U.S. Securities and Exchange Commission
Washington, D.C. 20549
Form 10-SB
Amendment No. 2
General form for registration of securities of small business issuers
Under Section 12(b) or (g) of the Securities Exchange Act of 1934
Forest Glade International, Inc.
--------------------------------
(Name of Small Business Issuer in its charter)
Nevada
------
(State or other jurisdiction of incorporation or organization)
52-212-549
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(I.R.S. Employer Identification No.)
Principal Executive Offices
---------------------------
444 Victoria Street, Suite 370
Prince George, B.C.
CANADA V2L 2J7
(250) 564-6868
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(Issuer's Telephone No.)
Securities to be Registered under Section 12(b) of the Act: None
Securities to be Registered under Section 12(g) of the Act:
Common Stock (Title of Stock)
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Total number of pages: 52
Index to Exhibits Appears on Page 35
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Item 1
(a) Business Development
--------------------
Forest Glade International, Inc. (the Registrant) was incorporated on
August 27, 1998 under the laws of the State of Nevada for the purpose of
acquiring Forest Glade Properties, Inc., a corporation organized under the
laws of British Columbia, Canada. Pursuant to the Agreement and Plan of
Reorganization dated September 30, 1998, which closed on November 17, 1998,
the Registrant acquired 100% of the outstanding common stock of Forest
Glade Properties Inc. in exchange for 7,700,000 shares of the Registrant's
common stock. The business of the Registrant is owning and operating
mobile home parks in Canada. Forest Glade Properties Inc. was established
in January 1998 by Wayne Loftus, Frank Dennis, Michael Jenks, Stan Polson
and Gil Rahier, the founders and Directors of the Registrant.
On December 1, 1998, the Registrant's wholly owned subsidiary, Forest
Glade Properties Inc., acquired the mobile home park, Mountain View Park,
Sparwood, B.C., from 514592 B.C. Ltd., a British Columbia corporation, for
$1,500,000 Cdn. based on the value determined by North Country Appraisals
(1985) Ltd., an independent appraiser certified by the Appraisal Institute
of Canada. There is no relationship between North Country Appraisals and
the Company or its management and principal shareholders. The terms of
payment were the assumption of the existing mortgage against the property
with a balance of $681,554 Cdn., at the date of acquisiton, and the issuance
to the Vendors of 200,000 common shares of Forest Glade International Inc.,
at a deemed value of $2.73 per share for a total of $546,000 (or $818,446
Cdn.). Gil Rahier, a Director of the Registrant, was the registered owner
of 50% of the corporation owning the property, and beneficially received
100,000 common shares of Forest Glade International, Inc. Orv
Schattenkirk, a non-affiliate, was the owner of the remaining 50% interest
of the corporation owning the property, and received 100,000 shares of
Forest Glade International Inc. Mr. Rahier acquired his interest in 514592
B.C. Ltd., in May 1996.
Historical cost of the mobile home park to 514592 B.C. Ltd., was
$1,009,776 Cdn., (approximately $740,000 US). Upon conclusion of this
transaction the Company accounted for the mobile home park based upon
its appraised value (resulting in an increase in cost of approximately
$250,000 US).
Forest Glade Properties, Inc., entered into an agreement with an
unaffiliated third party to acquire an additional mobile home park in
Alberta, Canada in August 1998 and paid a non refundable deposit of $75,000
Cdn. while negotiating the terms of the acquisition. Forest Glade
Properties, Inc., and the seller were unable to come to an agreement as to
the price and form of consideration for the acquisition and in October
1998, the deposit was forfeited to the seller.
(b) Narrative Description of Business
---------------------------------
The Registrant's business is owning and operating mobile home parks.
The Registrant presently owns and operates one mobile home park (see
Description of Properties below). The Registrant rents mobile home sites
and charges monthly fees for services including maintenance, management, and
provides utilities to the sites. Each mobile home pad is provided with
municipal water, sewer, garbage service, natural gas, electricity and cable
television.
The market for mobile home rental space is highly site specific with
proximity to a growing urban area or major employers such as the mining
industry providing the greatest demand for mobile home rental space. In
addition, the appearance, services and amenities of the mobile home park
are substantial factors in the competition for renters. Management
believes that the markets for mobile home rental space in British Columbia
and Alberta are stable and steadily growing. Management believes that the
market for mobile home rental space is stable and steadily growing due to
the increasing population and diversity of economic activity in British
Columbia. Over the past two decades the economy of British Columbia has
grown from its primary dependence upon natural
2
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resources to include manufacturing and urban commerce, resulting in a
stable and steadily growing market for housing in general including mobile
home parks.
The Registrant's plan of operation is to acquire additional, fully
developed and operating mobile home parks in the United States and Canada.
It is Management's belief that acquiring existing and operating mobile home
parks is a superior strategy to developing new mobile home parks for
several reasons. Acquiring operating parks avoids the expenses, delays and
risks inherent in new development while allowing rapid incorporation of the
existing parks cash flow with the Registrant's operations.
