Item 1. Description of Business” of our Annual Report
on Form 10-KSB filed with the United States Securities and Exchange Commission
on May 1, 2007, and not to place undue reliance on the forward-looking
statements contained herein, which speak only as of the date of this
report. We undertake no obligation to publicly revise forward-looking
statements to reflect events or circumstances that may arise after the date
of
this report.
Overview
N.E.C.
Properties, Inc. (“NEC”) was incorporated on September 16, 1995, under the
laws in the State of Nevada. NEC was organized as a blank check company with
no
operations or plan of business. On September 30, 1995, NEC had 25,000
shares at no par value authorized and 18,600 shares outstanding, which were
issued for $1,860 in cash. On November 19,1998, the amended and restated
Articles of Incorporation were filed with the Secretary of State of Nevada
that
increased NEC’s authorized common shares from 25,000 to 25,000,000, and
established a par value of $.001 per share. In November 1998, the NEC
stockholders approved two forward stock splits. The first was a 100 for 1 split
increasing the number of the outstanding common shares to 1,860,000 and the
second was a 1.77 for 1 stock split resulting in 3,292,200 common shares
outstanding.
On
November 10, 1999, NEC acquired all of the outstanding stock of March Indy
International, Inc. (“March”), in exchange for 7,706,575 shares of NEC (the
“Share Exchange”). March was incorporated in Delaware on November 24, 1998
(“inception”). For accounting purposes, the transaction was accounted for as a
reverse acquisition under the purchase method for business combinations, and
accordingly the transaction was treated as a recapitalization of March, with
March having acquired NEC.
On
June
17,2000, March declared a one-for-three reverse stock split, effective September
26, 2000. This reverse stock split reduced the number of our outstanding common
stock shares from 12,090,234 to 4,030,078.
From
the
Share Exchange through September 30, 2000, we were in the preliminary stages
of
engaging in the business of designing, building and racing cars for Formula
One,
Cart and Indy competition both in the United States and abroad. We also planned
to develop an internet website to offer and sell merchandise products related
to
our racing efforts. In October 2000, because of our inability to
successfully organize an Indy car race team and our failure to compete in the
Indianapolis 500, we discontinued our racing and related promotional
activities.
In
2001,
we changed our name from March to Bancorp International
Group, Inc.
In
September 2005, we entered into a non-binding joint venture agreement with
an
oil export concern pursuant to which we would acquire rights to sell and market
the oil and natural gas production from the petroleum reserves of Papua, New
Guinea. The conditions to this joint venture were not satisfied by the other
party, and the prospective joint venture did not become effective.
On
August
19, 2005, our Board of Directors approved and adopted the Certificate of
Designation Preferences and Right of Preferred Stock (“Certificate of
Designation”). The Certificate of Designation sets forth the preferences and
rights of our 15,000,000 authorized shares of preferred stock, $.0001 par value,
designated as the Series A Convertible Preferred Stock (“Series A
Preferred Stock”).
On
August
19, 2005, our stockholders voted to amend our Articles of Incorporation to
increase the number of authorized shares of common stock from 25,000,000 at
a
par value of $.001 to 500,000,000 at a par value of $.0001. In a second
amendment on August 19, 2005, effective January 6, 2006, our
stockholders approved another amendment to our Articles of Incorporation that
increased the number of our authorized shares of common stock from 500,000,000
at $.0001 par value to 2,000,000,000 at $.0001 par value.
On
January 11, 2006, in accordance with a Settlement Agreement relating to a
lawsuit brought by us against certain parties, the Company issued 269,773,000
shares of the Company’s common stock. The lawsuit and resulting Settlement
Agreement are discussed under “Legal Proceedings.” These shares were issued in
accordance with the registration exemption afforded under Section
3(a)(10) of the Securities Act of 1933.
In
June
2006, we entered into a letter of intent with a Midwestern oil company in effort
to enable us to acquire the working interest in producing wells and proven
non-developed reserves. The conditions to the letter of intent were not
satisfied by the oil company, and the letter of intent was abandoned.
As
of
March 31, 2007, we have no operations. However, we currently desire to
pursue
oil and gas exploration and development opportunities outside the United
States,
particularly in Papua New Guinea. We believe that any such undertaking
(and the
undertaking of any other significant business opportunity) is necessarily
contingent upon the prior final determination of the number of shares our
common
stock that are outstanding.
