes are based on taxes payable or refundable for the current year
and deferred taxes on temporary differences between the amount of taxable income
and pretax financial income and between the tax bases of assets and liabilities
and their reported amounts in the financial statements. Deferred tax assets
and
liabilities are included in the financial statements at currently enacted income
tax rates applicable to the period in which the deferred tax assets and
liabilities are expected to be realized or settled. As changes in tax laws
or
rates are enacted, deferred tax assets and liabilities are adjusted through
the
provision for income taxes are provided based on the provisions of Statement
of
Financial Accounting Standards No. 109, "Accounting for Income Taxes" ("SFAS
No.
109"), to reflect the tax effect of differences in the recognition of revenues
and expenses between financial reporting and income tax purposes based on the
enacted tax laws in effect at December 31, 2007.
Earnings
Per Share
Basic
earnings per share is computed in accordance with FASB No. 128 “Earnings Per
Share”
,
by
dividing net income (loss) available to common shareholders by the weighted
average number of common shares outstanding during the reporting period. Diluted
earnings per share reflects the potential dilution that could occur if stock
options and other commitments to issue common stock were exercised or equity
awards vest resulting in the issuance of common stock that could share in the
earnings of the Company. As of December 31, 2007, there were no potential
dilutive instruments that could result in share dilution
.
Fair
Value of Financial Instruments
The
fair
value of a financial instrument is the amount at which the instrument could
be
exchanged in a current transaction between willing parties other than in a
forced sale or liquidation.
The
carrying amounts of the Company’s financial instruments, including cash,
accounts payable and accrued liabilities, income tax payable and related party
payable approximate fair value due to their most maturities.
Concentration
of Credit Risk
The
Company maintains its operating cash balances in banks in Midland, Texas. The
Federal Depository Insurance Corporation (FDIC) insures accounts at each
institution up to $100,000.
Inventory
of Residential Lots Held For Sale
The
inventory of fully developed residential lots held for sale is carried at the
lower of cost or market. The cost of a lot is approximately $27,000 and the
market value is estimated at $38,500.
Cost
includes land, construction costs, including hard and soft cost, capitalized
interest, capitalized property taxes and amortization of loan costs. The
residential lots for sale are due to be completely sold within the next
operating cycle.
Revenue
Recognition
Land
sales are recognized at closing when sufficient down payments have been
obtained, possession and other attributes of ownership have been transferred
to
the buyer and the Company has no significant continuing involvement. The costs
of acquiring and developing land are accumulated and charged to cost of sales
as
the related inventories are sold.
The
Company has adopted the Securities and Exchange Commission’s Staff Accounting
Bulletin (SAB) No. 104, which provides guidance on the recognition, presentation
and disclosure of revenue in financial statements.
Recent
Accounting Pronouncements
Recent
accounting pronouncements that the Company has adopted or will be required
to
adopt in the future are summarized below.
On
December 21, 2007 the Securities and Exchange Commission (“SEC”) staff issued
Staff Accounting Bulletin No. 110 (SAB 110), which, effective January 1, 2008,
amends and replaces SAB 107, Share-Based Payment. SAB 110 expresses the views
of
the SEC staff regarding the use of a "simplified" method in developing an
estimate of expected term of "plain vanilla" share options in accordance with
FASB Statement No. 123(R), Share-Based Payment. Under the "simplified" method,
the expected term is calculated as the midpoint between the vesting date and
the
end of the contractual term of the option. The use of the "simplified" method,
which was first described in Staff Accounting Bulletin No. 107, was scheduled
to
expire on December 31, 2007. SAB 110 extends the use of the "simplified” method
for "plain vanilla" awards in certain situations. The SEC staff does not expect
the "simplified" method to be used when sufficient information regarding
exercise behavior, such as historical exercise data or exercise information from
external sources, becomes available. The Company is currently evaluating the
potential impact that the adoption of SAB 110 could have on its consolidated
financial statements.
In
December 2007, the FASB issued SFAS No. 141(R), “Business Combinations”. This
Statement replaces SFAS No. 141, Business Combinations, and requires an acquirer
to recognize the assets acquired, the liabilities assumed, including those
arising from contractual contingencies, any contingent consideration, and any
noncontrolling interest in the acquiree at the acquisition date, measured at
their fair values as of that date, with limited exceptions specified in the
statement. SFAS No. 141(R) also requires the acquirer in a business combination
achieved in stages (sometimes referred to as a step acquisition) to recognize
the identifiable assets and liabilities, as well as the noncontrolling interest
in the acquiree, at the full amounts of their fair values (or other amounts
determined in accordance with SFAS No. 141(R)). In addition, SFAS No. 141(R)'s
requirement to measure the noncontrolling interest in the acquiree at fair
value
will result in recognizing the goodwill attributable to the noncontrolling
interest in addition to that attributable to the acquirer. SFAS No. 141(R)
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. The Company is currently evaluating the potential
impact that the adoption of SFAS No. 141(R) could have on its consolidated
financial statements.
In
December 2007, the FASB issued SFAS No. 160, “Noncontrolling Interests in
Consolidated Financial Statements” (“SFAS No. 160”), which amends Accounting
Research Bulletin 51, Consolidated Financial Statements, to establish accounting
and reporting standards for the noncontrolling interest in a subsidiary and
for
the deconsolidation of a subsidiary. It also clarifies that anoncontrolling
interest in a subsidiary is an ownership interest in the consolidated entity
that should be reported as equity in the consolidated financial statements.
SFAS
No. 160 also changes the way the consolidated income statement is presented
by
requiring consolidated net income to be reported at amounts that include the
amounts attributable to both the parent and the noncontrolling interest. It
also
requires disclosure, on the face of the consolidated statement of income, of
the
amounts of consolidated net income attributable to the parent and to the
noncontrolling interest. SFAS No. 160 requires that a parent recognize a gain
or
loss in net income when a subsidiary is deconsolidated and requires expanded
disclosures in the consolidated financial statements that clearly identify
and
distinguish between the interests of the parent owners and the interests of
the
noncontrolling owners of a subsidiary. SFAS No. 160 is effective for fiscal
periods, and interim periods within those fiscal years, beginning on or after
December 15, 2008. The Company does not expect the adoption of SFAS No. 160
to
have a material impact on its financial statements.
