SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
__________________________________________
FORM 10-KSB
(Mark one)
[_] Annual report under section 13 or 15(d) of the Securities Exchange Act of
1934
For the fiscal year ended ________________
OR
[X] Transition report under section 13 or 15(d) of the Securities Exchange Act
of 1934
For the transition Period from January 1, 2000 to September 30, 2000
Commission file number: 0-30096
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Home.Web, Inc.
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(Name of small business issuer in its charter)
Nevada 77-0454933
-------------------- ------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
435 Martin Street
Blaine, Washington 98230
------------------------------------- -----------------
(Address of principal executive offices) (Zip Code)
Issuer's telephone number: (360) 332-1350
Securities registered under Section 12(b) of the Act:
(Title of Class) Name of exchange on
which registered
None None
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Securities registered under Section 12(g) of the Act: Common Stock,
$0.001 par value
---------------------------
(Title of class)
Check whether the Issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Securities Exchange Act during the past 12 months (or for
such shorter period that the registrant was required to file such reports), and
(2) has been subject to such filing requirements for the past 90 days.
Yes X No
--- ---
Check if there is no disclosure of delinquent filers in response to Item 405 of
Regulation S-B is not contained in this form, and no disclosure will be
contained, to the best of 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]
Registrant's revenues for its most recent fiscal year: $Nil
----
The aggregate market value of the voting stock held by non-affiliates of the
registrant on November 30, 2000, computed by reference to the closing price of
that date, was $119,643,450, assuming solely for purposes of this calculation
that all directors and executive officers of the issuer are "affiliates." This
determination of affiliate status is not necessarily a conclusive determination
for other purposes.
On November 30, 2000, the registrant had 32,876,400 shares of Common Stock,
$0.001 par value per share, issued and outstanding.
TRANSITIONAL SMALL BUSINESS DISCLOSURE FORMAT: Yes [_] No [X]
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HOME.WEB, INC.
INDEX TO
ANNUAL REPORT ON FORM 10-KSB
FOR THE NINE MONTH TRANSITION PERIOD ENDED SEPTEMBER 30, 2000
<S> <C> <C>
PART I PAGE
Item 1 Description of Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Item 2 Description of Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Item 3 Legal Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Item 4 Submission of Matters to a Vote of Security Holders . . . . . . . . . . . . . . . .9
PART II
Item 5 Market for Common Equity and Related Stockholder Matters . . . . . . . . . . . . . . 9
Item 6 Management's Discussion and Analysis of Financial Condition and Results of Operations . . 10
Item 7 Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Item 8 Changes In and Disagreements With Accountants on Accounting and Financial Disclosure . . .14
PART III
Item 9 Directors, Executive Officers, Promoters and Control Persons; Compliance With
Section 16(a) of the Exchange Act . . . . . . . . . . . . . . . . . . . . . . . . . .15
Item 10 Executive Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Item 11 Security Ownership of Certain Beneficial Owners and Management . . . . . . . . . . . 17
Item 12 Certain Relationships and Related Transactions . . . . . . . . . . . . . . . . . . . 18
Item 13 Exhibits and Reports on Form 8-K . . . . . . . . . . . . . . . . . . . . . . . . . . 18
SIGNATURES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .20
FINANCIAL STATEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .F-1
</TABLE>
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PART I
ITEM 1. DESCRIPTION OF BUSINESS
-----------------------------------
Certain statements contained in this Report, including, without limitation,
statements containing the words, "believes," "anticipates," "expects," and other
words of similar import, constitute "forward-looking statements" within the
meaning of Section 27A of the Securities Act of 1933, as amended, and Section
21E of the Securities Exchange Act of 1934, as amended. Such forward-looking
statements involve known and unknown risks, uncertainties and other factors
which may cause the actual results, performance or achievements of Home.Web,
Inc. to be materially different from any future results, performance, or
achievements expressed or implied by such forward-looking statements. Given
these uncertainties, readers are cautioned not to place undue reliance on such
forward-looking statements. Home.Web, Inc. disclaims any obligation to update
any such factors or to announce publicly the results of any revision of the
forward-looking statements contained or incorporated by reference herein to
reflect future events or developments.
THE COMPANY
Home.Web, Inc. (the "Company") is a Nevada corporation formed on September 15,
1995 with authorized capital of 50,000,000 shares of Common Stock, par value
$0.001 per share, and 32,876,400 shares of issued and outstanding Common Stock
as of November 30, 2000. The Company has been a development stage company
specializing in the wholesaling of specialty and gourmet cheeses. The Company
suspended operations in the year 2000.
On October 16, 2000, the Company conducted a voluntary share exchange whereby it
offered up to 28,800,000 shares of its Common Stock to the shareholders of Duro
Enzyme Products Inc. ("Duro Enzyme") in exchange for all of the issued and
outstanding shares of Duro Enzyme. The effect of the share exchange was to
transfer control of the Company to the shareholders of Duro Enzyme. The majority
of shares of the Company are now held by former shareholders of Duro Enzyme.
The Company effectively took control of all of the assets of Duro Enzyme,
including its subsidiaries, by becoming its sole shareholder. Following the
share exchange, the Company has offices in both Canada and the United States and
has changed the focus of its business from gourmet and specialty cheeses to
DuroZyme technology. Its Canadian office is located adjacent to the site of its
Technology Development Center in Langley, British Columbia.
The Company changed its fiscal year end from December 31 to September 30 by
unanimous consent of the Board of Directors on December 15, 2000.
The Company now has the license to utilize and exploit the DuroZyme plant and
3SF Technology anywhere in the world. Through application of the technology,
the Company can manufacture unique, stable and natural enzymes and specialty end
products. This technology solves a major environmental problem and provides the
world with unique, stable and natural enzyme products.
The Company is structured as an integrated business with several subsidiaries
dedicated to delivering distinct aspects of its overall mandate. The following
shows how the Company is organized to serve its clients and shareholders:
DURO ENZYMES PRODUCTS INC.
------------------------------
| |
| |
DURO ENZYME SOLUTIONS INC. DURO ENZYME SOLUTIONS INC.
----------------------------- -----------------------------
(U.S. Subsidiary) (Canadian Subsidiary)
| |
| |
DUROZYME PLANT DURO ENZYME MANAGEMENT
--------------- -------------------------
Both of the Duro Enzyme Solutions Inc. subsidiaries are wholly owned by the
Company. The U.S. subsidiary owns 100% of the prototype DuroZyme plant and
holds the worldwide license to utilize and distribute products based on the 3SF
Technology. The U.S. subsidiary is responsible for managing and operating Duro
Enzyme's Technology Development Center, including researching and developing new
products and the protection of intellectual property.
3
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The Canadian subsidiary owns 100% of Duro Enzyme Management, which is
responsible for marketing, distributing, researching and siting DuroZyme plants,
products and services. The Canadian subsidiary will also provide management
and operations support services, arrange for and secure financing for the
production of plants, arrange for and secure long-term put-or-pay contracts for
selected specific input organic materials and arrange for and secure sales
contracts for DuroZyme and specialty end products.
The initial DuroZyme plants will be wholly owned and operated by the Company and
run as autonomous business entities. Plants will be strategically sited in or
near major urban centers. Each operating division and DuroZyme plant under the
Company's corporate structure will have access to a large pool of skilled
personnel, including experienced managers, business consulting professionals,
research and process technicians, plant operators and general laborers.
Products, Process and Market Opportunity
--------------------------------------------
DuroZyme plants are delivered as a turnkey package. The plants take in
specific, selected organic materials and charge a processing fee to convert them
to enzymes with unique, stable properties that have uses in environmental
restoration and preservation and processing of consumer products, such as
pharmaceutical, nutritional and health products. Specialty end products are
also manufactured as byproducts with unique growth enrichment properties for
wide agricultural use. DuroZyme plants provide a comprehensive solution that is
unique, stable and natural.
The DuroZyme process is a 100% natural process that is provided by way of the
exclusive 3SF Technology in environmentally-friendly DuroZyme plants. The
fermentation is carried out under aerobic conditions, at high temperatures,
using natural organic substrates and using naturally occurring heat- and
oxygen-loving microorganisms. The high temperatures pasteurize the input
organic material and destroy pathogens and other undesirable organisms,
including insects, insect eggs, larvae and worms. The aerobic conditions of the
fermentation control obnoxious odors. The full range of heat-loving
microorganisms naturally occurring on the input organic materials are provided
with their natural food sources.
The 3SF Technology is not limited by the unique growth or fermentation
conditions of a specific microorganism like other commercial fermentation
technologies used to produce enzymes. The microorganisms used in the DuroZyme
process are not modified or manipulated in any way. No microorganisms are
specifically added, and no chemical additives or synthetic media are needed.
The input materials, process and products are all natural.
The selection of specific natural raw materials and application of unique
process conditions enable stable and natural enzymes to be tailor-produced to
meet the needs of any enzyme application. Unique, stable and natural enzymes
are obtained by separating solid-liquids from the fermented organic slurry.
DuroZymes are recovered and purified from the liquid stream using specific
steps. The DuroZymes and end products are packaged, marketed and distributed to
the market from each of the strategically located plants.
The DuroZyme process and 3SF Technology have the following attributes:
- efficient - continuous production of commercial DuroZymes;
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- aerobic - non-odor producing;
-------
- unique - processing technologies not previously available;
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- flexible and robust - production of virtually any enzyme type through
---------------------
specific selection of input raw material and control of operating
conditions;
- selective - one type of input raw material yields one major type of stable
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enzyme; and
- cost-effective - very high value DuroZyme and end products manufactured
--------------
from low-value raw materials for which a processing fee is collected.
4
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The Company has plans to build a prototype DuroZyme plant in Langley, B.C.,
Canada, as a fully integrated manufacturing and technology development facility
capable of processing up to 60 tons per day of specific, selected organic
material. The cost of the prototype plant is estimated at $10 million.
The DuroZyme plant
--------------------
The DuroZyme plant is a state-of-the-art modular-built facility that utilizes
the 3SF Technology and DuroZyme process. The highly engineered plant is
designed to be a stand-alone production facility. Each plant takes up very
little space, about 10,000 square feet. A plant can be sited in or near urban
or residential areas since it is operated with zero environmental impact. This
is assured with use of an advanced air handling and water recovery system. The
spent air is passed through a scrubber system to remove particulates before it
is burnt off or thermally oxidized by the power co-generator. Operating from
its own power generator, each plant offers a self-sustaining high-temperature,
aerobic fermentation system that is not dependent on utility power.
