U. S. Securities and Exchange Commission
Washington, D. C. 20549
FORM 10-KSB
[X] ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2004
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from _____________ to ____________
Commission File No. 333-60906
A.C.T. HOLDINGS, INC.
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(Name of Small Business Issuer in its Charter)
NEVADA 87-0656515
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(State or Other Jurisdiction of (I.R.S. Employer)
incorporation or organization) Identification No.)
9005 Cobble Canyon Lane
Sandy, Utah 84093
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(Address of Principal Executive Offices)
Issuer's Telephone Number: (801) 942-0555
Securities Registered under Section 12(b) of the Exchange Act: None
Securities Registered under Section 12(g) of the Exchange Act: $.001 par value
common stock
Check whether the Company (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such
shorter period that the Company was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days.
(1) Yes X No (2) Yes X No
--- --- --- ---
Check if there is no disclosure of delinquent files 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 Company'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. [ ]
State Company's revenues for its most recent fiscal year: December 31,
2004 - $2,500.
State the aggregate market value of the voting stock of the Company held
by non-affiliates computed by reference to the price at which the stock was
sold, or the average bid and asked prices of such stock, as of a specified
date within the past 60 days.
January 27, 2005 - $408,659. There are presently approximately 3,405,490
shares of common voting stock of our Company that are beneficially owned by
non-affiliated persons. There is a limited public market for our common
stock; this valuation is based upon the offering price of our common stock in
our 2001 public offering pursuant to Form SB-2 that was filed with the
Securities and Exchange Commission on May 14, 2001, and which became effective
on August 10, 2001. See Part III, Item 1.
(ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS
DURING THE PAST FIVE YEARS)
Check whether the Registrant has filed all documents and reports required
to be filed by Section 12,13, or 15(d) of the Exchange Act after the
distribution of securities under a plan confirmed by a court. Yes No
--- ---
Not applicable.
(APPLICABLE ONLY TO CORPORATE ISSUERS)
State the number of shares outstanding of each of the Company's classes
of common equity, as of the latest practicable date:
January 27, 2005 - 5,480,490 shares
DOCUMENTS INCORPORATED BY REFERENCE
A description of "Documents Incorporated by Reference" is contained
in Part III, Item I.
Transitional Small Business Issuer Format Yes X No
--- ---
PART I
Item 1. Description of Business.
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Business Development.
---------------------
A.C.T. Holdings, Inc. (our "Company" or "ACT" or "we," "our," "us"
or words of similar import) was formed on May 19, 2000. We were organized for
the purpose of marketing and selling Kachina dolls in the $6,000 to $8,000
price range. A Kachina doll is a carved wooden doll that resembles a Kachina
or benevolent spirit recognized by the Hopi Indians of the American Southwest.
In May, 2000, 4,150,000 shares of our common stock were issued to
our two founders who were directors and executive officers, 2,075,000 shares
to each (all computations herein reflect an 8.3 for one dividend at November
8, 2004, that is referenced below), in consideration of the aggregate sum of
$25,000 or $12,500 from each.
On May 14, 2001, we filed an SB-2 Registration Statement with the
Securities and Exchange Commission to offer and sell 1,660,000 shares of our
common stock at an offering price of $0.12 per share. This Registration
Statement became effective on August 10, 2001, and we closed the offering
after the sale of 662,340 shares on or about November 8, 2001.
We filed an 8-A with the Securities and Exchange Commission on May
28, 2003, which registered our common stock under Section 12(g) of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"). See Part
III, Item 13.
On September 26, 2003, we filed an S-8 Registration Statement to
issue an aggregate of 668,150 of our shares of common stock for services under
two written compensation agreements. See Part III, Item 13.
On November 8, 2004, we effected a forward split, by dividend, of
our outstanding common stock on a basis of 8.3 for one, while retaining the
current par value of $0.001 and authorized shares, and with appropriate
adjustments in the capital accounts of our Company. The dividend required a
mandatory exchange of certificates. Our OTC Bulletin Board symbol was changed
from "TWMK" to "ACTH" as a result. All computations herein take into account
this dividend.
On December 15, 2004, we amended our By-Laws to allow for the
majority of stockholders to take action without a meeting, in lieu of the
consent of all stockholders for any stockholder action without a meeting. A
copy of the actual Bylaw amendment is contained in our 8-K Current Report
dated December 15, 2004, that was filed with the Securities and Exchange
Commission on December 29, 2004, and which is incorporated herein by
reference. See Part III, Item 13.
On December 30, 2004, we filed with the Nevada Secretary of State
a Certificate of Amendment changing our name from "Two Moons Kachinas, Inc."
to "A.C.T. Holdings, Inc." This action was taken pursuant to Article X of our
Articles of Incorporation, as amended, which permits our Board of Directors to
change the Company's name without stockholder approval. A copy of the
Certificate of Amendment was filed with our 8-K Current Report dated December
30, 2004, that was filed with the Securities and Exchange Commission on
January 3, 2005, and which is incorporated herein by reference. See Part III,
Item 13.
Subsequent Events.
-----------------
Effective January 3, 2005, we and our newly formed wholly-owned
subsidiary entered into an Agreement and Plan of Merger (the "Merger
Agreement") with Advanced Cell Technology, Inc., a Delaware corporation
("Advanced Cell"). The Merger Agreement calls for us to issue up to
17,736,175 shares of our common stock to the shareholders of Advanced Cell for
100% of the outstanding equity securities of Advanced Cell and whereby
Advanced Cell would become a wholly-owned subsidiary of ours. The Merger
Agreement is conditioned upon Advanced Cell raising at least $3,000,000 in a
private offering to "accredited investors" prior to closing. The acquisition,
if complete, would result in a change of control of our Company and a change
in management would also occur. The proposed acquisition is subject to
certain other terms and conditions. Final consummation of the proposed
acquisition is not guaranteed. Our 8-K Current Report dated December 30,
2004, that was filed with the Securities and Exchange Commission on January 4,
2005, and which is incorporated herein by reference, contains a copy of the
Merger Agreement, for additional information our the proposed acquisition.
See Part III, Item 13. If the Merger Agreement is finalized and closed, we
will cease our current operations of selling Kachinas dolls and undertake as a
successor, the current and intended business operations of Advanced Cell.
Advanced Cell is a biotechnology company in the emerging field of regenerative
medicine. No assurance can be given that this Merger Agreement will be
completed.
If the Merger Agreement with Advanced Cell closes, simultaneous with
such closing, certain persons who were pre-Merger Agreement stockholders of
our Company have agreed to sell approximately 4,980,000 shares of our common
stock to certain other persons who were either instrumental in introducing
Advanced Cell to us or who were introduced to these selling stockholders by
those persons who introduced Advanced Cell to us. Certain of the principal
selling stockholders who have agreed to sell these shares are required to
execute and deliver a Lock-Up/Leak-Out Agreement that covers the remaining
shares held by these persons and all buyers of these shares will be required
to execute and deliver a Lock-Up/Leak-Out Agreement concerning the shares that
they may purchase. Of these shares, 1,921,667 will be sold by David C.
Merrell, the Company's President, Secretary, Treasurer and sole director
(1,106,256 of these shares will be cancelled to the treasury); and
the purchasers of these securities will receive "restricted securities," with
a new holding period that commenced on the completion of the closing of the
Merger Agreement, along with being subject to resales pursuant to a
Lock-up/Leak-Out Agreement. The Lock-Up/Leak-Out Agreements require all
resales of the common stock covered thereby to be made in compliance with the
"brokers' transactions" and "manner of sale" requirements of Rule 144, and
limit resales to no more than 1/12th of such holders' holdings in any monthly
period of such 12 month period, on a non-cumulative basis.
Business.