There
are
currently 525,035,229 shares of our common stock validly issued and outstanding.
As described in Part II, Item 1. “Legal Proceedings,” we were initially aware of
approximately 243,842,000 additional shares of our common stock that we
believe
were wrongfully issued. We have also identified 306,207,408 shares of common
stock that are currently held in brokerage accounts, which shares may be
in
addition to the shares noted above. Based on the foregoing, we estimate
that a
total of 1,075,084,637 shares are outstanding, whether validly issued or
invalidly issued, comprised of 525,035,229 validly issued shares, 243,842,000
invalidly shares identified previously by us, and 306,207,408 additional
invalidly issued shares held by brokerage firms on behalf of various beneficial
owners. If our continued investigations reveal additional shares or reveal
that
the number of such shares is less than described above, we will report
such
conclusions by filing an appropriate Current Report on Form 8-K.
After
consideration of various means to resolve the issues of the invalidly issued
shares, we currently intend to undertake a reverse stock split of our common
stock. If undertaken, we intend to base the reverse stock split on a ratio
that
would reduce the number of our outstanding shares of our common stock,
whether
validly or invalidly issued, to approximately 5,000,000 shares. Such action,
if
undertaken and completed, would also result in the reduction of the number
of
our shareholders. Following the reverse stock split, if undertaken and
completed, we intend to recognize all then outstanding shares of our common
stock as validly issued and outstanding.
Because
we intend to recognize the 1,075,084,637 shares of our common stock described
above in the proposed reverse stock split, the 243,842,000 invalidly shares
identified previously by us and 306,207,408 additional invalidly issued
shares
held by brokerage firms on behalf of various beneficial owners are assumed
to be
outstanding for purposes of this report.
In
connection with our desire to pursue energy exploration and development
opportunities, we intend to change our name to Energy Source, Inc. to reflect
our current business intent.
In
order
to undertake the contemplated reverse stock split and our name change, the
Board
of Directors intends to call a meeting of our shareholders as soon as
practicable following the date that the Company becomes current in its reporting
obligations under the Securities Act of 1934, which requires us to file our
quarterly reports on Form 10-QSB for the third quarter of 2007, along with
any
other current reports on Form 8-K that may be required.
Litigation
Regarding Common Stock Certificates
We
filed
a lawsuit on April 11, 2007, against approximately 1,500 purported shareholders
alleging that they hold improperly issued stock certificates. A
primary
reason this litigation was pursued was to finally determine the number of shares
of our common stock that should be recognized as outstanding. However, we
dismissed this litigation without prejudice in May 2007, because the litigation
was becoming cost-prohibitive. See “Legal Proceedings – Stock
Certificate Litigation” for a discussion of the lawsuit.
Employees
As
of the
date of this report, we have one employee, Thomas Megas, our Chief Executive
Officer and President, who does not receive any form of compensation or
remuneration for his services.
Going
Concern
As
indicated in the notes to the financial statements included in this report,
the
financial statements have been prepared assuming that we will continue as a
going concern. In the year ended December 31, 2006, we incurred a net loss
of approximately $364,000. In addition, at December 31, 2006 and 2005, we
had working capital deficiencies of approximately $288,000 and $267,000,
respectively. These conditions raise substantial doubt about our ability to
continue as a going concern. The accompanying financial statements do not
include any adjustments that might be necessary in the event we are unable
to
continue as a going concern.
Our
budgeted overhead expenses for the 12 months ending December 31, 2007, are
as
follows:
|
Expenditures:
|
Per
Month
|
12
Months
|
|||||
|
Travel
expenses
|
$
|
3,000
|
$
|
36,000
|
|||
|
Hotel
accommodations
|
2,500
|
30,000
|
|||||
|
Rent
and office expenses
|
1,000
|
12,000
|
|||||
|
Legal
expenses
|
5,000
|
60,000
|
|||||
|
Accounting
expenses
|
7,500
|
90,000
|
|||||
|
Utilities
and telephone
|
3,000
|
36,000
|
|||||
|
Transfer
agent
|
|
7,500
|
|||||
|
Office
supplies and equipment
|
1,042
|
12,500
|
|||||
|
Miscellaneous
expenses
|
3,500
|
42,000
|
|||||
|
Total
Administrative Expenditures
|
$
|
27,167
|
$
|
326,000
|
|||
Except
as
set forth in the table above, we do not have any capital commitments.
