| **UNITED STATES**SECURITIES AND EXCHANGE    COMMISSION**Washington, DC 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, 1999   
[  ] TRANSITION REPORT    UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1994
For the transition period    from _______ to _______  
COMMISSION FILE NUMBER: 0-27075   **BSD HEALTHCARE INDUSTRIES, INC.
(Name of Small Business    Issuer in Its Charter)   
Florida
31-1586472
(State or Other Jurisdiction    of Incorporation or Organization
(IRS Employer Identification    Number)    
2700 North 29th Avenue,    Suite 305 Hollywood, FL 
33020
(Address of Principal    Executive Offices)
(Zip Code)   
(954)-923-4438
(Issuer's    telephone number)   
Securities    registered under Section 12 (b) of the Act:
NONE
(Title of class)   
Securities    registered under Section 12(g) of the Exchange Act:
COMMON STOCK,    PAR VALUE $.001
(Title of class)   
Check whether    the issuer: (i) 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 registrant was    required to file such reports), and (ii) has been subject to the filing requirements for    the past 90 days. Yes [ ] No [X]  Check if there is no disclosure of    delinquent filers in response to Item 405 of Regulation S-B contained in this form, and no    disclosure will be contained, to the best of the registrant's knowledge, in definitive    proxy or information statements incorporated by reference in Part III of this Form 10-KSB    or any amendment to this Form 10-KSB. [X]  
Issuer’s    revenues for its most recent fiscal year: none  
At November 30,    2000 there were 1,960,001 shares of the issuer's Common Stock issued and outstanding.    There is no active trading market in the shares of the Issuer’s common stock at the    date of the filing of the Form 10-KSB. The Issuer will seek by filing this report and    other reports due under the Securities Exchange Act of 1934 (the "Exchange Act")    to become current and reporting under the requirements of the Exchange Act. Affiliates of    the Issuer own 1,820,975 shares of the Issuer’s issued and outstanding common stock    and the remaining 139,026 shares are held by non-affiliates. (*) 
DOCUMENTS    INCORPORATED BY REFERENCE:
There are no    documents incorporated by reference in this Annual report on Form 10-KSB except for    certain previously filed exhibits identified in Part III, Item 13. Reference is made to    the Quarterly Reports on Form 10-QSB, which the Issuer is filing at or about the date of    filing of this Form 10-KSB under the Exchange Act. (*) Affiliates for the purposes of this    Annual Report refer to the officers, directors and/or persons or firms owning 5% or more    of Issuer’s common stock, both of record and beneficially.
 
**TABLE OF CONTENTS**  
PagePART I
Item 1. Description of    Business.3
Item 2. Description of    Property.14
Item 3. Legal Proceedings. 14
Item 4. Submission of Matters    to a Vote of Security Holders. 14   **PART II
Item 5. Market for Common    Equity and Related Stockholder Matters. 15
Item 6. Management's Plan of    Operation. 16
Item 7. Financial Statements. 18
Item 8. Changes In and    Disagreements With Accountants on Accounting and Financial Disclosure.28   **PART III
Item 9. Directors, Executive    Officers, Promoters and Control Persons.28
Item 10. Executive    Compensation. 29
Item 11. Security Ownership of    Certain Beneficial Owners and Management. 29
Item 12. Certain Relationships    and Related Transactions. 29
Item 13. Exhibits and Reports    on Form 8-K30
 

 

 

 

 

 

 

 

 

 

 

 

 

FORWARD LOOKINGSTATEMENTS: THIS FORM 10-KSB AND OTHER STATEMENTS ISSUED OR MADE FROM TIME TO TIME BY BSDHEALTHCARE INDUSTRIES, INC. OR ITS REPRESENTATIVES CONTAIN STATEMENTS WHICH MAY CONSTITUTE"FORWARD-LOOKING STATEMENTS" WITHIN THE MEANING OF THE SECURITIES ACT OF 1933,AS AMENDED (THE "ACT") AND THE SECURITIES EXCHANGE ACT OF 1934 (THE"EXCHANGE ACT") BY THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995. 15U.S.C.A. SECTIONS 77Z-2 AND 78U-5 (SUPP. 1996). THOSE STATEMENTS INCLUDE STATEMENTSREGARDING THE INTENT, BELIEF OR CURRENT EXPECTATIONS OF THE COMPANY’S MANAGEMENT ASWELL AS THE ASSUMPTIONS ON WHICH SUCH STATEMENTS ARE BASED. PROSPECTIVE INVESTORS ARECAUTIONED THAT ANY SUCH FORWARD-LOOKING STATEMENTS ARE NOT GUARANTEES OF FUTUREPERFORMANCE AND INVOLVE RISKS AND UNCERTAINTIES, AND THAT ACTUAL RESULTS MAY DIFFERMATERIALLY FROM THOSE CONTEMPLATED BY SUCH FORWARD-LOOKING STATEMENTS. IMPORTANT FACTORSCURRENTLY KNOWN TO MANAGEMENT THAT COULD CAUSE ACTUAL RESULTS TO DIFFER MATERIALLY FROMTHOSE IN FORWARD-LOOKING STATEMENTS ARE SET FORTH IN THE SAFE HARBOR COMPLIANCE STATEMENTFOR FORWARD-LOOKING STATEMENTS INCLUDED AS EXHIBIT 99.1 TO THIS FORM 10-KSB, AND AREHEREBY INCORPORATED HEREIN BY REFERENCE. THE COMPANY UNDERTAKES NO OBLIGATION TO UPDATE ORREVISE FORWARD-LOOKING STATEMENTS TO REFLECT CHANGED ASSUMPTIONS, THE OCCURRENCE OFUNANTICIPATED EVENTS OR CHANGES TO FUTURE OPERATING RESULTS OVER TIME. SEE THE DISCUSSIONUNDER "RISK FACTORS" BELOW. IT SHOULD ALSO BE UNDERSTOOD THAT IF A COMPANY ISNOT SUBJECT TO THE REPORTING REQUIREMENTS OF SECTION 13(A) OR SECTION 15(D) OF THEEXCHANGE ACT AT THE TIME A FORWARD-LOOKING STATEMENT IS MADE, IT CANNOT AVAIL ITSELF OFTHE PROTECTIONS OF SECTION 27A OF THE ACT OR SECTION 21E OF THE EXCHANGE ACT.

**PART I**

ITEM 1. DESCRIPTION OF BUSINESS

GENERAL BACKGROUND AND REPORTS UNDER EXCHANGE ACT

BSD Healthcare Industries, Inc., a Florida corporation, is sometimesreferred to herein as "we", "us", "our" and the"Company". We are filing this Annual Report for the year ended December 31,1999, which contains our audited financial statements for 1999 and 1998. This AnnualReport also contains disclosure that we have made in response to the comment letter of theSEC dated September 17, 1999 regarding our previously filed Form 10-SB/12g registrationstatement which became effective by lapse of time under the Exchange Act. We filed anamendment to our registration statement on Form 10-SB/12g/A We have included textdisclosure in this Annual Report for the period subsequent to the year ended December 31,1999 through the date of the filing under all items other than the financial statements.This disclosure includes our change of address, telephone and principal executive officer,among other material disclosure. We are also filing our several Quarterly Reports that wewere required to file under the Exchange Act but which we failed to file in a timelymanner. We are seeking to become current under reporting requirements of the Exchange Actby the filing the following Reports: our Annual Report for the year ended December 31,1999; and our Quarterly Reports for the periods ended September 30, 1999, March 31, 2000,June 30, 2000 and September 30, 2000.

We were incorporated in Florida on February 7, 1989 under the name ParkAvenue Marketing, Inc. On February 3, 1998, as a result of our acquisition of 100% of thecommon stock of two commonly controlled entities, Respiratory Care Services, Inc.("RCS") and RCS Subacute, Inc. ("RCSS"), that were engaged in thehealthcare industry as described below, we changed our name from Park Avenue Marketing toBDS Healthcare Industries, Inc. Prior to these acquisitions, we did not conduct anyoperations. The total purchase price for the acquisition of RCS and RCSS was $1,965,007 incash and $159,993 in shares of our common stock, based upon 35,554 shares at a price of$4.50 per share. The purchase price was allocated approximately as follows: $525,000 forRCS and $1,600,000 for RCSS. At the date of the acquisitions, Kevin J. Merritt owned 100%of the common stock of RCS and 74% of the common stock of RCSS, and had no interest in theCompany. The February 1998 acquisition of RCS and RCSS by the Company is attached atExhibit 10.1 to this Annual Report and is incorporated by reference hereto .

RCS was founded in 1988 with business headquarters in Indianapolis, IN,and served as a staffing company providing respiratory therapists to hospitals and nursinghomes on an as-needed basis to facilities in Indiana, Ohio, Kentucky, Illinois, Missouri,West Virginia, Wyoming, Michigan, Texas, and Tennessee. The staffing process wasimplemented by RCS through contracts established between RCS and hospitals and nursinghome facilities. RCSS, which commenced operations in 1995, with headquarters inIndianapolis, and provided hospital-based respiratory staffs to acute and subacute nursingfacilities and generic healthcare facilities in Indiana, Ohio, Kentucky, Illinois,Missouri and West Virginia. BSD acquired RCS and RCSS because of the perceived increasingdemand for respiratory care services in long-term healthcare facilities. RCS and RCSS on aconsolidated basis had no revenues in 1999 and 1998 and had net income (loss) of $148,609and ($27,352), respectively during such years. The net income in 1999 was attributable toforgiveness of debt of $689,910 and a loss from discontinued operations resulting from thesale of our subsidiaries, RCS and RCSS on July 1, 1999. In 1998 we had no income fromcontinuing operations but had income of $116,282 from discontinued operations relating toour RCS and RCSS healthcare subsidiaries.