The criteria for an acquisition include, but are not necessarily
limited to:
Favorable assessment of the development and operation of the park;
Minimum three year operating history;
Municipal water and other utilities;
Proximity to urban centers or major employers;
History of expenses not exceeding 30% of revenue;
Room for expansion;
Long term current ownership seeking retirement.
The Registrant's operations are generally subject to zoning and other
local business regulation.
The Registrant employs 2 people on a full time basis with namely 1
employed at the Mountain View Park operation, and 1 at its corporate
headquarters.
Item 2. Management's Discussion and Analysis or Plan of Operation
The Registrant was incorporated in August 1998 while its subsidiary was
incorporated in January 1998. Prior to the acquisition of the Mountain
View Park in Sparwood, B.C., the Registrant and its subsidiary were
inactive. The discussion below relates to a discussion of the financial
results of the Park (in Canadian dollars) and Management's plan of
operations. The financial results below do not include the financial
condition and results of operation of the Registrant. The financial
results of the Park will be included in the financial statements of the
Registrant in the second quarter of the 1999 fiscal year.
Results of Operations
The Park currently derives its revenue from 85 mobile home pads or sites
that are rented on a monthly basis. Management anticipates that 15
additional pads of the 51 presently vacant will be rented during 1999,
bringing the total number rented to 100. The Park expects commission
revenue from a Moduline Mobile Home Dealership which is owned by a
independent third party. The Registrant is evaluating several operating
mobile home parks in Western Canada and the United States for acquisition
in 1999 and thereafter.
Statement of operations data for the Park (in Canadian dollars)
- ---------------------------------------------------------------
3
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<TABLE>
<CAPTION>
For the Six Months For the Years
Ended October 31 Ended April 30
1998 1997 1998 1997
--------------------------------------------------
<S> <C> <C> <C> <C>
Rental revenue $87,177 $81,429 $160,291 $146,685
Commission revenue - $15,328 $ 25,210 $ 5,500
Total revenue $87,177 $96,757 $185,501 $152,185
Expenses $105,874 $127,581 $229,655 $189,037
Net loss for the period $18,697 $30,824 $44,154 $36,852
Exchange Rate information:
End of period $0.6481 $0.7102 $0.6982 $0.7154
Average for the period $0.6674 $0.7227 $0.7115 $0.7331
</TABLE>
Six months ended October 31, 1998 compared to the six months ended
- ------------------------------------------------------------------
October 31, 1997
- ----------------
Rental revenue for the six-month period ended October 31, 1998 was $87,177
or a 7% increase over the six-month period ended October 31, 1997. This
increase was attributable to additional pad rentals. Overall revenue of
$87,177 was down 10% over the six-month period ended October 31, 1997 due
to the absence in 1998 of $15,328 in commission income on mobile home sales
earned in 1997. Expenses declined by $21,707 over the similar period in
1997 to $105,874. While interest expense increased by $11,865 over 1997
due to recording of an interest rebate in 1997 on the refinancing of the
prior mortgage facility, this increase was offset by a $30,861 decline in
repairs and maintenance expenses. In 1997, the Park incurred significant
repair expenditures in relation to its sewer system and pumphouse. The
remaining expenses are comparable to amounts incurred in 1997.
The net loss of the Park for the six month period ended October 31, 1998
was $18,697 compared to a loss of $30,824 for the six month period ended
October 31, 1997.
The year ended April 30, 1998 compared to the year ended April 30, 1997
- -----------------------------------------------------------------------
Rental revenue for the year ended April 30, 1998 was $160,291 or a 9%
increase over the year ended April 30, 1997. This increase was
attributable to additional pad rentals. Overall revenue of $185,501 was up
22% over the year ended April 30, 1997 due to the increase in rental
revenue and $25,210 in commission income on mobile home sales in 1998
compared to $5,510 earned from that source in 1997. Expenses increased by
$40,618 over 1997 to $229,655. Repairs to the Park property increased by
$19,428 over 1997 due to required repairs to the sewer system and the
pumphouse. As well, professional fees incurred in connection with the
Company's attempt to recover costs incurred for sewer and pumphouse repairs
resulted in an increase of $7,193 over 1997. Finally, a full-year's
depreciation of $55,127 (an increase of $26,395) was recorded in 1998 due
to the fact that the property was acquired during 1997 resulting in a
reduced amount of depreciation in 1997. The effect of increases in these
expenses on the change in total expenses was reduced by a $10,048 decline
in interest on long term debt to $43,196. This decline was due to
refinancing the Company's mortgage on the property. The remaining expenses
are comparable to amounts incurred in 1997.
The net loss of the Park for the year ended April 30, 1998 was $44,154
compared to a loss of $36,852 for the year ended April 30, 1997.
4
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Liquidity and Capital Resources
- -------------------------------
The Registrant and its subsidiary have initially relied on equity
contributions of capital from the directors and other shareholders to meet
its working capital requirements. Hereafter cash flow, after debt
servicing, generated from the operation of the Mountain View Park and
additional equity financing will provide funding to provide capital for new
acquisitions. In connection with the acquisition of the Mountain View
Park, the Company's subsidiary has assumed the existing mortgage of
$681,554 Cdn., which is payable on demand by the Royal Bank of Canada with
monthly payments until 2011. Mr. Rahier, a director of the Company is also
a personal guarantor on the loan. New acquisitions would be partially
financed by conventional mortgage borrowings.