Duro Enzyme plans to strategically site DuroZyme plants throughout the world.
Construction of plants is planned to be at a rate of one per year and at an
estimated cost of $8 million using debt financing. A total of five wholly owned
DuroZyme plants are projected within the first five years of operations.
Marketplace and the Duro Enzyme Solution
---------------------------------------------
In 1998, the global industrial enzyme market was estimated to be worth about $2
billion. The addition of medicinal, pharmaceutical, health, dietary product and
other consumer markets in which enzymes were used has increased the global
enzyme market to just over $3 billion. The market is expected to grow to $6
billion within the next few years.(1) Despite the large number of applications,
the global enzyme market represents a virgin market in terms of its value.
Applications have been limited to the properties of available enzyme products.
This has limited market expansion and growth. The introduction of the 3SF
Technology provides a wider range of applications for enzyme use in the
production of products and does so efficiently and naturally.
Duro Enzyme believes the DuroZyme plants provide specific generators of organic
materials with a cost-effective and efficient way to manage these materials and
divert them from the disposal chain. Duro Enzyme will work with generators to
supply specific, high-quality single source or "pure" organic materials of
consistent composition and volume. These materials may be in the form of
liquids or solids and from sources including the following:
- food processors
- fish and fish process byproducts
- processed fruit and vegetable byproducts
- meat trimmings and byproducts
- cheese whey and other dairy byproducts
- grain and cereal byproducts
- fruit juices, jams and their byproducts
- brewery byproducts
- winery byproducts
- supermarkets, other food retailers and restaurants
- fresh produce
- meat trimmings and bones
- fish and fish products
- cereal products and baked goods
- fryer oils and greases
- coffee grounds and filters
---------------------
(1) Scientists Find Jobs Turning "Extremozymes' Into Industrial Catalysts. The
Scientist, Vol. 10, No. 19, pp. 1-8 (1996); Enzymes Usher in a New Era.
Chemical Engineering (July 1998); A Global Business Report on Enzymes
(Industrial, Food & Research). Global Industry Analysts Inc., p. 750 (1997);
U.S. Commercial Enzyme Markets. Frost & Sullivan Publishers, p. 275 (1998);
---------------------------------
Enzymes for Industrial Applications: Products, Uses, Technologies and Economic
Values. Publications Resource Group, p. 290 (1998); M.T. and B.L. Marrs,
Extremophiles. Scientific American, p. 8 (April 1997).
5
<PAGE>
- industrial processors
- pulp and paper byproducts
- tannery residuals
- oil refining byproducts
- fermentation byproducts
- miscellaneous sources
- paper and cardboard
- corn stalk, straw and other plant biomass
The Company believes that high quality "pure" organics are plentiful and readily
available to DuroZyme plants, especially in urban areas where management and
disposal of organic waste and associated environmental problems require
solutions such as DuroZyme processing.
The availability of unique, stable and natural enzyme products from the DuroZyme
process opens untapped markets. DuroZymes demand a premium price in the
marketplace because they expand enzyme application by being stable and available
for a wider range of uses that usually destroy other enzymes. Other commercial
enzymes range in price from $500.00 per ounce to more than $250,000.00 per
ounce. DuroZymes open up enzyme markets by providing applications not
previously available. Some of the products developed using the DuroZyme process
are the following: pharmaceuticals; health products; cosmetics; analytical
tests; diagnostic tests; home and commercial test kits; industrial processes,
including pulp and paper manufacture, leather tanning and ethanol fuel
production; food products; food production processes; animal feeds; soil
remediation; water purification; organic waste reduction; and bioconversion
technologies.
DuroZymes manufactured at the Company's prototype DuroZyme plant will initially
target the animal feed industry. A large number of different enzymes are used
to increase feed quality, provide conversion efficiencies and increase the value
and utilization of traditionally low value feed materials. Key enzymes are
those that break down cellulose, a major component of straw, hay, corn stalk and
other plant biomass and those that breakdown specific antinutritional and
intolerance factors, including lignin, phytates and lactose.
The specialty end products manufactured by each DuroZyme plant are the bulk
solids byproduct of the DuroZyme process. The specialty end products are
enriched with residual DuroZymes not removed in the solids-liquids separation of
the fermented organics. The end products also contain pre-digested solids and
microbial biomass, which are highly stable and available forms of organic matter
and nutrients. They are valuable as nutrients and growth enhancers for wide
agricultural uses, including the following: specialty fish feeds; specialty
animal feeds; feed enrichment additives; hydroponic growth media for greenhouse
crop production; mushroom growth media; specialty plant fertilizers; fertilizer
enrichment additives; and soil conditioners. These and other applications
provide vertical integrated business opportunities to the main business of
DuroZyme production.
Competition
-----------
Approximately 70% of the commercial enzymes are products of microbial
fermentation. The microorganisms are specific bacteria, fungi or yeast,
isolated from soils, water or other sources. Isolation and purification of the
microorganisms is a time-consuming and resource intensive process, often
involving trial and error in the laboratory and significant expense. Once
obtained, the microorganism is usually modified so that it produces the desired
enzyme in high yield by using genetic techniques. The enzymes are cultured in
batches in large fermentation tanks.
---------------------------
(2) A Global Business Report on Enzymes (Industrial, Food & Research). Global
Industry Analysts Inc., p. 750 (1997); U.S. Commercial Enzyme Markets. Frost &
------------------------------
Sullivan Publishers, p. 275 (1998); Enzymes for Industrial Applications:
Products, Uses, Technologies and Economic Values. Publications Resource Group,
p. 290 (1998); Biochemicals and Reagents for Life Science Research. SIGMA
-----
Product Catalog, Sigma-Aldrich Canada Ltd. (1997); Anachemia Sciences Catalog.
---------- --------------------------
Anachemia Sciences Ltd. (1998).
(3) A Global Business Report on Enzymes (Industrial, Food & Research).
Global Industry Analysts Inc., p. 750 (1997); U.S. Commercial Enzyme Markets.
------------------------------
Frost & Sullivan Publishers, p. 275 (1998); Enzymes for Industrial Applications:
Products, Uses, Technologies and Economic Values. Publications Resource Group,
p. 290 (1998); Chemistry from Unknown Microbes. Science/Technology, Vol. 77, No.
1 (1999); Stroh, W.H., Trends in Use of Industrial Bioprocessing Enzymes for the
21st Century, Genetic Engineering News (September 15, 1994).
6
<PAGE>
The Company believes the traditional method of batch fermentation that is relied
upon by most producers of commercial enzymes is limiting. The limitations
include the following:
- The microbial fermentation method depends upon the use of mild conditions
to promote the growth of the enzyme-producing microorganism that often
produces an inactive form of enzyme.
- The action of the enzyme products is greatest towards synthetic materials
but show poor performance in commercial use with natural materials.
- The genetic manipulation of the microorganisms or of the enzymes they
produce results in non-natural microorganisms and/or non-natural products.
- The expense of time, resources and money in the development and manufacture
of specific enzymes is often significant which results in high prices for
the resulting enzyme products and processes.
- The manufacture of enzymes in batches is inefficient and does not meet the
individual needs of many end-users.
While a wide range of commercial enzymes are available, there is a need for
enzymes with greater stability and unique properties. Unique and specialty
enzymes command a premium price in the marketplace. The potential for
substantial revenue has driven the formation of numerous small-scale specialty
enzyme producers, as well as the development and increased use of high-tech
genetic engineering methods to produce enzymes with desired properties.
The Company believes the development of the 3SF Technology delivered by way of
turnkey DuroZyme plants is a major advance. The new technology avoids the
limitations faced by existing enzyme producers. The technology does not depend
on mild fermentation conditions or on a limited number of species of
microorganisms. Rather, natural food sources are used, widening the
applications for the DuroZyme process. The supply of single-source organic
materials needed by DuroZyme plants is readily accommodated by the millions of
tons of organic waste produced each year throughout the world.
Research and Development
--------------------------
The Company's future success will depend on its focus of its research and
development efforts enhancing its existing products and developing new
applications based on its innovative technology. The Company plans to continue
to find new applications for its 3SF Technology. The Company continues to focus
on the various uses of the enzymes produced in the process to further develop
its markets and products.
Intellectual Property Protection
----------------------------------
The DuroZyme plant delivery system and exclusive 3SF Technology and commercial
DuroZyme and specialty products will be protected through patents and
trademarks. The Company is in the process of filing for patent protection of
the 3SF Technology in the United States and Canada. International filings will
follow. Confidentiality policies will be internally implemented to protect the
Company's proprietary information.
----------------------------
(4) Thermophilic Organisms as Sources of Thermostable Enzymes, TIBTECH, Vol. 7,
No. 12, pp. 349-353 (1989); The Enzymes from Extreme Thermophiles: Bacterial
Sources, Thermostabilities and Engineering / Biotechnology, Vol. 45, p. 57-98
(1992); Personal Communications with Kerr Anderson of the Dow Chemical Company.
(5) A Global Business Report on Enzymes (Industrial, Food & Research). Global
Industry Analysts Inc., p. 750 (1997); U.S. Commercial Enzyme Markets. Frost
-------------------------------
& Sullivan Publishers, p. 275 (1998); Enzymes for Industrial Applications:
Products, Uses, Technologies and Economic Values. Publications Resource Group,
p. 290 (1998).
7
<PAGE>
Sources of Revenue
--------------------
The Company anticipates the following revenue sources: technology licensing
fees; raw material processing fees; and end product sales, including specific
DuroZymes, bulk growth-enrichment products and DuroZyme product blends.
DuroZyme plants are expected to be profitable within their first year of
operation. This projection is based on the following assumptions:
- A cost of $8 million to construct the plant.
- Operating capacity of up to 60 tons per day, with the plant operating at
90% capacity by the end of the fist year with the remaining time allotted
for startup, commissioning optimization and maintenance.
- Capital cost to build a 60 ton per day DuroZyme plant is projected to be
$10 million, not including site development costs.