---------
We principally market Hopi Kachina Dolls. Each Kachina doll
represents a different Kachina, or benevolent spirit, who lives among the Hopi
for a six month period each year, generally from February to July. The
Kachina tradition is a religious practice that is unique only to the Pueblo
tribes of Arizona and New Mexico, which include the Hopi.
The Pueblo Indians believe that there are more than 350 Kachinas, or
ancestral spirits, who act as intermediaries between God and man. These
spirits may be animals, plants or earth. Well-known Kachinas include Mongwu,
the Great Horned Owl Kachina; Kwahu, the Eagle Kachina; Hon, the Bear Kachina;
Patung, the Squash Kachina and Koyemsi, the Mudhead Kachina. Each tribe has
its own variations.
During religious ceremonies, male members of the tribe wear masks
and costumes representing a particular Kachina. During the ceremony the
tribes believe that the Kachina actually inhabits the participant's body. The
dolls were initially created by Hopi men and given to children of the tribal
villages during the ceremonial performances.
Kachina dolls are carved of dried cottonwood roots to represent the
men who dance in costume as Kachina spirits. Because it draws moisture and
life from the earth, the carvers believe that the cottonwood root has a
spiritual quality. The carvers take only roots that are found broken from the
tree; never from live trees.
Originally, Kachina dolls were carved with flint knives and sanded
and finished with pieces of sandstone. The dolls were then painted with
mineral paint and adorned with feathers, shells, fur or leather. Most dolls
were carved from several pieces of wood, with the head and limbs being glued
to the torso.
In recent years, the style of carving has evolved. Today's dolls
feature intricate detail and are made with wood burning instruments, Dremel
tools and other modern tools. A Dremel tool is an electric carving tool that
has a spinning tip onto which bits of different shapes and sizes can be added
for different effects. Since the federal government banned the use of
endangered species, feathers are now carved into the doll. Carvers make their
dolls out of one piece of cottonwood and often spend several months on a
single doll. It has been the experience of our President, David C. Merrell,
that as collectors have begun to realize the beauty of these creations, demand
and prices have increased.
The Kachina dolls that we have marketed are unique works of
collectable art. We specialize in the higher end of the market, with prices
generally ranging from $6,000 to $8,000.
Principal Products or Services and their Markets.
-------------------------------------------------
There are over 350 varieties of Kachinas and our Company will
specialize in dolls in the $6,000 to $8,000 price range. All Kachina dolls
will be signed by the artist, and will include the name of the Kachina and the
village where the artist is from.
We also sell jewelry.
Distribution Methods of our Products or Services.
-------------------------------------------------
We market and distribute the Kachinas and our jewelry in two ways;
first, through our web site with multiple pictures and descriptions of each
piece, and second, by placing a few pieces at a time on an Internet auction
site such as E-bay or on consignment in retail speciality stores. Our sole
officer also uses a computer at his home office to monitor our corporate web
site.
In December, 2001, our Company acquired our first inventory the
remainder of which can be viewed on our web site, www.twomoonskachinas.com,
and entered into consignment relationships with Crosby Collections in Park
City, Utah, and Payne Anthony's in Trolley Square in Salt Lake City, Utah. We
attended in early 2003 the Marin County American Indian Arts Show which was
held on February 21-23, 2003; we also attended shows in San Francisco and Del
Mar, California; and we are actively researching the availability of similar
events to showcase our products.
Competition.
------------
Our management believes that there is substantial competition for
the sale of Kachina dolls, but that most of the competition is for Kachinas
that sell for under $300. In our President's 10 years of experience as a
Kachina collector, he has found that most Kachinas are sold in the Southwest
in trading post stores to tourists. There are also many Internet web sites
and Internet auctions that offer Kachinas. He believes that the higher priced
Kachinas that we will offer are primarily sold in art galleries. We do not
expect our competitive position within our industry to be significant, either
now or in the foreseeable future.
Sources and Availability of Raw Materials.
------------------------------------------
We plan to acquire Kachinas for sale through the help of Indian
traders who have dealt with Hopi carvers for many years. David C. Merrell,
our President, has contacts that will allow us to purchase Kachinas at below
wholesale prices. There are many Hopi Kachina carvers, but only a limited
number who produce the quality of Kachina that our Company markets. However,
we believe that our ability to purchase inventory will be limited more by lack
of funding than by the limited number of carvers.
We do not currently have any binding contracts for the supply of
Kachinas.
Dependence On One or a Few Major Customers.
-------------------------------------------
We have not undertaken any studies of the size of the market for
Kachinas. However, we believe that there is a large enough market, both in
the U.S. and Europe, that we will not have one or a few major customers. We
expect our customers to be numerous, coming mainly from the Internet and from
around the world. We sell and plan to sell and ship our products both
domestically and internationally.
Patents, Trademarks, Licenses, Franchises, Concessions, Royalty Agreements or
Labor Contracts.
----------------
We have obtained the domain name "twomoonskachinas.com."
Governmental Approval of Principal Products or Services.
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There are no laws pertaining to the purchase or sale of Kachina
Dolls.
Effects of Existing or Probable Governmental Regulations.
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Federal Legislation.
--------------------
It is federal crime for any person to offer, display for sell, or
sell any item in a way that falsely suggests that it is produced by Native
Americans. For a corporation, the first knowing violation may result in a
fine of up to $1,000,000, and for second violations, the fine may be as much
as $5,000,000. Federal law also permits the U. S. Attorney General and Native
American tribes to bring a civil action against any person who misrepresents
an item as being produced by a Native American. The court may award
injunctive relief, and the greater of: (i) treble damages; or (ii) $1000 for
each day on which the offer, display for sale, or sale continues. The court
may also award punitive damages and attorney's fees and costs of the lawsuit.
We will use our best efforts to make sure that we buy only Native American
goods. However, any violation of these statutes may significantly hurt our
operations. Other than any potential violation of these statutes, we do not
believe that existing governmental regulations will have any significant
effect on our business, other than the usual requirements for a business
license and payment of applicable taxes. Management is not aware of any
government restrictions on the export of cottonwood products.
Sarbanes-Oxley Act.
-------------------
On July 30, 2002, President Bush signed into law the Sarbanes-Oxley
Act of 2002 (the "Sarbanes-Oxley Act"). The Sarbanes-Oxley Act imposes a wide
variety of new regulatory requirements on publicly-held companies and their
insiders. Many of these requirements will affect us. For example:
* Our chief executive officer and chief financial officer must
now certify the accuracy of all of our periodic reports that contain financial
statements;
* Our periodic reports must disclose our conclusions about the
effectiveness of our disclosure controls and procedures; and
* We may not make any loan to any director or executive officer
and we may not materially modify any existing loans.
The Sarbanes-Oxley Act has required us to review our current
procedures and policies to determine whether they comply with the
Sarbanes-Oxley Act and the new regulations promulgated thereunder. We will
continue to monitor our compliance with all future regulations that are
adopted under the Sarbanes-Oxley Act and will take whatever actions are
necessary to ensure that we are in compliance.
Penny Stock.
------------
Our common stock is "penny stock" as defined in Rule 3a51-1 of the
Securities and Exchange Commission. Penny stocks are stocks:
* with a price of less than five dollars per share;
* that are not traded on a "recognized" national exchange;
* whose prices are not quoted on the NASDAQ automated quotation
system; or
* in issuers with net tangible assets less than $2,000,000, if
the issuer has been in continuous operation for at least three years, or
$5,000,000, if in continuous operation for less than three years, or with
average revenues of less than $6,000,000 for the last three years.
Section 15(g) of the Exchange Act and Rule 15g-2 of the Securities
and Exchange Commission require broker/dealers dealing in penny stocks to
provide potential investors with a document disclosing the risks of penny
stocks and to obtain a manually signed and dated written receipt of the
document before making any transaction in a penny stock for the investor's
account. You are urged to obtain and read this disclosure carefully before
purchasing any of our shares.