In December 1998, Comprehensive Medical Diagnostics, Inc., formerlyknown as Coventry Industries Corp. (hereinafter "CMDI"), an unaffiliated publiccompany, with headquarters in Princeton, NJ, acquired 81.7 % of our issued and outstandingshares of common stock, or a total of 1,602,000 shares. These shares were acquired by CMDIfrom Stephen Rosedale and Ronald Wilheim, who had no interest in CMDI at the date of thetransaction, in exchange for 118,250 shares of CMDI common stock, having a market price ofapproximately $4.00 per share, for total consideration of approximately $473,000. Messrs.Rosedale and Wilheim at the date of the transaction were principal shareholders, officersand directors of the Company. 

On July 1, 1999, principally as a result of a change in Medicarereimbursement rates for respiratory services, our board of directors decided that it wasin our best business interest to sell RCS and RCSS. As a result, we sold RCS and RCSS toMessrs. Rosedale and Wilheim in exchange for 75,000 shares of CMDI common stock, valued at$281,250, based upon the market price of CMDI of $3.75 per share at the date of thetransaction. The transaction involving 75,000 shares of CMDI represented approximately6.9% of CMDI’s equity. In July 2000 the 75,000 CMDI shares were subject to a 1 for 25reverse stock split which resulted in the Company’s ownership of 3000 CMDI shares.See Item 9, Part III, "Directors, Executive Officers, Promoters and Control Persons;Compliance with Section 16(a) of the Exchange Act". The Stock Purchase Agreementdated July 1, 1999 between the Company, CMDI and Messrs. Rosedale and Wilheim is attachedas Exhibit 10.2 and is incorporated by reference hereto. Also see Item 6, Part II,"Management’s Discussion and Analysis-Liquidity and Capital" regarding thedecline in value of the CMDI shares as of the date of this Annual Report.

As the result of our sale of our subsidiaries, we have no presentoperations and this has led us to redirect our efforts and limited resources to seekingpotential transactions with target companies. See the discussion under "BusinessObjective" below.

BUSINESS OBJECTIVE

We now seek and our management will pursue acquisition possibilitiesthroughout the United States and to make acquisitions or enter into other businessendeavors to the extent our limited assets and personnel will allow. As a result of ourlack of any operations, we are deemed to be a "blank check" company. Ourbusiness objective is to effect a merger, exchange of capital stock, asset acquisition orother business combination (a "Business Combination") with an operating business(a "Target Business"). Our intention is to seek a Business Combination with aTarget Business that we believe will have growth potential.

We will seek to acquire a Target Business without limiting ourselves toa particular industry. Most likely, the Target Business will be primarily located in theUnited States, although we reserve the right to acquire a Target Business with operationsand/or locations outside the United States. In seeking a Target Business, we willconsider, without limitation, businesses which (i) offer or provide services or develop,manufacture or distribute goods in the United States or abroad; or (ii) is engaged inwholesale or retail distribution, among other potential Target Business opportunities.While we may, under certain circumstances, seek to effect Business Combinations with morethan one Target Business, in all likelihood, as a result of our limited resources, we willhave the ability to effect only a single Business Combination with a Target Business. Wedo not intend to register as a broker-dealer, merge with or acquire a registeredbroker-dealer, or otherwise become a member of the NASD. Our sole officer/director has hadonly preliminary contact with representatives of other companies regarding the possibilityof a Business Combination, although none of these have resulted in any agreements orunderstandings. It is possible if not likely that any Business Combination will beconsummated with any of the parties that we have been in contacted. 

Our Common Stock was listed for trading on the OTC Bulletin Board underthe symbol "BSDI" from February 3, 1998 until our Common Stock was delisted onOctober 6, 1999 as a result of our not being a current reporting company under theExchange Act. We do not believe that there was any significant trading activity in the BSDCommon Stock since that date, notwithstanding the fact that our Common Stock has beenquoted from time to time on the "pink sheets". Management does not intend toundertake any efforts to cause any further market to develop in our securities until suchtime as we have successfully implemented our business plan described herein.

SELECTION OF A TARGET BUSINESS AND STRUCTURING OF A BUSINESS COMBINATION.

At present Mr. Marc Baker is our sole executive officer and director.Mr. Baker will have substantial flexibility in identifying and selecting a prospectiveTarget Business. As a result, we will be almost entirely dependent on the judgment of Mr.Baker in connection with the selection of a Target Business. In evaluating a prospectiveTarget Business, we will consider, among other factors, the following: (i) costsassociated with effecting the Business Combination; (ii) equity interest in andopportunity for control of the Target Business; (iii) growth potential of the TargetBusiness; (iv) experience and skill of management and availability of additional personnelof the Target Business; (v) capital requirements of the Target Business; (vi) competitiveposition of the Target Business; (vii) stage of development of the Target Business; (viii)degree of current or potential market acceptance of the Target Business, products orservices; (ix) proprietary features and degree of intellectual property or otherprotection of the Target Business; (x) the financial statements of the Target Business;and (xi) the regulatory environment in which the Target Business operates.

The foregoing criteria are not intended to be exhaustive and anyevaluation relating to the merits of a particular Target Business will be based, to theextent relevant, on the above factors as well as other considerations deemed relevant bymanagement in connection with effecting a Business Combination consistent with ourbusiness objectives. In connection with its evaluation of a prospective Target Business,management, with the possible assistance of an independent investment banking firm, orthird party consultants, anticipates that we will conduct a due diligence review whichwill encompass, among other things, meeting with incumbent management and inspection offacilities, as well as a review of financial, legal and other information which will bemade available to us.

The time and costs required to select and evaluate a Target Business(including conducting a due diligence review) and to structure and consummate the BusinessCombination (including negotiating and documenting relevant agreements and preparingrequisite documents for filing pursuant to applicable securities laws and state "bluesky" and corporation laws) cannot presently be ascertained with any degree ofcertainty. Our current executive officers and directors intend to devote only a smallportion of their time to the our affairs and, accordingly, consummation of a BusinessCombination may require a greater period of time than if our management devoted their fulltime to our affairs. However, each officer and director will devote such time as they deemreasonably necessary to carry out our business objective and affairs, including theevaluation of potential Target Businesses and the negotiation of a Business Combinationand, as a result, the amount of time devoted to our business and affairs may varysignificantly depending upon, among other things, whether we have identified a TargetBusiness or are engaged in active negotiation of a Business Combination. Any costsincurred in connection with the identification and evaluation of a prospective TargetBusiness with which a Business Combination is not ultimately consummated will result in aloss to us and reduce the amount of capital available to otherwise complete a BusinessCombination or for the resulting entity to utilize.

We anticipate that various prospective Target Businesses will bebrought to our attention from various sources, including broker-dealers, investmentbankers, venture capitalists, bankers, and other members of the financial community andaffiliated sources, including, possibly, our executive officers, directors and theiraffiliates. While we have not yet ascertained how, if at all, we will advertise andpromote ourselves, we may elect to publish advertisements in financial or tradepublications seeking potential business acquisitions. We may also engage the services ofprofessional firms that specialize in finding business acquisitions, in which event we mayagree to pay a finder's fee or other compensation. In no event, however, will we pay afinder's fee or commission to our officers or directors or to any entity with which theyare affiliated directly or indirectly. 

As a general rule, Federal and state tax laws and regulations have asignificant impact upon the structuring of business combinations. We will evaluate thepossible tax consequences of any prospective Business Combination and will endeavor tostructure a Business Combination so as to achieve the most favorable tax treatment to us,the Target Business and their respective shareholders. There can be no assurance that theInternal Revenue Service or relevant state tax authorities will ultimately agree with ourtax treatment of a particular consummated Business Combination. To the extent the InternalRevenue Service or any relevant state tax authorities ultimately disagree with ourproposed tax treatment and in fact prevail in recharacterizing the tax treatment of aBusiness Combination, there may be adverse tax consequences to us, the Target Business andtheir respective shareholders. Tax considerations as well as other relevant factors willbe evaluated in determining the precise structure of a particular Business Combination,which could be effected through various forms of a merger, consolidation or stock or assetacquisition.

ACQUISITION RESTRICTIONS.

We may acquire a company or business by purchasing, trading or sellingthe securities of such company or business. However, we do not intend to engage primarilyin such activities. Specifically, we intend to conduct our activities so as to avoid beingclassified as an "investment company" under the Investment Company Act of 1940,and therefore avoid application of the costly and restrictive registration and otherprovisions of the Investment Company Act of 1940 and the regulations promulgatedthereunder.

As a result of the fact that our registration statement on Form10-SB/12g became effective by lapse of time, as of the date of this Annual Report on Form10-KSB, we are subject to certain reporting requirements under the Securities Exchange Actof 1934 (the "Exchange Act"), including the requirement to file certain past duequarterly reports on Form 10-QSB and this Annual Report on From 10-KSB, with the SEC andto continue to file such reports as are required under the Exchange Act. Pursuant toSection 13 and 15(d) of the Exchange Act, in the event significant acquisitions takeplace, we will also be required to file reports with the SEC which will include certifiedfinancial statements for the acquired company covering one or two years depending upon therelative size of the acquisition. Consequently, acquisition prospects that do not have orare unable to obtain the required certified financial statements will not be appropriatefor acquisition so long as the reporting requirements of the Exchange Act are applicable.

Various impediments to an acquisition of a business or company or amerger may arise such as appraisal rights afforded the shareholders of a prospectiveTarget Business under the laws of the state under which the prospective Target Business isorganized. This may prove to be deterrent to a particular Business Combination. Inaddition, under the laws of the State of Florida, and Florida Statute Section 607.1103, aBusiness Combination, including a merger or share exchange, generally requires theapproval by a majority of all votes entitled to vote. However, Section 607.1103 (7)provides that "unless required by its articles of incorporation, action byshareholders of the surviving corporation on a plan of merger is not required if: (a) thearticles of incorporation of the surviving corporation will not differ . . . from itsarticles before the merger; and (b) each shareholder of the surviving corporation whoseshares were outstanding immediately prior to the effective date of the merger will holdthe same number of shares with identical designations, preferences, limitations andrelative rights, immediately after the merger". Our articles of incorporation do notrequire a shareholder vote for a Business Combination. Exhibit 99.3is incorporated by reference to our Form 10-SB/12g/A.