- All plants are wholly owned and debt financed over 10 years at 10%
interest.
- Conservative estimates project construction of one DuroZyme plant per year
and a more aggressive estimates project two or more plants per year.
- Plants are staffed by 12 persons - plant Manager, Assistant plant Manager,
Office Clerk/Secretary, six plant Operators and three Control Technicians.
- Plants receive $50 per ton in processing fees, secured by long-term
put-or-pay contracts between the Company and local generators of specific
organic materials. A 60 ton per day plant operating at capacity 365 days
per year will generate projected gross revenues of over $1 million per year
in processing fees.
- A single-source or "pure" organics stream with eight percent total solids
will yield 4.8 tons of bulk solids byproduct per day from a 60 ton per day
DuroZyme plant operating at capacity. This specialty DuroZyme-enriched, end
product is projected to sell for $500/ton, yielding annual gross revenues
of over $875,000.
- Every ton of input organic material containing eight percent total solids
is projected to yield an ounce of DuroZyme product priced at $1,000 per
ounce. A 60 ton per day plant running at capacity over 365 days per year
will generate projected annual gross revenues of over $20 million from sale
of unique, stable and natural DuroZymes.
The operating income depends upon the local tip fee structures, market demand
for end products and specific enzyme product pricing. Operating costs depend on
a number of factors, including local wages, utilities, taxes, finance fees,
logistics of obtaining raw materials and end product distribution.
The Company projects completion of construction and commencement of full
operation of its prototype DuroZyme plant and Technology Development Center
within its first year of operations. This facility will showcase Duro Enzyme's
advanced technology, delivery systems and products.
Employees
---------
As of November 30, 2000, the Company had seven consultants. Of those
employees, 3 were classified as executive officers, two as administrative
personnel, and two sales and marketing. The Company's employees do not belong
to a collective bargaining unit, and the Company is not aware of any labor union
organizing activity. The Company believes its future success will depend in
large part on its continuing ability to attract, train and retain skilled
technical, sales, marketing and customer support personnel.
ITEM 2. DESCRIPTION OF PROPERTY
-----------------------------------
The corporate headquarters of the Company is located at 435 Martin Street,
Blaine Washington, 98230, where it sub-leases approximately 250 square feet at a
monthly rate of US$400. The Company also has offices at 8412 Armstrong Road,
Langley, British Columbia, V1M 3P5, CANADA. There it leases approximately 5,000
square feet at a monthly rate of US$3,000.
8
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The Company believes that these facilities will be suitable for the operation of
its business for the foreseeable future. The facilities are adequately insured
against perils commonly covered by business insurance policies.
ITEM 3. LEGAL PROCEEDINGS
----------------------------
The Company is not presently a party to any material pending legal or
administrative proceedings, and its property is not subject to any such
proceedings, except as may be incurred in the ordinary course of business.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
---------------------------------------------------------------------
No matters were submitted to the shareholders during the three month period
ended September 30, 2000.
PART II
ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
-------------------------------------------------------------------------
The Company's common stock is traded on the Over-the-Counter Bulletin Board
(OTC-BB) under the symbol "HMWB." The following table sets forth, for the
periods indicated, the range of high and low sales prices of the Company's
common stock as quoted by various market makers for the period of January 1,
2000 through September 30, 2000.
January 1, 2000 to September 30, 2000: High* Low*
-----------------------
January to March $5.00 $1.75
April to June $4.00 $2.63
July to September $2.62 $1.48
*The pricing information was provided by Edgar Filing System.
On November 30, 2000, the Company's common stock was held by approximately 1000
shareholders of record or through nominee or street name accounts with brokers.
The Company has not paid dividends in prior years and has no plans to pay
dividends in the near future. The Company intends to reinvest its earnings on
the continued development and operation of its business. Any payment of
dividends would depend upon the Company's pattern of growth, profitability,
financial condition, and such other factors as the Board of Directors may deem
relevant.
RECENT SALES OF UNREGISTERED SECURITIES
In February, 2000, the Company conducted a 1.2 to 1 forward stock split whereby
the holders of the Common Stock of the Company received 1.2 shares for each
share of Common Stock held. The Company issued 5,479,400 shares of its Common
Stock to its existing shareholders in connection with the stock split. The
offering was made pursuant to an exemption from the Securities Act of 1933, as
amended, namely Section 3(a)(3)(9) of the Act.
9
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ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
--------------------------------------------------------------------------------
OF OPERATIONS
--------------
The following discussion of the financial condition and results of operations of
the Company should be read in conjunction with the financial statements and the
related notes there to included elsewhere in this transitional annual report for
the nine months ended September 30, 2000. This transitional annual report
contains certain forward-looking statements and the Company's future operating
results could differ materially from those discussed herein.
INTRODUCTION
The Company is a Nevada corporation formed on September 15, 1995. The Company
has been a development stage company specializing in the wholesaling of
specialty and gourmet cheeses. The Company suspended operations in the year
2000.
On October 16, 2000, the Company conducted a voluntary share exchange whereby it
offered up to 28,800,000 shares of its Common Stock to the shareholders of Duro
Enzyme Products Inc. ("Duro Enzyme") in exchange for all of the issued and
outstanding shares of Duro Enzyme. The effect of the share exchange was to
transfer control of the Company to the shareholders of Duro Enzyme. The majority
of shares of the Company are now held by former shareholders of Duro Enzyme.
The Company effectively took control of all of the assets of Duro Enzyme,
including its subsidiaries, by becoming its sole shareholder. Following the
share exchange, the Company has offices in both Canada and the United States and
has changed the focus of its business from gourmet and specialty cheeses to
recycling technologies. Its Canadian office is located adjacent to the site of
its prototype DuroZyme plant and Technology Development Center in Langley,
British Columbia.
The Company now has the license to utilize and exploit the DuroZyme Plant and
3SF Technology anywhere in the world. Through application of this technology,
the Company can manufacture unique, stable and natural enzymes and specialty end
products. This technology solves a major environmental problem and provides the
world with unique, stable and natural enzyme products.
The Company will implement its business plan through two subsidiaries:
Duro Enzyme Solutions Inc. ("Duro Solutions USA"), a Nevada corporation,
----------------------------------------------------
holds all the licenses and rights to the 3SF Technology and service as the sole
sublicensor of the technology. Duro Solutions USA provides technical support to
the DuroZyme Plants, including quality control and assurance functions and
training in the United States.
Duro Enzyme Solutions Inc. ("Duro Solutions Canada"), a Canadian
----------------------------------------------------------
corporation, is responsible for managing and operating the Company's Technology
Development Center, for carrying out and managing the corporate research and new
product development, for protection of intellectual property, and for bringing
new ideas to commercialization, through research and development contracts with
Thermo Enzyme Products Inc.
STATUS OF OPERATIONS
During the nine months ended September 30, 2000 the operations of the Company
were suspended. On October 16, 2000, the Company acquired Duro Enzyme. The
operations of the Company after October 16, 2000 consist entirely of the
business of Duro Enzyme.
The Company changed its fiscal year end from December 31 to September 30 by
unanimous consent of the Board of Directors on December 15, 2000.
PLAN OF OPERATIONS
With the acquisition of Duro Enzyme, the Company has shifted its business
operations away from gourmet and specialty cheeses to DuroZyme technology. The
new business is in the early stages of operations and is focused on implementing
and developing its business plan to meet its growth objectives. The majority of
the current resources of the Company will focus on developing the recycling
technologies of Duro Enzyme.
10
<PAGE>
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Nine Months Ended September 30, 2000, Compared to Year Ended December 31, 1999
The following discussion sets forth information for the nine months ended
September 30, 2000, compared with the twelve months ended December 31, 1999.
This information has been derived from audited financial statements of the
Company and Duro Enzyme contained elsewhere in this Form 10-KSB.
Results of Operations
-----------------------
Planned principal operations of the Company commenced in 1995. However, to this
date the Company has received limited revenues. In June 1975, the Financial
Accounting Standards Board, in its Statement No. 7, set forth guidelines for
identifying an enterprise in the development stage and the standards of
financial accounting and reporting applicable to such an enterprise. In the
opinion of the management of the Company, the Company and Duro Enzyme as well as
their activities from inception through September 30, 2000 fall within the
referenced guidelines. Accordingly, the Company has reported its and Duro
Enzyme's activities in accordance with the aforesaid Statement of Financial
Accounting Standards No. 7.
Sales and Revenues
--------------------
During the nine months ended September 30, 2000 and the years ended December 31,
1999 and 1998, the Company sustained a net loss of approximately $3,799, $29,765
and $40,521, respectively. The Company's losses up through September 2000 have
been due to suspended business operations.
The Company intends to derive revenues generally from the implementation of the
Duro Enzyme business plan. For the ten months (since inception) ended September
30, 2000, Duro Enzyme sustained a net loss of $3,932.
Expenses
--------
General and administrative expenses for the Company were $2,999, $27,454 and
$41,577 for the nine months ended September 30, 2000 and the for the years ended
December 31, 1999 and 1998, respectively. The significant expenditures have
been business startup costs and consulting fees.
As the Company proceeds with the business plan of Duro Enzyme, the Company
expects to incur significant startup costs. During the ten months ended
September 30, 2000, Duro Enzyme had expenses of $3,932, which consisted of
$2,699 in filing fees and $1,233 in interest. As of September 30, 2000, Duro
Enzyme had incurred limited expenditures but that is expected to change during
the three months ended December 31, 2000.
LIQUIDITY AND CAPITAL RESOURCES
No material commitments for capital expenditures were made during the nine
months ended September 30, 2000.
As of September 30, 2000, the Company had net stockholders' deficit of $
$25,923, accumulated losses during the development stage of $1,349,077 and a
working capital deficit of $25,938. As of the same date, Duro Enzyme had net
stockholders' deficit of $3,931 and a working capital deficit of $1,003,931.
There can be no assurance that the Company will be able to continue as a going
concern or achieve material revenues or profitable operations.
The Company plans to utilize a combination of internally generated funds from
operations, potential debt and/or equity financings to fund its short-term and
long-term growth. The availability of future financings will depend on market
conditions. A portion of the funds may be used to grow the business through
acquisitions of other businesses.