Rule 15g-9 of the Securities and Exchange Commission requires
broker/dealers in penny stocks to approve the account of any investor for
transactions in these stocks before selling any penny stock to that investor.
This procedure requires the broker/dealer to:
* get information about the investor's financial situation,
investment experience and investment goals;
* reasonably determine, based on that information, that
transactions in penny stocks are suitable for the investor and that the
investor can evaluate the risks of penny stock transactions;
* provide the investor with a written statement setting forth
the basis on which the broker/dealer made his or her determination; and
* receive a signed and dated copy of the statement from the
investor, confirming that it accurately reflects the investors' financial
situation, investment experience and investment goals.
Compliance with these requirements may make it harder for our
stockholders to resell their shares.
Reporting Obligations.
----------------------
Section 14(a) of the Exchange Act requires all companies with
securities registered pursuant to Section 12(g) of the Exchange Act to comply
with the rules and regulations of the Securities and Exchange Commission
regarding proxy solicitations, as outlined in Regulation 14A. Matters
submitted to stockholders of our Company at a special or annual meeting
thereof or pursuant to a written consent will require our Company to provide
our stockholders with the information outlined in Schedules 14A or 14C of
Regulation 14; preliminary copies of this information must be submitted to the
Securities and Exchange Commission at least 10 days prior to the date that
definitive copies of this information are forwarded to our stockholders.
We are also required to file annual reports on Form 10-KSB and
quarterly reports on Form 10-QSB with the Securities Exchange Commission on a
regular basis, and will be required to timely disclose certain material events
(e.g., changes in corporate control; acquisitions or dispositions of a
significant amount of assets other than in the ordinary course of business;
and bankruptcy) in a current report on Form 8-K.
Small Business Issuer.
----------------------
The integrated disclosure system for small business issuers adopted
by the Securities and Exchange Commission in Release No. 34-30968 and
effective as of August 13, 1992, substantially modified the information and
financial requirements of a "Small Business Issuer," defined to be an issuer
that has revenues of less than $25,000,000; is a U.S. or Canadian issuer; is
not an investment company; and if a majority-owned subsidiary, the parent is
also a small business issuer; provided, however, an entity is not a small
business issuer if it has a public float (the aggregate market value of the
issuer's outstanding securities held by non-affiliates) of $25,000,000 or
more. We are deemed to be a "small business issuer."
The Securities and Exchange Commission, state securities commissions
and the North American Securities Administrators Association, Inc. ("NASAA")
have expressed an interest in adopting policies that will streamline the
registration process and make it easier for a small business issuer to have
access to the public capital markets.
Cost and Effect of Compliance with Environmental Laws.
------------------------------------------------------
Management does not believe that compliance with environmental laws
will require any of our resources.
Research and Development Expenses.
----------------------------------
There are no research and development requirements, other than
developing a market on the Internet.
Number of Employees.
--------------------
Management of our Company works on an as needed basis; we have no
employees. If and when needed, one full time employee will be hired.
Item 2. Description of Property.
------------------------
We do not currently own any property. Our executive office is the
home of David C. Merrell, our President, and is provided rent free. We use a
third-party web hosting service to house and maintain our web site.
Item 3. Legal Proceedings.
------------------
We are not a party to any pending legal proceeding. To the
knowledge of management, no federal, state or local governmental agency is
presently contemplating any proceeding against us. No director, executive
officer or affiliate of ours or owner of record or beneficially of more than
five percent of our common stock is a party adverse to us or has a material
interest adverse to us in any proceeding.
Item 4. Submission of Matters to a Vote of Security Holders.
----------------------------------------------------
We did submit the following matters to a vote of our shareholders
during the calendar year ended December 31, 2004: we filed a Definitive
Information Statement with the Securities and Exchange Commission on February
24, 2004, regarding two amendments to our Articles of Incorporation that
increased our authorized shares by adding a class of preferred stock; and
allowed our Board of Directors to change our name without stockholder
approval. See our Definitive Information Statement that is incorporated
herein by reference in Part III, Item 13.
PART II
Item 5. Market for Common Equity and Related Stockholder Matters.
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Market Information.
-------------------
Pink Sheets LLC provided the following quotations. They do not
represent actual transactions and they do not reflect dealer markups,
markdowns or commissions.
STOCK QUOTATIONS
CLOSING BID
Quarter ended: High Low
-------------- ---- ---
March 31, 2003 0.50 0.50
June 30, 2003 0.50 0.50
September 30, 2003 0.50 0.50
December 31, 2003 0.52 0.50
March 31, 2004 0.60 0.52
June 30, 2004 0.62 0.60
September 30, 2004 0.64 0.62
October 1, 2004 through
November 8, 2004 0.75 0.64
November 9, 2004 through
December 31, 2004 0.12 0.10
(After 8.3 for 1 split)
Since September 24, 2002, our common stock has been quoted on the OTC
Bulletin Board of the National Association of Securities Dealers, Inc.
("NASD"). Our current symbol is "ACTH." No assurance can be given that any
market for our Company's common stock will develop or be maintained. If a
public market ever develops in the future, the sale of "unregistered" and
"restricted" shares of common stock pursuant to Rule 144 of the Securities and
Exchange Commission by our current stockholders may have a substantial
negative impact on any such public market.
There are no outstanding options, warrants or calls to purchase any
of our authorized shares; however, subject to the closing of the Merger
Agreement with Advanced Cell, certain warrants of our Company have been
authorized to be issued. See the heading "Subsequent Events" of the heading
"Business Development" of Part I, Item 1, above.
Future sales of the "unregistered" and "restricted" shares of common
stock may decrease the value of our common stock in any public market that may
develop for our common stock. See Part III, Item 11, "Security Ownership of
Certain Beneficial Owners and Management," below.
Recent Sales of Unregistered Securities.
----------------------------------------
The following table provides information about all "unregistered"
and "restricted" securities that we have sold since inception, and which were
not registered under the Securities Act of 1933, as amended (the "Securities
Act"):
Number
Date of Aggregate
Name of Owner Acquired Shares* Consideration
------------- -------- ------ ------------
David C. Merrell 5-19-00 2,075,000 $12,500
Common
R. Kip Paul 5-19-00 2,075,000 $12,500
Common
Management believed that Messrs. Merrell and Paul were "accredited
investors" as that term is defined under applicable federal and state
securities laws, rules and regulations, because they were directors and
executive officers of our Company at the time of the offer and sale of these
securities. Management also believed that the offer and sale of these shares
of common stock was exempt from the registration requirements of Section 5 of
the Securities Act pursuant to Section 4(2) thereof, Rule 506 of Regulation D
promulgated thereunder by the Securities and Exchange Commission. Section 18
of the Securities Act preempted state registration for offerings to
"accredited investors."
Holders.
--------
The number of record holders as of January 27, 2005, was
approximately 60, with 5,480,490 shares outstanding.
Dividends.
----------
We have not declared any cash dividends with respect to our common
stock, and do not intend to declare dividends in the foreseeable future. There
are no material restrictions limiting, or that are likely to limit, our
ability to pay dividends on our securities.
Securities Authorized for Issuance under Equity Compensation Plans.
-------------------------------------------------------------------
The table has not been included because we have not adopted any such
plans; however, subject to the closing of the Merger Agreement with Advanced
Cell, the Stock Option Plan of Advanced Cell with be adopted as our Stock
Option Plan. See the heading "Subsequent Events" of the heading "Business
Development" of Part I, Item 1, above.
Item 6. Management's Discussion and Analysis or Plan of Operation.
----------------------------------------------------------
Plan of Operation.