Because we do not have any assets, we are unable to fund such expenses without
obtaining additional funding. We have not formalized any plans for obtaining
the
necessary additional capital resources and funding, and have not obtained any
related commitments. We anticipate however that, on a short-term basis,
Thomas Megas (our controlling shareholder and Chief Executive Officer and one
of
our directors) will provide the necessary capital resources and funding through
loans. Unless the necessary capital resources are obtained, we may unable to
proceed with our intentions to pursue oil and gas exploration and development
opportunities.
As
a
result and based upon his evaluation as of the end of the period covered by
this
report, our Chief Executive Officer and Acting Chief Financial Officer concluded
that our disclosure controls and procedures are not effective to ensure that
information required to be included in our periodic SEC filings is recorded,
processed, summarized, and reported within the time periods specified in the
SEC
rules and forms.
Item
1. Legal Proceedings.
Pino
Litigation
In
August
2005, management became aware of the unauthorized issuance of approximately
243,842,000 shares of our common stock (the “Wrongfully Issued Shares”) to
various entities and individuals for services and gifts, whereupon these
entities and individuals attempted to sell the Wrongfully Issued Shares in
the
open market. Our current officers and directors had no relationship with the
entities and individuals that issued the Wrongfully Issued Shares.
In
September 2005, we filed a civil action (the “Pino Litigation”) in the
District Court of Oklahoma County, Oklahoma, styled Bancorp
International Group, Inc. v. Mario A. Pino, an individual, Sam Deeb, an
individual, Jean Carlos Medina, an individual, Charles Weller, an individual,
Barkev Kibarian, an individual, Felica Morales, an individual,
Clearstock, Inc., a Texas corporation, DealFlo, L.L.C., a New York Limited
Liability Company, The Grace Trust, a foreign trust, Global Consulting Group,
a
Maryland corporation, Intelligent Message Distributors, a Nevada corporation,
and Wall Street Group, L.L.C., a Arizona limited liability
company
(the
“Defendants”), Case No. CJ-2005-7459 (the “Civil Litigation”), seeking the
return of the Wrongfully Issued Shares and the Defendants’ receipt of proceeds
from the sale of those shares.
In
the
Civil Litigation we alleged that Mr. Pino individually and through various
affiliated entities and co-conspirators, including the Wall Street Group,
L.L.C., prepared or possessed 20 or more common stock certificates purportedly
representing 235,000,000 shares of our common stock, the previously referred
to
Wrongfully Issued Shares, that were distributed to various individuals and
entities, including the other Defendants. We could not determine if, in addition
to the 235,000,000 shares, any additional shares were wrongfully issued.
Capital
Growth Financial, L.L.C. and JH Darbie & Co., holders of our common
stock, intervened in the Civil Litigation (the “Interveners”) and alleged that
we negligently hired the Defendants and negligently supervised their actions
and
activities, and asserted Oklahoma and federal securities fraud and
failure-to-register claims against the Defendants and us.
In
conjunction with the Civil Litigation, we reached an agreement with JH
Darbie & Co., under which we delivered 25,025,000 common stock shares
to JH Darbie & Co. to be held pending settlement or conclusion of the
Civil Litigation. These shares were delivered to JH Darbie & Co. to
satisfy the requirements of Depository Trust Company (“DTC”) until common stock
shares eligible to be resold without restriction could be delivered by JH
Darbie & Co. to cover its short position in our common stock.
Furthermore, JH Darbie & Co. placed in trust $72,500 to be used to pay
the costs incurred by us in the litigation.
On
January 11, 2006, the Court entered an Order Approving Settlement Agreement
(the “Order”). As a result of issuance of the Order, a settlement agreement (the
“Settlement Agreement”) became binding upon the Company and the Defendants Mario
Pino, Barkev Kibarian, Juan Carlos Medina, Wall Street Group, L.L.C.,
Clearstock, Inc., Sam Deeb (“Deeb”), Global Consulting Group., DealFlo,
L.L.C., and Intelligent Message Distributors (the “Settling Defendants”) and the
Interveners with an effective date of December 8, 2005.