11
<PAGE>
The forecast of the period of time through which the Company's financial
resources will be adequate to support operations is a forward-looking statement
that involves risks and uncertainties. The actual funding requirements may
differ materially from this as a result of a number of factors including plans
to rapidly expand its new operations.
EFFECT OF FLUCTUATIONS IN FOREIGN EXCHANGE RATES
The Company's current operations are now located outside the United States. The
functional currency for this foreign operation is the local currency. The
carrying value of the Company's investments in Canada is subject to the risk of
foreign currency fluctuations. Any revenues received from the Company's
international operations will be subject to foreign exchange risk.
RECENT ACCOUNTING PRONOUNCEMENTS
In June 1998, the Financial Accounting Standards Board issued Statement of
Financial Standards No. 133, "Accounting for Derivative Instruments and Hedging
Activities" (SFAS No. 133). SFAS No. 133 requires companies to recognize all
derivatives contracts as either assets or liabilities in the balance sheet and
to measure them at fair value. If certain conditions are met, a derivative may
be specifically designated as a hedge, the objective of which is to match the
timing of gain or loss recognition on the hedging derivative with the
recognition of (i) the changes in the fair value of the hedged asset or
liability that are attributable to the hedged risk or (ii) the earnings effect
of the hedged forecasted transaction. For a derivative not designated as a
hedging instrument, the gain or loss is recognized in income in the period of
change. SFAS No. 133 is effective for all fiscal quarters of fiscal years
beginning after June 15, 2000.
Historically, the Company has not entered into derivatives contracts either to
hedge existing risks or for speculative purposes. Accordingly, the Company does
not expect adoption of the new standard on January 1, 2001 to affect its
financial statements.
In December 1999, the SEC staff released Staff Accounting Bulletin No. 101,
"Revenue Recognition in Financial Statements" ("SAB 101"). SAB 101 provides
interpretive guidance on the recognition, presentation and disclosure of revenue
in the financial statements. SAB 101 must be applied to the financial
statements no later than the quarter ending September 30, 2000. The Company
does not believe that the adoption of SAB 101 will have a material affect on the
Company's financial results.
In March 2000, the Financial Accounting Standards Board issued Interpretation
No. 44 ("FIN 44") Accounting for Certain Transactions Involving Stock
Compensation, an Interpretation of APB Opinion No. 25. FIN 44 clarifies the
application of APB No. 25 for (a) the definition of employee for purposes of
applying APB No. 25, (b) the criteria for determining whether a plan qualifies
as a non-compensatory plan, (c) the accounting consequences of various
modifications to the terms of a previously fixed stock option or award, and (d)
the accounting for an exchange of stock compensation awards in a business
combination. FIN 44 is effective July 2, 2000, but certain conclusions cover
specific events that occur after either December 15, 1998, or January 12, 2000.
The Company will adopt FIN 44 in accounting for the stock options granted.
In March 2000, EITF 00-2 "Accounting for Web Site Development Costs" was
released. EITF 00-2 provides guidance on how an entity should account for costs
involved in such areas as planning, developing software to operate the web site,
graphics, content, and operating expenses. EITF 00-2 is effective for web site
development costs incurred for fiscal quarters beginning after June 30, 2000.
FORWARD-LOOKING STATEMENTS
This Annual Report on Form 10-KSB contains forward-looking statements. The
words "anticipate", "believe", "expect", "plan", "intend", "estimate",
"project", "could", "may", "foresee" and similar expressions are intended to
identify forward-looking statements. The following discussion of risks should
be read in conjunction with the Company's financial statements and notes and
other financial information included elsewhere in this Form 10-KSB. In addition
to historical information, this Form 10-KSB contains statements that involve
risks and uncertainties. The Company's actual results could differ materially
from the results discussed in the forward-looking statements. Factors that
could cause or contribute to such differences include those discussed in this
"Risk Factors" section of the Form 10-KSB.
12
<PAGE>
RISK FACTORS
Shareholders and prospective purchasers of the Company's Common Stock should
carefully consider the following risk factors in addition to the other
information appearing in this Transitional Annual Report on Form 10-KSB.
THE COMPANY MAY REQUIRE ADDITIONAL EQUITY FINANCING, WHICH MAY NOT BE
AVAILABLE AND MAY DILUTE THE OWNERSHIP INTERESTS OF INVESTORS.
The Company's ultimate success will depend on its ability to raise additional
capital. No commitments to provide additional funds have been made by
management or other shareholders. The Company has not investigated the
availability, source or terms that might govern the acquisition of additional
financing. When additional capital is needed, there is no assurance that funds
will be available from any source or, if available, that they can be obtained on
terms acceptable to the Company. If not available, the Company's operations
could be severely limited, and it may not be able to implement its business
plan. If equity financing is used to raise additional working capital, the
ownership interests of existing shareholders may be diluted.
THE COMPANY'S OPERATING RESULTS ARE LIKELY TO FLUCTUATE SIGNIFICANTLY.
As a result of the Company's limited operating history following the acquisition
of Duro Enzyme and the planned rapid expansion of its business operations, the
Company's quarterly and annual revenues and operating results are likely to
fluctuate from period to period. For this reason, you should not rely on
period-to-period comparisons of the Company's financial results as indications
of future results. The Company's future operating results could fall below the
expectations of public market analysts or investors and significantly reduce the
market price of its common stock. Fluctuations in the Company's operating
results will likely increase the volatility of its stock price.
THE COMPANY'S DEPENDENCE ON RELATIONSHIPS WITH BUSINESSES AND GOVERNMENTS
OUTSIDE OF THE UNITED STATES INVOLVES RISKS.
The Company depends on its ability to establish and maintain successful
relationships with businesses and governments located outside of the United
States. If the Company is unable to establish and maintain such relationships,
it will not be able to implement the business plan in its current configuration,
which will affect both its revenue stream and profit potential. In addition,
the Company faces political sovereign risks of conducting international
business, including risks of changing economic conditions, which may have a
material adverse effect on its ability to expand its operations globally.
POTENTIAL BUSINESS COMBINATIONS COULD BE DIFFICULT TO INTEGRATE AND DISRUPT
BUSINESS OPERATIONS.
Any acquisition of or business combination with another company could disrupt
the Company's ongoing business, distract management and employees and increase
the Company's expenses. If another company acquires the Company, it could face
difficulties in assimilating with that company's personnel and operations.
Acquisitions also involve the need for integration into existing administration,
services, marketing and support efforts.
THE COMPANY DOES NOT ANTICIPATE PAYING DIVIDENDS TO COMMON SHAREHOLDERS IN
THE FORESEEABLE FUTURE, WHICH MAKES INVESTMENT IN THE COMPANY SPECULATIVE
OR RISKY.
The Company has not paid dividends on its common stock and does not anticipate
paying dividends on its common stock in the foreseeable future. The Board of
Directors has sole authority to declare dividends payable to the Company's
shareholders. The fact that the Company has not and does not plan to pay
dividends indicates that the Company must use all of its funds generated by
operations for reinvestment in its operating activities and also emphasizes that
the Company may not continue as a going concern. Investors also must evaluate
an investment in the Company solely on the basis of anticipated capital gains.
13
<PAGE>
THE COMPANY MAY BE UNABLE TO PROTECT ITS INTELLECTUAL PROPERTY, TRADE
SECRETS AND KNOW-HOW WHICH WOULD REMOVE A BARRIER TO COMPETITION AND MAY
DIRECTLY AFFECT THE AMOUNT OF REVENUE IT GENERATES.
The Company depends heavily on its 3SF technology to produce stable and unique
enzymes. The Company is dependent on its ability to keep trade secrets and
obtain patents on business processes as well as on its ability to develop new
processes to meet the needs of its marketplace. Although the Company intends to
employ various methods, including trademarks, patents, copyrights and
confidentiality agreements with employees, consultants and third party
businesses, to protect its intellectual property and trade secrets, there can be
no assurance that it will be able to maintain the confidentiality of any of its
proprietary technology, know-how or trade secrets, or that others will not
independently develop substantially equivalent technology. The failure or
inability to protect these rights could have a material adverse effect on the
Company's operations.
THE COMPANY MAY NOT BE ABLE TO EFFECTIVELY MANAGE ITS GROWTH WHICH COULD
HAVE A MATERIAL EFFECT ON ITS BUSINESS OPERATIONS.
The Company's ability to manage its growth depends in part upon its ability to
develop and expand operating, management, information and financial systems, and
production capacity, which may significantly increase its future operating
expenses. No assurance can be given that it will grow in the future or that it
will be able to effectively manage such growth. Its inability to manage its
growth successfully could have a material adverse effect on its business,
financial condition and results of operations. The Company cannot successfully
implement its business model if it fails to manage its growth. The Company plans
to rapidly and significantly expanded its operations domestically and
internationally and anticipates further expansion to take advantage of market
opportunities.
THE COMPANY MAY ENTER INTO NEW LINES OF BUSINESS WHICH INVESTORS ARE NOT
GIVEN THE OPPORTUNITY TO EVALUATE
In the event of a business combination, acquisition, or change in shareholder
control, the Company may enter into a new line of business which an investor did
not anticipate and in which that investor may not want to participate. The
Company may make investments in or acquire complementary products, technologies
and businesses, or businesses completely unrelated to its current business plan.
Similarly, an asset acquisition or business combination would likely include the
issuance of a significant amount of the Company's common stock, which may result
in a majority of the voting power being transferred to new investors. New
investors may replace the Company's management. New management may decide not
to continue to implement the Company's current business plan, and may decide to
enter into a business completely unrelated to the current business plan which an
investor did not anticipate and in which that investor may not want to
participate. In such case, an investor could lose its entire investment on a
business decision it did not get to evaluate at the time of investing in the
Company.
ITEM 7. FINANCIAL STATEMENTS
-------------------------------
Financial statements and supplementary data are set forth on pages F-1 thru
F-20.
ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
--------------------------------------------------------------------------------
FINANCIAL DISCLOSURE
---------------------
None.
14
<PAGE>
PART III
ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS;
-----------------------------------------------------------------------------
COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT
--------------------------------------------------------
In anticipation of the Exchange, on September 29, 2000 the Board of Directors of
the Company accepted the resignation of its directors and executive officers and
appointed new directors and executive officers.