------------------
Subject to whether the Merger Agreement with Advanced Cell is
completed as discussed under the heading "Subsequent Events" of the heading
"Business Development" of Part I, Item 1, above, our plan of operation for the
next 12 months is to continue sales of Kachina dolls and jewelry, both through
our own web site and through Internet auction sites and consignment to
specialty stores.
From our public offering proceeds, we hired a web site designer to
design our retail web site, which became operational in December, 2001. We
then purchased approximately 10 collector-quality Kachinas from jobbers, who
purchased Kachinas directly from the carvers, at below wholesale prices of
$1,200 to $1,800. In some cases, we will purchase Kachinas directly from
carvers in the $1,000 to $2,000 price range.
We have placed photographs of the Kachinas on our web site and, if
sales are slow after one month, we will put one or two Kachinas up for
auction, with a minimum bid price, on an Internet auction site. We also have
arrangements with two retail specialty stores, we attended the Marin County
American Indian Arts Show which was held on February 21-23, 2003, and shows in
San Francisco and Del Mar, California, and are actively researching the
availability of similar events to showcase our products.
As we sell Kachinas, we plan to use the proceeds to buy additional
Kachinas or jewelry for resale. Our President provides us with rent-free
office space, and our management has verbally agreed not to accept any
compensation until we are operating profitably. Mr. Merrell has contacts
through which he can purchase Kachinas at below wholesale prices. We plan to
keep our expenses low and to keep our inventory rolling over.
Mr. Merrell is well-informed about Kachinas and plan to stay up-
to-date on current trends through reading industry publications, visiting
trade shows and communicating with personal contacts.
Item 7. Financial Statements.
---------------------
A.C.T. HOLDINGS, INC. AND SUBSIDIARY
(Formerly Two Moons Kachinas, Corp.)
[A Development Stage Company]
CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2004
A.C.T. HOLDINGS, INC. AND SUBSIDIARY
(Formerly Two Moons Kachinas, Corp.)
[A Development Stage Company]
CONTENTS
PAGE
Report of Independent Registered Public
Accounting Firm 1
Consolidated Balance Sheet, December 31, 2004 2
Consolidated Statements of Operations, for the
years ended December 31, 2004 and 2003
and for the period from inception on
May 19, 2000 through December 31, 2004 3
Consolidated Statement of Stockholders' Equity,
from inception on May 19, 2000 through
December 31, 2004 4 - 5
Consolidated Statements of Cash Flows, for the
years ended December 31, 2004 and 2003
and for the period from inception on
May 19, 2000 through December 31, 2004 6
Notes to Consolidated Financial Statements 7 - 12
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
Board of Directors
A.C.T. HOLDINGS, INC. AND SUBSIDIARY
(Formerly Two Moons Kachinas, Corp.)
Sandy, Utah
We have audited the accompanying consolidated balance sheet of A.C.T.
Holdings, Inc. and Subsidiary [a development stage company] as of December 31,
2004 and the related consolidated statements of operations, stockholders'
equity (deficit) and cash flows for the years ended December 31, 2004 and 2003
and for the period from inception on May 19, 2000 through December 31, 2004.
These financial statements are the responsibility of the Company's management.
Our responsibility is to express an opinion on these financial statements
based on our audit.
We 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
financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our
audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the consolidated financial position of A.C.T. Holdings,
Inc. and Subsidiary [a development stage company] as of December 31, 2004 and
the consolidated results of their operations and their cash flows for the
years ended December 31, 2004 and 2003 and for the period from inception on
May 19, 2000 through December 31, 2004 in conformity with accounting
principles generally accepted in the United States of America.
The accompanying financial statements have been prepared assuming the Company
will continue as a going concern. As discussed in Note 7 to the financial
statements, the Company has not yet been successful in establishing profitable
operations. Further, the Company has current liabilities in excess of current
assets. These factors raise substantial doubt about the ability of the
Company to continue as a going concern. Management's plans in regards to
these matters are also described in Note 7. The financial statements do not
include any adjustments that might result from the outcome of these
uncertainties.
/S/Pritchett, Siler & Hardy
PRITCHETT, SILER & HARDY, P.C.
Salt Lake City, Utah
January 17, 2005
A.C.T. HOLDINGS, INC. AND SUBSIDIARY
(Formerly Two Moons Kachinas, Corp.)
[A Development Stage Company]
CONSOLIDATED BALANCE SHEET
ASSETS
December 31,
2004
___________
CURRENT ASSETS:
Cash $ 2,742
Interest receivable 4
Inventory 50,500
Prepaid expense 123
___________
Total Current Assets 53,369
PROPERTY AND EQUIPMENT, net 1,856
OTHER ASSETS:
Website development, net -
___________
$ 55,225
___________
LIABILITIES AND STOCKHOLDERS' EQUITY(DEFICIT)
CURRENT LIABILITIES:
Accounts payable $ 54,386
Advances from shareholder 6,653
___________
Total Current Liabilities 61,039
___________
STOCKHOLDERS' EQUITY (DEFICIT):
Preferred stock, $.001 par value,
5,000,000 shares authorized,
no shares issued and outstanding -
Common stock, $.001 par value,
50,000,000 shares authorized,
5,480,490 shares issued and
outstanding 5,480
Capital in excess of par value 108,580
Deficit accumulated during the
development stage (119,874)
___________
Total Stockholders' Equity (Deficit) (5,814)
___________
$ 55,225
___________
The accompanying notes are an integral part of this consolidated financial
statement.
F-2
A.C.T. HOLDINGS, INC. AND SUBSIDIARY
(Formerly Two Moons Kachinas, Corp.)
[A Development Stage Company]
CONSOLIDATED STATEMENTS OF OPERATIONS
For the From Inception
Year Ended on May 19,
December 31, 2000 Through
______________________ December 31,
2004 2003 2004
__________ __________ ____________
REVENUE $ 2,500 $ 3,200 $ 13,376
COST OF GOODS SOLD 2,000 2,500 9,000
__________ __________ ____________
GROSS PROFIT 500 700 4,376
__________ __________ ____________
OPERATING EXPENSES:
Selling - - 5,144
General and administrative 53,022 30,462 120,009
__________ __________ ____________
Total Operating Expenses 53,022 30,462 125,153
__________ __________ ____________
LOSS FROM OPERATIONS BEFORE
OTHER INCOME (52,522) (29,762) (120,777)
OTHER INCOME:
Interest income 27 41 903
__________ __________ ____________
LOSS BEFORE INCOME TAXES (52,495) (29,721) (119,874)
CURRENT TAX EXPENSE - - -
DEFERRED TAX EXPENSE - - -
__________ __________ ____________
NET LOSS $ (52,495) $ (29,721) $ (119,874)
__________ __________ ____________
LOSS PER COMMON SHARE $ (.01) $ (.01) $ (.03)
__________ __________ ____________
The accompanying notes are an integral part of these consolidated financial
statements.
F-3
A.C.T. HOLDINGS, INC. AND SUBSIDIARY
(Formerly Two Moons Kachinas, Corp.)