BUSINESS EXPERIENCE OF PRINCIPAL

The present management of our Company is limited to Marc Baker, whoserves as our president and sole director. Mr. Baker is a certified public accountantlicensed in the State of Florida. During the past five years, Mr. Baker has hadsignificant professional experience in negotiating mergers, acquisitions and stockpurchase agreements involving several different private companies with public companies.Mr. Baker has also provided consulting services to other independent public accountingfirms and attorneys in several transactions which services have facilitated companies inbecoming operating companies and in several instances becoming fully reporting companiesunder the Exchange Act. Mr. Baker has also worked closely with the professionals engagedby the entities seeking to enter into Business Combinations, similar to those that we maypursue for the purpose of due diligence and evaluation of Target Businesses and conductingnegotiations for Business Combinations. During the past five years, Mr. Baker served as anofficer and director of the following public companies each of which entered into aBusiness Combination during the year stated: Life Industries Inc., a public non-reportingcompany, entered into a merger agreement with Quill Industries, an operating company, in1997; Stetson Oil Exchange Inc., a public non-reporting company, entered into a mergeragreement with Telecom Wireless, an operating company, in 1998; Biologistics Inc., apublic non-reporting company, entered into a merger agreement with Skintek Labs Inc., anoperating company, in 1999; and Union Chemical Corp., a public non-reporting company,entered into a merger agreement with Hot Yellow 98.com, an operating company in 1999.

RETENTION OF INVESTMENT BANKER

We may engage an investment-banking firm, which is a member of the NASDto assist us in identifying, evaluating, structuring and negotiating potential BusinessCombinations. At present we do not have the cash resources to engage and pay forinvestment banking services.

RISK FACTORS

The following important factors, among others, could cause actualresults to differ from those indicated in forward-looking statements made in thisdocument. Further, reference is made to the disclosure in "all capitalizedletters" on the first page following the cover page of this Annual Report on Form10-KSB. 

The following factors contain certain forward-looking statements.Forward-looking statements give our current expectations or forecasts of future events.You can identify these statements by the fact that they do not relate strictly tohistorical or current facts. They use words such as "anticipate,""estimate," "expect," "project," "intend,""plan," "believe," and other words and terms of similar meaning inconnection with any discussion of future operating or financial performance. From time totime, we also may provide oral or written forward-looking statements in other materials werelease to the public.

Any or all of our forward-looking statements in this document and inany other public statements we make may turn out to be wrong. They can be affected byinaccurate assumptions we might make or by known or unknown risks and uncertainties. Manyfactors mentioned in the discussion below will be important in determining future results.Consequently, no forward-looking statement can be guaranteed. Actual future results mayvary materially.

We undertake no obligations to publicly update any forward-lookingstatements, whether as a result of new information, future events or otherwise. You areadvised, however, to consult any further disclosures we make on related subjects in ourfuture filings with the SEC.

NO RELEVANT OPERATING HISTORY; LIMITED RESOURCES; NO PRESENT SOURCE OF REVENUES.

On July 1, 1999 we sold our operating subsidiaries, RCS and RCSS toMessrs. Rosedale and Wilheim in exchange for 75,000 shares of CMDI common stock, valued at$281,250, based upon the market price of CMDI at the date of the transaction. As a result,we have at present no business operations and therefore our historical financialinformation contained in this Form 10-KSB is of limited value to potential investors inevaluating any investment in our Company. Although our president and sole director, MarcBaker, has had extensive experience as a certified public accountant in Florida regardingthe evaluation and acquisition of Target Businesses, because of our lack of operatinghistory, and limited financial and personnel resources, there is only a limited basis uponwhich to evaluate our prospects for achieving our intended business objectives. We haveonly limited resources and have no operating income or revenues. Until June 30, 1999, wereceived all working capital from our former operating subsidiaries. From July 1, 1999 toSeptember 30, 1999, CMDI provided   limited  funding needed for us to continueour corporate existence. We had no written finance agreement with CMDI, which owned 81% ofour capital stock, and which transferred all of its beneficial and record ownership in ourshares of common stock to a charitable organization, the Institute for Geriatric Researchin Cincinnati, Ohio. See Item 4, Part I, "Security Ownership of Certain BeneficialOwners and Management" below. Our new president and sole director, Marc Baker, hasnot agreed in writing to provide any interim financing for any period until we complete aBusiness Combination, if ever. However, Mr. Baker has advanced funding directly to payprofessional accounting fees and other expenses $12,500 through the date of this Form10-KSB. Such funding was not paid through the Company. In addition, we will not achieveany revenues unless and until the consummation of a Business Combination, of which therecan be no assurance. Moreover, there can be no assurance that any Target Business, at thetime of our consummation of a Business Combination, or at any time thereafter, will deriveany material revenues from its operations or operate on a profitable basis.

"BLANK CHECK" COMPANY; BROAD DISCRETION OF MANAGEMENT.

The filing of this Form 10-KSB under the Exchange Act does not involvethe offering of any securities. While there can be no assurance, it may be expected thatupon our becoming current under the reporting requirements of the Exchange Act a tradingmarket may develop for our securities, however limited. Therefore, any persons who investin our securities will do so without an opportunity to evaluate the specific merits orrisks of any potential Business Combination(s) in which we may engage. As a result,investors will be entirely dependent on the broad discretion and judgment of management inconnection the selection of a Target Business. There can be no assurance thatdeterminations ultimately made by our management will permit us to achieve its businessobjectives.

ABSENCE OF SUBSTANTIVE DISCLOSURE RELATING TO PROSPECTIVE BUSINESS COMBINATIONS;INABILITY TO DETERMINE A TARGET BUSINESS AT PRESENT

"Blank check" companies are inherently characterized by theabsence of substantive disclosure, other than general descriptions, relating to potentialBusiness Combinations and Target Businesses. We have not yet identified a prospectiveTarget Business. Accordingly, shareholders and any person contemplating any investment inour shares, in the event that any active trading market commences, of which there can beno assurance, have no substantive information concerning consummation of any specificBusiness Combination. There can be no assurance that any Target Business with which weenter into a Business Combination, if any will ultimately prove to be more favorable toshareholders than any other investment, if such opportunity were available, toshareholders and investors.

THERE IS NO ACTIVE MARKET FOR OUR COMMON STOCK AND NONE MAY DEVELOP OR BE SUSTAINED

Our Common Stock was listed for trading on the OTC Bulletin Board underthe symbol "BSDI" from February 3, 1998 until our Common Stock was delisted inJuly, 1999 as a result of our not being a current reporting company under the ExchangeAct. We do not believe that there was any significant trading activity in the BSD CommonStock since that date, notwithstanding the fact that our Common Stock has been quoted fromtime to time on the "pink sheets". There can be no assurance that there will bean active trading market for our securities following the completion of a BusinessCombination if, in fact, such Business Combination shall occur. Further, in the event thatan active trading market commences, there can be no assurance as to the market price ofour shares of common stock, whether any trading market will provide liquidity toinvestors, or whether any trading market will be sustained. While a prospective TargetBusiness may deem a consummation of a Business Combination with us to be desirable forvarious reasons, a Business Combination may involve the acquisition of, merger orconsolidation with, a company which does not need substantial additional capital, butwhich desires to establish a public trading market for its shares, while avoiding what itmay deem to be adverse consequences of undertaking a public offering itself, includingtime delays, significant expense, loss of voting control, the time and expense incurred tocomply and compliance with various Federal and state securities laws that regulate initialpublic offerings.

UNCERTAIN STRUCTURE OF BUSINESS COMBINATION

The structure of a future transaction with a Target Business cannot bedetermined at the present time and may take, for example, the form of a merger, anexchange of stock or an asset acquisition. We may form one or more subsidiary entities toeffect a Business Combination and may, under certain circumstances, distribute thesecurities of any such subsidiaries to our shareholders. There can be no assurance thatany market will develop for our securities or the securities of any subsidiary distributedto shareholders or, if any such market develops, no assurance can be given as to theprices at which such securities might trade or whether any trading market will besustained. The structure of a Business Combination or the distribution of securities toshareholders may result in our taxation, the taxation of any Target Business or taximplications for our shareholders. Nevertheless, it is our intention to structure anyBusiness Combination so that it will not result in a taxable event under the InternalRevenue Code or the laws of any jurisdiction.

UNSPECIFIED INDUSTRY AND TARGET BUSINESS; UNASCERTAINABLE RISKS

While we will target industries located in the United States, whilereserving the right to acquire a Target Business located elsewhere, we have not selectedany particular Target Business or industry in which to concentrate our BusinessCombination efforts. None of our directors or executive officers has had any contact ordiscussions with any entity or representatives of any entity regarding a consummation of aBusiness Combination. Accordingly, there is no basis for shareholders to evaluate thepossible merits or risks of the Target Business or the particular industry in which we mayultimately operate. To the extent that we effect a Business Combination with a financiallyunstable company or an entity in its early stage of development or growth (includingentities without established records of revenues or income), we will become subject tonumerous risks inherent in the business and operations of financially unstable and earlystage or potential emerging growth companies. In addition, to the extent that we effect aBusiness Combination with an entity in an industry characterized by a high degree of risk,we will become subject to the currently unascertainable risks of that industry. Anextremely high level of risk frequently characterizes certain industries that experiencerapid growth. Although management will endeavor to evaluate the risks inherent in aparticular Target Business or industry, there can be no assurance that we will properlyascertain or assess all such risks or that subsequent events may not alter the risks thatwe perceive at the time of the consummation of any Business Transaction.