Plan of Operation
- -----------------
Management believes that its current cash flow is sufficient to provide its
current cash requirements for the next twelve months. The Company's
anticipated current cash requirements do not include any expansion to the
Mountain View Park. However, Management anticipates using equity in the
Registrant as partial consideration for the acquisition of mobile home
parks. The Registrant does not presently have any agreements, arrangements
or understandings for the acquisition of other mobile home parks. The
Registrant has not pursued acquisitions while in the process of
establishing a public market for its securities and does not anticipate
entering into such negotiations until a public market has been established.
Acquisitions are anticipated to involve a combination of debt and equity
financing. The use of debt financing for possible acquisitions is
anticipated to have the effect of increasing the Company's total
liabilities. However, it is the Company's intention to only use debt
financing in connection with the acquisition of operating mobile home parks
with sufficient cash flow for servicing the acquisition debt as well as
increasing the Company's liquidity. The use of equity as partial
consideration for potential acquisitions is anticipated to reduce the
reliance upon debt financing.
Effect of Inflation
- -------------------
The Company believes that inflation has not had a material affect on its
past business.
Year 2000 Computer Problems
- ---------------------------
Many existing computer programs use only two digits to identify a year in
the date field. These programs were designed and developed without
considering the impact of the upcoming change in the century. If not
corrected, many computer applications could fail or create erroneous
results by or at the Year 2000. The Year 2000 issue affects virtually all
companies and organizations.
Although many companies undertake major projects to address the Year
2000 issue, Management does not believe that its operations are highly
dependent upon computer programs. However, the Registrant has undertaken
to ensure that its associated computer fields were designed and constructed
to receive and manipulate four digit integers instead of only two. The
Registrant's computer system has been evaluated and found to adequately
address the Year 2000 Issue. As a result, no additional costs are expected
to be incurred. The Registrant does not anticipate any material risk
resulting from Year 2000 issues in that its computer programs are
relatively simple word processing and accounting programs which have been
certified as Year 2000 ready. In addition, the Registrant maintains
physical files of all essential documents and data.
5
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Item 3. Description of Property
The Registrant presently owns one property:
Mountain View Park, Sparwood, British Columbia
- -----------------------------------------------
The Mountain View Park is a 33.23 acre facility located in Sparwood,
British Columbia which is 610 miles east of Vancouver in the southeast
corner of British Columbia, forty-five miles north of the U.S. - Canadian
border. The Park has 1,041 feet of frontage space on the main street of
Sparwood, close to its downtown area. Sparwood is a hub of coal mining and
timber activity in the area. The population of Sparwood is approximately
4,200 people with the trading area population of the surrounding Elk River
Valley being approximately 24,000 people. Mining and timber are the
primary employers in the area.
The Park has 136 mobile home pads. At present, 84 sites are rented,
plus 1 pad with a park owned mobile that is also rented resulting in a
sixty-two percent occupancy rate. The occupancy rate has remained stable
for the past twelve months and is expected to remain so. The rentals are
based upon monthly tenancy and 80% of the rentals have occupied their space
for longer than 1 year.
Located on the Park is a Moduline Mobile Home Dealership which is
owned independently by an unaffiliated third party. The Dealership pays
the Park a commission for each mobile home sale and produces a profit of
$7,500 Cdn. for each unit sold. The Dealership provides a facility to
display mobile homes to perspective purchasers, together with an
opportunity to establish residency.
The Registrant's subsidiary holds the property in fee simple title
which is encumbered by a first mortgage in the amount of $681,554 Cdn.,
bearing interest at the rate of the prime interest rate plus 1% per annum.
The mortgage is payable on demand with monthly payments amortized over
fifteen years ending in 2011. The prime rate is based upon the Royal Bank
of Canada published prime rate. Mr. Rahier, a director of the Registrant is
a personal guarantor on the mortgage. The monthly payments are $6,800
Cdn., including interest and principal. The Park and the leased operations
are covered by liability and damage insurance, which Management believes to
be adequate.
There is 1 other mobile home park 25 miles from Sparwood, B.C.
Management believes that the appearance, amenities and location of the
Mountain View Park makes the park competitive with the other existing park
and allows the Park to charge higher rentals than these other parks without
impact to its occupancy rates. This belief is based upon the close
proximity of the Mountain View Park to the central business district of
Sparwood, access to a greenspace park and playground and the availability
of municipal water, sewage, natural gas, electric and garbage services.
The Registrant records annual depreciation on the property at the rate
of 4% for Buildings; 20% for Equipment; and 8% for Pads using the declining
balance method. The tax basis for the property is $1,500,000 Cdn., and the
remaining useful life of the pads for purposes of depreciation is
approximately 12 years.