[A Development Stage Company]
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY (DEFICIT)
FROM THE DATE OF INCEPTION ON MAY 19, 2000
THROUGH DECEMBER 31, 2004
Deficit
Accumulated
Preferred Stock Common Stock Capital in During the
_____________________________ Excess of Development
Shares Amount Shares Amount Par Value Stage
______ ______ ________ ______ ___________ ___________
BALANCE, May 19, 2000 - $ - - $ - $ - $ -
Issuance of 4,150,000
shares of common stock
for cash at
approximately $.006
per share, May 2000 - - 4,150,000 4,150 20,850 -
Net loss for the
period ended December
31, 2000 - - - - - (916)
______ ______ ________ ______ ___________ ___________
BALANCE,
December 31, 2000 - - 4,150,000 4,150 20,850 (916)
Issuance of 662,340
shares of common
stock for cash at
approximately $.1205
per share, net of
offering costs of
$10,865, November 2001 - - 662,340 662 68,273 -
Net loss for the year
ended December 31, 2001 - - - - - (10,467)
______ ______ ________ ______ ___________ ___________
BALANCE,
December 31, 2001 - - 4,812,340 4,812 89,123 (11,383)
Net loss for the year
ended December 31, 2002 - - - - - (26,275)
______ ______ ________ ______ ___________ ___________
BALANCE,
December 31, 2002 - - 4,812,340 4,812 89,123 (37,658)
Issuance of 668,150
shares of common stock
at approximately $.03
per share, for legal
services of $2,500 and
reduction of accounts
payable for legal
services of $17,625,
September 2003 - - 668,150 668 19,457 -
Net loss for the year
ended December 31, 2003 - - - - - (29,721)
______ ______ ________ ______ ___________ ___________
[Continued]
F-4
A.C.T. HOLDINGS, INC. AND SUBSIDIARY
(Formerly Two Moons Kachinas, Corp.)
[A Development Stage Company]
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY (DEFICIT)
FROM THE DATE OF INCEPTION ON MAY 19, 2000
THROUGH DECEMBER 31, 2004
[Continued]
Deficit
Accumulated
Preferred Stock Common Stock Capital in During the
_____________________________ Excess of Development
Shares Amount Shares Amount Par Value Stage
______ ______ ________ ______ ___________ ___________
BALANCE,
December 31, 2003 - - 5,480,490 5,480 108,580 (67,379)
Net loss for the year
ended December 31, 2004 - - - - - (52,495)
______ ______ ________ ______ ___________ ___________
BALANCE,
December 31, 2004 - $ - 5,480,490$5,480 $ 108,580 $ (119,874)
______ ______ ________ ______ ___________ ___________
The accompanying notes are an integral part of this consolidated financial
statement.
F-5
A.C.T. HOLDINGS, INC. AND SUBSIDIARY
(Formerly Two Moons Kachinas, Corp.)
[A Development Stage Company]
CONSOLIDATED STATEMENTS OF CASH FLOWS
NET INCREASE (DECREASE) IN CASH
For the From Inception
Year Ended on May 19,
December 31, 2000 Through
______________________ December 31,
2004 2003 2004
__________ __________ ____________
Cash Flows from Operating Activities:
Net loss $ (52,495) $ (29,721) $ (119,874)
Adjustments to reconcile net loss to
net cash used by operating activities:
Depreciation and amortization 2,040 2,212 8,848
Non-cash services paid by issuance of
stock - 2,500 2,500
Changes in assets and liabilities:
(Increase) decrease in interest
receivable (3) 7 (4)
(Increase) decrease in inventory - 2,500 (50,500)
(Increase) decrease in prepaid expense 3 (109) (123)
Increase in accounts payable 44,958 16,816 72,011
__________ __________ ____________
Net Cash (Used) by Operating
Activities (5,497) (5,795) (87,142)
__________ __________ ____________
Cash Flows from Investing Activities:
Purchase of property and equipment - - (10,171)
Payments for website development - - (533)
__________ __________ ____________
Net Cash (Used) by Investing
Activities - - (10,704)
__________ __________ ____________
Cash Flows from Financing Activities:
Advances from shareholder 480 853 6,653
Proceeds from issuance of common stock - - 104,800
Payments for stock offering costs - - (10,865)
__________ __________ ____________
Net Cash Provided by Financing
Activities 480 853 100,588
__________ __________ ____________
Net Increase (Decrease) in Cash (5,017) (4,942) 2,742
Cash at Beginning of Period 7,759 12,701 -
__________ __________ ____________
Cash at End of Period $ 2,742 $ 7,759 $ 2,742
__________ __________ ____________
Supplemental Disclosures of Cash Flow Information:
Cash paid during the period for:
Interest $ - $ - $ -
Income taxes $ - $ - $ -
Supplemental Schedule of Non-cash Investing and Financing Activities:
For the period from inception on May 19, 2000 through December 31, 2004:
In September 2003, the Company issued 585,150 shares of common stock to
pay legal fees of $17,625 previously accrued in accounts payable and the
Company issued 83,000 shares of stock for current legal services valued
at $2,500.
The accompanying notes are an integral part of these consolidated financial
statements.
F-6
A.C.T. HOLDINGS, INC. AND SUBSIDIARY
(Formerly Two Moons Kachinas, Corp.)
[A Development Stage Company]
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Organization - A.C.T. Holdings, Inc. ("Parent") was organized under
the laws of the State of Nevada on May 19, 2000 as Two Moons
Kachinas, Corp. In December 2004, Parent changed its name to A.C.T.
Holdings, Inc.
A.C.T. Acquisitions Corp., Inc. ("Subsidiary") was organized under
the laws of the State of Delaware on December 16, 2004 as a wholly-
owned subsidiary of Parent.
A.C.T. Holdings, Inc. and Subsidiary (the "Company") sells Hopi
Kachina Dolls and related artwork. The Company has not yet
generated significant revenues from their planned principal
operations and is considered a development stage company as defined
in Statement of Financial Accounting Standards No. 7. The Company
has, at the present time, not paid any dividends and any dividends
that may be paid in the future will depend upon the financial
requirements of the Company and other relevant factors.
Consolidation - The consolidated financial statements include the
accounts of Parent and its wholly-owned Subsidiary. All significant
intercompany transactions have been eliminated in consolidation.
Cash and Cash Equivalents - The Company considers all highly-liquid
debt investments purchased with a maturity of three months or less
to be cash equivalents.
Accounts Receivable - The Company records accounts receivable at the
lower of cost or fair value. The Company recognizes interest income
on an account receivable based on the stated interest rate for past-
due accounts over the period that the account is past-due. The
Company estimates allowances for doubtful accounts based on the aged
receivable balance and historical losses. The Company records
interest income on delinquent accounts receivable only when payment
is received. The Company first applies payments received on
delinquent accounts receivable to eliminate the outstanding
principal. The Company charges off uncollectible accounts
receivable when management estimates no possibility of collecting
the related receivable. The Company considers accounts receivable
to be past-due or delinquent based on contractual terms.
Inventory - Inventory is carried at the lower of cost or market
using the specific identification method. At December 31, 2004,
inventory consists of Kachina dolls and related artwork valued at
$50,500. The Company has estimated that no allowance for slow
moving or obsolete inventory was necessary at December 31, 2004.
Property and Equipment - Property and equipment are stated at cost.
Expenditures for repairs and maintenance are charged to operating
expense as incurred. Expenditures for additions and betterments
that extend the useful lives of property and equipment are
capitalized upon being placed in service. When assets are sold or
otherwise disposed of, the cost and related accumulated depreciation
or amortization is removed from the accounts and any resulting gain
or loss is included in operations. Depreciation is computed using
the straight-line method over the estimated useful lives of the
assets of five years.
F-7
A.C.T. HOLDINGS, INC. AND SUBSIDIARY
(Formerly Two Moons Kachinas, Corp.)
[A Development Stage Company]
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES [Continued]
Website Costs - The Company has adopted the provisions of Emerging
Issues Task Force 00-2, "Accounting for Web Site Development Costs."
Costs incurred in the planning stage of a website are expensed as
research and development while costs incurred in the development
stage are capitalized and amortized over the life of the asset,
estimated to be two years. As of December 31, 2004, the Company has
capitalized a total of $533 of website costs. The Company did not
incur any planning costs and did not record any research and
development costs for the years ended December 31, 2004, and 2003.