In
February 2007, the FASB issued SFAS No. 159, “The Fair Value Option
for Financial Assets and Financial Liabilities”
(“SFAS
No. 159”), which provides companies with an option to report selected
financial assets and liabilities at fair value with the changes in fair value
recognized in earnings at each subsequent reporting date. SFAS No. 159
provides an opportunity to mitigate potential volatility in earnings caused
by
measuring related assets and liabilities differently, and it may reduce the
need
for applying complex hedge accounting provisions. If elected, SFAS No. 159
is effective for fiscal years beginning after November 15, 2007. Management
does not expect the adoption of SFAS No. 159 the impact that this statement
may
have on the Company results of operations and financial position, and has yet
to
make a decision on the elective adoption of SFAS No. 159.
In
September 2006, the FASB issued SFAS No. 157, "Fair Value Measurements" (SFAS
No. 157). SFAS No. 157 provides guidance for using fair value to measure assets
and liabilities. SFAS No.157 addresses the requests from investors for expanded
disclosure about the extent to which companies measure assets and liabilities
at
fair value, the information used to measure fair value and the effect of fair
value measurements on earnings. SFAS No. 157 applies whenever other standards
require (or permit) assets or liabilities to be measured at fair value, and
does
not expand the use of fair value in any new circumstances. SFAS No. 157 is
effective for financial statements issued for fiscal years beginning after
November 15, 2007 and will be adopted by the Company in the first quarter of
fiscal year 2008. The Company does not expect the adoption of SFAS No. 157
to
have a material effect on its results of operations and financial
conditions.
In
July
2006, the FASB issued FASB Interpretation No. 48, "Accounting for Uncertainty
in
Income Taxes, an interpretation of FASB Statement No. 109" (FIN 48). FIN 48
clarifies the accounting for uncertainty in income taxes by prescribing the
recognition threshold a tax position is required to meet before being recognized
in the financial statements. It also provides guidance on derecognition,
classification, interest and penalties, accounting in interim periods,
disclosure and transition. The cumulative effects, if any, of applying FIN
48
will be recorded as an adjustment to retained earnings as of the beginning
of
the period of adoption. FIN 48 is effective for fiscal years beginning after
December 15, 2006, and the Company is required to adopt it in the first quarter
of fiscal year 2008. The Company
does
not
expect the adoption of FIN 48 to have a material impact on its financial
statements.
In
June
2006, the FASB ratified Emerging Issues Task Force (EITF) Issue No. 06−3 (EITF
06-3), “How Taxes Collected from Customers and Remitted to Governmental
Authorities Should Be Presented in the Income Statement (That Is, Gross versus
Net Presentation).” EITF 06−3 applies to any tax assessed by a governmental
authority that is directly imposed on a revenue producing transaction between
a
seller and a customer. EITF 06−3 allows companies to present taxes either gross
within revenue and expense or net. If taxes subject to this issue are
significant, a company is required to disclose its accounting policy for
presenting taxes and the amount of such taxes that are recognized on a gross
basis. EITF 06−3 is required to be adopted during the first quarter of fiscal
year 2008. The Company
does
not
expect the adoption of EITF 06-3 to have a material impact on its financial
statements.
In
March
2006, the FASB issued SFAS No. 156, “Accounting for Servicing of
Financial Assets — an amendment of FASB Statement No. 140”
(“SFAS No.156”).
SFAS No. 156 requires an entity to recognize a servicing asset or servicing
liability each time it undertakes an obligation to service a financial asset
by
entering into a servicing contract in specific situations. Additionally, the
servicing asset or servicing liability is initially measured at fair value;
however, an entity may elect the “amortization method” or “fair value method”
for subsequent reporting periods. SFAS No. 156 is effective beginning
Fiscal year 2008. The Company does not expect the adoption of SFAS No. 156
to have a material effect
on
its
results of operations and financial condition
.
NOTE
3 -
INVESTMENT IN MARKETABLE SECURITIES
The
Company’s Invested in the sale of marketable securities and as of December 31,
2007 had an unrealized loss of $38,855 consists of the following:
|
|
2007
|
|
|
|
|
|
Equity
securities - fair value
|
|
$
|
711,941
|
|
Less:
unrealized loss on market securities
|
|
|
(38,855
|
|
Equity
securities - net
|
|
$
|
673,086
|
|
NOTE
4 -
LAND DEVELOPMENT LOANS AND LOANS FROM AFFILIATES
All
land
development loans and loans from affiliates were paid off by December 31,
2007.
NOTE
5 -
SHARE CAPITAL
Genesis
Holdings, Inc. was incorporated in Nevada on May 25, 1999 as part of the
reorganization of Diagnostic International, Inc. which had filed under Chapter
11 of the United States Bankruptcy Code. The Company has authorized 25,000,000
shares of common stock, at $.001 par value and 21,780,226 are issued and
outstanding.
During
the year ended December 31, 2007, the Company did not issue any common stock.
The Company has no options or warrants issued or outstanding as of December
31,
2007.
The
Company has issued shares of its common stock as consideration to consultants
for the fair value of the services rendered. The value of the shares was
determined based on the trading value of the stock at the dates on which the
agreements were entered into for the services and value of the services
rendered. During the year ended December 31, 2006, the Company granted to
consultants, 1,800,000 shares of common stock valued in the aggregate at $1,800
with a strike price range of $.01. The value of these shares was expensed during
the year December 31, 2006.
