U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-QSB
(Mark One)
X Quarterly report under Section 13 or 15(d) of the Securities Exchange Act of
1934
For the quarterly period ended February 29, 2000.
Transition report under Section 13 or 15(d) of the Exchange Act
For the transition period from _______ to ____________
Commission file number: 0-26673
forestindustry.com, Inc.
(Exact Name of Small Business Issuer as Specified in Its Charter)
Delaware 98-0207081
(State or Other Jurisdiction of (I.R.S.Employer Identification No.)
Incorporation or Organization)
504 - 999 Canada Place, Vancouver, British Columbia, V6C 3E1
(Address of Principal Executive Offices)
(604) 632-3802
(Issuer's Telephone Number, Including Area Code)
----------------------------------------------------------------------
(Former Name, Former Address and Former Fiscal Year, if
Changed Since Last Report)
Check whether the issuer: (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such
shorter period that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days.
Yes X No
As of March 31, 2000 the Company had 15,314,540 outstanding shares of
common stock.
Transitional Small Business Disclosure Format (check one):
Yes No X
<PAGE>
Item 1. Financial Statements
Interim Consolidated Balance Sheet
- ----------------------------------------------------------------------------
February 29, July 31,
2000 1999
------------ ------------
ASSETS
CURRENT
Cash and Cash Equivalents $517,805 $2,819
Accounts Receivable 79,504 64,657
Prepaid Expenses 4,805 1,795
Due from Affiliated Company 166
------- -------
602,114 69,437
Equipment 57,154 31,031
$659,268 $100,468
======== ========
LIABILITIES and STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Operating Line of Credit $10,348 $13,278
Accounts Payable and Accrued Liabilities 50,921 39,265
Unearned Revenues 57,764 52,281
Current Portion of Long Term Debt -- 22,465
------- -------
119,033 127,289
Due to Parent Company -- 50,341
Due to Shareholders -- 17,672
Long Term Debt -- 33,230
------- -------
119,033 228,532
STOCKHOLDERS' EQUITY
Share Capital
Common stock, $0.0001 par value
30,000,000 authorized; 15,314,540
issued and outstanding 1,531 1
Preferred stock, $0.0001 par value
5,000,000 authorized; 750 issued and
outstanding 1 --
Additional paid in capital 737,853
Deficit (199,150) (128,065)
540,235 (128,064)
-------- ---------
$659,268 $100,468
======== ========
Unaudited - "See accompanying notes to the consolidated financial statements"
<PAGE>
Interim Consolidated Statements of Operations
For the Three and Nine Month Periods Ended February 29, 2000 and February 28,
1999 (In U.S. $)
- --------------------------------------------------------------------------------
Three Months Ended Nine Months Ended
---------------------- -----------------------
Feb. 29 Feb. 28, Feb. 29, Feb. 28,
2000 1999 2000 1999
$ $ $ $
REVENUES 101,052 74,590 264,144 178,323
---------------------------------------------
EXPENSES
Advertising and Promotion 2,887 278 3,584 -
Amortization 2,029 1,940 8,753 7,095
Bad Debts 6,544 461 18,044 3,856
Bank Charges and Interest 2,865 3,530 11,033 12,317
Consulting Fees 17,211 - 17,490 1,828
Filing Fees 3,684 - 3,703 -
Foreign Exchange Loss (Gain) 7,961 1,974 5,885 (6,655)
Office 10,015 3,080 18,788 5,221
Printing 15,286 4,097 23,720 4,680
Professional Fees 14,610 2,882 33,411 13,542
Rent, Property Taxes and 5,794 1,717 14,250 5,316
Utilities
Salaries and Benefits 63,654 34,519 169,158 105,122
Telephone 6,576 2,198 13,398 7,233
Trade Shows 2,566 - 9,466 817
Travel and Lodging 8,336 1,372 21,049 5,099
---------------------------------------------
170,018 58,048 371,732 165,471
---------------------------------------------
NET INCOME (LOSS)
FOR THE PERIOD (68,966) (16,542) (107,588) 12,852
---------------------------------------------
Weighted Average Number of
Shares Outstanding, Basic and
Diluted 11,596,941 10,000,000 10,530,371 10,000,000
================================================
Earnings (Loss) per Common
Share,
Basic and Diluted (0.006) (0.002) (0.01) 0.001
=============================================
Unaudited - "See accompanying notes to the consolidated financial statements"
<PAGE>
Interim Consolidated Statements of Stockholders' Equity
For the Periods from January 09, 1997 (inception) to February 29, 2000