DEPENDENCE UPON SOLE EXECUTIVE OFFICER/DIRECTOR RELATING TO BLANK CHECK COMPANIES

Our ability to successfully effect a Business Combination will belargely dependent upon the efforts of our sole executive officer/director, Marc Baker.Notwithstanding our dependence upon the experience of our chief executiveofficer/director, we do not have an employment agreement with Mr. Baker or any otherperson nor have we obtained any "key man" life insurance for the benefit of theCompany. The loss of the services of Mr. Baker prior to any Business Combination couldhave a material adverse effect on our ability to successfully achieve our businessobjectives. Mr. Baker is not required to commit a substantial amount of his time to ouraffairs and, accordingly, he may have a conflict of interest in allocating management timeamong various business activities. However, our executive officer/director will devotesuch time, as he deems reasonably necessary, in his sole discretion, to carry out ourbusiness and affairs, including the evaluation of potential Target Businesses and thenegotiation and consummation of a Business Combination. As a result, the amount of timedevoted to our business and affairs may vary significantly depending upon, among otherthings, whether we have identified a Target Business or are engaged in active negotiationof a Business Combination. Our executive officer/director has substantial experience innegotiating and completing Business Combinations involving non-operating or "blankcheck" companies with operating companies. We will rely upon the expertise of Mr.Baker and we do not anticipate that we will hire additional personnel unless and until aBusiness Combination is concluded. However, if additional personnel are required, therecan be no assurance that we will be able to retain such necessary additional personnel.

CONFLICTS OF INTEREST

Our executive officer/director is not required to commit his full timeto our affairs and it is likely that he will not devote a substantial amount of time toour affairs. Therefore, there may be a conflict of interest in allocating management timeamong his various business activities. As a result, the consummation of a BusinessCombination may require a greater period of time than if our management devoted his fulltime to our affairs. However, our executive officer/director will devote such time, as hedeems reasonably necessary, in his sole discretion, to conduct our business and affairs,including the evaluation of potential Target Businesses and the negotiation andconsummation of a Business Combination. As a result, the amount of time devoted to ourbusiness and affairs may vary significantly, depending upon, among other things, whetherwe have identified a Target Business or are engaged in active negotiation and consummationof a Business Combination. Although Mr. Baker, our sole executive officer/director, hasnot identified and is not currently negotiating a Business Combination for the Company,nor is he devoting any significant time to any other public or private company, in thefuture Mr. Baker and other persons that may become associated with us may becomeaffiliated with entities engaged in business activities similar to those we intend toconducted, including seeking potential Business Combinations. In such event, such personsmay have conflicts of interest in determining to which entity a particular businessopportunity should be presented. In general, officers and directors of a corporationincorporated under the laws of the State of Florida, which is where we are incorporated,are required to present certain business opportunities to such corporation. Accordingly,as a result of multiple business affiliations, certain of our directors and executiveofficers may have similar legal obligations to present certain business opportunities tomultiple entities. There can be no assurance that any conflicts will be resolved in ourfavor. 

LIMITED ABILITY TO EVALUATE TARGET BUSINESS MANAGEMENT; POSSIBILITY THAT MANAGEMENTWILL CHANGE

The role of our executive officer/director in our future operationsfollowing a Business Combination with a Target Business cannot be determined with anycertainty at this time. Although we intend to scrutinize closely the management of aprospective Target Business in connection with its evaluation of the desirability ofeffecting a Business Combination, and may retain an independent investment banking firm toassist us in this regard, there can be no assurance that our assessment of such managementwill prove to be correct, especially in light of the possible inexperience of our currentmanagement in evaluating certain types of businesses. While it is possible that certain ofour directors or executive officers will remain associated with us in some capacitiesfollowing a consummation of a Business Combination, it is unlikely that any of them willdevote a substantial portion of their time to our affairs. Moreover, there can be noassurance that such personnel will have significant experience or knowledge relating tothe operations of the Target Business with which we enter into a Business Combination. Wemay also seek to recruit additional personnel to supplement the incumbent management ofthe Target Business. There can be no assurance that we will successfully recruitadditional personnel or that the additional personnel will have the requisite skills,knowledge or experience necessary or desirable to enhance the incumbent management. Inaddition, there can be no assurance that our future management will have the necessaryskills, qualifications or abilities to manage a public company embarking on a program ofbusiness development.

POSSIBLE BUSINESS COMBINATION WITH A TARGET BUSINESS OUTSIDE THE UNITED STATES

It is possible that we may effectuate a Business Combination with aTarget Business located outside the United States, or which has business operationsoutside of the United States. In such event, we may face the additional risks of languagebarriers, different presentations of financial information, different business practices,and other cultural differences and barriers. Furthermore, due to our limited resources, itmay be difficult to assess fully these additional risks. Therefore, a Business Combinationwith a Target Business outside the United States may increase the risk that we will notachieve our business objectives.

COMPETITION

We expect to encounter intense competition from other entities havingbusiness objectives similar to ours. Many of these entities, including venture capitalpartnerships and corporations, other blank check and blind pool companies, largeindustrial and financial institutions, small business investment companies and wealthyindividuals, are well-established and have extensive experience in connection withidentifying and effecting Business Combinations directly or through affiliates. Many ofthese competitors possess greater financial, technical, human and other resources than usand there can be no assurance that we will have the ability to compete successfully. Basedupon our limited financial resources, we will lack the resources as compared to those ofmany of our potential competitors. Further, such competitors will generally not berequired to seek the prior approval of their own shareholders to approve a BusinessCombination, which may enable them to close a Business Combination far more quickly andexpeditiously than we may. This inherent competitive limitation may compel us to selectcertain less attractive Business Combination prospects. There can be no assurance thatsuch prospects will permit us to achieve its stated business objectives.

UNCERTAINTY OF COMPETITIVE ENVIRONMENT OF TARGET BUSINESS

In the event that we succeed in effecting a Business Combination, wewill, in all likelihood, become subject to intense competition from competitors of theTarget Business. In particular, certain industries that experience rapid growth frequentlyattract an increasingly larger number of competitors, including competitors with greaterfinancial, marketing, technical, human and other resources than the initial competitorsthat we may confront in any particular industry. The degree of competition characterizingan industry of any prospective Target Business cannot presently be ascertained. There canbe no assurance that, subsequent to a consummation of a Business Combination, we will havethe resources to compete in an industry of the Target Business effectively, especially tothe extent that the Target Business is in a high-growth industry.

ADDITIONAL FINANCING REQUIREMENTS

Because we have had no revenues since our sale of RCS and RCSS, andhave no present operations, we will be entirely dependent upon the willingness of ourpresent management to fund any costs associated with the search, evaluation andconsummation of a Business Combination, as well as, paying for the legal and accountingcosts associated with filing the required reports under the Exchange Act. Mr. Baker sinceJune 30, 2000 has made cash advances of $12,500 through the date of this Form 10-KSB topay our accounting fees and is negotiating with our attorney and certain third parties forpayment for services in shares in connection with the preparation and filing of this Form10-KSB and our Quarterly Reports due under the Exchange Act in order for us to becomecurrent in our reporting obligations. The amount of the legal and related consulting feeshas not been determined with certainty at the date of the filing of this Form 10-KSB, butwe expect to be able to pay such expense in shares of our common stock. In fact, we aredependent upon the willingness of such third parties to provide services to us inconsideration for our agreement to issue shares in lieu of cash compensation, in amountsto be determined, because we will not achieve any revenues (other than investment incomewhich may result from our sale of CMDI shares received upon our sale of RCS and RCSS)until, at the earliest, the consummation of a Business Combination. We anticipate that wewill have available to us sufficient resources, however limited, to continue to payaccounting fees and other miscellaneous expenses that may be required until we effect aBusiness Combination. However, as we have not yet identified any prospective TargetBusiness candidates, we cannot ascertain with any degree of certainty the capitalrequirements for any particular Business Combination. In the event that our availableresources from Mr. Baker prove to be insufficient for purposes of effecting a BusinessCombination (because of the size of the Business Combination or other reasons), we will berequired to seek additional financing. Our failure to secure additional financing couldhave a material adverse effect on our ability to consummate a Business Combination orcontinued development or growth of the Target Business. We do not have any arrangementswith any bank or financial institution to secure additional financing and there can be noassurance that any such arrangement, if required or otherwise sought, would be availableon terms deemed to be commercially acceptable and in our best interests.

STATE BLUE SKY REGISTRATION; RESTRICTED RESALES OF THE SECURITIES

Because the securities registered hereunder have not been registeredfor resale under the "blue sky" laws of any state, the holders of such sharesand persons who desire to purchase them in any trading market that might develop in thefuture, should be aware that there may be significant state blue-sky law restrictions uponthe ability of investors to sell the securities and of purchasers to purchase thesecurities. Most jurisdictions do not allow under any circumstances the trading or resaleof "blank-check" securities. Accordingly, investors should consider thesecondary market for the Company's securities to be a limited one or virtuallynon-existent. 

It is the intention of the management following the consummation of aBusiness Combination to seek coverage and publication of information regarding the Companyin Standard & Poor's Corporation Records Service. Inclusion in this publication isdeemed by approximately 40 state security regulation agencies to provide an exemption fromthe "blue sky" registration requirements.

DIVIDENDS UNLIKELY

We do not expect to pay dividends prior to the consummation of aBusiness Combination. The payment of dividends after consummating a Business Combination,if any, will be contingent upon our revenues and earnings, if any, capital requirementsand general financial condition subsequent to consummation of a Business Combination. Thepayment of any dividends subsequent to a Business Combination will be within thediscretion of our Board of Directors as then constituted. It is our expectation that anyfuture management following a Business Combination will determine to retain all earnings,if any, for use in the future business operations and accordingly, we do not anticipatedeclaring any dividends in the foreseeable future. Further under the Florida Statutes,Section 607.06401, a Florida corporation is limited in its ability to pay dividends, asfollows: No distribution may be made if, after giving its effect; (a) the corporationwould not be able to pay its debts as they become due in the usual course of business; or(b) the corporation’s total assets would be less than the sum of its totalliabilities plus . . . the amount that would be needed, if the corporation were to bedissolved at the time of the distribution, to satisfy the preferential rights upon thedissolution of shareholders whose preferential rights are superior to those receiving thedistribution".