NOTE
6 -
INCOME TAXES
The
provision (benefit) for income taxes from continued operations for the years
ended December 31, 2007 and 2006 consist of the following:
|
|
December
31,
|
|
|
|
2007
|
|
2006
|
|
Current:
|
|
|
|
|
|
Federal
|
|
$
|
30,466
|
|
$
|
27,765
|
|
State
|
|
|
1,846
|
|
|
34,709
|
|
|
|
|
32,312
|
|
|
62,474
|
|
Deferred:
|
|
|
|
|
|
|
|
Federal
|
|
|
—
|
|
|
—
|
|
State
|
|
|
—
|
|
|
—
|
|
—
|
|
|
|
|
|
—
|
|
Benefit
from the operating
loss
carryforward
|
|
|
—
|
|
|
—
|
|
(Benefit)
provision for income taxes, net
|
|
$
|
32,312
|
|
$
|
62,474
|
|
|
|
|
|
|
|
|
|
The
difference between income tax expense computed by applying the federal statutory
corporate tax rate and actual income tax expense is as follows:
|
|
December
31,
|
|
|
|
2007
|
|
2006
|
|
|
|
|
|
|
|
Statutory
federal income tax rate
|
|
|
34.0
|
%
|
|
34.0
|
%
|
State
income taxes and other
|
|
|
2.4
|
%
|
|
2.4
|
%
|
Effective
tax rate
|
|
|
36.4
|
%
|
|
36.4
|
%
|
Deferred
income taxes result from temporary differences in the recognition of income
and
expenses for the financial reporting purposes and for tax purposes. The tax
effect of these temporary differences representing deferred tax asset and
liabilities result principally from the
following:
|
|
December
31,
|
|
|
|
2007
|
|
2006
|
|
|
|
|
|
|
|
Net
operating loss carryforward
|
|
|
—
|
|
|
—
|
|
Valuation
allowance
|
|
|
—
|
|
|
—
|
|
|
|
|
|
|
|
|
|
Deferred
income tax asset
|
|
$
|
—
|
|
$
|
—
|
|
|
|
|
|
|
|
|
|
NOTE
7 —
NET INCOME PER SHARE
Net
loss
per share is calculated using the weighted average number of shares of common
stock outstanding during the year.
NOTE
8—
RELATED PARTY TRANSACTIONS
One
of
the Company’s director is a significant shareholder of the Company. The Company
frequently receives advances and advances funds to an entity controlled by
a
director of the Company to cover short-term cash flow deficiencies. During
the
year ended December 31, 2006 the director advanced $266,622 to the Company
and
received repayments of that advance during the six months ended June, 2007
and
all remaining balances were paid in full.
NOTE
9-
SUBSEQUENT EVENT
In
February 18, 2008 the Company acquired BioAuthorize, Inc. which is a hi-tech
biometric technology company delivering voice-enabled payment authorization
and
processing services to the payment processing industry.
*
* * * *
*
ITEM
8.
CHANGES
IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
DISCLOSURE.
In
March
3, 2008 our prior auditor, Weaver & Martin, LLC, was dismissed and
terminated, and the Company engaged the firm of Jewett, Schwartz, Wolfe &
Associates as its principal independent accountant. There were no reportable
disagreements or events (as defined in Regulation S-B Item
304(a)
(1) (iv)), and no transactions or events similar to a reportable disagreement
or
event with regard to the dismissal and termination of Weaver & Martin, LLC.
Additional information regarding the change in our principal independent
accountant is set forth in the Report on Form 8-K filed March 5,
2008.
ITEM
8A. CONTROLS AND PROCEDURES
(a)
|
Evaluation
of disclosure controls and
procedures
|
Based
upon an evaluation of the effectiveness of the Company’s disclosure controls and
procedures performed by the Company’s management, with participation of the
Company’s Chief Executive Officer, Chief Operating Officer, and its Chief
Accounting Officer as of the end of the period covered by this report, the
Company’s Chief Executive Officer, Chief Operating Officer, and its Chief
Accounting Officer concluded that the Company’s disclosure controls and
procedures have been effective in ensuring that material information relating
to
the Company, including its consolidated subsidiary, is made known to the
certifying officers by others within the Company and the Bank during the period
covered by this report.
As
used
herein, “disclosure controls and procedures” mean controls and other procedures
of the Company that are designed to ensure that information required to be
disclosed by the Company in the reports that it files or submits under the
Securities Exchange Act is recorded, processed, summarized and reported, within
the time periods specified in the Commission’s rules and
forms. Disclosure controls and procedures include, without
limitation, controls and procedures designed to ensure that information required
to be disclosed by the Company in the reports that it files or submits under
the
Securities Exchange Act is accumulated and communicated to the Company’s
management, including its principal executive and principal financial officers,
or persons performing similar functions, as appropriate to allow timely
decisions regarding required disclosure.
(b)
|
Management’s
Report on Internal Control Over Financial
Reporting
|
Management
is responsible for establishing and maintaining adequate internal control over
financial reporting, as such term is defined in Exchange Act Rule 13a-15(f)
under the Securities Exchange Act of 1934. Under the supervision and
with the participation of the Chief Executive Officer, the Chief Operating
Officer and the Chief Accounting Officer, we conducted an evaluation of the
effectiveness of our control over financial reporting based on the framework
in
Internal
Control-Integrated Framework
issued
by
the Committee of Sponsoring Organizations of the Treadway Commission
(“COSO”). Based on our evaluation under the framework, management has
concluded that our internal control over financial reporting was effective
as of
December 31, 2007.
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
Securities and Exchange Commission that permit the Company to provide only
management’s report in this annual report.
(c)
|
Changes
in Internal Control over Financial
Reporting
|
There
have not been any changes in the Company’s internal controls or in other factors
that occurred during the Company’s last fiscal quarter ended December 31, 2007
that have materially affected or are reasonably likely to materially affect
the
Company’s internal control over financial reporting.
ITEM
8B. OTHER INFORMATION
None
PART
III
ITEM
9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS; COMPLIANCE
WITH
SECTION 16(a) OF THE EXCHANGE ACT.