Taxes on the property are assessed at the rate of .0122% and total
$10,000 Cdn. annually. Annual realty taxes on the proposed expansion would
result in $5,000 Cdn. additional taxes per year.
6
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Item 4. Security Ownership of Certain Beneficial Owners and Management
(a) Security Ownership of Certain Beneficial Owners holding five
percent or greater of the 17,900,000 shares of common stock outstanding as
of November 30, 1998.
Title of Class Name and Address Amount and Nature % of
of Beneficial Owner of Beneficial Owner Class
- ------------------------------------------------------------------------
Common Paul Flanagan 900,000 5.0%
c/o Intl Sec Trade
7th Flr., Ledsema Condo 117
Gambia St. Legaspi VIL 1229 Makati
Manila, Philippines
Janice Lun 900,000 5.0%
c/o Intl Sec Trade
7th Flr., Ledsema Condo 117
Gambia St. Legaspi VIL 1229 Makati
Manila, Philippines
(b) Security Ownership of Management
Name and Address(1) Amount and Nature % of
Title of Class of Beneficial Owner of Beneficial Owner Class
- ------------------------------------------------------------------------
Common Wayne E. Loftus 1,583,333 8.9
Frank Denis 2,866,668 16.0
Michael Jenks 1,583,333 8.9
Stan Polson 1,583,333 8.9
Gil Rahier 1,683,333 9.3
--------- ----
All officers and Directors
as a Group (5 persons) 9,300,000 52.0
(1) 444 Victoria Street, Suite 370, Prince George, B.C. CANADA V2L 2J7
(c) Changes in Control:
There are no arrangements which may result in a change in control
of the issuer.
Item 5. Directors, Executive Officers, Promoters and Control Persons
(a) Directors and Executive Officers
WAYNE E. LOFTUS - Age 49. President, Chief Executive Officer and
Chairman of the Board of Directors. 1983 to present, owner/manager of
Pacific Rim Mortgage & Loan Corp. located in Prince George, B.C., Canada.
Pacific Rim, a private corporation, is involved in brokering loans and
private financing in all facets of residential, commercial and
institutional lending. Education - Graduated 1972, Douglas Community
College, Burnaby, B.C. and obtained a Degree in Business Management &
Economics.
FRANK A. DENIS - Age 62. Vice President and Director. Since 1986 has
been President and owner of Kenda Enterprises Ltd. located in Prince
George, B.C., Canada. The Company is engaged in the business of buying and
selling of land and timber, having gross annual revenues of $1,000,000 Cdn.
Graduated in 1953 from Prince George Secondary High School located in
Prince George, B.C.
7
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GIL RAHIER - Age 58. Secretary, Treasurer and Director. Since 1976, Mr.
Rahier has been associated with the Barton Group of Companies located in
Prince George, British Columbia, and is presently a Senior Vice President
with a portfolio of forest industry and commercial insurance accounts.
Since April 1996 Mr. Rahier has served as president and director of 514592
B.C., Ltd., the corporation from whom the Registrant acquired its Mountain
View Park property. Mr. Rahier graduated in 1957 from Prince George Senior
Secondary School in Prince George, B.C., Canada.
MICHAEL JENKS - Age 47. Director. Since 1968 owner of Jeni Holdings
Ltd. located on Gabriola Island, British Columbia, Canada. The company
owns and develops commercial, industrial and residential real estate
properties throughout British Columbia. Mr. Jenks graduated in 1967 from
Duchess Park Senior Secondary School, located in Prince George, B.C.,
Canada.
STAN POLSON - Age 58. Director. 1978 to present, owner and operator of
Mountain View Mobile Home Sales Ltd., located in Prince George, British
Columbia, Canada. Owner, Developer and Operator of 4 mobile home Parks
established in the general region of Prince George, B.C., Canada.
Graduated in 1952 from High School in Bolgonie, Saskatchewan, Canada.
(b) Significant Employees: None
Item 6. Executive Compensation Table
(a) Name & Position Year Salary Paid
--------------- ---- -----------
Wayne Loftus - President & C.E.O. 1998 NIL
Item 7. Certain Relationships and Related Transactions
The Registrant's Board of Directors are the Registrant's Founders and
Promoters. The Company's By-Laws include a provision regarding Related
Party Transactions which requires that each participant to such transaction
identify all direct and indirect interests to be derived as a result of the
Company's entering into the related transaction. A majority of the
disinterested members of the board of directors must approve any Related
Party Transaction.
Pursuant to the Agreement and Plan of Reorganization dated September 30,
1998, which closed on November 17, 1998, the Registrant acquired 100% of
the outstanding common stock of Forest Glade Properties Inc. in exchange
for 7,700,000 shares of the Registrant's common stock.. Wayne E. Loftus,
Michael Jenks, Stan Polson and Gil Rahier each received 1,283,333 shares of
common stock for their shares of Forest Glade Properties, Inc, and Frank
Denis received 2,566,668 shares of the Registrant's common stock for his
shares of Forest Glade Properties, Inc.