The following individuals resigned as directors and executive officers of the
Company:
Dennis Davis Director and President
Cornelia Davis Director, Secretary and Treasurer
Florence Roberts Director
The following individuals were appointed directors and executive officers of the
Company:
Robert L. Jackman Director, President and Treasurer
Dean Branconnier Director and Vice President
Jolene Fuller Director and Secretary
The following table sets forth the name, age and position of each Director and
Executive Officer of the Company and Duro Enzyme as of September 30, 2000.
<TABLE>
<CAPTION>
NAME AGE POSITION
----------------- --- --------
<S> <C> <C>
Rowland Wallenius 30 President, Secretary, Treasurer and sole Director of Duro
Enzyme
Robert L. Jackman 38 President, Treasurer and a Director of Home.Web
Dean Branconnier 32 Vice President and a Director of Home.Web
Jolene Fuller 25 Secretary and a Director of Home.Web
</TABLE>
ROWLAND WALLENIUS - PRESIDENT, SECRETARY, TREASURER AND SOLE DIRECTOR OF DURO
--------------------------------------------------------------------------------
ENZYME
------
Mr. Wallenius has been involved with Duro Enzymes Products Inc. since its
inception and was appointed director and elected President, Secretary and
Treasurer of Duro Enzyme on December 1, 1999. His duties and responsibilities
have been to structure and design the initial startup, develop and implement a
business and marketing plan, negotiate license agreements for the core
technology and manage the daily operations of Duro Enzyme. Mr. Wallenius is
also President of Planet Earth Recycling Inc., a U.S. public corporation trading
on the OTC Bulletin Board, which is involved in building plants and providing
services that involve waste recycling. In 1997, Mr. Wallenius formed Rowland
Consulting Ltd., a private consulting company. He has performed consulting work
for Thermo Tech Technologies Inc., a public Canadian corporation. Prior to
opening a consulting business, Mr. Wallenius worked as a Chartered Accountant
for BDO Dunwoody and Collins Barrow in Vancouver, B.C., Canada. Mr. Wallenius
received a Bachelors of Business Administration degree in Accounting from Simon
Fraser University, Burnaby, B.C., Canada in 1993 and became a Chartered
Accountant in 1996.
15
<PAGE>
ROBERT L. JACKMAN - PRESIDENT, TREASURER AND A DIRECTOR OF HOME.WEB
-----------------------------------------------------------------------------
Prior to becoming a member of the Board and President of Home.Web, Inc., Robert
Jackman assisted with starting and organizing Duro Enzyme. Currently, Dr.
Jackman is a research and development and management consultant to Thermo Enzyme
Products Inc. (since 1998), Earthscape Maintenance Inc. (since 1997), Thermo
Tech Technologies Inc. (since 1995), and Thermo Tech Research Systems Inc.
(since 1995). As a consultant, he has assisted in the management of corporate
research and new product and technology development, coordinated experimental
research projects, provided technical support services, assisted with day-to-day
management of operations, assisted with promotion of the companies and their
products, assisted with preparation of patent applications, and provided quality
control of facilities. In 1994 and 1995, Dr. Jackman worked as a research
associate at the University of Guelph in Guelph, Ontario, Canada. As a research
associate, he conducted research studies on food texture-structure relationships
and published his findings. Dr. Jackman is an author of six book chapters and
20 scientific research papers. He received a Ph.D. in Food Science in 1992 and
a Masters of Science degree in 1988 from the University of Guelph. He also has
a Bachelors of Science degree from the University of British Columbia, which he
received in 1985.
DEAN BRANCONNIER - VICE PRESIDENT AND A DIRECTOR OF HOME.WEB
---------------------------------------------------------------------
Over the past year, Dean Branconnier has assisted with the organization and
development of Duro Enzyme. Prior to the year 2000, Mr. Branconnier was Plant
Manager for the Richmond Bio Conversion Inc. Thermo Master Plant in Richmond,
British Columbia, Canada (1998-2000) and for the Hamilton Bio Conversion Inc.
Thermo Master Plant in Hamilton, Ontario, Canada (1995-1998). As Plant Manager,
Mr. Branconnier has the following duties and responsibilities: assist with
project schedules and construction contracts; responsible for start of
operations at both plants; maintain a daily log of all plant events and manage
daily operations; oversee all office administration; manage expenditures; ensure
compliance with permits; conduct performance reviews of employees; ensure plant
safety and security; and staff the plants. From 1985 to 1995, Mr. Branconnier
worked as a management consultant for Thermo Tech Waste Systems Inc., assisting
with managing and organization the startup company.
JOLENE FULLER - SECRETARY AND A DIRECTOR OF HOME.WEB
------------------------------------------------------------
Over the past year, Jolene Fuller has assisted with day-to-day operations at
Duro Enzyme. She has monitored the research and development projects, reviewed
promotional materials, set up the office and hired personnel. Since 1998, Ms.
Fuller was an office administrator at Thermo Enzyme Products Ltd. Her duties
and responsibilities included: hiring and training administrative staff;
monitoring research and development projects; implementing policies and
procedures; and reviewing promotional materials. Since 1993, Ms. Fuller has
been property manager of several rental properties. As property manager, she is
responsible for collecting rents, monitoring repairs, retaining contracts, and
managing the portfolio of properties. Since 1997, Ms. Fuller has been Vice
President of Earthscape Maintenance Inc., a Langley, B.C. company. She is
responsible for office management and bookkeeping and maintaining a database of
customers. From 1988 to 1998, Ms. Fuller was Office Manager at Thermo Tech
Technologies Inc. As Office Manager she had the following duties and
responsibilities: bookkeeping; reviewing and filing documents; ordering
supplies; monitoring stock trading activities; preparing promotional materials;
preparing company database; and managing staff of ten.
COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT
Directors and officers of the Company are required by Section 16(a) of the
Securities Exchange Act of 1934 to report to the Securities and Exchange
Commission their transactions in, and beneficial ownership of, the Company's
common stock, including any grants of options to purchase common stock. To the
best of the Company's knowledge, Dennis Davis, Cornelia Davis and Florence
Roberts have not filed Form 3 and have not reported any other transactions on
Form 4 or Form 5 prior to September 30, 2000. Mr. Davis, Ms. Davis and Ms.
Roberts were replaced as officers and directors of the Company on September 29,
2000 by Robert L. Jackman, Dean Branconnier and Jolene Fuller. Mr. Jackman, Mr.
Branconnier and Ms. Fuller have filed with the SEC Forms 3 and 4. These forms
were filed after their due dates.
16
<PAGE>
ITEM 10. EXECUTIVE COMPENSATION
----------------------------------
The following table sets forth the compensation we have paid to Dennis Davis
(President and Treasurer) for the nine months ended September 30, 2000 and the
fiscal years ended December 31, 1999 and 1998. No other executive officers
received more than $100,000 during each of those periods. The Company does not
currently have a long term compensation plan and does not grant any long term
compensation to its executive officers or employees . The table does not reflect
certain personal benefits, which in the aggregate are less than ten percent of
each Named Executive Officer's salary and bonus. No other compensation was
granted for the periods covered.
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
Long Term Compensation
----------------------------------
Annual Compensation Awards Payouts
---------------------------------- ------------------------ --------
Securities
Name Other Restricted Underlying
and Annual Stock Options/ LTIP All Other
Principal Compens- Award(s) SARs (#) Payouts Compen-
Position Year Salary ($) Bonus ($) ation ($) ($) (1) ($) sation ($)
----------- ---- ----------- --------- ---------- ----------- ----------- -------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Davis, 2000 $ Nil N/A $ 0 N/A 0 N/A $ 0
Dennis 1999 $ Nil N/A $ 0 N/A 0 N/A $ 0
(President) 1998 $ Nil N/A $ 0 N/A 250,000 N/A $ 0
----------- ---- ----------- --------- ---------- ----------- ----------- -------- -----------
</TABLE>
(1) Consists of grants of stock options under the Company's Stock Option Plan.
The 250,000 stock options granted to Dennis Davis in 1998 were cancelled by him
on September 27, 2000.
COMPENSATION OF DIRECTORS
Directors are not compensated for their service as directors. All directors are
reimbursed for any reasonable expenses incurred in the course of fulfilling
their duties as a director of the Company.
EMPLOYMENT CONTRACTS
The Company does not currently have employment agreements with its executive
officers.
ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
--------------------------------------------------------------------------------
The following table sets forth as of November 30, 2000 certain information known
to the Company regarding the beneficial ownership of the Company's common stock,
and as adjusted to reflect the share ownership for (i) each executive officer or
director of the Company who beneficially owns shares; (ii) each shareholder
known to the Company to beneficially own five percent or more of the outstanding
shares of its common stock; and (iii) all executive officers and directors as a
group. The Company believes that the beneficial owners of the common stock
listed below, based on information furnished by such owners, have sole
investment and voting power with respect to such shares, subject to community
property laws where applicable. The individuals listed in the table are
accessible at the following address: 435 Martin Street, Blaine, Washington,
98230.
<TABLE>
<CAPTION>
PERCENTAGE OF
NAME AND POSITION NUMBER OF SHARES OUTSTANDING SHARES
------------------------------------------------------ ---------------- -------------------
<S> <C> <C>
Robert L. Jackman - President, Treasurer and Director 1,500,000 4.6%
------------------------------------------------------ ---------------- -------------------
Dean Branconnier - Vice President and Director 1,600,000 4.9%
------------------------------------------------------ ---------------- -------------------
Jolene Fuller - Secretary and Director 1,625,000 4.9%
------------------------------------------------------ ---------------- -------------------
ALL CURRENT DIRECTORS AND
OFFICERS AS A GROUP (3 Persons) 4,725,000 14.4%
------------------------------------------------------ ---------------- -------------------
</TABLE>
17
<PAGE>
CHANGE IN CONTROL
The Company is not aware of any arrangement that would upset the control
mechanisms currently in place. Although it is conceivable that a third party
could attempt a hostile takeover of the Company, the Company has not received
notice of any such effort.
ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
-------------------------------------------------------------
None.
ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K
------------------------------------------------
<TABLE>
<CAPTION>
EXHIBITS
EXHIBIT
NUMBER DESCRIPTION
------- -----------
<C> <S>
2.1**** Agreement and Plan of Reorganization, executed August 1, 2000, by and between
Home.Web, Inc. and Duro Enzyme Products Inc.