Directors
and Executive Officers
The
Agreement through which the Company acquired BioAuthorize, provides under a
post-closing condition that, Larry Don Bankston and Lenny Amado, presently
directors of the Company will resign from the Board of Directors, and G. Neil
Van Wie and Gerald B. Van Wie are to be appointed to the Board. Those
resignations have not yet occurred. None of the officers and directors named
below are acting on behalf of, or at the direction of, any other
person.
Name
|
|
Age
|
|
Position
|
|
Term
|
Yada
Schneider
|
|
37
|
|
Director,
president and Chief Executive Officer
|
|
Since
February 2008
|
Larry
Don Bankston
|
|
59
|
|
Director
|
|
Since
July 2006
|
G.
Neil Van Wie
|
|
58
|
|
Vice-President
and Chief Financial Officer
|
|
Since
February 2008
|
Gerald
B. Van Wie
|
|
36
|
|
Vice-President,
Chief Operating Officer and Chief Technical Officer
|
|
Since
February 2008
|
Lenny
Amado
|
|
49
|
|
Director
|
|
Since
November 2007
|
Biographical
information regarding each of our directors and executive officers is set forth
below:
Larry
Don
Bankston: Since 1985, Mr. Bankston has been the Chief Executive Officer of
Bankston Electric Company, Inc. (BECI), a commercially licensed electrical
contracting company based in Texas. BECI serves the Dallas and Fort Worth
metropolitan area providing services in new construction, remodeling, repair
and
trouble call related electrical services including today’s latest computerized
motor controls, equipment and appliance applications. Mr. Bankston created
Genesis Land Development, LLC now known as Genesis Land, Inc. with two partners
in July 2003. In July 2004 Mr. Bankston bought out the two other partners and
owned the company exclusively until its merger with AABB now known as Genesis
Holdings, Inc. Genesis Land completed its first residential development in
2005,
which consisted of the 55 acre, 172 lot “Bankston Meadows” development. Mr.
Bankston has devoted an average of 40 hours per week to the business of the
Company over the last year.
Yada
Schneider, 37, was appointed as a director of the Company and as
the
President and Chief Executive Officer of the Company effective February
18, 2008 pursuant to provisions of the Share Exchange Agreement dated
February 18, 2008 between the Company, BioAuthorize and the BioAuthorize
Shareholders (the “Agreement”). He holds no other directorship positions
in reporting companies. Mr. Schneider has most recently been a director
and President and Chief Executive Officer of BioAuthorize, positions
he
continues to hold and receive compensation under his employment agreement.
Mr. Schneider has 20 years experience in the high tech industry and
10 yrs
experience as CTO of a successful start-up company, Bridge Technology,
Inc. He has years of experience designing, implementing, deploying,
and
supporting diverse technology solutions including artificial intelligence,
enterprise business systems, public-key infrastructure, device interface
software, embedded systems, web-based solutions, and services based
(n-tier) architecture to major corporations including Intel Corporation,
Choice Hotels International, GTX Corporation, and Allied Signal Aerospace.
He has extensive experience delivering transaction processing solutions
including delivery of credit card transaction processing functionality
for
Choice Hotel’s enterprise application functionality. He also successfully
delivered a patented transaction processing system to realize Bridge
Technology’s business goals. Mr. Schneider has experience certifying
software solutions with VISA and third-party payment processors,
including
Southern DataCom, PaymentTech, and Vital Processing. In connection
with
Mr. Schneider’s appointment to the Board and as an officer of the Company,
the Company did not enter into or materially amend any plan, contract
or
arrangement that Mr. Schneider will participate in as a director
or
officer of the Company. Mr. Schneider will be compensated on the
Board in
accordance with any existing policies for employee members of the
Board
and no compensation has been established for his positions as an
officer
of the Company.
|
G.
Neil
Van Wie, 58, was appointed as Vice President and Chief Financial Officer of
the
Company effective February 18, 2008 pursuant to provisions of the Agreement.
Mr.
Van Wie has most recently been a director, a Vice President and Chief Financial
Officer of BioAuthorize, positions he continues to hold and receive compensation
under his employment agreement. From late 2003 through September 2007, he served
as controller of Maverick Masonry, Inc., a commercial masonry contractor,
responsible for human resources, payroll, financial accounting and reporting.
From September 2001 through November 2003 Mr. Van Wie served as the Director
of
Information Services - Planning & Administration for Pulte Homes, Inc. with
responsibilities for the combined IT organizations of Pulte Homes and Del Webb
Corporation directly reporting to the Vice President/CIO. G. Neil Van Wie is
the
father of Gerald B. Van Wie. In connection with Mr. Van Wie’s appointment as an
officer of the Company, the Company did not enter into or materially amend
any
plan, contract or arrangement that Mr. Van Wie will participate in as an officer
of the Company. No compensation has been established for his positions as an
officer of the Company.
Gerald
B.
Van Wie, 36, was appointed Vice President, Chief Operating Officer and Chief
Technical Officer of the Company effective February 18, 2008 pursuant to
provisions of the Agreement. Mr. Van Wie has most recently been a director,
a
Vice President and Chief Operating Officer of BioAuthorize, and he will continue
to hold those positions and receive compensation under his employment agreement.
From March 1995 until February 2007, Mr. Van Wie worked for Intel Corporation
holding various positions during his tenure with Intel. As a Senior Systems
Architect/Technical Project Manager he managed several technical teams on
various engineering projects of information systems. Following that he was
a
Technical Product Architect/Operations Manager managing engagements,
enhancements and operations for billing systems for Pay-Per-View
inter-department billings within Intel. Finally, as a Technical Program Manager
he acted as a coach for solution integration of mission critical enterprise
information systems. Gerald Van Wie is the son of G. Neil Van Wie. In connection
with Mr. Van Wie’s appointment as an officer of the Company, the Company did not
enter into or materially amend any plan, contract or arrangement that Mr. Van
Wie will participate in as an officer of the Company.