Revenue Recognition - The Company recognizes revenue upon delivery
of the product. Revenue derived from sales through art dealers and
galleries is recorded net of any commissions to the dealers or
galleries.
Advertising Costs - Advertising costs, except for costs associated
with direct-response advertising, are charged to operations when
incurred. The costs of direct-response advertising are capitalized
and amortized over the period during which future benefits are
expected to be received. During the years ended December 31, 2004
and 2003, respectively, advertising costs amounted to $0 and $0.
Income Taxes - The Company accounts for income taxes in accordance
with Statement of Financial Accounting Standards No. 109,
"Accounting for Income Taxes" [See Note 5].
Loss Per Share - The computation of loss per share is based on the
weighted average number of shares outstanding during the period
presented in accordance with Statement of Financial Accounting
Standards No. 128, "Earnings Per Share" [See Note 8].
Accounting Estimates - The preparation of financial statements in
conformity with generally accepted accounting principles in the
United States of America requires management to make estimates and
assumptions that affect the reported amounts of assets and
liabilities, the disclosures of contingent assets and liabilities at
the date of the financial statements, and the reported amount of
revenues and expenses during the reported period. Actual results
could differ from those estimated.
Recently Enacted Accounting Standards - Statement of Financial
Accounting Standards ("SFAS") No. 151, "Inventory Costs - an
amendment of ARB No. 43, Chapter 4", SFAS No. 152, "Accounting for
Real Estate Time-Sharing Transactions - an amendment of FASB
Statements No. 66 and 67", SFAS No. 153, "Exchanges of Nonmonetary
Assets - an amendment of APB Opinion No. 29", and SFAS No. 123
(revised 2004), "Share-Based Payment", were recently issued. SFAS
No. 151, 152, 153 and 123 (revised 2004) have no current
applicability to the Company or their effect on the financial
statements would not have been significant.
Restatement - The financial statements have been restated for all
periods presented to reflect a 8.3-for-1 forward stock split that
Parent effected on October 28, 2004 [See Note 4].
F-8
A.C.T. HOLDINGS, INC. AND SUBSIDIARY
(Formerly Two Moons Kachinas, Corp.)
[A Development Stage Company]
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 2 - PROPERTY AND EQUIPMENT
The following is a summary of property and equipment at cost, less
accumulated depreciation at:
December 31,
2004
___________
Computer and office equipment $ 10,171
Less: accumulated depreciation (8,315)
___________
$ 1,856
___________
Depreciation expense for the years ended December 31, 2004 and
2003 amounted to $2,040 and $2,034, respectively.
NOTE 3 - OTHER ASSETS
The following is a summary of other assets at cost, less
accumulated amortization at:
December 31,
2004
___________
Website development $ 533
Less: accumulated amortization (533)
___________
$ -
___________
Amortization expense for the years ended December 31, 2004 and
2003 amounted to $0 and $178, respectively.
NOTE 4 - CAPITAL STOCK
Preferred Stock - In April 2004, Parent amended its articles of
incorporation to authorize 5,000,000 shares of preferred stock,
$.001 par value, with such rights, preferences and designations
and to be issued in such series as determined by the Board of
Directors. No shares are issued and outstanding at December 31,
2004.
Common Stock - In May 2000, in connection with its organization,
the Company issued 4,150,000 shares of its previously authorized
but unissued common stock. The shares were issued for cash of
$25,000 (or approximately $.006 per share).
In November 2001, the Company issued 662,340 shares of its
previously authorized but unissued common stock. The shares were
issued for cash of $79,800 (or approximately $.1205 per share).
Stock offering costs of $10,865 were netted against the proceeds.
F-9
A.C.T. HOLDINGS, INC. AND SUBSIDIARY
(Formerly Two Moons Kachinas, Corp.)
[A Development Stage Company]
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 4 - CAPITAL STOCK [Continued]
In September 2003, the Company issued 585,150 shares of its
previously authorized but unissued common stock to pay for legal
services that had previously been accrued as accounts payable of
$17,625 (or approximately $.03 per share).
In September 2003, the Company issued 83,000 shares of its
previously authorized but unissued common stock for current legal
services rendered valued at $2,500 (or approximately $.03 per
share).
Stock Split - On October 28, 2004, the Parent effected a 8.3-for-1
forward stock split. The financial statements for all periods
presented have been restated to reflect the stock split.
Warrants - In December 2004, the Company's Board of Directors
approved the sale of warrants to purchase 3,124,875 shares of
common stock for total consideration of $10,000. Of the warrants,
1,291,615 would be exercisable at $2.00 per share and 1,833,260
would be exercisable at $.85 per share. All of the warrants would
be exercisable for ten years, but none of the warrants would be
exercisable for one year following issuance. As of December 31,
2004, the Company had not sold any warrants.
NOTE 5 - INCOME TAXES
The Company accounts for income taxes in accordance with Statement
of Financial Accounting Standards No. 109, "Accounting for Income
Taxes". SFAS No. 109 requires the Company to provide a net
deferred tax asset/liability equal to the expected future tax
benefit/expense of temporary reporting differences between book
and tax accounting methods and any available operating loss or tax
credit carryforwards. The Company has available at December 31,
2004, operating loss carryforwards of approximately $120,300,
which may be applied against future taxable income and which
expire in various years through 2024. If certain substantial
changes in the Company's ownership should occur, there will be an
annual limitation on the amount of net operating loss
carryforwards which can be utilized.
The amount of and ultimate realization of the benefits from the
operating loss carryforwards for income tax purposes is dependent,
in part, upon the tax laws in effect, the future earnings of the
Company, and other future events, the effects of which cannot be
determined. Because of the uncertainty surrounding the
realization of the loss carryforwards, the Company has established
a valuation allowance equal to the tax effect of the loss
carryforwards and, therefore, no deferred tax asset has been
recognized for the loss carryforwards. The net deferred tax
assets are approximately $18,000 and $10,300 as of December 31,
2004 and 2003, respectively, with an offsetting valuation
allowance of the same amount. The change in the valuation
allowance during the year ended December 31, 2004 is approximately
$7,700.
NOTE 6 - RELATED PARTY TRANSACTIONS
Advances from a shareholder - An officer/shareholder of the
Company has made advances to the Company and has directly paid
expenses on behalf of the Company. At December 31, 2004, the
Company owed the shareholder $6,653. The advances bear no
interest and are due on demand.
F-10
A.C.T. HOLDINGS, INC. AND SUBSIDIARY
(Formerly Two Moons Kachinas, Corp.)
[A Development Stage Company]
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 6 - RELATED PARTY TRANSACTIONS [Continued]
Management Compensation - The Company has not paid any
compensation to any officer or director of the Company.
Office Space - The Company has not had a need to rent office
space. An officer/shareholder of the Company is allowing the
Company to use his offices as a mailing address, as needed, at no
expense to the Company.
NOTE 7 - GOING CONCERN
The accompanying financial statements have been prepared in
conformity with generally accepted accounting principles in the
United States of America, which contemplate continuation of the
Company as a going concern. However, the Company has not yet been
successful in establishing profitable operations. Further, the
Company has current liabilities in excess of current assets.
These factors raise substantial doubt about the ability of the
Company to continue as a going concern. In this regard,
management is proposing to raise any necessary additional funds
not provided by operations through loans or through additional
sales of its common stock. There is no assurance that the Company
will be successful in raising this additional capital or in
achieving profitable operations. The financial statements do not
include any adjustments that might result from the outcome of
these uncertainties.