3.1* Articles of Incorporation dated September 12, 1995
3.2** Certificate of Amendment of Articles of Incorporation dated July 15, 1998
3.3* Bylaws dated June 1, 1997
4.1 Specimen Stock Certificate for Shares of Common Stock of the Company
10.1*** License and Distribution Agreement between Thermo Enzyme Products Inc. and Duro
Enzyme Solutions Inc. (U.S.)September 21, 2000
10.2*** Research and Development Services Agreement - Canada between Thermo Enzyme
Products Inc. and Duro Enzyme Solutions Inc. Canada dated September 21, 2000
10.3*** Research and Development Services Agreement United States between Thermo Enzyme
Products Inc. and Duro Enzyme Solutions Inc. (U.S.) and Duro Enzyme Products Inc.
dated September 21, 2000
23.1 Consent of Hawkins Accounting, Independent Auditor
27.1 Financial Data Schedule
</TABLE>
* Filed on March 17, 1999, as an Exhibit to an amendment to the Company's
Registration Statement on Form 10-SB and incorporated herein by this reference.
** Filed on June 14, 1999, as an Exhibit to an amendment to the Company's
Registration Statement on Form 10-SB and incorporated herein by this reference.
*** Filed on November 20, 2000, as an Exhibit to the Company's Report on Form
10-QSB for the three months ended September 30, 2000 and incorporated herein by
this reference.
**** Filed on December 29, 2000, as an Exhibit to a report by the Company on an
amendment to Form 8-K dated October 16, 2000.
18
<PAGE>
REPORTS ON FORM 8-K
No reports on Form 8-K were filed by the Company during the nine months ended
September 30, 2000.
An amendment to a report on Form 8-K dated October 16, 2000 was filed, however,
on December 29, 2000. The amended Form 8-K discusses the change in control of
the Company and the acquisition of Duro Enzyme and all of its assets by the
Company through a voluntary share exchange with Duro Enzyme's shareholders.
Audited financial statements of Duro Enzyme and Pro Forma financial information
was included in the amended Form 8-K.
19
<PAGE>
SIGNATURES
----------
In accordance with Section 13 or 15(d) of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
HOME.WEB, INC.
By: /s/ Bob Jackman
------------------------------
Robert L. Jackman
President
Date: December 29, 2000
----------------------------
In accordance with the Exchange Act, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.
By: /s/ Bob. Jackman Date: December 29, 2000
------------------------ -------------------
Robert L. Jackman
President, Treasurer and a Director
By: /s/ Dean Branconnier Date: December 29, 2000
------------------------ -------------------
Dean Branconnier
Vice President and a Director
By: /s/ Chad Burback Date: December 29, 2000
------------------------ -------------------
Jolene Fuller
Secretary and a Director
20
<PAGE>
<TABLE>
<CAPTION>
INDEX TO FINANCIAL STATEMENTS
HOME.WEB, INC.
<S> <C>
Independent Auditor's Report, dated December 15, 2000 . . . . . . . . . . . . . . . . . . . . . . F-1
Balance Sheets as at September 30, 2000 and December 31, 1999 (audited) . . . . . . . . . . . . . F-2
Statement of Operations for the nine months ended September 30, 2000 and
the year ended December 31, 1999 (audited). . . . . . . . . . . . . . . . . . . . . . . . . . . . F-3
Statement of Cash Flows for the nine months ended September 30, 2000 and
the year ended December 31, 1999 (audited). . . . . . . . . . . . . . . . . . . . . . . . . . . . F-4
Statement of Shareholders' Equity as at September 30, 2000 and December 31, 1999 (audited). . . . F-5
Summary of Significant Accounting Policies. . . . . . . . . . . . . . . . . . . . . . . . . . . . F-6
Notes to Financial Statements (audited) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-7
DURO ENZYME PRODUCTS INC.
Independent Auditors' Report, dated October 17, 2000. . . . . . . . . . . . . . . . . . . . . . . F-11
Consolidated Balance Sheet as at September 30, 2000 (audited) . . . . . . . . . . . . . . . . . . F-12
Consolidated Statement of Loss for the ten months ended September 30, 2000 (audited). . . . . . . F-13
Consolidated Statement of Changes in Financial Position for the ten months ended
September 30, 2000 (audited). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-14
Notes to Financial Statements for the ten months ended September 30, 2000 (audited) . . . . . . . F-15
INDEX TO PRO FORMA FINANCIAL STATEMENTS OF THE COMBINED ENTITY
Pro Forma Consolidated Balance Sheet as at September 30, 2000 (unaudited) . . . . . . . . . . . . F-18
Pro Forma Consolidated Statement of Loss for the nine months ended September 30, 2000 (unaudited) F-19
Pro Forma Consolidated Statement of Loss for the year ended December 31, 1999 (unaudited) . . . . F-20
</TABLE>
<PAGE>
To the Board of Directors and Shareholders
------------------------------------------------
Home Web, Incorporated
Monterey, California
INDEPENDENT AUDITOR'S REPORT
----------------------------
I have audited the balance sheet of Home Web, Incorporated (a development stage
company) as of September 30, 2000 and December 31, 1999 and the related
statements of operations, stockholders' equity and cash flows for the nine month
period ended September 30, 2000 (Note D) and the twelve month period ended
December 31, 2000. These financial statements are the responsibility of the
Company's management. My responsibility is to express an opinion on these
financial statements based on my audit.
I conducted my audit in accordance with generally accepted auditing standards.
Those standards require that I plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. I believe that my audit provides reasonable basis for
my opinion.
In my opinion, the financial statements referred to in the first paragraph
present fairly, in all material respects, the financial position of Home Web,
Incorporated, as of September 30, 2000 and December 31, 1999 the results of
operations the cash flows and the cumulative results of operations and
cumulative cash flows for the year then ended in conformity with generally
accepted accounting principles.
The accompanying financial statements have been prepared assuming the Company
will continue as a going concern. As discussed in Note I to the financial
statements, the Company has incurred net losses since inception, which raise
substantial doubt about its ability to continue as a going concern. The
financial statements do not include any adjustment that might result from the
outcome of this uncertainty.
/s/ "Hawkins Accounting"
December 15, 2000
F - 1
<PAGE>
<TABLE>
<CAPTION>
HOME WEB, INCORPORATED
(A Development Stage Company)
BALANCE SHEET
September 30, 2000 and December 31, 1999
(Audited)
ASSETS
2000 1999
---- ----
<S> <C> <C>
Current assets
Cash in bank $ 0 $ 7
Non-trade receivable 1,450 1,450
------------ ------------
Total current assets 1,450 1,457
Equipment
Coolers and equipment 40,308 40,308
Office equipment 9,841 9,841
------------ ------------
50,149 50,149
Accumulated depreciation (9,288) (9,288)
------------ ------------
Total equipment 40,861 40,861
Other assets
Trade name 11,000 11,000
------------ ------------
Total other assets 11,000 11,000
------------ ------------
TOTAL ASSETS $ 53,311 $ 53,318
============ ============
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Accounts payable 1,426 $ 17,655
California Franchise Tax payable 0 3,116
Loan from affiliate 25,962 2,825
------------ ------------
Total current liabilities 27,388 23,596
Shareholders' equity
Capital stock 27,507 27,507
Paid in capital 1,347,493 1,347,493
Deficit accumulated during development stage (1,349,077) (1,345,278)
------------ ------------
Total shareholders' equity 25,923 29,722
------------ ------------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 53,311 $ 53,318
============ ============
</TABLE>
The accompanying notes are an integral part of the financial statements.
F - 2
<PAGE>
<TABLE>
<CAPTION>
HOME WEB, INCORPORATED
(A Development Stage Company)
STATEMENT OF OPERATIONS
For the nine months ended September 30, 2000 and the twelve months ended
December 31, 1999
(Audited)
September 30,2000
Deficit
Accumulated
During
Nine Months Twelve Months Development
2000 1999 Stage
------------------- --------------- -------------
<S> <C> <C> <C>
Sales $ 0 $ 528 $ 18,887
Cost of Sales 0 523 15,091
------------------- --------------- -------------
Gross Margin 5 3,796
Expenses
Advertising 7 856
Amortization 1,584
Consulting fees 2,929 5,500 14,125
Equipment rental 2,339
Depreciation 4,003 9,288
Licenses and taxes 145 370
Office help 1,591 12,432
Office supplies 70 588 3,830
Postage 673
Travel, meals and entertainment 54 2,679
Rent, utilities and telephone 248 3,591
Organization and start up costs 15,318 41,674
Compensation due stock issuance 1,254,500
------------------- --------------- -------------
Total expenses 2,999 27,454 1,347,941
------------------- --------------- -------------
(Loss) from operations (2,999) (27,449) (1,344,145)
Other income (expense)
Interest 50
Nondeductible penalties 716 882
State tax expense 800 1,600 4,000
------------------- --------------- -------------
Total other expenses 800 2,316 4,932
------------------- --------------- -------------
Net loss $ (3,799) $ (29,765) $ (1,349,077)
=================== =============== =============
Loss per share
of common stock $ (0.0001) $ (0.0010) $ (0.0410)
Weighted average of
shares outstanding 32,876,400 27,157,000 32,876,400
=================== =============== =============
</TABLE>
The accompanying notes are an integral part of the financial statements.
F - 3
<PAGE>
<TABLE>
<CAPTION>
HOME WEB, INCORPORATED
(A Development Stage Company)
STATEMENT OF CASHFLOWS-INDIRECT METHOD
For the nine months ended September 30, 2000 and the twelve months ended
December 31, 1999
(Audited)
September 30, 2000
Cash flows
Accumulated
During
Nine Months Twelve Months Development
2000 1999 Stage
---------- ----------- ------------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss) $ (3,799) $ (29,765) $(1,349,077)
Adjustments to reconcile net income to net cash
provided by operating activities
Depreciation and amortization 4,003 9,288
Stock issued for services 500 1,254,500
Expensing of organization costs 2,376 2,366
Increase in accounts payable 17,655 500
Increase in accounts receivable (1,450)
Increase in accrued liabilities 3,792 5,141 27,388
---------- ----------- ------------
NET CASH PROVIDED BY OPERATING
ACTIVITIES (7) (90) (56,485)
INVESTING ACTIVITIES
Increase in other assets 13,366
Purchase of equipment 50,149
---------- ----------- ------------
NET CASH USED IN INVESTING ACTIVITIES 63,515
FINANCING ACTIVITIES
Sale of common stock 120,000
---------- ----------- ------------
INCREASE (DECREASE) IN CASH AND CASH
EQUIVALENTS (7) (90) 0
Cash and cash equivalents at the beginning of the
period 7 97 0
---------- ----------- ------------
CASH AND CASH EQUIVALENTS AT THE END OF
THE PERIOD $ 0 $ 7 $ 0
========== =========== ============
</TABLE>
The accompanying notes are an integral part of the financial statements.