(In U.S.$)
- -------------------------------------------------------------------------------
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C>
Common Stock Preferred Stock
----------------------- --------------------- Additional
Number of Number Paid in
Shares Amount of Shares Amount Capital Deficit Total
$ $ $ $ $
- --------------------------------------------------------------------------------------------------------------------------------
Balance, January 09, 1997 (inception) 100 - - - - - -
Net Loss for the Period - - - - - (54,533) (54,533)
- -------------------------------------------------------------------------------------------------------------------------------
Balance, May 31, 1997 100 - - - - (54,533) (54,533)
Net Loss for the Year - - - - - (51,892) (51,892)
- -------------------------------------------------------------------------------------------------------------------------------
Balance, May 31, 1998 100 - - - - (106,425) (106,425)
Net Income for the Year - - - - - 14,863 14,863
- -------------------------------------------------------------------------------------------------------------------------------
Balance, May 31, 1999 100 - - - - (91,562) (91,562)
Common stock issued to purchase all
issued and
outstanding shares of The Forest 10,000,000 1,000 - - - - 1,000
Industry Online Inc.,
January 31, 2000 (note 3)
Adjustment to comply with 4,926,940 492 - - (21,020) - (20,528)
recapitalization
accounting (note 3)
Common stock issued for services,
January 31, 2000, valued 37,500 4 - - 859 - 863
at approximately $0.023 per share
(note 3)
750 Series `A' convertible preferred
shares issued for cash, - - 750 1 749,999 - 750,000
January 31, 2000 at $1,000 per share (note 3)
Common stock issued for services in
February, 2000 valued at approximately
$0.023 per share (note 5(c)) 350,000 35 - - 8,015 - 8,050
Net Loss for the Period - - - - - (107,588) (107,588)
- ---------------------------------------------------------------------------------------------------------------------------------
Balance, February 29, 2000 15,314,540 1,531 750 1 737,853 (199,150) 540,235
- --------------------------------------------------------------------------------------------------------------------------
</TABLE>
Unaudited - "See accompanying notes to the consolidated financial statements"
<PAGE>
Interim Consolidated Statements of Cash Flows
For the Nine Month Periods Ended
February 29, 2000 and February 28, 1999 (In U.S. $)
- ----------------------------------------------------------------------------
2000 1999
$ $
CASH WAS PROVIDED FROM, UTILIZED (FOR):
OPERATING ACTIVITIES:
Net Income (Loss) for the Period (107,588) 12,852
Non-Cash Items:
Amortization 8,753 7,095
Common Stock Issued in Exchange for Services 8,050 -
Foreign Exchange Loss 5,885 -
Change in Non-Cash Working Capital Accounts
Accounts Receivable (22,324) (22,173)
Prepaid Expenses (4,565) -
Accounts Payable and Accrued Liabilities 30,454 (2,118)
Unearned Revenues 33,742 9,487
-------------------------
Net Cash Provided by Operating Activities (47,593) 5,143
-------------------------
FINANCING ACTIVITIES
Long-term Debt and Operating Line of Credit Advances (60,860) 79,930
(Repayments)
Advances (to) Related Company (71,229) (66,862)
Advances from (to) Shareholders (18,348) 11,918
Net Proceeds from Issuance of Preferred Stocks 750,000 -
-------------------------
Net Cash Provided by Financing Activities 599,563 24,986
-------------------------
INVESTING ACTIVITY
Acquisition of Capital Assets (37,712) (18,634)
-------------------------
INCREASE IN CASH 514,258 11,495
Cash, Beginning of the Period 3,547 4,317
-------------------------
CASH, END OF THE PERIOD 517,805 15,812
=========================
Unaudited - "See accompanying notes to the consolidated financial statements"
<PAGE>
Notes to the Interim Consolidated Financial Statements
As at February 29, 2000
- --------------------------------------------------------------------
NOTE 1 - NATURE OF OPERATIONS
forestindustry.com, Inc. (the "Company") was incorporated in Delaware on
December 18, 1997 under the name of Autoeye Inc. On February 25, 2000, the
Company changed its name to forestindustry.com, Inc. Prior to our acquisition of
The Forest Industry Online Inc. ("Forest") (note 2(a)), the Company was
inactive.