POSSIBLE ISSUANCE OF ADDITIONAL SECURITIES

Our Articles of Incorporation authorize the issuance of 50,000,000shares of Common Stock and 5,000,000 shares of Preferred Stock, both with a par value of$0.01. There are no shares of Preferred Stock issued or outstanding. Although we have nowritten commitments as of the date hereof to issue any additional shares of Common Stock,we will, in all likelihood, issue additional shares in consideration for legal andconsulting services as well as a substantial number of additional shares in connectionwith or following a Business Combination. In fact, the consummation of a BusinessCombination between a "blank check" entity with an operating company oftenresults in the issuance of many times more shares than issued prior to the BusinessCombination as well as a change in control. To the extent that additional shares of CommonStock are issued in any Business Combination, our shareholders would experience dilutionof their respective ownership interests in BSD. Additionally, if we issue a substantialnumber of shares of Common Stock in connection with or following a Business Combination, achange in control of BSD will occur which may affect, among other things, our ability toutilize net operating loss carry forwards, if any. Furthermore, the issuance of asubstantial number of shares of Common Stock may adversely affect prevailing marketprices, if any, for the Common Stock and could impair our ability to raise additionalcapital through the sale of its equity securities.

Our Articles of Incorporation also authorizes the issuance of 5,000,000shares of preferred stock (the "Preferred Stock"), with such designations,powers, preferences, rights, qualifications, limitations and restrictions and in suchseries as our Board of Directors, subject to the laws of the State of Florida, maydetermine from time to time. Accordingly, our Board of Directors is empowered, withoutshareholder approval, to issue Preferred Stock with dividend, liquidation, conversion,voting or other rights that could adversely affect the voting power or other rights of theholders of Common Stock. In addition, the Preferred Stock could be utilized, under certaincircumstances, as a method of discouraging, delaying or preventing a change in control ofBSD. Although we do not currently intend to issue any shares of Preferred Stock, there canbe no assurance that we will not do so in the future. As of the date hereof, we have noshares of Preferred Stock issued and outstanding.

COMPLIANCE WITH PENNY STOCK RULES

Our securities will initially be considered a "penny stock"as defined in the Exchange Act and the rules thereunder, since the price of our shares ofCommon Stock is less than $5. Unless our Common Stock is otherwise excluded from thedefinition of "penny stock," the penny stock rules apply with respect to thatparticular security. The penny stock rules require a broker-dealer prior to a transactionin penny stock not otherwise exempt from the rules, to deliver a standardized riskdisclosure document prepared by the SEC that provides information about penny stocks andthe nature and level of risks in the penny stock market. The broker-dealer also mustprovide the customer with current bid and offer quotations for the penny stock, thecompensation of the broker-dealer and its sales person in the transaction, and monthlyaccount statements showing the market value of each penny stock held in the customer'saccount. In addition, the penny stock rules require that the broker-dealer, not otherwiseexempt from such rules, must make a special written determination that the penny stock issuitable for the purchaser and receive the purchaser's written agreement to thetransaction. These disclosure rules have the effect of reducing the level of tradingactivity in the secondary market for a stock that becomes subject to the penny stockrules. So long as the common stock is subject to the penny stock rules, it may become moredifficult to sell such securities. Such requirements, if applicable, could result inreduction in the level of trading activity for that particular security of BSD and couldmake it more difficult for investors to sell that particular security. 

ITEM 2. DESCRIPTION OF PROPERTY

Our corporate headquarters are presently located at the offices of MarcBaker, at 2700 North 29th Avenue, Suite 305 Hollywood, FL 33020, which space provided toit on a rent-free basis by Mr. Baker. Mr. Baker’s office facilities consist ofapproximately 800 square feet of office space, which he rents from an unaffiliated party.It is anticipated that this arrangement for rent-free space will remain until such time aswe successfully consummate a Business Combination. The space made available for us at theoffices of Marc Baker are sufficient for the foreseeable future, until such time as weshall conclude a Business Combination. 

Prior to our sale of RCS and RCSS as described above in July 1999, oursubsidiary, RCS incurred rent expense was approximately $46,000 for 1998 and $13,000 forthe six month period ended June 30, 1999. See Note 6 to the Notes to ConsolidatedFinancial Statements.

ITEM 3. LEGAL PROCEEDINGS

None.

ITEM 4. Submission of Matters to a Vote of Security Holders.

None.

 
**PART II**
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.

(A) MARKET INFORMATION

Our Common Stock was listed for trading on the OTC Bulletin Board (OTC:BB) under the symbol "BSDI" from February 3, 1998 until our Common Stock wasdelisted in July 1999 following which date our Common Stock was quoted from time to timeon the "pink sheets". We were delisted from the OTC: BB as a result of our notbeing a current reporting company under the Exchange Act. We do not believe that there wasever any significant trading activity in our Common Stock at any time. 

(B) HOLDERS

At November 30, 2000 there were approximately 75 holders of record of BSD's commonstock.

(C) DIVIDENDS

We have never paid any of dividends on our Common Stock, have no fundsfrom which to pay dividends and do not intend to pay dividends for the foreseeable future.We intend to retain earnings, if any, to finance the development and expansion of ourbusiness. Payment of dividends in the future will depend, among other things, upon ourability to generate earnings, its need for capital and its overall financial condition.

Further, under Florida law, no distribution may be made if, aftergiving it effect: (a) The corporation would not be able to pay its debts as they becomedue in the usual course of business; or (b) The corporation's total assets would be lessthan the sum of its total liabilities plus (unless the articles of incorporation permitotherwise) the amount that would be needed, if the corporation were to be dissolved at thetime of the distribution, to satisfy the preferential rights upon dissolution ofshareholders whose preferential rights are superior to those receiving the distribution.

RECENT SALES OF UNREGISTERED SECURITIES

The following information is given with regard to unregisteredsecurities sold by the Company during the past three years, including the dates andamounts of securities sold; the persons or class of persons to whom we sold thesecurities; the consideration received in connection with such sales and if the securitieswere issued or sold other than for cash, the description of the transaction and the typeand amount of consideration received. The number of restricted shares sold reflects areverse split of 1 for 14.5 shares in 1998.

Date
Title
Amount of Securities    Sold
Persons
Cash or Non Cash    Consideration 
2/3/98
Common
35.554 sharesKevin J. Merritt (1)
Pursuant to Acquisition of    RCS and RCSS   
(1) The    restricted shares issued to Mr. Merritt were in consideration for the acquisition of RCS    and RCSS. Mr. Merritt owned 100% or RCS and 74% or RCSS. The issuance and sale of the    restricted shares to Mr. Merritt was based upon Section 4 (2) under the Act and were    valued at $4.50 per share. The calculation of the sale price of restricted shares was    arbitrary and was not based upon any trading market in the Company’s Common Stock.    While our shares of Common Stock were listed for trading on the OTC:BB from February 3,    1998, following the date of the transaction with Mr. Merritt, until delisting in July    1999, and from such delisting date there were periodic quotes entered on the "pink    sheets", there was no liquidity applicable to the Company’s Common and no    independent basis to price the shares.
ITEM 6. MANAGEMENT'S PLAN OF OPERATION

The following discussion and analysis of financial condition andresults of operations contain some forward-looking statements. Forward-looking statementsgive our current expectations or forecasts of future events. You can identify thesestatements by the fact that they do not relate strictly to historical or current facts.They use words such as "anticipate," "estimate," "expect,""project," "intend," "plan," "believe," and otherwords and terms of similar meaning in connection with any discussion of future operatingor financial performance. From time to time, we also may provide forward-lookingstatements in other materials we release to the public. See Exhibit 99.1 attached heretoregarding The Private Securities Litigation Reform Act of 1995, Safe Harbor ComplianceStatement for Forward Looking Statements. 

We undertake no obligations to publicly update any forward-lookingstatements, whether as a result of new information, future events or otherwise. You areadvised, however, to consult any further disclosures we make on related subjects in ourfuture SEC filings. Also note that we provide cautionary discussion of risks,uncertainties and possibly inaccurate assumptions relevant to our business under thesection entitled "Risk Factors" under Item 1 Part 1. Other factors besides thoselisted could also adversely affect us in the future.

OVERVIEW

All our current activity is related to seeking a Business Combination.We will use our limited personnel and financial resources principally in connection witheffecting a Business Combination, and structuring and consummating a Business Combination.It may be expected that any Business Combination will involve the issuance of our sharesof Common Stock. To the extent that Common Stock is used as consideration to effect aBusiness Combination, any available cash, of which there can be no assurance, will be usedto finance the operations of the Target Business. At December 31, 1999 and at the datefiling of this Annual Report on Form 10-KSB, we have no cash or other current assets.Further, the 3000 CMDI shares that are included in non-current assets in our ConsolidatedBalance Sheet at December 31, 1999 with a value of $46,875, has a present value of $1,500based upon the market price of $.50 per share at November 30, 2000. See the discussionunder Liquidity and Capital Resources below.

Results of Operations

Since we sold our RCS and RCSS operations effective July 1, 1999, wehave treated the healthcare businesses formerly owned by us as discontinued operations.For the year ended December 31, 1999 we had income from continuing operations of $687,758compared to no income from continuing operations in 1998. Our income from continuingoperations resulted solely from the forgiveness of debt in the amount of $689,910 in 1999,which is a non-cash transaction. We had a loss from discontinued healthcare operationstotaling $539,149 during 1999 compared to a loss from discontinued healthcare operationsof $27,352 in 1998. Our net income for the year ended December 31, 1999 was $148,609,which reflects the non-cash item from forgiveness of debt. During 1998, we had a net lossof $27,352. We have at present no continuing operations.

Liquidity and Capital Resources

At December 31, 1999 we had no current assets and had non-currentassets represented by available for sale securities (3000 shares of CMDI common stock)valued at $46,875 at such date. We had no liabilities at December 31, 1999. However, atNovember 30, 2000 the 3000 CMDI shares declined in value to $1,500 based upon a marketprice of $.50 per share on the OTC:BB.