On December 1, 1998, the Registrant's wholly owned subsidiary, Forest
Glade Properties Inc., acquired the mobile home park, Mountain View Park,
Sparwood, B.C., from 514592 B.C. Ltd., a British Columbia corporation for
$1,500,000 Cdn. based on the value determined by North Country Appraisals
(1985) Ltd., an independent appraiser certified by the Appraisal Institute
of Canada. The terms of payment were the assumption of the existing
Mortgage against the property in the amount of $681,554 Cdn., and the
issuance to the Vendors of 200,000 common shares of Forest Glade
International Inc. at a deemed value of $2.73 U.S. per share. Gil Rahier,
a Director of the Registrant,
8
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was the registered owner of 50% of the Corporation owning the property, and
beneficially received 100,000 common shares of Forest Glade International,
Inc. Please see DEVELOPMENT OF THE BUSINESS above.
Item 8. Description of Securities
The authorized capital stock of Company consists of 200,000,000 shares of
common stock. No warrants to acquire common stock have been authorized.
There are no outstanding obligations of the Company to repurchase, redeem
or otherwise acquire any shares of the Company's common stock.
The common stock carry no preemptive rights, are not convertible,
redeemable, assessable or entitled to the benefits of any sinking fund.
The common stock affords the holders no cumulative voting rights, and the
holders of a majority of the shares voting for the election of the
directors can elect all of the directors if they should choose to do so.
Pursuant to a vote of the Shareholders on September 1, 1998, the
Registrant's Board of Directors has the authority to declare a reverse
split of the outstanding shares.
PART II
Item 1. Market Price of and Dividends on the Registrant's Common Equity
and Other Shareholder Matters
(a) Market Information
The Registrant's stock is not listed for sale on any exchange or trading
medium. The Registrant intends to seek the listing of its Common Stock on
the OTC Electronic Bulletin Board upon the effectiveness of this Form 10-SB.
Until such time, there is no public market for the Company's Common Stock.
(b) Holders
There are 23 holders of the Registrant's Common Stock as of November 30,
1998. There are 7,900,000 which are restricted securities as defined by
Rule 144, none of which have been held in excess of one year.
(c) Dividends
The Registrant has paid no dividends to date on its Common Stock. The
Registrant reserves the right to declare a dividend when operations merit.
Item 2. Legal Proceedings
There is no action, suit or proceeding before or by any court or
governmental agency or body, domestic or foreign, now pending or, to the
knowledge of the Registrant, threatened, against or affecting the
Registrant, or any of its properties, business affairs or business
prospects of the Registrant.
Item 3. Changes in and Disagreements with Accountants: None
9
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Item 4. Recent Sales of Unregistered Securities
During the past three years, the Registrant sold securities which were not
registered under the Securities Act of 1933, as amended, as set forth
below.
Date Name # of shares issued Consideration (U.S. $)
- ---- ---- ------------------ --------------
090198 Terry Kline 350,000 3,500
090198 Michael Lee 160,000 1,600
090198 Keith Betnard 250,000 2,500
090198 Tim Fung 400,000 4,000
090198 Andrew Fulton 525,000 5,250
090198 Henry Melnik 125,000 1,250
090198 Larry Kaburda 600,000 6,000
090198 Robert Ng 50,000 500
090198 Dennis Love 375,000 3,750
090198 Walter Slemko 900,000 9,000
090198 Peter King 750,000 7,500
090198 John Yale 800,000 8,000
090198 Bruce Cambruzzi 190,000 1,900
090198 Paul Flanagan 900,000 9,000
090198 Braham Pocock 250,000 2,500
090198 Jonathan Lahiffe 750,000 7,500
090198 Janice Lun 900,000 9,000
090198 Linda Hazelton 225,000 2,250
090198 Mark Virk 650,000 6,500
090198 Ron Seth 750,000 7,500
090198 David Tsuyuki 45,000 450
090198 Francis Yang 55,000 550
112598 Wayne E. Loftus 1,283,333 exchange(1)
112598 Frank Denis 2,566,668 exchange(1)
112598 Michael Jenks 1,283,333 exchange(1)
112598 Stan Polson 1,283,333 exchange(1)
112598 Gil Rahier 1,383,333 exchange(1)(2)
112598 Orv Shattenkirk 100,000 exchange(2)
(1) Shares exchanged for common stock of Forest Glade Properties Inc., on
Nov. 17, 1998
(2) 100,000 shares exchanged to each individual for Mountain View Park
property.
The Registrant was not a reporting company pursuant to the Securities
Exchange Act of 1934 nor was it a development stage company with no
business plan. Thus it was eligible to rely upon Rule 504 as a safe harbor
exemption from the registration requirements of the Securities Act of 1933.