F - 4
<PAGE>
<TABLE>
<CAPTION>
HOME WEB, INCORPORATED
(A Development Stage Company)
STATEMENT OF SHAREHOLDERS' EQUITY
September 30, 2000 and December 31, 1999
(Audited)
1999
----
Deficit
Accumulated
Common stock During
-------------------- Paid in Development
Shares Amount Capital Stage Total
----------- ------------- ---------- ------------ --------
<S> <C> <C> <C> <C> <C>
Balance,
December 31, 1998 27,497,000 $ 27,497 $1,347,003 $(1,315,513) $58,987
Common stock issued 10,000 10 490 500
Net loss for the period
ended December 31, 1999 (29,765) (29,765)
----------- ------------- ---------- ------------ --------
27,507,000 $ 27,507 $1,347,493 $(1,345,278) $29,722
2000
----
Balance,
December 31, 1999 27,507,000 $ 27,507 $1,347,493 $(1,345,278) $29,722
February 23, 2000,
forward stock split 5,369,400
Net loss for the period
ended September 30, 2000 (3,799) (3,799)
----------- ------------- ---------- ------------ --------
32,876,400 $ 27,507.00 $1,347,493 $(1,349,077) $25,923
=========== ============= ========== ============ ========
</TABLE>
The accompanying notes are an integral part of the financial statements.
F - 5
<PAGE>
HOME WEB, INCORPORATED
(A Development Stage Company)
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
September 30, 2000 and December 31, 1999
(Audited)
Development Stage Company
---------------------------
Home Web, Inc. (the "Company") is a development stage company as defined in
the Financial Accounting Standards Board No. 7. The Company is devoting
substantially all of its present efforts in securing and establishing a new
business, and although planned principal operations have commenced,
substantial revenues have yet to be realized.
Use of estimates
------------------
The preparation of the financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect certain reported amounts and disclosures.
Accordingly, actual results could differ from these estimates.
Cash equivalents
-----------------
For the purpose of the statement of cash flows, the company considers all
highly liquid debt instruments purchased with the original maturity of
three months or less to be cash equivalents.
Organization and Business Start Up and Amortization
---------------------------------------------------------
Organization costs were expensed during the period ending March 31, 1999 in
accordance with SOP 98-5. Management made the election to expense the costs
for years beginning January 1, 1999.
Income Taxes
-------------
Income taxes are provided for the tax effects of transactions reported in
the financial statements and consist of taxes currently due plus deferred
taxes related primarily to differences between the recorded book basis and
tax basis of assets and liabilities for financial and income tax reporting.
The deferred tax assets and liabilities represent the future tax return
consequences of those differences, which will either be taxable or
deductible when the assets and liabilities are recovered or settle.
Deferred taxes are also recognized for operating losses that are available
to offset future taxable income and tax credits that are available to
offset future federal income taxes.
Common Stock
-------------
Common stock is at .001 par value with 50,000,000 shares authorized,
32,876,400 were outstanding as of September 30, 2000 and 27,507,000 for the
period ending December 31, 1999.
F - 6
<PAGE>
HOME WEB, INCORPORATED
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
September 30, 2000 and December 31, 1999
(Audited)
NOTE A: Background
----------
The Company was incorporated under the laws of the State of Nevada on
September 15, 1995. The principal activities of the Company, from the
beginning of the development stage, have been organizational matters and
the sale of stock. The Company was formed to sell wholesale gourmet and
specialty cheese on the Internet. During the period ending September 30,
2000 and 1999 the Company had sales and incurred expenses against those
sales, but the activity was immaterial for the purposes of SFAS No. 7.
NOTE B: Related Party Transactions
----------------------------
During the period ending September 30, 2000 an affiliated company advanced
the Company $20,908. This money was used to pay off the accounts payable as
of June 30, 2000. For the period ended December 31, 1999 the Company paid a
total of $5,400 in rent and consulting fees per an agreement with the
affiliate.
NOTE C: Income taxes
-------------
The benefit for income taxes from operations consisted of the following
components: current tax benefit of $5,458 for September 30, 2000 and
$4,458, as of September 30, 1999 resulting from a net loss before income
taxes, and deferred tax expenses of $ 5,458 and $4,458 respectively
resulting from a valuation allowance recorded against the deferred tax
asset resulting from net operating losses. Net operating loss carryforward
will expire in 2013.
The valuation allowance will be evaluated at the end of each year,
considering positive and negative evidence about whether the asset will be
realized. At the time, the allowance will either be increased or reduced;
reduction would result in the complete elimination of the allowance if
positive evidence indicates that the value of the deferred tax asset is no
longer required.
NOTE D: Change in Accounting Year
----------------------------
The Board of Directors elected to change the year end date of the Company
to September 30. This change became effective at September 30, 2000. The
financial statements are for the nine months ended while the December 31,
2000 amounts are for a twelve month period.
NOTE E: Common Stock
-------------
During the period ending September 30, 1999, pursuant to an exemption under
Rule 504 of Regulation D of the Securities Act of 1933, as amended (the
Act), the
F - 7
<PAGE>
HOME WEB, INCORPORATED
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
September 30, 2000 and December 31, 1999
(Audited)
NOTE E: Continued
---------
Company sold solely to accredited and/or sophisticated investors, its
common stock. The only transaction during the period of December 31, 1999
was 10,000 shares of stock issued to the corporate counsel in exchange for
legal services to the corporation.
On February 10, 2000 the board of directors voted a 1.2:1 forward stock
split as of the record date of February 23, 2000.
NOTE F: Stock options
--------------
It was also voted upon at the organizational meeting during 1997 to grant
options to officers of the corporation and MVI, an affiliated company along
with one of the employees of MVI. The options can be exercised at $.001.
The options to be exercised are 1,250,000 and have no expiration date.
These options are considered compensatory and the expense was recognized in
the prior year.
There were no options exercised during the nine-month period ending
September 30, 2000.
NOTE G: Property, equipment and depreciation
---------------------------------------
Property and equipment are recorded at cost. Maintenance and repairs are
expensed as incurred; major renewals and betterments are capitalized. When
items of property and equipment are sold or retired, the related costs and
accumulated depreciation are removed from the accounts and any gain or loss
is included in income.
Depreciation expense for the period ending September 30, 2000 was $0. And
$4,003 for the year ended December 31, 1999.
NOTE H: Major customer
---------------
The Company had a purchase commitment to purchase the Company's merchandise
from a non-affiliated company. This customer is also to take physical
possession of the Company's major assets and use those assets in the
ordinary course of its business. Terms are discussed more fully in Note I
NOTE I: Going concern
--------------
As of September 30, 2000, the Company had net losses from operating
activities which raise substantial doubt about its ability to continue as a
going concern.
F - 8
<PAGE>
HOME WEB, INCORPORATED
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
September 30, 2000 and December 31, 1999
(Audited)
NOTE I: Continued
---------
The Company is in the process of raising initial working capital through a
public offering of its common stock, which is expected to provide liquidity
until operations become profitable. The Company has obtained a commitment
for up to $150,000 from a significant shareholder, Monterey Ventures, Inc
for funding
over the next twelve months. The funds would be paid distributed in
increments per requests from the Company on an "as needed" basis. Under the
agreement, the Company can repay the borrowed funds in increments as the
Company receives payment from its' customers. Also in the credit agreement
is any funds needed for longer than twelve months would be considered long
term debt. This type of funding, if needed, would be structured for a
twenty four or thirty-six month payoff not to exceed $ 25,000 in requests
in the first year of operations.
The Company has signed an agreement with Internet Food Company to purchase
its' products. Internet Food Company has already penetrated the hotel and
gift basket market and has further developed a web site to market its
goods. The two companies are in the process of identifying specific
products that Home Web. Inc. would supply wholesale.
The Company's ability to continue as a going concern is dependent upon a
successful public offering and ultimately achieving profitable operations.
There is no assurance that the Company will be successful in its efforts to
raise additional proceeds or achieve profitable operations. The financial
statements do not include any adjustments that might result from the
outcome of this uncertainty.
NOTE J: Subsequent event
-----------------
On October 16, 2000, principal shareholders of the Company returned to
treasury 28,800,000 shares of Common Stock as contemplated by an Agreement
and Plan of Reorganization with Duro Enzyme Products Inc. executed on
August 1, 2000. On September 29, 2000, the Company authorized the issuance
of 28,800,000 shares of Common Stock of the Company to shareholders of Duro
Enzyme Products Inc. On October 16, 2000, the Company issued the 28,800,000
shares of Common Stock pursuant to a voluntary share exchange with the
shareholders of Duro Enzyme Products Inc. The 28,800,000 shares issued to
shareholders of Duro Enzyme Products Inc. represented over 80% of the
issued and outstanding shares of Common Stock of the Company and therefore
resulted in a change in control of the Company. By virtue of this issuance,
the Company acquired 100% of the issued and outstanding capital of Duro
Enzyme Products Inc., which had net assets of $1,023,515 as of
F - 9
<PAGE>
HOME WEB, INCORPORATED
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
September 30, 2000 and December 31, 1999
(Audited)
NOTE J: Continued
---------
September 30, 2000. Pro forma net assets of the combined entities as of
September 30, 2000 were $1,076,826. For more information on the business
combination, please see the Home.Web, Inc. report on the Amendment No. 1
to Form 8-K dated October 16, 2000 and filed on December 29, 2000, with the
SEC.
NOTE K: Stock Options
--------------
Stock that is issued for services rendered is recorded at the fair value of
the stock in the year that the stock is given and recorded as an expense in
the same year.