At December 31, 1998 we had current assets of $1,478,575 principallyconsisting of $1,363,610 in accounts receivable relating to our former healthcare businessoperations. We had non-current assets of $1,715,535 principally consisting of goodwill of$1,681,577, as well as equipment of $90,416 and deferred loan fees of $24,917.

Our accumulated deficit at December 31, 1999 was $123,118 compared to$37,352 at December 31, 1998.

During 1999 we raised no funds through the sale of securities. However,prior to the sale of RCS and RCSS on July 1, 1999, we collected $712,414 in accountsreceivable which proceeds were utilized in connection with our then existing healthcareoperations. Following the sale of RCS and RCSS, we have generated no revenues from anysource nor have we received any funding from CMDI. In fact we had only limitedadministrative expenses of $2,152 during 1999. Since Mr. Baker became our president andchairman in July 2000 he has advanced or paid for the benefit of the Company a total of$12,500 which monies have been applied principally to pay accounting fees relating to ourfilings and reports under the Exchange Act. These filings are intended to permit us tobecome current under the reporting requirements of the Exchange Act. While we aredependent upon limited interim advances made on behalf of the Company by Mr. Baker to payprofessional fees, we have no written finance agreement with Mr. Baker to provide anycontinued funding. Further, the repayment terms of any funding advanced or to be advancedand/or paid by Mr. Baker have not been determined at the date of the filing of thisregistration statement. Mr. Baker is presently negotiating on behalf of the Company withits attorney and certain third parties to be paid for services in shares. No determinationhas been made regarding the amount of shares.

We may determine to seek to raise funds from the sale of equity or debtsecurities, from bank or other borrowings or a combination thereof as part of anyconsideration in effecting a Business Combination. However, we have no commitments as ofthe date hereof to issue any securities, and cannot at this time predict whether equity ordebt financing will become available at terms acceptable to the Company, if at all. Weanticipate that in connection with a Business Combination, we will, in all likelihood,issue a substantial number of additional shares and to the extent that such additionalshares are issued, our shareholders will experience a dilution in their ownershipinterest. Additionally, if a substantial number of shares of Common Stock are issued inconnection with the consummation of a Business Combination, a change in control of BSD maybe expected to occur.

There currently are no limitations on our ability to borrow funds toeffect a Business Combination. However, our limited resources and lack of operatinghistory may make it difficult to borrow funds. The amount and nature of any borrowing byus will depend on numerous factors, including BSD's capital requirements, potentiallenders' evaluation of BSD's ability to meet debt service on borrowing and the thenprevailing conditions in the financial markets, as well as general economic conditions.BSD does not have any arrangements with any bank or financial institution to secureadditional financing and there can be no assurance that such arrangements if required orotherwise sought, would be available on terms commercially acceptable or otherwise in thebest interests of BSD. The inability of BSD to borrow funds required to effect orfacilitate a Business Combination, or to provide funds for an additional infusion ofcapital into a Target Business, may have a material adverse effect on BSD's financialcondition and future prospects, including the ability to effect a Business Combination. Tothe extent that debt financing ultimately proves to be available, any borrowing willsubject BSD to various risks traditionally associated with indebtedness, including therisks of interest rate fluctuations and insufficiency of cash flow to pay principal andinterest. Furthermore, a Target Business may have already incurred debt financing and,therefore, subject BSD to all the risks inherent thereto.

ITEM 7. FINANCIAL STATEMENTS

Set forth below are the audited financial statements for the Companyfor the year ended December 31, 1999 and 1998.

**INDEX TO    CONSOLIDATED FINANCIAL STATEMENTS**
PageREPORT OF INDEPENDENT PUBLIC    ACCOUNTANTS18
CONSOLIDATED    BALANCE SHEETS DECEMBER 31, 1999 AND DECEMBER 31, 199819
CONSOLIDATED    STATEMENTS OF OPERATIONS FOR THE YEARS ENDED DECEMBER 31, 1999 AND 199820CONSOLIDATED STATEMENTS OF    STOCKHOLDERS’ EQUITY YEARS ENDED DECEMBER 31, 1999 AND 199820
CONSOLIDATED    STATEMENTS OF CASH FLOWS YEARS ENDED DECEMBER 31, 1999 AND 199821NOTES TO CONSOLIDATED FINANCIAL    STATEMENTS22
 

REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

 To the Directors and Stockholders

BSD Healthcare Industries, Inc.

 We have audited the accompanying consolidated balance sheets of BSD HEALTHCAREINDUSTRIES, INC. as of December 31, 1999 and 1998, and the related consolidated statementsof operations, stockholders’ equity and cash flows for the years then ended. Thesefinancial statements are the responsibility of the Company’s management. Ourresponsibility is to express an opinion on these financial statements based on our audit.

We conducted our audit in accordance with generally accepted auditing standards. Thosestandards require that we plan and perform the audit to obtain reasonable assurance aboutwhether the financial statements are free of material misstatement. An audit includesexamining, on a test basis, evidence supporting the amounts and disclosures in thefinancial statements. An audit also includes assessing the accounting principles used andsignificant estimates made by management, as well as evaluating the overall financialstatement presentation. We believe that our audit provides a reasonable basis for ouropinion.

In our opinion, the consolidated financial statements referred to above present fairly,in all material respects, the financial position of BSD Healthcare Industries, Inc. as ofDecember 31, 1999 and 1998, and its results of operations and cash flows for the yearsthen ended, in conformity with generally accepted accounting principles.

 /s/ GRASSANO ACCOUNTING, P. A.Boca Raton, FloridaSeptember 5, 2000
 

 
**BSD HEALTHCARE    INDUSTRIES, INC.
CONSOLIDATED BALANCE SHEETS    DECEMBER 31, 1999 AND 1998    
ASSETS
1999
1998Current Assets:   Cash and cash equivalents
$- 
$
18,171    Accounts receivable, net of    allowance for     doubtful accounts of    $235,000 in 1998- 
1,363,310    Other current assets- 
20,850    Receivable from affiliate- 
76,244      Total current assets- 
1,478,575    Available-for-sale securities
46,875 -    Equipment, net of accumulated    depreciation of  $38,827- 
90,416    Deferred loan fees, net of    accumulated amortization of $21,083- 
24,917    Goodwill, net of accumulated    amortization of $377,497- 
1,681,577      Total Assets
$
46,875 
$
3,275,485 
LIABILITIES AND    STOCKHOLDERS' EQUITYCurrent liabilities:   Notes payable to bank under    revolving credit facility
$- 
$
81,694    Note payable to bank under term    loan    6% note payable to    stockholder on demand- 
500,000    Accounts payable- 
309,142    Accrued expenses and other    liabilities- 
808,383    Estimated loss on disposal of    discontinued operations- 
143,634      Total current    liabilities- 
1,842,853 Notes payable to bank under term loan- 
1,299,991        Total    liabilities- 
3,142,844 Stockholders' equity:   Preferred stock, $.001 par value;    5,000,000 shares   authorized; none issued and    outstanding   Common stock, $.001 par value;    50,000,000 shares    authorized; 1,960,001    shares issued and outstanding
1,960 
1,960    Additional paid-in capital
168,033 
168,033    Retained earnings (accumulated    deficit)
111,257 
(37,352)   Accumulated other comprehensive    income (loss)
(234,375)
-         Total stockholders'    equity
46,875 
132,641        Total      Stockholders' Equity and Liabilities
$
46,875 
$
3,275,485 
See    accompanying notes to consolidated financial statements.
 
**BSD HEALTHCARE    INDUSTRIES, INC.
CONSOLIDATED STATEMENTS OF    OPERATIONS YEARS ENDED DECEMBER 31, 1999 AND 1998    
1999
1998Administrative expense
$
(2,152)
$
- Forgiveness of debt
689,910 
- Income (loss) from continuing operations
687,758 
- Discontinued health care operations:   Income (loss) from discontinued    operations
(539,149)
116,282    Loss on disposal of discontinued    operations
- 
(143,634)   Income (loss) from discontinued    operations
(539,149)
(27,352)Net income (loss)
$
148,609 
$
(27,352)Basic earning (loss) per common share:   Earnings (loss) from continuing    operations
$
.35 
$
-    Earnings (loss) from discontinued    operations
(.27)
(.01)   Net earnings (loss) per share
$
.08 
$
(.01) Basic weighted average common shares    outstanding
1,960,001 
1,960,001 
See    accompanying notes to consolidated financial statements.
 
**BSD    HEALTHCARE INDUSTRIES, INC.
CONSOLIDATED    STATEMENTS OF STOCKHOLDERS’ EQUITY YEARS ENDED DECEMBER 31, 1999 AND 1998           
Retained
Accumulated  
Addi-
Earnings
Other  
Common    Stock
tional
(Accu-
Comprehensive  
Number
Paid-in
mulated
Income
of Shares
Amount
Capital
Deficit)
Loss
TotalBalance, January 1, 1998
1,000,000 
$
1,000 
$
9,000 
$
(10,000)
$
- 
$
- Effect of 1 for 14.5 reverse stock    split
(931,034)
(931)
931 Proceeds from issuance common    stock
1,855,481 
1,855 
(1,855)Issuance of common stockin connection with theacquisition of businesses
35,554 
36 
159,957 
159,993 Net loss
  
  
   
(27,352)
(27,352)Balance, December 31, 1998
1,960,001 
1,960 
168,033 
(37,352)
132,641 Unrealized loss on available-for-sale securities
(234,375)
(234,375)Net income                 
148,609       
148,609 Balance, December 31, 1999
1,960,001 
$
1,960 
$
168,033 
$
111,257 
$
(234,375)
$
46,875 
See    accompanying notes to consolidated financial statements.
 