Moreover, Rule 504 was available in that the Registrant sold less
than$1,000,000.00 worth of securities in the previous 12 month period and
except for the Registrant's officers and directors, the purchasers were
unaffiliated investors. The Registrant relied upon the Rule 504 safe
harbor exemption for the sales of securities for cash. These sales were
entirely private transactions pursuant to which all material information as
specified in Rule 502(b)(2) was made available to the purchasers. The
Registrant relied upon the exemption from registration set forth in section
4(2) of the Securities Act of 1933 for its sale of shares pursuant to the
acquisition of Forest Glade Properties, Inc., and of the acquisition of the
Mountain View Park property. The purchasers in these sales were all
sophisticated investors
10
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who were provided all material information regarding the Registrant. In
addition, the Registrant placed a restrictive legend upon the certificates
issued to these purchaser denoting the securities are "restricted
securities" or held by a control person of the Registrant and may only be
sold in compliance with Rule 144. Thus the exemptions from registration
afforded by Rule 4(2) and Rule 3(b) were available to the issuer.
On all transactions depicted, no sales commission was paid by the Company
to Pacific Rim Investment Inc. pursuant to the September 1, 1998, Offering
Sales Agency Agreement. (See Exhibit 10(ii)). Pacific Rim Investment Inc.
is a corporation organized under the law of the Pacific island nation of
Vanuatu. Pacific Rim has two principals. They are Geoffrey Robert Gee and
John Caldwell Malcolm. Pacific Rim Investment, Inc., introduced the Rule
504 investors to the Registrant and provides brokerage and securities safe-
keeping services to its clients. Pacific Rim Investment, Inc., has
informed the Registrant that it is not registered as a broker-dealer with
the U.S. Securities and Exchange Commission as it does not conduct business
within the United States.
Item 5. Indemnification of Directors and Officers
Article 11 of the Company's By-laws provides that every person who was
or is a party or is threatened to be made a party to or is involved in any
action, suit or proceeding, whether civil, criminal, administrative or
investigative, by reason of the fact that he or a person for whom he is the
legal representative is or was a director or officer of the corporation or
is or was serving at the request of the corporation or for its benefit as
a director or officer of another corporation, or as its representative in
a partnership, joint venture, trust or other enterprise, shall be
indemnified and held harmless to the fullest extent legally permissible
under the General Corporation Law of the State of Nevada against all
expenses, liability and loss (including attorney's fees, judgments, fines
and amounts paid or to be paid in settlement) reasonably incurred or
suffered by him in connection therewith.
11
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PART F/S
The following financial statements are filed as part of this registration
statement:
FOREST GLADE INTERNATIONAL, INC.
Unaudited Pro-Forma Consolidated Financial Information
Consolidated Balance Sheet as of October 3l, 1998
Consolidated Statement of Operations for the three months ended
October 31, 1998
Consolidated Statement of Operations for the year ended July 31, 1998
Notes to Financial Statements
FOREST GLADE PROPERTIES INC.
Auditors' Report
Financial Statements
Balance Sheets as of October 31, 1998 (unaudited) and July 31, 1998
Statements of Operations for the three months ended October 31, 1998
(unaudited) and for the six months ended July 31, 1998
Statements of Stockholders' Equity for the three months ended October
31, 1998 (unaudited) and for the six moaths ended July 31, 1998
Statements of Cash Flows for the three months ended October 31, 1998
(unaudited) and for the six months ended July 31, 1998
Notes to the Financial Statements
514592 B.C. LTD.
Auditors' Report
Financial Statements
Balance Sheets as of October 31, 1998 (unaudited) and April 30, 1998
Statements of Loss and Deficit for the six months ended October 31,
1998 and 1997 (unaudited), for the year ended April 30, 1998 and for
the year ended April 30, 1997 (unandited)
Statements of Changes in Financial Position for the six months ended
October 31, 1998 and 1997 (unaudited), for the year ended April 30,
1998 and for the year ended April 30, 1997 (unaudited)
Notes to the Financial Statements
12
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Unaudited Pro Forma Consolidated Financial Information
The Unaudited Pro Forma Consolidated Financial Information reflects
financial information which gives effect to:
1. the acquisition of all outstanding common shares of Forest Glade
Properties Inc. in exchange for 7.7 million common shares of the
Registrant at a deemed value of $0.001 per share; and
2. the acquisition of the Mountain View Park fixed assets for $1,500,000
Cdn (US$988,470) from 514592 B.C. Ltd.
The Pro Forma Consolidated Statements included herein reflect the
anticipated use of the purchase method of accounting for both of the above
transactions. The acquisition of Forest Glade Properties Inc. will be
accounted for as a reverse acquisition as the former shareholders of Forest
Glade Properties Inc. controlled 52% of the voting common shares of the
Registrant immediately after the acquisition. Such financial information
has been prepared from, and should be read in conjunction with, the
historical financial statements and notes thereto included elsewhere in
this 10-SB Registration Statement.