F - 10
<PAGE>
The Raber Mattuck Group
Chartered Accountants
Suite 318, North Tower, Oakridge Centre, 650 West 41st Avenue, Vancouver B.C.,
V5Z 2M9
Telephone: (604) 435-5655 Facsimile: (604) 435-1913 E-mail:
[email protected]
--------------------------------------------------------------------------------
AUDITORS' REPORT
--------------------------------------------------------------------------------
To the Shareholder of Duro Enzyme Products Inc.:
We have audited the consolidated balance sheet of Duro Enzyme Products Inc. as
at September 30, 2000 and the consolidated statements of loss and deficit and
changes in financial position for the ten months then ended. These financial
statements are the responsibility of the company's management. Our
responsibility is to express an opinion on these financial statements based on
our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform an audit to obtain reasonable
assurance whether the financial statements are free of material misstatement.
An audit includes examining, on a test basis, evidence supporting the amounts
and disclosures in the financial statements. An audit also includes assessing
the accounting principals used and significant estimates made by management, as
well as evaluating the overall financial statement presentation.
In our opinion, these financial statements present fairly, in all material
respects, the financial position of the company as at September 30, 2000 and the
results of its operations and the changes in its financial position for the
period ended in accordance with generally accepted accounting principles.
/s/ "Raber Mattuck"
----------------------------------
CHARTERED ACCOUNTANTS
Vancouver, British Columbia
October 17, 2000
F - 11
<PAGE>
DURO ENZYME PRODUCTS INC.
CONSOLIDATED BALANCE SHEET
AS AT SEPTEMBER 30, 2000
(Audited)
U.S. $
-----------
ASSETS
------
CURRENT ASSET
Accounts receivable $ 1
Prepaid expenses 23,514
-----------
23,515
LICENSE (Note 2 (c) and 6 (a)) 1,000,000
-----------
TOTAL ASSETS $1,023,515
===========
LIABILITIES & SHAREHOLDER'S EQUITY
----------------------------------
CURRENT LIABILITIES
Accounts Payable (Note 3) $ 27,446
Note Payable (Note 4) 1,000,000
-----------
1,027,446
-----------
SHAREHOLDER'S EQUITY
--------------------
CAPITAL STOCK (Note 5) 1
DEFICIT (3,932)
-----------
(3,931)
-----------
$1,023,515
===========
See accompanying notes.
F - 12
<PAGE>
<TABLE>
<CAPTION>
DURO ENZYME PRODUCTS INC.
CONSOLIDATED STATEMENT OF LOSS
FOR THE 10 MONTH PERIOD ENDED SEPTEMBER 30, 2000
(Audited)
U.S. $
--------
<S> <C>
EXPENSES
Filing Fees 2,699
Interest Expense 1,233
--------
NET LOSS AND DEFICIT $ 3,932
========
</TABLE>
See accompanying notes.
F - 13
<PAGE>
<TABLE>
<CAPTION>
DURO ENZYME PRODUCTS INC.
CONSOLIDATED STATEMENT OF CHANGES IN FINANCIAL POSITION
FOR THE 10 MONTH PERIOD ENDED SEPTEMBER 30, 2000
(Audited)
U.S. $
------------
<S> <C>
CASH RESOURCES PROVIDED BY (USED IN)
OPERATING ACTIVITES
Net Loss $ (3,932)
Cash generated from (used for) operating working capital
Accounts receivable 1
Prepaid expenses (23,514)
Accounts payable and accrued liabilities 27,446
------------
(1)
------------
CASH RESOURCES PROVIDED BY (USED IN)
FINANCING ACTIVITIES
Share capital 1
Note Payable 1,000,000
------------
1,000,001
------------
CASH RESOURCES PROVIDED BY (USED IN)
INVESTING ACTIVITIES
Acquisition of license (1,000,000)
------------
(1,000,000)
------------
INCREASE (DECREASE) IN CASH -
CASH AND TERM DEPOSITS, beginning of year -
------------
CASH AND TERM DEPOSITS, end of year $ -
============
</TABLE>
See accompanying notes.
F - 14
<PAGE>
DURO ENZYME PRODUCTS INC.
NOTES TO FINANCIAL STATEMENTS
FOR THE 10 MONTHS ENDED SEPTEMBER 30, 2000
(Audited)
1. NATURE OF BUSINESS AND STATUS OF ACTIVITIES
Duro Enzyme Products Inc. (the "Company") was incorporated in Nevada, USA
on November 29, 1999, and is a private company.
Duro Enzyme Products Inc. has the license to utilize and exploit the
DuroZyme Plant and 3SF Technology anywhere in the world. Through
application of the technology, the Company can manufacture unique, stable
and natural enzymes and specialty end products.
The Company has investments in two subsidiary, as follows:
Company Nature of Business
Duro Enzyme Solutions Inc.
(100% owned) - Nevada Corporation Licensor of Technology
Duro Enzyme Solutions Inc.
(100% owned) - B.C. Corporation Canadian Subsidiary
2. SIGNIFICANT ACCOUNTING POLICIES
<TABLE>
<CAPTION>
<C> <S>
(a) PRINCIPLES OF ACCOUNTING These consolidated financial statements have been
prepared in accordance with accounting principles
generally accepted in Canada applicable to a going
concern, which assumes that the Company will
continue operation for a reasonable period of time and
will be able to realize its assets and discharge its
liabilities and commitments in the normal course of
operations.
These principles can differ in certain material respects from
those accounting principles generally accepted in the
United States but no material differences exist in these
statements.
F - 15
<PAGE>
(b) BASIS OF CONSOLIDATION These financial statements have been prepared using the
----------------------------
purchase method of consolidation. The assets and
liabilities of acquired companies are initially recorded at
their cost. The results of operations of the acquired
companies are included from the dates of acquisition. All
significant intercompany transactions and balances have
been eliminated on consolidation.
(c) LICENSES License rights are recorded at cost and are amortized on a
--------------
straight-line basis over the license period (10 years) which
is the Company's estimated period of benefit for these
costs.
</TABLE>
3. ACCOUNTS PAYABLE
Included in accounts payable is $25,213 US owing to the President, Director
and Sole Shareholder of the Company.
4. NOTE PAYABLE
The Company, in connection with its acquisition of the license agreement
(Note 6 (a)) is indebted by way of a $1,000,000 US note payable, due on
demand at five percent (5%) rate of interest payable both before and after
maturity. Interest of $1,233 US has been accrued but unpaid to September
30, 2000.
5. CAPITAL STOCK
The Company has authorized share capital of 25,000,000 common shares par
value of $0.01US. Only 1 share has been issued.
6. SIGNIFICANT AGREEMENTS
The Company has entered into several significant agreements during the
operating period as follows:
a) License and Distribution Agreement. The Company, through its
subsidiary entered into a License and Distribution Agreement on
September 21, 2000 to utilize and exploit the DuroZyme plants and the
advanced 3SF Technology anywhere in the world. The License is
$1,000,000 US and was satisfied by a Note payable (Note 4).
Amortization has not been recorded during the period (Note 2 (e)). The
License Agreement also calls for an additional payment of two and
one-half percent (2.5%) of gross revenue.
F - 16
<PAGE>
b) Research and Development Service Agreement. The Company has entered
two separate agreements (one for the United States and one for Canada)
on September 21, 2000 to retain the services of a Consultant to be the
Company's prime supplier, to provide research, development and related
consulting services. These services are provided at a cost plus 15%
rate. This contract is for five (5) years and renewable automatically
if not terminated.
F - 17
<PAGE>
<TABLE>
<CAPTION>
HOME.WEB, INC.
PROFORMA - CONSOLIDATED BALANCE SHEET
As At September 30, 2000 (Unaudited)
U.S. $
------------
ASSETS
------
<S> <C>
CURRENT ASSET
Accounts receivable $ 1,451
Prepaid expenses 23,514
------------
23,515
CAPITAL ASSETS 40,861
LICENSE 1,000,000
TRADE NAME 11,000
------------
TOTAL ASSETS $ 1,076,826
============
LIABILITIES & SHAREHOLDER'S EQUITY
----------------------------------
CURRENT LIABILITIES
Accounts Payable $ 28,872
Note Payable 1,000,000
Loan from affiliate 25,962
------------
1,054,834
------------
SHAREHOLDER'S EQUITY
--------------------
CAPITAL STOCK 27,508
PAID IN CAPITAL 1,347,493
DEFICIT (1,353,009)
------------
21,992
$ 1,076,826
============
</TABLE>
F - 18
<PAGE>
HOME.WEB, INC.
PROFORMA - CONSOLIDATED STATEMENT OF LOSS
For the 9 Month Period Ended September 30, 2000 (Unaudited)
U.S. $
------------
EXPENSES
Consulting Fees 2,929
Filling Fees 2,699
Interest Expense 1,233
Office supplies 70
------------
NET LOSS $6,931
============
F - 19
<PAGE>
HOME.WEB, INC.
PROFORMA - CONSOLIDATED STATEMENT OF LOSS
For the 12 Month Period Ended December 31, 1999 (Unaudited)
U.S. $
------------
REVENUE 528
COST OF SALES 523
------------
GROSS MARGIN 5
EXPENSES
Advertising 7
Consulting Fees 5,500
Depreciation 4,003
Filling Fees 1,000
License and Taxes 145
Office help 1,591
Office supplies 588
Travel 54
Rent 248
Business start up costs 15,318
------------
TOTAL EXPENSES 28,454
------------
LOSS FROM OPERATION (28,449)
OTHER INCOME (EXPENSES)
Nondeductible penalties (716)
State tax expense (1,600)
------------
Total other expense (2,316)
NET LOSS (30,765)
============
NET LOSS PER COMMON STOCK $(0.0011)
------------
WEIGHTED AVERAGE OF SHARES OUTSTANDING 27,157,000
------------
F - 20
<PAGE>
EXHIBIT INDEX
EXHIBIT
NUMBER DESCRIPTION
------- --------------------------------------------------------------------
4.1 Specimen Stock Certificate for Shares of Common Stock of the Company
23.1 Consent of Hawkins Accounting, Independent Auditor
27.1 Financial Data Schedule
<PAGE>