Lenny
Amado, 49, began serving as the Vice President of Operations for Nutritional
Beverages, a dietary supplements manufacturer based in Phoenix, Arizona, in
August of 2003. In January of 2006 he also took over the daily operations
management for Aerobic Life Industries, a sales and marketing company based
in
Phoenix, Arizona, which focuses on selling dietary supplement products. All
manufacturing and sales for both companies are housed in a 15000 square foot
facility with 22 employees. Prior to joining Nutritional Beverages and Aerobic
Life Industries, Mr. Amado worked from 2001 to 2003 as the General Manager
of
Bottled Water Images in Phoenix, Arizona, a bottled water company selling niche
products to retail markets. Mr. Amado became a director of the Company in
November 2007.
None
of
the executive officers or directors of the Company has, during the last five
years, been convicted in a criminal proceeding (excluding traffic violations
or
similar misdemeanors) or has been a party to a civil proceeding which resulted
in a judgment, decree or final order enjoining further violations of, or
prohibiting activities subject to, federal or state securities laws or finding
any violation of such laws. All of the executive officers and directors of
the
Company are citizens of the United States.
The
Board
of Directors of the Company has not established any committees.
Compliance
With Section 16(a) of the Exchange Act
Section
16(a) of the Securities Exchange Act of 1934 (the “Exchange Act”) requires the
Company’s directors and executive officers, and persons who beneficially own
more than ten percent of a registered class of our equity securities, to file
with the Securities and Exchange Commission (the “Commission”) initial reports
of beneficial ownership and reports of changes in beneficial ownership of our
Common Stock. The rules promulgated by the Commission under Section 16(a) of
the
Exchange Act require those persons to furnish us with copies of all reports
filed with the Commission pursuant to Section 16(a). The information in this
section is based solely upon a review of Forms 3, Forms 4, and Forms 5 received
by us.
We
believe that the Company’s executive officers, directors and 10% shareholders
timely complied with their filing requirements during the year ended December
31, 2007 except for the Form 3 filed on July 6, 2007 by Jason Pratte, the former
President and CEO of the Company and the Form 3 filed on July 26, 2007 by Larry
Don Bankston, a current director of the Company. Both of these reports were
filed late.
Code
of Ethics
The
Company has not adopted a code of ethics with standards as set out by the SEC's
regulations as of the date of this filing, although management intends to
consider the need for a code of ethics in the near future.
ITEM
10. EXECUTIVE COMPENSATION
Summary
Compensation Table
The
following table sets forth the cash compensation paid by the Company to its
Chief Executive Officer and to all other executive officers for services
rendered from July 1, 2001 through December 31, 2007. As of February 18, 2008,
Yada Schneider was appointed as a director and the Chief Executive Officer
and
President, and Neil Van Wie as Vice-President and Chief Financial Officer and
Gerald B. Van Wie as Vice-President, Chief Operating Officer and Chief Technical
Officer of the Company. Since Mr. Schneider, Neil Van Wie and Gerald Van Wie
held no positions with the Company prior to February 2008, they are not included
in any of the executive compensation information.
2007
and 2006 SUMMARY COMPENSATION TABLE
Name
and Principal Position
|
|
|
Year
|
|
|
Salary ($)
|
|
|
Bonus ($)
|
|
|
Restricted
Stock
Awards
($)
|
|
|
Securities
Underlying Option
Awards
($)
|
|
|
Non-Equity
Incentive
Plan
Compensation
($)
|
|
|
Change
in
Pension
Value
and
Nonqualified
Deferred
Compensation
Earnings
($)
|
|
|
All
Other
Compensation
($)
|
|
|
Total
($)
|
|
Jason
Pratte
|
|
|
2007
&
2006
|
|
|
0.
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
OPTION
EXERCISES AND STOCK VESTED TABLE
|
|
|
|
|
|
Option
Awards
|
|
Stock
Awards
|
|
Name
|
|
Number of Shares
Acquired on Exercise
(#)
|
|
Value Realized
on
Exercise
($)
|
|
Number of Shares
Acquired on Vesting
(#)
|
|
Value Realized
on
Vesting
($)
|
|
Jason
Pratte
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
PENSION
BENEFITS TABLE
|
|
|
|
|
|
|
|
|
|
|
|
Name
|
|
Plan Name
|
|
Number of Years
Credited
Service
(#)
|
|
Present Value
of Accumulated
Benefit
($)
|
|
Payments During Last
Fiscal
Year
($)
|
|
Jason
Pratte
|
|
|
(1
|
)
|
|
0
|
|
|
0
|
|
|
0
|
|
Name
|
|
Executive
Contributions
in
Last Fiscal Year
($)
|
|
Registrant
Contributions
in Last
Fiscal
Year
($)
|
|
Aggregate
Earnings in Last Fiscal Year
($)
|
|
Aggregate
Withdrawals /
Distributions
($)
|
|
Aggregate
Balance at
Last
Fiscal Year-End
($)
|
|
Jason
Pratte
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
Name
|
|
|
Fees
Earned or
Paid
in Cash
($)
|
|
|
Stock
Awards
($)
|
|
|
Option
Awards
($)
|
|
|
Non-Equity
Incentive Plan Compensation
($)
|
|
|
Change
in Pension
Value
and
Nonqualified
Deferred Compensation Earnings
($)
|
|
|
All
Other
Compensation
($)
|
|
|
Total
($)
|
|
Jason
Pratte
|
|
$
|
0-
|
|
|
0
|
|
$
|
0-
|
|
|
0
|
|
|
0
|
|
|
0
|
|
$
|
0-
|
|
Name
|
|
|
Year
|
|
|
Perquisites
and
Other Personal Benefits
($)
|
|
|
Tax
Reimbursements
($)
|
|
|
Insurance
Premiums
($)
|
|
|
Company
Contributions
to
Retirement and 401(k) Plans
($)
|
|
|
Severance
Payments / Accruals
($)
|
|
|
Change
in Control Payments / Accruals
($)
|
|
|
Total
($)
|
|
Jason
Pratte
|
|
|
2007
& 2006
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
Name
|
|
|
Year
|
|
|
Personal
Use of Company Car/Parking
|
|
|
Financial
Planning/ Legal Fees
|
|
|
Club
Dues
|
|
|
Executive
Relocation
|
|
|
Total
Perquisites and
Other
Personal Benefits
|
|
Jason
Pratte
|
|
|
2007
& 2006
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
Name
|
|
|
Benefit
|
|
|
Before
Charge in Control Termination w/o Cause or for Good
Reason
|
|
|
After
Change in Control Termination w/o Cause or for Good
Reason
|
|
|
Voluntary
Termination
|
|
|
Death
|
|
|
Disability
|
|
|
Change
in Control
|
|
Jason
Pratte
|
|
|
Severance
|
|
|
(1
|
)
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
There
was
no compensation paid to any other director or officer during the fiscal years
ended December 31, 2004-2007.