The Pro Forma Consolidated Balance Sheet gives effect to the above
transactions as if they occurred on October 31, 1998. The Pro Forma
Consolidated Statement of Operations gives effect to the transactions as if
they had occurred at the beginning of the earliest period presented,
combining the results of Forest Glade International Inc. from incorporation
(August 27, 1998) to October 31, 1998 and Forest Glade Properties Inc. and
514592 BC Ltd for the three months ended October 31, 1998. As well, the
Pro Forma Consolidated Statement of Operations combines the accounts of
Forest Glade Properties Inc. for the period from incorporation (January 29,
1998) to July 31, 1998 and 514592 BC for the year ended April 30, 1998 are
presented, respectively. Prior to the acquisition of Forest Glade
Properties Inc., Forest Glade International Inc. was inactive. As Forest
Glade Properties Inc. is the continuing company for accounting purposes and
Forest Glade International Inc. is inactive, the financial statements of
Forest Glade International Inc. have been incorporated in the Pro Forma
Consolidated Financial Information by adjustment.
The financial statements of 514592 BC Ltd. included in the Consolidated Pro
Forma Financial Information utilize Canadian GAAP (which substantially
conforms to US GAAP).
The Pro Forma Consolidated Financial Information is unaudited and is not
necessarily indicative of the consolidated results which actually would
have occurred if the above transactions had been consummated at the
beginning of the periods presented; nor does it purport to present the
future financial position and results of operations for future periods.
13
<PAGE>
FOREST GLADE INTERNATIONAL INC.
PRO FORMA BALANCE SHEET
OCTOBER 31, 1998
(Unaudited)
(In United States dollars)
<TABLE>
<CAPTION>
Forest Glade 514592 Pro Forma
Properties Inc. B.C. Ltd. Adjustments Balance
------------------------------------------------------------
<S> <C> <C> <C> <C>
ASSETS
Current Assets
Cash $ 11,525 $ 6,130 $ (6,130) (1) $ 11,525
Prepaid expenses - 1,070 - 1,070
------------------------------------------------------------
11,525 7,200 (6,130) 12,595
Fixed Assets,
net of amortization 218 583,740 (583,740) (1) 988,688
988,470 (2)
------------------------------------------------------------
$ 11,743 $ 590,940 $ 398,600 $1,001,283
============================================================
LIABILITIES
Current Liabilities
Accounts payable and
accrued Liabilities $ 2,622 $ 4,610 $ (4,610) (1) $ 2,622
Bank loan - 12,960 (12,960) (1) -
Deferred revenue and
security Deposits - 1,810 - 1,810
Current portion of long-term
Debt - 21,170 - 21,170
------------------------------------------------------------
2,622 40,550 (17,570) 25,602
Long-Term Debt - 420,560 - 420,560
Shareholders' Loans - 194,440 (194,440) (1) -
------------------------------------------------------------
2,622 655,550 (212,010) 446,162
------------------------------------------------------------
STOCKHOLDERS' EQUITY
Capital Stock 79 - 200 (2) 17,900
17,621 (3)
Authorized
200,000,000 common shares;
par value $0.001
Issued
17,900,000 common shares
Additional paid-in capital 97,342 - 545,800 (2) 625,521
(17,621) (3)
Accumulated Deficit (88,300) (64,610) 64,610 (1) (88,300)
------------------------------------------------------------
9,121 (64,610) 610,610 555,121
------------------------------------------------------------
$ 11,743 $ 590,940 $ 398,600 $1,001,283
============================================================
</TABLE>
The accompanying notes are an integral part of these
financial statements.
14
<PAGE>
FOREST GLADE INTERNATIONAL INC.
PRO FORMA STATEMENT OF OPERATIONS
FOR THE THREE MONTHS ENDED OCTOBER 31, 1998
(Unaudited)
(In United States dollars)
<TABLE>
<CAPTION>
Forest Glade 514592 Pro Forma
Properties Inc. B.C. Ltd. Adjustments Balance
------------------------------------------------------------
<S> <C> <C> <C> <C>
Revenue
Rental $ - $ 30,080 $ - $ 30,080
------------------------------------------------------------
Expenses
Bank charges and interest 814 - - 814
Depreciation 13 8,240 4,460 (2) 12,713
Office & miscellaneous 2,421 1,990 - 4,411
Professional fees 11,088 - - 11,088
Property management - 2,320 - 2,320
Property taxes - 1,740 - 1,740
Repairs and maintenance - 1,980 - 1,980
Travel - 1,200 - 1,200
Utilities - 5,470 - 5,470
------------------------------------------------------------
14,336 22,940 4,460 41,736
------------------------------------------------------------
(14,336) 7,140 (4,460) (11,656)
Interest on long-term debt - (9,820) - (9,820)
Loss on termination of
trailer park
Acquisition (69,985) - - (69,985)
------------------------------------------------------------
Loss for the period $ (84,321) $ (2,680) $ (4,460) $ (91,461)
============================================================
Loss per share $ (0.005)
=============
Weighted Average shares
Outstanding 17,900,000
=============
</TABLE>
The accompanying notes are an integral part of these
financial statements.
15
<PAGE>
FOREST GLADE INTERNATIONAL INC.