In
accordance with the Settlement Agreement, our claims against the Settling
Defendants and the claims of the Settling Defendants against us were resolved
by
the exchange of releases of claims, a release of the Wrongfully Issued Shares
and payments to us in the aggregate sum of $171,546 from funds held at Capital
Growth Financial, L.L.C. and the further agreement to pay an additional $277,093
by Capital Growth. Furthermore, the claims of the Interveners against us were
released for the issuance of 25,025,000 shares of our common stock to JH
Darbie & Co. and 219,723,000 shares of our common stock to Capital
Growth Financial, L.L.C. for an aggregate sum of 244,748,000 common stock shares
(the “Newly Issued Shares”). These shares were required to be deposited with DTC
by JH Darbie & Co. and Capital Growth Financial, L.L.C. in satisfaction
of their short positions with companies through which securities purchase and
sale transactions are cleared on behalf of JH Darbie & Co. and Capital
Growth Financial, L.L.C. The Newly Issued Shares were issued in accordance
with
the registration exemption afforded under Section 3(a)(10) of the
Securities Act.
Defendants
Pino, Medina, Kibarian, Global Consulting Group, Intelligent Message
Distributors and Wall Street Group, L.L.C. agreed to indemnify and hold harmless
the Company against all actions, suits, proceedings, demands, and assessments
brought by any past, present or future holder of our common stock in connection
with the Settlement Agreement and our various claims settled in the Settlement
Agreement and any associated judgments, attorney’s fees, costs and
expenses.
In
addition, the Settlement Agreement Deeb, Intelligent Message Distributors,
and
Wall Street Group/Mario Pino acknowledged that they owed to BCIT approximately
$16,500, $36,800, and $73,000, respectively, and agreed to pay such amounts
to
the Company as partial consideration for the issuance of the Newly Issued Shares
to JH Darbie & Co. and Capital Growth Financial, L.L.C. Each of Deeb,
Intelligent Message Distributors and Wall Street Group, L.L.C./Mario Pino have
failed to pay such amounts, and the Company is pursuing collection of the
same.
The
Defendants, Grace Trust, Charles Weller, and Felica Morales (“Non-Settling
Defendants”), did not execute the settlement agreement and accordingly did not
settle the claims asserted against them in the Civil Litigation. In February
2006, we received judgments against the Non-Settling Defendants, other than
The
Grace Trust, and are currently pursuing collection of these
judgments.
Stock
Certificate Litigation
We
filed
a lawsuit (the “Stock Certificate Litigation”) on April 11, 2007, against
approximately 1,500 shareholders alleging that they hold invalid stock
certificates that were wrongfully issued and distributed by Mr. Pino and others,
which represent the remaining outstanding Wrongfully Issued Shares that we
are
currently able to identify from the Pino Litigation. The style of the lawsuit
is
Bancorp
International Group, Inc. v. Michael W. Cannan, et al.,
Case No.
CJ-2007-3181, District Court of Oklahoma County, State of Oklahoma. The lawsuit
requested the court to rule that the stock certificates held by the defendants
representing the Wrongfully Issued Shares be declared void and that we be
awarded damages and attorney’s fees and costs in connection with the Stock
Certificate Litigation. It was our intent that the Stock Certificate Litigation
would determine which certificates and related shares of common stock are valid
and which are not valid. In May 2007, we dismissed the Stock Certificate
Litigation without prejudice to the Company. The Board of Director determined
that continuing the Stock Certificate Litigation was becoming cost-prohibitive.
During
the six months ended June 30, 2007, we did not sell any unregistered shares
of
our common stock.
We
are
not in default on any senior securities.
During
the six months ended June 30, 2007, no matters were submitted to the holder
of
our common stock shares, through the solicitation of proxies or
otherwise.
We
do not
have any information required to be disclosed in a repot on Form 8-K during
the
six months ended June 30, 2007 that has not been previously reported on Form
8-K.
|
Exhibit
|
|
Description
|
|
|
|
Rule
13a - 14(a)/15d - 14(a) Certification, as adopted pursuant to Section
302
of the Sarbanes Oxley Act of 2002
|
|
|
|
|
|
|
|
Certification
of the Chief Executive Officer and Acting Chief Financial Officer
pursuant
to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of
the
Sarbanes Oxley Act of 2002
|
SIGNATURES
Pursuant
to the requirements of the Securities Exchange Act of 1934, the Registrant
has
duly caused this report to be signed on its behalf by the undersigned hereunto
duly authorized.