Employment
Agreements
The
Company has not entered into employment agreements with any of its officers
as
of the date of this filing. Yada Schneider and Gerald B. Van Wie each have
five
(5) year employment agreements with BioAuthorize, and G. Neil Van Wie has a
four
(4) year employment agreement with BioAuthorize, our wholly-owned subsidiary
which was acquired in February 2008. These employment agreements continue
through the end of 2012 and 2011, respectively.
Director
Compensation
The
Company’s directors did not receive any cash or other compensation during any of
the respective years ended December 31, 2006 through December 31,
2007.
ITEM
11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT.
As
of
March 26, 2008 we had 25,000,000 shares of common stock outstanding. The
following table sets forth certain information regarding beneficial ownership
of
the common stock as of March 26, 2008 with respect to (i) our named executive
officers and directors; (ii) our named executive officers and directors as
a
group; and (iii) all persons which we, pursuant to filings with the SEC and
our stock transfer record by each person or group, know to own more than 5%
of
the outstanding shares of our common stock. Under SEC rules, a person
(or group of persons) is deemed to be a
"beneficial
owner"
of a
security if he or she, directly or indirectly, has or shares the power to vote
or to direct the voting of such security, or the power to dispose of or to
direct the disposition of such security. Accordingly, more than one
person may be deemed to be a beneficial owner of the same security. A
person is also deemed to be a beneficial owner of any security, which that
person has the right to acquire within 60 days, such as warrants or options
to
purchase shares of our common stock. Unless otherwise noted, each person has
sole voting and investment power over the shares indicated below subject to
applicable community property law. Unless otherwise stated in the table below,
the address of each beneficial owner is Genesis Holdings, Inc.,
15849
N.
71
st
Street,
Suite 226, Scottsdale, AZ 85254-2179.
Title
of Class
|
|
Name
& Address of Beneficial Owner
(1)
|
|
Amount
and Nature of Beneficial Ownership
(2)
|
|
Percentage
of Class
(3)
|
|
|
|
|
|
|
|
|
|
Common
Stock
|
|
Larry
Don Bankston, Director
1525
Clover Hill
Road,
Mansfield, TX 76063
|
|
|
2,219,774
|
(4)
|
|
8.88
|
%
|
|
|
|
|
|
|
|
|
|
|
Common
Stock
|
|
Yada
Schneider, President, CEO, Director
|
|
|
7,128,000
|
|
|
28.51
|
%
|
|
|
|
|
|
|
|
|
|
|
Common
Stock
|
|
Gerald
B. Van Wie,
Vice President, Chief Operating Officer and Chief Technical Officer
of the
Company
|
|
|
7,128,000
|
|
|
28.51
|
%
|
|
|
|
|
|
|
|
|
|
Common
Stock
|
|
G.
Neil Van Wie, Vice President and Chief Financial Officer
|
|
|
880,000
|
|
|
3.52
|
%
|
|
|
|
|
|
|
|
|
|
|
Common
Stock
|
|
Members
Only Financial, Inc.
16680
N. 174
th
Lane
Surprise,
AZ 85388
|
|
|
2,464,000
|
|
|
9.86
|
%
|
|
|
|
|
|
|
|
|
|
|
Common
Stock
|
|
Soliton,
LLC
49
W. River Road
Rumson,
NJ 07760
|
|
|
2,400,000
|
|
|
9.60
|
%
|
|
|
|
|
|
|
|
|
|
|
Common
Stock
|
|
Directors
and Officers as a group, 4 people
|
|
|
17,355,774
|
|
|
69.42
|
%
|
(1)
The
address of beneficial owners Yada Schneider, Gerald B. Van Wie and G. Neil
Van
Wie is c/o Genesis Holdings, Inc. is 15849 N. 71st Street, Suite 226,
Scottsdale, AZ 85254-2179.
(2)
All
of
the shares shown are held by individuals or entities possessing sole voting
and
investment power with respect to such shares.
(3)
The
"Percentage of Class" is calculated by dividing the amount of shares
beneficially owned by the sum of 25,000,000 which is the total outstanding
shares of common stock of the Company.
(4)
Includes 2,219,774 shares held by the Bankston Third Family Limited Partnership,
of which Larry Don Bankston is the controlling partner, but excludes 16,780,226
shares which have been delivered by the Bankston Third Family Limited
Partnership to the Company for cancellation in exchange for all of the interests
of the Company in its wholly-owned real estate subsidiary, Genesis Land, Inc.
pursuant to terms of the share exchange agreement dated February 18, 2008
between the Company, Genesis land, Inc. and the Bankston Third Family Limited
Partnership which is scheduled to close no later than March 31,
2008.
DESCRIPTION
OF SECURITIES
General
Our
authorized capital stock consists of 25,000,000 shares of common stock, par
value $ .001 per share. Currently, we are not authorized to issue any shares
of
preferred stock.