The Company's current business activities include designing web sites and
operating and maintaining a computer internet web site for companies associated
with the forest industry.
NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES
a) Reverse Takeover
On January 31, 2000, the Company merged with Forest, with Forest's stockholders
receiving 10,000,000 shares of common stock and control of the Company.
Accordingly, Forest is deemed the accounting acquiror for financial statement
purposes. The acquisition, a reverse takeover, has been accounted for as a
capital transaction effectively representing an issue of stocks by Forest for
the net assets of forestindustry.com, Inc.
The Company's historical financial statements reflect the financial position,
results of operations and cash flows of Forest from the date of its
incorporation on January 09, 1997 under the laws of the Province of British
Columbia. The historical stockholders' equity gives effect to the shares issued
to the stockholders of Forest. The results of operations of forestindustry.com,
Inc. are included only from the date of acquisition, January 31, 2000.
b) Basis of Presentation
The accompanying unaudited interim consolidated financial statements have been
prepared in accordance with United States generally accepted accounting
principles for interim financial information and the rules of the Securities and
Exchange Commission (the "SEC") for quarterly reports on Form 10-QSB. In the
opinion of management, all adjustments (consisting of normal recurring accruals)
considered necessary for a fair presentation have been included.
c) Basis of Consolidation
These consolidated financial statements include the accounts of the Company's
wholly-owned subsidiary, The Forest Industry Online Inc. All significant
intercompany balances and transactions have been eliminated in the consolidated
financial statements.
d) Equipment and Depreciation
Equipment are recorded at cost and are depreciated using the straight-line
method over their estimated useful lives ranging from five to ten years.
<PAGE>
Notes to the Interim Consolidated Financial Statements
As at February 29, 2000
- ---------------------------------------------------------------------------
Note 2 - Significant Accounting Policies (continued)
e) Cash and Cash Equivalents
The Company considers all short-term investments with a maturity date at
purchase of three months or less to be cash equivalents.
f) Revenue Recognition and Unearned Revenues
Revenues are recorded on the billed basis. Customers are billed on a quarterly
basis in advance for advertising fees and hosting revenue. Unearned revenues
relate to the period of the billing that has not yet transpired and therefore
not earned.
g) Use of Estimates
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities at the date of the
financial statements and the reported amounts of revenues and expenses during
the reporting period. Actual results could differ from those estimates.
h) Net Earnings (Loss) Per Share
Basic earnings (loss) per share is computed using the weighted average number of
common stock outstanding during the periods. Diluted loss per share is computed
using the weighted average number of common and potentially dilutive common
stock outstanding during the period. As the Company has losses in the periods
presented, basic and diluted loss per share is the same.
i) Stock-based Compensation
The Company accounts for its stock-based compensation arrangement in accordance
with provisions of Accounting Principles Board (APB) Opinion No. 25, Accounting
for Stock Issued to Employees, and related interpretations. As such,
compensation expense under fixed plans would be recorded on the date of grant
only if the fair value of the underlying stock at the date of grant exceeded the
exercise price. The Company recognizes compensation expense for stock options,
common stock and other equity instruments issued to non-employees for services
received based upon the fair value of the services or equity instruments issued,
whichever is more reliably determined.
This information is presented in note 5(c).
SFAS No. 123, Accounting for Stock Based Compensation, required entities that
continue to apply the provision of APB Opinion No. 25 for transactions with
employees to provide for forma net income and pro forma earnings per share
disclosures for employee stock option grants made in 1995 and future years as if
the fair-value -based method defined in SFAS No. 123 had been applied to these
transactions.
<PAGE>
Notes to the Interim Consolidated Financial Statements
As at February 29, 2000
- ----------------------------------------------------------------------------
Note 2 - Significant Accounting Policies (continued)
j) Foreign Currency Translation
The functional currency of the Company is the United States dollar and for its
Canadian subsidiary the forestindustry.com, Inc. Canadian dollars. Transactions
in foreign currencies are translated to United States dollars at the rates in
effect on the transaction date. Exchange gains or losses arising on translation
or settlement of foreign currency denominated monetary items are included in the
consolidated statement of operations.