**BSD    HEALTHCARE INDUSTRIES, INC.
CONSOLIDATED    STATEMENTS OF CASH FLOWS YEARS ENDED DECEMBER 31, 1999 AND 1998   
1999
1998Operating activities:   Net income (loss)
$
148,609 
$
(27,352)   Adjustments to    reconcile net income (loss)    to net cash    provided by operating activities:   Depreciation
7,126 
19,186    Amortization of    goodwill and deferred financing costs
217,408 
398,580    Bad debt expense
28,000 
235,000    Forgiveness of debt
(689,910)
-    Estimated loss on    disposal of discontinued operations
- 
143,634    Disposal of RCS's    cash
(49,884)
-    Changes in operating    assets and liabilities     Accounts    receivable
712,414 
(585,550)     Other    current assets
(1,868)
(2,497)     Accounts    payable
47,825 
124,713      Accrued    expenses and other liabilities
(367,445)
235,983           Net cash provided by operating activities
52,275 
541,697 Investing activities:   Purchase of    businesses, net of cash acquired of $39,073
- 
(1,950,086)   Purchases of    equipment
(823)
(21,881)   (Payments to)    proceeds received from affiliate
182,638 
(76,244)          Net cash provided by (used in) investing activities
181,815 
(2,048,211)Financing activities:   Net repayments of    short-term borrowings
(252,261)
(429,315)   Proceeds from    borrowings from stockholder- 
500,000    Proceeds from    borrowings under term loan- 
1,500,000    Deferred financing    costs
- 
(46,000)          Net cash provided by (used in) financing activities
(252,261)
1,524,685 Net increase (decrease) in cash    and cash equivalents
(18,171)
18,171 Cash and cash equivalents,    beginning of period
18,171 
- Cash and cash equivalents, end of    period
$
   - 
$
18,171 Supplemental disclosure of cash    flow data:   Interest paid
$
90,614 
$
195,600 
See    accompanying notes to consolidated financial statements.
 

BSD HEALTHCARE INDUSTRIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 1 – History and organization of the Company:

BSD Healthcare Industries Inc. ("BSD") was incorporated inFlorida as Park Avenue Marketing, Inc. on February 7, 1989 to serve as a "blindpool" or "blank check" company for the purpose of either merging with oracquiring an operating company. BSD was initially capitalized by its founders whopurchased 68,966 shares of common stock for $10,000 (share and per share amounts have beenretroactively restated, where appropriate, to reflect a 200 for 1 stock split effected bythe Company on June 24, 1997 and a 1 for 14.5 reverse stock split effected by the Companyon February 2, 1998).

BSD did not conduct any operations of a commercial nature or have anysignificant activities until February 1, 1998 when it acquired 100% of the common stock oftwo commonly controlled companies, Respiratory Care Services, Inc. ("RCS") andRCSS. RCS and RCSS are referred to collectively herein as "RCS," and BSD, RCSand RCSS are referred to collectively herein as the "Company." As furtherexplained in Note 3, BSD accounted for the acquisition of its 100% interest in RCSpursuant to the purchase method of accounting effective as of February 1, 1998 and,therefore, the historical consolidated financial statements only include the results ofoperations of RCS subsequent to its acquisition. Since the Company did not have anysignificant activities prior to February 1, 1998, the Company has not included anystatements of operations, changes in stockholders' equity and cash flows for the yearended December 31, 1997 in the accompanying consolidated financial statements.

On December 7, 1998, Comprehensive Medical Diagnostics, Inc. (formerlyCoventry Industries Corp.) ("CMDI") issued shares of common stock to thestockholders of BSD and acquired 81.7% of the outstanding shares of common stock of BSD.The acquisition of BSD by CMDI had no effect on the accompanying consolidated financialstatements of the Company.

BSD has been a holding company since it acquired RCS and the Company'sonly operations have been conducted by RCS and RCSS. RCS, which was incorporated on July1, 1988, provides quality respiratory therapy staff in a variety of health care settings.RCSS, which was incorporated on October 19, 1995, provides credentialed, licensedtherapists experienced in all phases of skilled and subacute respiratory care. Thesehealth care services are provided primarily to Medicare patients.

As further explained in Note 3, on July 1, 1999, the Company's board ofdirectors and stockholders approved the disposal of the Company's health care operationsand the sale of RCS and RCSS to two of the stockholders of CMDI (they also serve asofficers and directors of CMDI) and, accordingly, the results of operations of thesubsidiaries have been reclassified and reflected as discontinued operations in theaccompanying consolidated statements of operations for all periods subsequent to theiracquisition. Since they conducted all of the business operations of the Company, theaccompanying consolidated statements of operations do not reflect any continuingoperations and substantially a11 of the assets and liabilities in the accompanyingconsolidated balance sheets are those related to the discontinued operations.

Subsequent to the consummation of the sale of the subsidiaries, themanagement of CMDI intends to use BSD as a "blind pool" or "blankcheck" company for the purpose of either merging with or acquiring an operatingcompany.

Note 2 - Summary of significant accounting policies: 

Principles of consolidation:

The accompanying consolidated financial statements include the accountsof BSD and its wholly owned subsidiaries, RCS and RCSS, from February 1, 1998, the datethey were acquired. All significant intercompany accounts and transactions have beeneliminated in consolidation.

Use of estimates:

The preparation of financial statements in conformity with generallyaccepted accounting principles requires management to make estimates and assumptions thataffect certain reported amounts and disclosures. Accordingly, actual results could differfrom those estimates.

Revenue recognition:

The Company recognizes revenue at the time staffing services areprovided.

Cash equivalents:

Cash equivalents include all highly liquid investments with a maturityof three months or less when acquired.

Equipment: 

Equipment is carried at cost. Depreciation is provided using thestraight-line method over estimated useful lives ranging from five to 14 years.

Available-for-sale securities:

Equity securities are classified as "available-for-sale" asdefined by SFAS No. 115. In accordance with that statement, they are reported at aggregatefair value with unrealized gains and losses excluded from earnings and reported as aseparate component of stockholders’ equity, net of deferred taxes.

Goodwill: 

Goodwill, which is comprised of costs in excess of net assets ofacquired businesses, is being amortized on a straight-line basis over an estimated usefullife of five years. The Company periodically evaluates the recoverability of itsintangible assets and measures the amount of impairment, if any, by assessing, among otherthings, the market and economic conditions related to, and the current and estimatedfuture levels of income and cash flows to be generated by, the acquired businesses.

Deferred loan fees:

Deferred loan fees are amortized using the straight-line method overthe term of the Company's loan facilities. Amortization of such costs is included ininterest expense and approximated $21,000 in 1998.

Advertising: 

The Company expenses the cost of advertising and promotions asincurred. Advertising costs charged to operations were not material during the year endedDecember 31, 1998.

Income taxes:

The Company accounts for income taxes pursuant to the asset andliability method which requires deferred income tax assets and liabilities to be computedannually for temporary differences between the financial statement and tax bases of assetsand liabilities that will result in taxable or deductible amounts in the future based onenacted tax laws and rates applicable to the periods in which the differences are expectedto affect taxable income. Valuation allowances are established when necessary to reducedeferred tax assets to the amount expected to be realized. The income tax provision orcredit is the tax payable or refundable for the period plus or minus the change during theperiod in deferred tax assets and liabilities.

Earnings (loss) per share:

The Company presents "basic" earnings (loss) per share and,if applicable, "diluted" earnings per share pursuant to the provisions ofStatement of Financial Accounting Standards No. 128, Earnings per Share ("SFAS128"). Basic earnings (loss) per share is calculated by dividing net income or lossby the weighted average number of shares outstanding during each period. The calculationof diluted earnings (loss) per share is similar to that of basic earnings per share,except that the denominator is increased to include the number of additional common sharesthat would have been outstanding if all potentially dilutive common shares, such as thoseissuable upon the exercise of stock options or under other agreements, had been issuedduring the period.

Diluted per share amounts have not been presented in the accompanyingconsolidated statements of operations because the Company did not have any securities oragreements during the years ended December 31, 1999 and 1998 that could have resulted inthe issuance of additional common shares.

Comprehensive income:

Statement of Financial Accounting Standards No. 130, "ReportingComprehensive Income," (SFAS 130), requires that total comprehensive income bereported in the financial statements. Total comprehensive income is presented in Note 5.

Recent accounting pronouncements:

The Financial Accounting Standards Board and the Accounting StandardsExecutive Committee of the American Institute of Certified Public Accountants had issuedcertain accounting pronouncements as of December 31, 1999 and 1998 that will becomeeffective in subsequent periods; however, management of the Company does not believe thatany of those pronouncements would have significantly affected the Company's financialaccounting measurements or disclosures had they been in effect as of December 31, 1999 and1998.

Note 3 - Acquisition and disposition of RCS: 

The Company acquired its 100% interest in RCS on February 1, 1998 inexchange for total initial consideration of $2,149,150, of which $1,989,157 was paid incash and the balance of $159,993 was paid through the issuance of 35,554 shares of theCompany's common stock at $4.50 per share (the fair market value of the common stock as ofthe date of closing). The acquisition has been accounted for pursuant to the purchasemethod and, accordingly, the results of operations of RCS have only been included in theaccompanying consolidated statements of operations from February 1, 1998. 

The cost of acquiring RCS, which exceeded the fair valueof the net assets acquired by $1,559,074, was allocated as follows:
Cash and cash equivalents
$
39,073 Accounts receivable
1,012,760 Goodwill
1,559,074 Other current and noncurrent    assets
106,074 Short-term notes payable
(311,000)Other current liabilities
(256,831)Total cost of acquisition
$
2,149,150 
The issuance of the shares of common stock as part of the considerationfor the acquisition of RCS was a noncash transaction that is not reflected in theaccompanying 1998 consolidated statement of cash flows.

In connection with the acquisition, the Company agreed to makeadditional payments to the former stockholders of RCS based on the results of operationsof RCS during the five-year period that commenced on February 1, 1998. Under generallyaccepted accounting principles, such consideration is only accrued and charged as anadditional cost of the acquisition when a contingent payment becomes due. The Companyaccrued a liability of $500,000 for the contingent payment due based on RCS's results ofoperations through December 31, 1998 and recorded an equivalent amount as goodwill. Noadditional amount was recorded during the year ended December 31, 1999. Any additionalamounts of goodwill recorded as a result of the contingent payment provisions of theacquisition agreement will be amortized prospectively over the estimated remaining usefullife of the asset.