Common
Stock
The
shares of our common stock presently outstanding, and any shares of our common
stock issued upon exercise of stock options and/or warrants, will be fully
paid
and non-assessable. There are no outstanding options or warrants. Each holder
of
common stock is entitled to one vote for each share owned on all matters voted
upon by shareholders, and a majority vote is required for all actions to be
taken by shareholders. In the event we liquidate, dissolve or wind-up our
operations, the holders of the common stock are entitled to share equally and
ratably in our assets, if any, remaining after the payment of all our debts
and
liabilities. The common stock has no preemptive rights, no cumulative voting
rights, and no redemption, sinking fund, or conversion provisions. Since the
holders of common stock do not have cumulative voting rights, holders of more
than 50% of the outstanding shares can elect all of our Directors, and the
holders of the remaining shares by themselves cannot elect any Directors.
Holders of common stock are entitled to receive dividends, if and when declared
by the Board of Directors, out of funds legally available for such purpose.
Dividend
Policy
We
have
never declared any cash dividends on our common stock. We currently intend
to
retain future earnings, if any, to finance the expansion of our business. As
a
result, we do not anticipate paying any cash dividends in the foreseeable
future.
Options
and Warrants:
As
of
December 31, 2007 there were no options and warrants
outstanding.
Convertible
Securities
At
December 31, 2007 we have no convertible securities.
Amendment
of our Bylaws
Our
bylaws may be adopted, amended or repealed by the affirmative vote of a majority
of our outstanding shares. Subject to applicable law, our bylaws also may be
adopted, amended or repealed by our board of directors.
Transfer
Agent
On
December 31, 2007, the Company engaged Island Stock Transfer to serve in the
capacity of transfer agent. The transfer agent’s mailing address and telephone
number is 100 Second Avenue South, Suite 104N, St. Petersburg, Florida - Phone
(727) 289-0010.
ITEM
12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR
INDPENDENCE.
On
July
1, 2006, Genesis Holdings entered into a Merger Agreement with Genesis Land
Development, LLC to acquire 100% of the ownership interests of Genesis Land
Development, LLC as a wholly-owned subsidiary in exchange for the issuance
of
19,000,000 shares of Genesis Holdings common stock
to the
Bankston Third Family Limited Partnership
.
Genesis
Land Development, LLC merged into AABB Acquisition Sub, Inc., a Nevada
corporation that changed its name post-merger to Genesis Land, Inc.
Mr.
Bankston controls the Bankston Third Family Limited Partnership, the sole equity
holder in Genesis Land Development, LLC
prior
to
the July 1, 2006 merger. Genesis Land Development, LLC
was
organized in Texas on September 8, 2003 for the purpose of developing a 55.509
acre tract of land within the Dallas, Texas metropolitan area. The real estate
was contributed to Genesis Land Development, LLC by Larry Don Bankston on
September 30, 2003. Other than through beneficial ownership of this equity,
there was no prior relationship between Mr. Bankston and the Company. Mr.
Bankston is a director of the Company.
On
January 1, 2006, Genesis Holdings entered into Consulting Agreements with
William Lane, RD Bickerstaff, Laura Poulson, and Heritage West Capital, whereby
William Lane, RD Bickerstaff, Laura Poulson, and Heritage West Capital agreed
to
provide consulting services to the Company for a one-year period. In exchange
for entering into the agreement and performing the services required thereby,
William Lane, RD Bickerstaff, Laura Poulson, and Heritage West Capital received
an aggregate of 1,800,000 shares of common stock in the Company. The Company
is
not required to make any additional payments to William Lane, RD Bickerstaff,
Laura Poulson, and Heritage West Capital, but is responsible for reimbursing
certain expenses incurred to William Lane, RD Bickerstaff, Laura Poulson, and
Heritage West Capital during the performance of their duties.
The
Company issued seven notes payable dated from January 28, 2005 through April
29,
2005 payable to Larry Don Bankston. The loans bear interest at a rate of 7%.
Principal is due on demand. The outstanding principal balance and accrued
interest on these notes, in the total amount of $266,622, was paid in full
during the six (6) month period ended September 30, 2007.
On
February
18, 2008
,
we
entered into a Share Exchange Agreement (the “Exchange Agreement”) with
BioAuthorize and all of BioAuthorize's shareholders, some of which are the
individuals now or to be appointed to our board of directors under provisions
of
the Exchange Agreement. Yada Schneider was appointed to our board of
directors on February 18, 2008. Following the 10-day period after an Information
Statement is mailed to our registered shareholders, two of our current
directors, Larry Don Bankston and Lenny Amado, will resign from the board of
directors, and the remaining director, Yada Schneider, will appoint G. Neil
Van
Wie and Gerald B. Van Wie to our board of directors.
Under
the
terms of the Exchange Agreement we acquired the business of BioAuthorize through
an acquisition of all of its outstanding stock from its
shareholders. In exchange we issued, in the aggregate, 20,000,000
shares of our common stock to the five (5) BioAuthorize
shareholders. As a result, BioAuthorize became our wholly owned
subsidiary, and the BioAuthorize shareholders now own approximately 80% of
our
outstanding stock on a fully diluted basis. In connection with the
Closing of the Exchange Agreement, we issued shares of our common stock to
the
individuals being appointed to our board of directors as discussed herein in
exchange for their shares of BioAuthorize stock.
Yada
Schneider, G. Neil Van Wie and Gerald B. Van Wie received approximately 60.54%
of the outstanding shares of the Company’s common stock on a fully diluted
basis.
See
"Security
Ownership Of Certain Beneficial Owners And Management,"
above.
In
addition, on February 18, 2008, the Company entered into a Share Exchange
Agreement for the transfer of all interests in its wholly-owned real estate
subsidiary, Genesis Land, Inc., to the Bankston Third Family Limited Partnership
no later than March 31, 2008 in exchange for 16,780,226 shares of common stock
of the Company owned by the Bankston Third Family Limited
Partnership
.
The
Bankston Third Family Limited Partnership has delivered the shares of common
stock to the Company
.
None
of
the Company’s directors
would
be
considered independent under the definition of independence used by any national
securities exchange or any inter-dealer quotation system, other than Mr.
Amado.
Although
the Company is not subject to any listing standards with respect to director
independence, for purposes of this determination, the Company used the NASDAQ
director independence standard for evaluating director independence.