Note 3 - Acquisition
On January 31, 2000, the Company merged with Forest. The acquisition was a
reverse takeover with Forest being the deemed accounting acquiror for financial
statement purposes.
Under the terms of agreement, the Company issued 10,000,000 common shares for
all of the 100 common issued and outstanding shares of Forest. As at January 31,
2000, there were 4,927,040 common shares of the Company (after reflecting a 21:1
stock consolidation which occurred on August 20, 1999 and a subsequent stock
split of 1:40 which occurred on August 21, 1999). The acquisition was accounted
for as a recapitalization of Forest. The transaction has been accounted for as a
capital transaction effectively representing an issue of shares by Forest for
the net assets of the Company. On January 31, 2000 the net assets of the Company
consisted of:
Cash and Cash Equivalents $ 750,000
Accounts Payable (19,703)
------------
$ 730,297
------------
Total costs related to this recapitalization transaction were estimated at
$15,863. They include cash expense in the estimated amount of $15,000 and
non-cash expense in the amount of $863. The non-cash expense relates to the
issuance of 37,500 shares of common stock of the Company. The fair value of
these services was estimated based upon the estimated fair value of the shares
at $0.023 per share. Total transaction costs have been recorded as a charge to
the stockholders' equity of the Company.
Cash and cash equivalents held by the Company in the amount of $750,000 were
obtained through subscriptions for a private placement of 750 shares of Series
"A" Convertible Preferred Stock at a price of $1,000 per share. The closing of
this private placement and the release of funds held in escrow were contingent
on this acquisition being completed. The shares of Series "A" preferred stock
are convertible, at the option of the holder, and at any time after March 16,
2000, into common stock at 75% of the last ten day average closing bid price of
the Company subject to a maximum conversion rate of 5,000 shares of common stock
for one share of preferred stock and a minimum conversion rate of 250 shares of
common stock for one share of preferred stock. In addition, if a registration
statement in respect of the common stock underlying the preferred stock is
effective, all Series "A" preferred stock will be deemed to convert into common
stock on or before January 31, 2001, the first anniversary date.
The following table reflects unaudited pro forma information which combines the
operations of forestindustry.com, Inc. for the nine months ended February 29,
2000 and February 28, 1999 as if the acquisition of forestindustry.com, Inc. had
taken place at the beginning of the period. There were no pro forma adjustments
required in combining this information of these two entities. This pro forma
information does not reflect any non-recurring charges or credits directly
attributable to the transaction. This pro forma information does not purport to
be indicative of the revenues and net loss that could have resulted had the
acquisition been in effect for the period presented and is not intended to be a
projection of future results or trends.
<PAGE>
Notes to the Interim Consolidated Financial Statements
As at February 29, 2000
- -----------------------------------------------------------------------------
Note 3 - Acquisition (continued)
Nine Months Ended
February 29, February 28,
2000 1999
$ $
Revenues 264,144 178,323
Expenses
Bad Debts 18,044 3,856
Promotion and Trade Shows 34,098 5,916
General and Administrative 103,562 35,207
Professional Fees 54,756 25,122
Wages 169,158 105,122
------------------------------
Net Income (Loss) for the Period (115,474) 3,100
----------------------------
Net Loss Per Share (0.01) -
=============================
Note 4 - Operating Line of Credit
The Company has a $10,347 (CDN $15,000) revolving operating line of credit with
the Royal Bank of Canada. The line of credit is payable on demand, bears
interest at prime plus 1.75% per annum payable monthly, and is secured by a
general security agreement over all assets of the Company, guarantees by a
corporate shareholder and personal guarantee of the principals of the Company.
The line of credit was paid off in March, 2000 and the general security
agreement as well as the guarantees have been removed.
Note 5 - Stockholders' Equity
a) Preferred Stock
On January 31, 2000, the Company issued through a private placement 750 shares
of Series "A" convertible preferred stock at a price of $1,000 per share.
Holders of Series "A" convertible preferred stock are entitled to distribution
of $1,000 per share prior to any distribution to the holders of the Company's
common stock in the event of any liquidation or dissolution of the Company.