Unaudited pro forma information showing the Company's results ofoperations for the years ended December 31, 1999 and 1998 assuming the acquisition of RCShad been consummated on January 1, 1998 has not been presented since such assumption wouldhave no affect on the results of the Company's continuing operations.

As explained in Note 1, on July 1, 1999, the Company's board ofdirectors and stockholders approved the disposal of all of the Company's health careoperations and the sale of RCS and RCSS to two of the stockholders of CMDI. Accordingly,the results of operations of RCS from February 1, 1998, the date of acquisition, throughDecember 31, 1999 have been retroactively reclassified and reflected as income (loss) fromdiscontinued health care operations in the accompanying consolidated statements ofoperations for the years ended December 31, 1999 and 1998. 

Since RCS conducted all of the business operations of the Company, theaccompanying consolidated statements of operations do not reflect any continuingoperations and substantially all of the assets and liabilities in the accompanyingconsolidated balance sheets are those related to the discontinued operations.

The Company received 75,000 (3,000 after the 1999 25 to 1 reverse stocksplit) shares of common stock of CMDI as the total consideration for the sale of RCS andRCSS. The Company accrued an estimated loss of $143,634 on the disposal of its health careoperations as of December 31, 1998 based on management's estimate of the carrying value ofthe net assets of RCS and RCSS that will be transferred upon the consummation of theirsale, net of the estimated fair market value of the shares of CMDI it will receive of$253,152 (or $3.375 per share). The accrued loss on disposal is included in income (loss)from discontinued health care operations in the accompanying consolidated statement ofoperations for the year ended December 31, 1998. (Note: the actual value of the CMDIcommon stock was $3.75 per share. This difference was adjusted during 1999.) RCS alsoforgave all of BSD’s intercompany debt.

Note 4 - Notes payable to bank:

During the year ended December 31, 1998, the Company obtained a$2,000,000 revolving credit facility and a $1,500,000 term loan facility from a bank.Interest is payable monthly at 2.5% above the prime rate on revolving credit facilityborrowings and 4% above the prime rate on term loan borrowings (the applicable prime ratewas 7.75% at December 31, 1998 and June 30, 1999).

Borrowings under the revolving credit facility, which expires inFebruary 2000, are limited to 80% of the outstanding balance of the Company's eligibleaccounts receivable and are secured by all of its accounts receivable. Borrowings underthe revolving credit facility totaled $81,864 and $9,980 at December 31, 1998 and June 30,1999, respectively. Since such borrowings are limited based on accounts receivablebalances, they are classified as a current liability in the accompanying consolidatedbalance sheets.

The entire balance of the term loan is payable in February 2000 and,accordingly, the balance of $1,299,991 at December 31, 1998 was classified as a noncurrentliability. This is a liability of RCS and consequently was $-0- as of December 31, 1999 onBSD’s unconsolidated balance sheet. (See Note 3.) Borrowings under the term loan arecross-collateralized by the accounts receivable securing the revolving credit facility andsecured by all of the other available assets of the Company.

Note 5 - Comprehensive income:

The Company adopted SFAS No. 130, "Reporting ComprehensiveIncome," at the beginning of 1998. The adoption had no impact on net income or totalstockholders’ equity. Comprehensive income consists of net income and othercomprehensive income. The year ended December 31, 1998 had no other comprehensive income.

On July 1, 1999, BSD acquired 75,000 (3,000 after the 1999 25 to 1reverse stock split) shares of CMDI common stock in exchange for its stock in RCS (seeNote 3.) This stock represents available-for-sale securities according to SFAS No. 115 andwas valued at $281,250. As of December 31, 1999, the stock is valued at $46,875, resultingin an unrealized loss of $234,375, which is other comprehensive income. Totalcomprehensive income (loss) for the year ended December 31, 1999 is $(85,766).

Note 6 - Income taxes: 

The Company’s Federal income tax liability was $4,792 for the yearended December 31, 1998 and is not included in these financial statements due toimmateriality. BSD has no income tax liability for the year ended December 31, 1999, andthere are no tax timing differences as of December 31, 1999 and 1998. 

Note 7 – Noncash transaction for cash flows statements:

As explained in Note 3, BSD sold RCS on July 1, 1999. The followingrepresents this noncash transaction for the year ended December 31, 1999:
Receipt of CMDI common stock
$
281,250 Disposal of RCS's    assets and liabilities:Accounts receivable, net
(622,896)Other current assets
(22,718)Equipment, net
(84,113)Deferred loan fees, net
(13,417)Goodwill, net
(1,475,669)Notes payable
1,129,424 Accounts payable
326,207 Accrued expenses and other    liabilities
440,938 Payable to affiliate
40,994 
$
- 
Note 8 - Commitments and contingencies: 

Leases: 

RCS has been utilizing its office space under month-to-month and othershort-term leases while it negotiates a new lease with its landlord for additional space.Rent expense charged to operations approximated $46,000 and $13,000 for the year endedDecember 31, 1998 and the six months ended June 30, 1999, respectively.

Litigation: 

In the ordinary course of business, the Company is both a plaintiff anddefendant in various legal proceedings. In the opinion of management, the resolution ofthese proceedings will not have a material adverse effect on the consolidated financialposition or results of operations of the Company in subsequent years.

Concentrations of credit risk and major customers:

Financial instruments that potentially subject the Company toconcentrations of credit risk consist principally of cash and cash equivalents andaccounts receivable. The Company places its cash and cash equivalents with high qualityfinancial institutions. At times, balances exceed Federally insured limits. The Companygenerally extends credit to its customers, substantially all of whom are located in thecentral United States. Management of the Company closely monitors the extension of creditto customers while maintaining allowances for potential credit losses. During the yearended December 31, 1998 and the six months ended June 30, 1999 and 1998, no customeraccounted for more than 10% of the Company's revenues. As of December 31, 1999, BSD nolonger has any cash or accounts receivable due to the divestiture of RCS. (See Note 3.)

Note 9 - Fair value of financial instruments:

The Company's material financial instruments at December 31, 1999 forwhich disclosure of estimated fair value is required by certain accounting standardsconsisted of available-for-sale securities. In the opinion of management,available-for-sale securities are being carried at their fair value. 

Note 10 - Transactions with affiliate:

From time to time, the Company makes payments on behalf of CommunicareHealth Services, Inc., a company controlled by certain stockholders of CMDI, and theaffiliate makes payments on behalf of the Company. Receivables and payables arising fromthese transactions are noninterest bearing and are repaid in the ordinary course ofbusiness.

ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIALDISCLOSURE

We are filing this Annual Report for the year ended December 31, 1999.Our financial statements for the year ended December 31, 1999 and 1998 were audited byGrassano Accounting, P.A. During the two most recent fiscal years, there was a change inindependent accountants. The financial statements used in our Registration Statement Form10-12/g filed on August 18, 1999 were audited by J.H. Cohn L.L.P., New Jersey, another accounting firm which weunderstand resigned or declined to stand for re-election. There was no adverse opinion,disclaimer of opinion, or was modified as to uncertainty, audit scope or accountingprinciples. There was no disagreement with the former accountant, whether or not resolved,on any matter of accounting principles or practices, financial statement disclosure, whichwould have caused it to make reference to the subject matter of the disagreement(s) inconnection with its reports. Further, the decision to change accountants was recommendedby our board of directors, and was the result of our cessation of business operations andchange in control.

 
**PART III**
ITEM 9. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

At present we have one executive officer and director. We contemplatethat we will elect one or more additional directors and appoint additional officers inconnection with a Business Combination transaction. Our director(s) are elected to serveuntil the next annual meeting of shareholders and until his (their) respective successorswill have been elected and will have qualified.

The following table sets forth as the name, age and position held with respect to oursole director and executive officer:
Name
Age
PositionsMarc Baker
40
President and Chairman
Marc Baker, our sole executive officer and director, has served inthese capacities since July 2000. Mr. Baker is a licensed certified public accountant withoffices in Hollywood, FL. For more than the past five years, Mr. Baker has been engaged inthe business of accounting and financial and business consulting services. During the pastfive years, Mr. Baker served as an officer and director of the following public companieseach of which entered into a Business Combination during the year stated: Life IndustriesInc., a public non-reporting company, entered into a merger agreement with QuillIndustries, an operating company, in 1997; Stetson Oil Exchange Inc., a publicnon-reporting company, entered into a merger agreement with Telecom Wireless, an operatingcompany, in 1998; Biologistics Inc., a public non-reporting company, entered into a mergeragreement with Skintek Labs Inc., an operating company, in 1999; and Union Chemical Corp.,a public non-reporting company, entered into a merger agreement with Hot Yellow 98.com, anoperating company in 1999.

Section 16(a) Beneficial Ownership Reporting Compliance:

Name of Officer/DirectorForms Not Filed

Marc Baker Forms 3 and 4

ITEM 10. EXECUTIVE COMPENSATION
          
Long Term Compensation        
Annual Compensation
Awards
Payouts  
(a)
(b)
(c)
(d)
(e)
(f)
(g)
(h)
(i)
Name and Principal    Position
Year
Salary
Bonus 
Other Annual    Compensation
Restricted Stock    Award(1) 
Securities Underlying    Options/SAR 
LTIP Payouts 
All other compensation      
($)($)($)($)(#)($)($)
Marc Baker, President    and Chairman (1)
1999
$132,000000000
(1) Mr. Baker, our    sole executive officer and director, commenced serving in such positions in July 2000.    During 1999 and 1998, we paid no executive compensation, because we lacked the cash flow    and financial resources.  The Company has no employment agreement with Mr. Baker nor    any arrangement to pay any compensation to Mr. Baker.
ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The following table sets forth certain information regarding thebeneficial ownership of the Common Stock of BSD as of November 1, 2000, and the date ofthe filing of this Form 10-KSB for the year ended December 31, 1999, beneficially by eachperson owning more than 5% of such common shares and the directors and executive officers,and by all officers and directors, as a group.
Name and Address of Beneficial Owner********************** |
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