|
BANCORP INTERNATIONAL GROUP, INC.
|
|
|
|
|
|
DATE:
December 7, 2007
|
/s/
THOMAS MEGAS
|
|
|
Thomas
Megas
|
|
|
Chief Executive Officer
|
|
|
Acting Chief Financial Officer
|
Index
to
Consolidated Financial Statements
|
Report
of Independent Registered Public Accounting Firm - for the three
months
Ended June 30, 2007 and 2006
|
F-1
|
|||
|
Balance
Sheets
|
F-2
|
|||
|
Statements
of Operations
|
F-3
|
|||
|
Statements
of Shareholders' Equity (Deficit)
|
F-4
|
|||
|
Statements
of Cash Flows
|
F-5
|
|||
|
Notes
to Financial Statements
|
F-6-8
|
LIEBERMAN
& ASSOCIATES P.A.
CERTIFIED
PUBLIC ACCOUNTANT
|
800 E. Cypress Creek Rd. Suite 200 Ft. Lauderdale, FL 33334
|
Office
(954) 491-0411
|
Fax
(954) 491-0211
|
|
Auditing
|
Accounting
|
Taxes
|
|
Condominium Accounting
|
Financial Management
|
Consulting
|
The
Board
of Directors
Bancorp
International Group, Inc.
3126
South Blvd.
Suite
264
Edmond,
OK 73013
Dear
Board of Directors,
We
have
reviewed the accompanying Balance Sheet of Bancorp International Group, Inc.
as
of June 30, 2007, and June 30, 2006 and the related statements of income,
stockholders’ equity and comprehensive income and cash flows for the six months
then ended. These financial statements are the responsibility of the company’s
management.
We
conducted our review in accordance with the standards of the Public Company
Accounting Oversight Board (United States). A review of interim financial
information consists principally of applying analytical procedures and making
inquires of persons responsible for the financial and accounting matters. It
is
substantially less in scope than an audit conducted in accordance with standards
of the Public Company Accounting Oversight Board (United States), the objective
of which is the expression of an opinion regarding the financial statements
taken as a whole. Accordingly, we do not express such an opinion.
Based
on
our review, we are not aware of any material modifications that should be made
to the accompanying interim financial statements for them to be in conformity
with accounting principles generally accepted in the United States of America.
/s/
Lieberman & Associates
Lieberman
& Associates P.A.
Ft.
Lauderdale, Florida
August
8,
2007
|
American
Institute of Certified Public Accountants ▪ Public Company Accounting
Oversite Board Florida Institute
of
Certified Public Accountants ▪
Certified Fraud Examiners ▪ American Institute of Certified
Bookkeepers
|
Bancorp
International Group, Inc.
Statement
of Financial Position
As
of June 30,
|
2007
|
2006
|
||||||
|
Assets
|
|||||||
|
Cash
|
$
|
|
$
|
1,128
|
|||
|
Subscription
Receivable
|
267,549
|
270,052
|
|||||
|
Total
Assets
|
$
|
268,044
|
$
|
271,180
|
|||
|
Liabilities
and Stockholders' Equity
|
|||||||
|
Accounts
Payable and Accrued Expenses
|
$
|
193,722
|
$
|
285,864
|
|||
|
Current
portion of Long Term Debt
|
203,816
|
201,402
|
|||||
|
Total
Liabilities
|
397,538
|
487,266
|
|||||
|
Stockholders'
Equity
|
|||||||
|
Preferred
Stock Series A $.0001 par value, 15,000,000 share authorized, issued
and
outstanding at June 30, 2007 and June 30, 2006.
|
1,500
|
1,500
|
|||||
|
Common
Stock, $.0001 par value, 2,000,000,000 shares authorized, 1,075,084,637
shares issued and outstanding at June 30, 2007 and June 30, 2006.
|
107,509
|
107,509
|
|||||
|
Additional
Paid in Capital
|
4,617,519
|
4,617,519
|
|||||
|
Accumulated
Deficit
|
(4,856,022
|
)
|
(4,942,613
|
)
|
|||
|
Total
Stockholders' Equity
|
(129,494
|
)
|
(216,085
|
)
|
|||
|
Total
Liabilities and Stockholders' Equity
|
$
|
268,044
|
|||||