<PAGE>
Notes to the Interim Consolidated Financial Statements
As at February 29, 2000
- ----------------------------------------------------------------------------
Note 5 - Stockholders' Equity (continued)
The Series "A" preferred stock is convertible, at the option of the holder, and
at any time after March 16, 2000, into common stock at 75% of the last ten day
average closing bid price of the Company subject to a maximum conversion rate of
5,000 shares of common stock for one share of preferred stock and a minimum
conversion rate of 250 shares of common stock for one share of preferred stock.
In addition, if a registration statement in respect of the common stock
underlying the preferred stock is effective, all Series "A" preferred stock will
be deemed to convert into common stock on or before January 31, 2001, the first
anniversary date.
b) Stock Options
In February, 2000, the Company adopted a fixed stock option plan that provides
for the issuance of incentive and non-qualified stock options to officers,
directors and employees to acquire up to 250,000 shares of the Company's common
stock.
The Board of Directors determines the terms of the options granted, including
the number of options granted, the exercise price and the vesting schedule. The
exercise price for qualified incentive stock options is not to be less than the
fair market value of the underlying stock at the date of grant, and to have
terms no longer than ten years from the date of grant.
On February 29, 2000, the Company granted options to purchase a total of 31,000
shares of the Company's common stock at a price of $4.00 per share to employees
of the Company. The options vest on or after February 29, 2001 and expire
between February and April, 2005
c) Stock-Based Compensation
In January, 2000, the Company issued 37,500 shares of common stock in exchange
for services relating to the acquisition of forestindustry.com, Inc. The fair
value of these services was estimated based upon the estimated fair value of the
shares at $0.023 per share or $863. The costs were deducted from the additional
paid-in capital from the said acquisition.
In February, 2000, the Company recorded non-cash compensation expense of $8,050
related to the issuance of 350,000 shares of common stock to certain employees
of the Company. The fair value of the shares was estimated at $0.023 per share
at the time of the transaction.
Note 6 - Commitments
a) The Company has entered into an agreement to lease office premises to
September 30, 2001. The monthly lease payment is $2,679.
b) The Company has entered into an agreement to lease a vehicle to March 9,
2003. The monthly lease payment is $529 with an option to purchase the
vehicle at the end of the lease for $14,717.
c) The Company has entered into an agreement to lease an internet
telecommunication line to December 31, 2002. The monthly lease payment is
$959.
<PAGE>
Notes to the Interim Consolidated Financial Statements
As at February 29, 2000
- -------------------------------------------------------------------------------
Note 6 - Commitments (continued)
d) The Company has entered into a consulting contract with an individual to
perform various investor relations and corporate development functions for an
initial fee of $4,600, which was settled by the issuance of 200,000 common
shares of the Company at $0.023 per share, and a monthly fee of $2,414. The
contract term commenced on February 29, 2000 and continues until February 28,
2001.
e) The Company has entered into a consulting contract with an individual to
perform various accounting functions for a monthly fee of $1,655. The
contract term commenced on February 15, 2000 and continues until August 15,
2000.
f) The Company has entered into an employment contract with the President of the
Company for an annual salary of $51,738. The employment contract commenced on
February 1, 2000 and continues until January 31, 2003.
g) The Company has entered into an employment contract with the Chief
Information Officer for a signing bonus of $3,450, which was settled by the
issuance of 150,000 common shares of the Company at $0.023 per share, and an
annual salary of $51,738. The employment contract commenced on February 29,
2000 and continues until February 28, 2001.
h) The Company entered into an agreement dated March 1, 2000 for advertising and
marketing services for a term of three months pursuant to which the Company
agreed to pay total fees of $15,000.
Note 7 - Financial Instruments
Financial instruments include cash and cash equivalents, accounts receivable,
operating line of credit, and accounts payable and accrued liabilities. The
estimated fair value of such financial instruments approximates their carrying
value.
<PAGE>
Item 2.Management's Discussion And Analysis And Plan Of Operations
The financial information contained in this Quarterly Report
reflects the business operations of our wholly owned subsidiary, The Forest
Industry Online Inc. As a result of the acquisition of The Forest Industry
Online Inc. on January 31, 2000, as described below, we succeeded to the
business operations of The Forest Industry Online Inc. On February 25, 2000
we changed our name to forestindustry.com, Inc. from Autoeye, Inc. Prior to
our acquisition of The Forest Industry Online Inc. we had not commenced any
operational activities other than initial corporate formation and
capitalization.