ITEM
13. EXHIBITS.
The
exhibits marked with an "*" were filed with the Company's original Form 8-A12G
on August 10, 2001, and those marked with a “#” were filed with the Company’s
initial Form SB-2 on September 15, 2006. The remaining exhibits are filed with
this report. The exhibits marked with an “**” were filed with the December 31,
2006 10-KSB, the exhibits marked with an “***” were filed with the February 18,
2008 8-K filing and the exhibit marked with an “****” were filed with the March
21, 2008 8-K filing.
Exhibit #
|
|
Description
|
*3.1
|
|
Articles
of Incorporation
|
|
|
|
*3.2
|
|
By-Laws
|
|
|
|
**10.1
|
|
Agreement
of Purchase and Sale dated June 3, 2005 by and between Genesis Land
Development, LLC and Wall Homes, Inc.
|
|
|
|
**10.2
|
|
Consulting
Agreement dated January 1, 2006, by and between AABB, Inc. and William
E.
Lane
Lane
|
|
|
|
**10.3
|
|
Consulting
Agreement dated January 1, 2006, by and between AABB, Inc. and RD
Bickerstaff
|
|
|
|
**10.4
|
|
Consulting
Agreement dated January 1, 2006, by and between AABB, Inc. and Laura
Poulson
|
|
|
|
**10.5
|
|
Consulting
Agreement dated January 1, 2006, by and between AABB, Inc. and Heritage
West Capital
|
|
|
|
**10.6
|
|
Merger
Agreement, dated July 1, 2006, by and among AABB, Inc., AABB Acquisition
Sub, Inc., Genesis Land Development, LLC and certain
shareholders
|
|
|
|
***10.7
|
|
Share
Exchange Agreement dated February 18, 2008 by and among the Company,
BioAuthorize and the BioAuthorize Shareholders list on Exhibit A
to the
Agreement
|
|
|
|
***10.8
|
|
Share
Exchange Agreement dated February 18, 2008 by and among the Company,
Genesis Land, Inc. and the Bankston Third Family Limited
Partnership
|
|
|
|
****10.9
|
|
First
Amendment to Share Exchange Agreement dated February 18, 2008 by
and among
the Company, Genesis Land, Inc. and the Bankston Third Family Limited
Partnership
|
|
|
|
31.1
|
|
Certification
Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 - Chief
Executive Officer
|
|
|
|
31.2
|
|
Certification
Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 - Chief
Financial Officer
|
|
|
|
32.1
|
|
Certification
Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 - Chief
Executive Officer
|
|
|
|
32.2
|
|
Certification
Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 - Chief
Financial Officer
|
Reports
on Form 8-K
During
the last quarter of the year ended December 31, 2007 we filed no reports on
Form
8-K. During the first quarter ended March 31, 2008 we filed the following
reports on Form 8-K:
January
3, 2008 for report dated November 5, 2007 regarding the appointment of Lenny
Amado as a director.
February
22, 2008 for report dated February 18, 2008 regarding the acquisition of
BioAuthorize and the transaction for the conveyance of all ownership interest
in
Genesis Land to the Bankston Third Family Limited Partnership no later than
March 31, 2008.
March
5,
2008 for report dated March 3, 2008 regarding the change in the Company’s
principal independent accountant.
March
21,
2008 for the report dated March 17, 2008 regarding the extension of the closing
of the Genesis Land transaction with the Bankston Third Family Limited
Partnership from March 17 to March 31, 2008.
ITEM
14.
PRINCIPAL
ACCOUNTANT FEES AND SERVICES
The
Company paid or accrued the following fees in the 2007 fiscal year to its
principal accountant, Jewett, Schwartz, Wolfe and Associates:
|
|
Year
ended December 31, 2007
|
|
1. Audit
fees
|
|
$
|
10,000
|
|
2. Audit-related
fees
|
|
|
—
|
|
3. Tax
fees
|
|
|
—
|
|
4. All
other fees
|
|
|
—
|
|
Totals
|
|
$
|
10,000
|
|
The
Company’s principal accountant did not engage any other persons or firms other
than the principal accountant’s full-time, permanent employees. As the Company
does not have an audit committee, the entire Board pre-approves all services
provided by the Company's principal accountant.
SIGNATURES
In
accordance with 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, there unto duly authorized.
|
|
|
Date:
March 31, 2008
|
Genesis
Holdings, Inc.
|
|
|
|
|
|
By:
|
/s/
Yada Schneider
|
|
Yada
Schneider
President
and Chief Executive Officer (Principal Executive Officer)
|
|
|
|
Date:
March 31, 2008
|
|
|
|
|
|
|
By:
|
/s/
Neil Van Wie
|
|
Vice-President
and Chief Financial Officer (Principal Financial Officer)
|
POWER
OF
ATTORNEY
Know
All
Persons By These Presents, that each person whose signature appears below
constitutes and appoints Yada Schneider his true and lawful attorney-in-fact
and
agent, with full power of substitution and resubstitution, for him and in his
name, place and stead, in any and all capacities, to sign any and all amendments
to this Annual Report on Form 10-KSB, and to file the same, with all exhibits
thereto, and other documents in connection therewith, with the Commission,
granting unto said attorneys-in-fact and agents, and each of them, full power
and authority to do and perform each and every act and thing requisite and
necessary to be done in connection therewith, as fully to all intents and
purposes as he might or could do in person, hereby ratifying and confirming
our
signatures as they may be signed by ours said attorney-in-fact and any and
all
amendments to this Annual Report on Form 10-KSB.
Pursuant
to the requirements of the Securities Exchange Act of 1934, this Annual Report
on Form 10-KSB has been signed by the following persons in the capacities and
on
the dates indicated.
|
|
|
Date:
March 31, 2008
|
By:
|
/s/
Yada Schneider
|
|
Yada
Schneider
Director,
President & CEO
|
|
|
|
Date:
March 31, 2008
|
By:
|
/s/
Larry Don Bankston
|
|
Larry
Don Bankston,
Director
|
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