NOTE 8 - LOSS PER SHARE
The following data shows the amounts used in computing loss per
share:
For the From Inception
Year Ended on May 19,
December 31, 2000 Through
______________________ December 31,
2004 2003 2004
__________ __________ ____________
Loss from continuing operations
available to common shareholders
(numerator) $ (52,495) $ (29,721) $ (119,874)
__________ __________ ____________
Weighted average number of
common shares outstanding
used in loss per share for the
period (denominator) 5,480,490 4,995,395 4,787,335
__________ __________ ____________
Dilutive loss per share was not presented, as the Company had no common
stock equivalent shares for all periods presented that would affect the
computation of diluted loss per share.
F-11
A.C.T. HOLDINGS, INC. AND SUBSIDIARY
(Formerly Two Moons Kachinas, Corp.)
[A Development Stage Company]
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 9 - CONCENTRATIONS
Geographic Region - During the year ended December 31, 2004, all
of the Company's sales and operations were located in and around
Salt Lake City, Utah including all of the Company's inventory and
property.
Significant Customer - During the year ended December 31, 2004,
the Company had only one customer that accounted for all of the
Company's revenues. The loss of this significant customer could
adversely affect the Company's business and financial position.
NOTE 10 - SUBSEQUENT EVENTS
Agreement and Plan of Merger - On January 3, 2005, the
Company entered into an Agreement and Plan of Merger with Advanced
Cell Technology, Inc. ("ACT"). The agreement calls for the
Company to issue up to 17,736,175 shares of common stock to the
shareholders of ACT for 100% of the outstanding shares of ACT's
common stock wherein ACT would become a wholly-owned subsidiary of
the Company. The agreement also calls for ACT to raise at least
$3,000,000 in a private offering to accredited investors prior to
closing. The acquisition, if complete, would result in a change
of control of the Company and a change in management would occur.
The proposed acquisition is subject to certain other terms and
conditions. Final consummation of the proposed acquisition is not
guaranteed.
F-12
Item 8. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure.
---------------------
There has been no change in our independent accounting firm since
our inception.
Item 8(a). Controls and Procedures.
------------------------
Within 90 days prior to the date of this Annual Report and as of the
period covered thereby or December 31, 2004, we carried out an evaluation,
under the supervision and with the participation of our President and
Treasurer, of the effectiveness of the design and operation of our disclosure
controls and procedures. Based on this evaluation, our President and
Treasurer concluded that our disclosure controls and procedures are effective
in timely alerting them to material information required to be included in our
periodic Securities and Exchange Commission reports. It should be noted that
the design of any system of controls is based in part upon certain assumptions
about the likelihood of future events, and there can be no assurance that any
design will succeed in achieving its stated goals under all potential future
conditions, regardless of how remote. In addition, we reviewed our internal
controls, and there have been no significant changes in our internal controls
or in other factors that could significantly affect those controls subsequent
to the date of their last evaluation.
Item 8(b). Other Information.
------------------
See the heading heading "Business Development" of Part I, Item 1,
above, for information about our recent Bylaw amendment, our 8.3 for one
dividend at November 8, 2004, our recent name change and our proposed Merger
Agreement with Advanced Cell.
PART III
Item 9. Directors, Executive Officers, Promoters and Control Persons;
Compliance with Section 16(a) of the Exchange Act.
--------------------------------------------------
Identification of Directors and Executive Officers.
---------------------------------------------------
The following table sets forth the names of all of our current
directors and executive officers. These persons will serve until the next
annual meeting of the stockholders or until their successors are elected or
appointed and qualified, or their prior resignations or terminations.
Date of Date of
Positions Election or Termination
Name Held Designation or Resignation
---- ---- ----------- --------------
David C. Merrell President 5/00 *
Director 5/00 *
Secretary & 1/03
Treasurer 1/03
R. Kip Paul Secretary/ 5/00 1/03
Treasurer 5/00 1/03
Director 5/00 1/03
* This person presently serve in the capacities
indicated.
Term of Office.
---------------
The terms of office of the current sole director shall continue
until the annual meeting of stockholders, which has been scheduled by the
Board of Directors to be held in May of each year. The annual meeting of the
Board of Directors immediately follows the annual meeting of stockholders, at
which executive officers for the coming year are elected.
Business Experience.
--------------------
David C. Merrell, Director, President, Secretary and Treasurer.
Mr. Merrell is 45 years of age. Since 1989, he has been the owner of DCM
Finance, a Salt Lake City based finance company that makes and brokers real
estate loans. Mr. Merrell received his Bachelor of Science degree in
Economics from the University of Utah in 1981. He has been a Kachina
collector for over 10 years.
Family Relationships.
---------------------
None; not applicable.
Involvement in Certain Legal Proceedings.
-----------------------------------------
During the past five years, no present or former director, executive
officer or person nominated to become a director or an executive officer of
ours:
(1) was a general partner or executive officer of any business
against which any bankruptcy petition was filed, either at the time of the
bankruptcy or two years prior to that time;
(2) was convicted in a criminal proceeding or named subject to a
pending criminal proceeding (excluding traffic violations and other minor
offenses);
(3) was subject to any order, judgment or decree, not subsequently
reversed, suspended or vacated, of any court of competent jurisdiction,
permanently or temporarily enjoining, barring, suspending or otherwise
limiting his involvement in any type of business, securities or banking
activities; or
(4) was found by a court of competent jurisdiction (in a civil
action), the Commission or the Commodity Futures Trading Commission to have
violated a federal or state securities or commodities law, and the judgment
has not been reversed, suspended or vacated.
Compliance with Section 16(a) of the Exchange Act.
--------------------------------------------------
On May 30, 2003, David C. Merrell, who is our sole director and
officer, filed with the Securities and Exchange Commission a Form 3, Initial
Statement of Beneficial Ownership of Securities, disclosing his ownership of
2,075,000 shares of our Company's common stock.
On June 2, 2003, R. Kip Paul, a former officer, also filed with the
Securities and Exchange Commission a Form 3 disclosing his ownership of
2,075,000 shares of our Company's common stock.
On January 20, 2004, R. Kip Paul filed with the Securities and
Exchange Commission a Form 4 disclosing the gift of 1,660,000 shares of our
Company's common stock to family members.
Based upon our review of the copies of such forms and reports we
have received from the foregoing persons, we believe that no such person was
required to file a Form 5 for the year ended December 31, 2004.
Code of Ethics.
---------------
We have adopted a Code of Ethics and that was attached to our Annual
Report on Form 10-KSB for the year ended December 31, 2003, as Exhibit 14, and
which is incorporated herein by reference. See Part III, Item 13.
Audit Committee.
----------------
We have not appointed an Audit Committee or adopted an Audit
Committee Charter for any Audit Committee because we have only one director
and limited operations.
Item 10. Executive Compensation.
-----------------------
We have not paid any of our directors or officers any compensation
since our inception. We do not have any employment agreements with our
officers. If we are able to establish profitable operations, we expect to pay
each of them $1,000 per month in compensation. The compensation may be
deferred and convertible to stock at the officers' option. We have not
created any arrangement in this regard; however, we will disclose the terms of
any such arrangement in future periodic report filings with the Securities and
Exchange Commission.
The following table sets forth the aggregate compensation paid by
ACT for services rendered during the periods indicated:
SUMMARY COMPENSATION TABLE
Long Term Compensation
Annual Compensation Awards Payouts
(a) (b) (c) (d) (e) (f) (g) (h) (i)
Secur-
ities All
Name and Year or Other Rest- Under- LTIP Other
Principal Period Salary Bonus Annual rictedlying Pay- Comp-
Position Ended ($) ($) Compen-Stock Optionsouts ensat'n
-----------------------------------------------------------------
David C. 12/31/04 0 0 0 0 0 0 0
Merrell, 12/31/03 0 0 0 0 0 0 0
President, 12/31/02 0 0 0 0 0 0 0
Secretary/
Treasurer
Director
R. Kipp 12/31/03 0 0 0 0 0 0 0
Paul, 12/31/02 0 0 0 0 0 0 0
Secretary/
Treasurer
Director
Compensation Plans.