This discussion, other than the historical financial information,
may consist of forward-looking statements that involve risks and
uncertainties, including quarterly and yearly fluctuations in results, the
timely availability of new communication products, the impact of
competitive products and services, and the other risks and uncertainties,
including those relating to the recent acquisition of a new line of
business described below. These forward-looking statements speak only as of
the date hereof and should not be given undue reliance. Actual results may
vary significantly from those projected.
Overview
We are in the business of providing direct customer service and
support to businesses, individuals and organizations within the forest and
wood product industries. Through our website, we have developed an internet
based community that aides businesses, organizations, and individuals
involved in the forest industry to use the internet for communication as
well as daily operations.
Through and including January 31, 2000, the period which financial
information is presented herein, we conducted business under the name
"Autoeye Inc." During this period we were inactive and without operations.
Our sole business during that time was to locate a suitable business entity
to acquire.
On January 31, 2000, we acquired all of the issued and outstanding
shares of The Forest Industry Online Inc. by way of a Share Exchange
Agreement, and subsequently changed our name to forestindustry.com, Inc. As
a consequence of such acquisition, our President resigned and Joe Perraton,
a principal of The Forest Industry Online Inc., was appointed President.
The Company has entered into a three year Employment Agreement with Mr.
Perraton. In connection with the share exchange, the Company issued
10,000,000 shares of common stock to the shareholders of The Forest
Industry Online Inc. in exchange for all of the issued and outstanding
shares of The Forest Industry Online Inc. Also in connection with such
transaction, the Company authorized and issued 750 shares of a newly
created Series A Convertible Preferred Stock at an aggregate price of
$750,000. For accounting purposes, the acquisition by us of The Forest
Industry Online Inc. has been treated as a reverse acquisition.
From its inception in 1997, we have grown to approximately 500
customers as of February 29, 2000. Approximately 70% of our clients are
U.S. companies and the majority of our other clients are from Canada,
Europe, Asia and Australasia. An essential element of our business will be
to expand the internet services we offer to customers and to obtain the
rights to proprietary software for the hosting of online business to
business services. We will be seeking partnerships with electronic commerce
providers to build the proprietary online lumber and equipment exchange.
<PAGE>
Results of Operations
During the nine months ending February 29, 2000 revenues increased
by 48% over the prior period as we added more customers to our website.
However, during this same period expenses increased by 125% over the nine
months ending February 28, 1999 resulting in a loss of $(107,588). The
increase in expenses was the result of an expanded advertising and
marketing program and the addition of customer service and technical
support personnel who were required due to our higher level of activity.
Liquidity and Capital Resources
During the nine months ending February 29, 2000 our sources and use of
cash were:
Cash provided by operations $(47,593)
Payment of long term debt and bank
credit line (60,860)
Loans repaid to Teaco Properties Ltd. (71,229)
(a principal shareholder)
Loans repaid to other shareholders (18,348)
Proceeds from sale of preferred stock 750,000
Purchase of Equipment (37,712)
Net increase in cash during the period $514,258
========
During the twelve months ending April 30, 2001 we anticipate that we will
need capital for the following purposes:
Fund operating losses: $1,000,000
Sales and marketing: 100,000
Expansion of Internet Services 150,000
Establishment of our Lumber and
Equipment Exchange: 300,000
--------
1,550,000
=========
We expect our expenses will continue to increase during the next twelve
months as a result of increased marketing expenses and the expansion of our
online services.
We plan to develop the Lumber and Equipment Exchange, or LEE, which will
conduct auctions of lumber, equipment and other wood products by means of the
internet. To establish the Lumber and Equipment Exchange we will need to license
from a third party the computer software systems needed to operate an internet
based auction site. We will earn commissions on any sales made through the LEE.
We anticipate that the LEE will be operational by July, 2000.
<PAGE>
We expect that we can obtain a license for the computer system needed for
the LEE for approximately $300,000. In the alternative, we may attempt to
establish a joint venture or similar arrangement with a company which has the
rights to such a computer system, in which case the initial cost of the license
would be less but we would be reuquired to share any revenues we earn from the
LEE with our joint venture partner. As of March 31, 2000 we had not obtained any
license for the computer programs which will be required for our Lumber and
Equipment Exchange.
As of February 29, 2000 we had working capital of $483,081. We anticipate
obtaining the additional capital which we will require through revenues from our
operations and through a combination of debt and equity financing. There is no
assurance that we will be able to obtain capital we will need or that our
estimates of our capital requirements will prove to be accurate. As of the date
of this prospectus we did not have any commitments from any source to provide
additional capital.
<PAGE>
PART II
Other Information
Item 2. Changes in Securities
During the three months ended February 29, 2000 we:
o Issued 10,000,000 shares of common stock to three persons in connection
with the acquisition of The Forest Industry Online, Inc.
o Issued 387,500 shares of common stock to three persons for services
rendered, and
o Sold 750 shares of our preferred stock to three persons for $750,000 in
cash.
The shares of common stock issued or sold during the quarter were issued
or sold in reliance upon the exemption provided by Section 4(2) of the Act. The
persons who acquired these shares were either accredited or sophisticated
investors. The shares of common stock were acquired for investment purposes only
and without a view to distribution. The persons who acquired these shares were
fully informed and advised about matters concerning the Company, including the
Company's business, financial affairs and other matters. The persons acquired
these shares for their own accounts. The certificates representing the shares of
common stock bear legends stating that the shares may not be offered, sold or
transferred other than pursuant to an effective registration statement under the
Securities Act of 1933, or pursuant to an applicable exemption from
registration. The shares are "restricted" securities as defined in Rule 144 of
the Securities and Exchange Commission.
All sales of the Series A preferred stock were exempt from registration
pursuant to Rule 506 of the Securities and Exchange Commission. All shares of
the preferred stock were acquired for investment purposes only and without a
view to distribution. All of the persons who acquired the Company's Series A
preferred stock were fully informed and advised about matters concerning us,
including our business, financial affairs and other matters. The purchasers of
the Company's Series A preferred stock acquired the securities for their own
accounts. The certificates evidencing the Series A preferred stock bear legends
stating that they may not be offered, sold or transferred other that pursuant to
an effective registration statement under the Securities Act of 1933, or
pursuant to an applicable exemption from registration. All Series A preferred
shares are "restricted" securities as defined in Rule 144 of the Rules and
Regulations of the Securities and Exchange Commission.
Item 6. Exhibits and Reports on Form 8-K
The Exhibits in the following table have been filed as part of this Report
on Form 10-QSB:
Exhibit Number Description of Exhibit
27 Financial data schedule
<PAGE>
Reports on Form 8-K:
1. On February 15, 2000, the Company filed a Current Report on Form 8-K to
report (i) the closing of its acquisition of The Forest Industry Online
Inc. and (ii) the closing of a private placement of securities.
2. On February 16, 2000, the Company amended the 8-K Report filed on February
15, 2000
3. On March 8, 2000, the Company filed a Current Report on Form 8-K to report
(i) a change in its independent certified public accountant and (ii) the
change of the name of the Company to forestindustry.com, Inc.
<PAGE>
SIGNATURES
In accordance with the requirements of the Exchange Act, the
registrant caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
forestindustry.com, Inc.
Date: April 14, 2000 /s/ Joe Perraton
------------------------------
Joe Perraton, President,
(Principal Financial and Accounting Officer)
<PAGE>
forestindustry.com, Inc.
FORM 10-QSB
QUARTER ENDING FEBRUARY 29, 2000
EXHIBIT 27
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0001052671
<NAME> forestindustry.com, Inc.
<MULTIPLIER> 1
<CURRENCY> US
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> MAY-31-2000
<PERIOD-START> JUN-1-1999
<PERIOD-END> FEB-29-2000
<EXCHANGE-RATE> 1
<CASH> 517,805
<SECURITIES> 0
<RECEIVABLES> 79,504
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 602,114
<PP&E> 73,002
<DEPRECIATION> 15,848
<TOTAL-ASSETS> 659,268
<CURRENT-LIABILITIES> 119,033
<BONDS> 0
0
1
<COMMON> 1,531
<OTHER-SE> 538,703
<TOTAL-LIABILITY-AND-EQUITY> 659,268
<SALES> 264,144
<TOTAL-REVENUES> 264,144
<CGS> 0
<TOTAL-COSTS> 371,732
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (107,588)
<INCOME-TAX> 0
<INCOME-CONTINUING> (107,588)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (107,588)
<EPS-BASIC> (0.017)
<EPS-DILUTED> (0.017)
</TABLE>