-------------------
We have no compensation plans; however, see the heading "Subsequent
Events" of the heading "Business Development" of Part I, Item 1, above, for
reference to information about adopting the Stock Option Plan of Advanced Cell
if that Merger Agreement is completed.
Termination of Employment and Change of Control Arrangements.
-------------------------------------------------------------
We have no special arrangements involving any change of control of
our company or termination of any director or executive officer.
Item 11. Security Ownership of Certain Beneficial Owners and Management.
---------------------------------------------------------------
The following tables set forth the share holdings of our directors
and executive officers and those persons who own more than five percent of our
common stock as of the date of the Annual Report:
Number Percentage
Name and Address of Shares Beneficially Owned of Class
---------------- ---------------------------- --------
David C. Merrell 2,075,000 37.86%
9005 Cobble Canyon Lane
Sandy, Utah 84093
R. Kip Paul 415,000 7.57%
175 East 400 South, #700
Salt Lake City, Utah 84111
Helen W. Paul 415,000 7.57%
5293 Cottonwood Club Drive
Salt Lake City, Utah 84117
Mark H. Paul 415,000 7.57
7 Addison Avenue
Franklin, MA 08038
Robert P. Paul 415,000 7.57%
5293 Cottonwood Club Drive
Salt Lake City, Utah 84117
Terri J. Paul 415,000 7.57%
87 U Street
Salt Lake City, Utah 84103
Leonard W. Burningham, Esq. 343,620 6.27%
455 East 500 South, Suite #204
Salt Lake City, Utah 84111
Daniel L. Ross 332,000 6.9%
2424 East Katie Lynn Lane
Salt Lake City, Utah 84117
------- -----
TOTALS 4,825,620 88.1%
Security Ownership of Management.
---------------------------------
The following table sets forth the share holdings of our directors
and executive officers as of the date of this Annual Report. Each of these
persons has sole investment and sole voting power over his shares.
Number Percentage
Name and Address of Shares Beneficially Owned of Class
---------------- ---------------------------- ----------
David C. Merrell 2,075,000 37.86%
9005 Cobble Canyon Lane
Sandy, Utah 84093
------- -----
All directors and executive
officers as a group
(1 persons) 2,075,000 37.86%
Changes in Control.
-------------------
To our knowledge, there are no present arrangements or pledges of
our securities that may result in a change in control of our Company.
Item 12. Certain Relationships and Related Transactions.
-----------------------------------------------
Transactions with Management and Others.
----------------------------------------
Except as stated below, during the past two years, there have been
no material transactions, series of similar transactions or currently proposed
transactions, to which our Company or any of our subsidiaries was or is to be
a party, in which the amount involved exceeded $60,000 and in which any
director or executive officer, or any security holder who is known to us to
own of record or beneficially more than five percent of our common stock, or
any member of the immediate family of any of the foregoing persons, or any
promoter or founder had a material interest.
An officer/shareholder of our Company has made advances to us and has
directly paid expenses on behalf of our Company in the amount of $480, as of
December 31, 2004. The advances bear no interest and are due on demand.
Certain Business Relationships.
-------------------------------
Except as stated above, during the past two years, there have been
no material transactions, series of similar transactions or currently proposed
transactions, to which our Company or any of our subsidiaries was or is to be
a party, in which the amount involved exceeded $60,000 and in which any
director or executive officer, or any security holder who is known to us to
own of record or beneficially more than five percent of our common stock, or
any member of the immediate family of any of the foregoing persons, or any
promoter or founder had a material interest.
Indebtedness of Management.
---------------------------
Except as stated above, during the past two years, there have been
no material transactions, series of similar transactions or currently proposed
transactions, to which our Company or any of our subsidiaries was or is to be
a party, in which the amount involved exceeded $60,000 and in which any
director or executive officer, or any security holder who is known to us to
own of record or beneficially more than five percent of our common stock, or
any member of the immediate family of any of the foregoing persons, or any
promoter or founder had a material interest.
Parents of the Issuer.
----------------------
Except and to the extent that Mr. Merrell may be deemed to be a
parent of our Company by virtue of his substantial stock ownership, we have no
parents.
Transactions with Promoters.
----------------------------
During the past two years, there have been no material transactions,
series of similar transactions or currently proposed transactions, to which
our Company or any of our subsidiaries was or is to be a party, in which the
amount involved exceeded $60,000 and in which any director or executive
officer, or any security holder who is known to us to own of record or
beneficially more than five percent of our common stock, or any member of the
immediate family of any of the foregoing persons, or any promoter or founder
had a material interest.
Item 13. Exhibits and Reports on Form 8-K.
---------------------------------
Reports on Form 8-K:
8-K Current Report dated December 15, 2004, and filed with the
Securities and Exchange Commission on December 29, 2004, regarding an
amendment to the Company's Bylaws. This Current Report is incorporated herein
by reference.
8-K Current Report dated December 30, 2004, and filed with the
Securities and Exchange Commission on January 4, 2005, regarding the Advamced
Cell Merger Agreement and a Certificate of Amendment changing our name from
Two Moons Kachinas, Inc. to A.C.T. Holdings, Inc. This Current Report is
incorporated herein by reference.
Exhibits*
(i)
Where Incorporated
in this Report
--------------
Registration Statement on SB-2, as Parts I, II and III
amended.**
8-A Registration Statement, filed May 28, 2003**
S-8 Registration Statement, as amended, filed on September 26, 2003**
10-KSB Annual Report for the year ended December 31, 2003**
Definitive Information Statement, filed February 24, 2004**
(ii)
Exhibit
Number Description
------ -----------
31 302 Certification of David C. Merrell
32 906 Certification of David C. Merrell
* Summaries of all exhibits contained within this Annual
Report are modified in their entirety by reference
to these Exhibits.
** These documents and related exhibits have been
previously filed with the Securities and Exchange
Commission and are incorporated herein by reference.
Item 14. Principal Accountant Fees and Services.
---------------------------------------
The following is a summary of the fees billed to us by our principal
accountants during the calendar years ended December 31, 2004 and 2003:
Fee category 2004 2003
------------ ---- ----
Audit fees $4,450 $3,830
Audit-related fees $ 0 $ 0
Tax fees $ 390 $ 520
All other fees $ 0 $ 0
------ ------
Total fees $4,840 $4,350
Audit fees. Consists of fees for professional services rendered by our
principal accountants for the audit of our annual financial statements and the
review of financial statements included in our Forms 10-QSB Quarterly Reports
or services that are normally provided by our principal accountants in
connection with statutory and regulatory filings or engagements.
Audit-related fees. Consists of fees for assurance and related services
by our principal accountants that are reasonably related to the performance of
the audit or review of our financial statements and are not reported
under "Audit fees."
Tax fees. Consists of fees for professional services rendered by our
principal accountants for tax compliance, tax advice and tax planning.
All other fees. Consists of fees for products and services provided by
our principal accountants, other than the services reported under "Audit
fees," "Audit-related fees" and "Tax fees" above.
SIGNATURES
In accordance with Section 13 or 15(d) of the Exchange Act, the
Registrant caused this Annual Report to be signed on its behalf by the
undersigned, thereunto duly authorized.
A.C.T. HOLDINGS, INC.
Date: 01/28/05 By/s/David C. Merrell
------------- -------------------------------------
David C. Merrell
President, Secretary, Treasurer and
Director
In accordance with the Exchange Act, this Annual Report has been signed
below by the following persons on behalf of the Registrant and in the
capacities and on the dates indicated.
A.C.T. HOLDINGS, INC.
Date: 01/28/05 By/s/David C. Merrell
------------- -------------------------------------
David C. Merrell
President, Secretary, Treasurer and
Director