PRO FORMA STATEMENT OF OPERATIONS
FOR THE YEAR ENDED JULY 31, 1998
(Unaudited)
(In United States dollars)
<TABLE>
<CAPTION>
Forest Glade 514592 Pro Forma
Properties Inc. B.C. Ltd. Adjustments Balance
------------------------------------------------------------
<S> <C> <C> <C> <C>
Rental $ - $ 114,050 $ - $ 114,050
Commission - 17,940 - 17,940
------------------------------------------------------------
- 131,990 - 131,990
------------------------------------------------------------
Expenses
Depreciation 26 39,220 16,180 (2) 55,426
Office & miscellaneous 575 9,630 - 10,205
Professional fees 1,796 8,750 - 10,546
Property management - 9,540 - 9,540
Property taxes - 7,070 - 7,070
Repairs and maintenance - 27,450 - 27,450
Travel 1,582 4,820 - 6,402
Utilities - 26,190 - 26,190
------------------------------------------------------------
3,979 132,670 16,180 152,829
------------------------------------------------------------
(3,979) (680) (16,180) (20,839)
Interest on long-term debt - (30,730) - (30,730)
------------------------------------------------------------
Loss for the year $ (3,979) $ (31,410) $ (16,180) $ (51,569)
============================================================
Loss per share $ (0.003)
==============
Weighted Average shares
Outstanding 17,900,000
==============
</TABLE>
The accompanying notes are an integral part of these
financial statements.
16
<PAGE>
FOREST GLADE INTERNATIONAL INC.
NOTES TO PRO FORMA STATEMENTS
(Unaudited)
(in United States dollars)
(1) To remove the assets and liabilities of 514592 B.C. Ltd. which are not
being acquired by Forest Glade Properties Inc. in connection with the
acquisition of Mountain View Park.
(2) To reflect the components of the purchase price for acquisition of
Mountain View Park.
Long Term Debt Assumed (Cdn. $681,554) $ 441,730
Share capital of Forest Glade International Inc.
(200,000 shares at a deemed value of US $2.73) 546,000
----------
987,730
Less prepaid expenses acquired (1,070)
Add deferred revenue and security deposits
acquired 1,810
----------
Purchase price of fixed assets $ 988,470
==========
The purchase price of $988,470 for the fixed assets would have
caused depreciation to increase by $4,460 for the three months
ended October 31, 1998 and by $16,180 for the year ended July 31,
1998.
(3) Share Exchange with Forest Glade Properties Inc.
The acquisition of Forest Glade Properties Inc. has been
accounted for as a reverse acquisition whereby the Pro Forma
Consolidated Financial Statements of Forest Glade International
Inc. are presented as a continuation of Forest Glade Properties
Inc. The acquisition is recorded at the fair value of the net
assets of Forest Glade International Inc. which prior to the
acquisition was $Nil due to its inactivity. The adjustment
necessary is to reclassify amounts between capital stock and
additional paid-in capital to reflect the par value stock of the
Registrant.
(4) Exchange Rate Information
The accounts of 514592 B.C. Ltd. have been translated into US
dollars using the following rates:
As at October 31, 1998 $0.6481
For the three months ended October 31, 1998 $0.6519
For the year ended April 30, 1998 $0.7115
17
<PAGE>
AUDITORS' REPORT
To the Shareholders of
Forest Glade Properties Inc.
(formerly 558539 BC Ltd.):
We have audited the balance sheet of Forest Glade Properties Inc. (formerly
558539 BC Ltd.) as at July 31, 1998, and the statements of loss,
stockholders' equity and cash flows for the period from the date of
incorporation (January 29, 1998) to July 31, 1998. 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 in Canada. 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 principles
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 July 31, 1998 and the
results of its operations and its cash flows for the period from the date
of incorporation (January 29, 1998) to July 31, 1998 in accordance with
accounting principles generally accepted in the United States.
/s/ CHAN FOUCHER LeFEBVRE
CHARTERED ACCOUNTANTS
September 3, 1998
Prince George, Canada
18
<PAGE>
FOREST GLADE PROPERTIES INC.
BALANCE SHEETS
- --------------
(in United States dollars)
===========================================================================
OCTOBER 31 July 31
1998 1998
(UNAUDITED)
- ---------------------------------------------------------------------------
ASSETS
- ------
CURRENT ASSET
Cash $ 11,525 $ 3,016
DEPOSIT (Note 3) - 13,228
FIXED ASSET (Note 4) 218 231
---------- ----------
TOTAL ASSETS $ 11,743 $ 16,475
========== ==========
LIABILITIES
- -----------
CURRENT LIABILITIES
Accounts payable and accrued liabilities $ 2,622 $ 10,824
---------- ----------
STOCKHOLDERS' EQUITY
- --------------------
CAPITAL STOCK (Note 5) 79 66
ADDITIONAL PAID-IN CAPITAL 97,342 9,564
ACCUMULATED DEFICIT (88,300) (3,979)
---------- ----------
TOTAL STOCKHOLDERS' EQUITY 9,121 5,651
---------- ----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 11,743 $ 16,475
========== ==========
See accompanying notes
19
<PAGE>
FOREST GLADE PROPERTIES INC.
STATEMENTS OF LOSS
(in United States dollars)
===========================================================================
for the period ended OCTOBER 31 July 31
1998 1998
(3 MONTHS) (6 months)
(UNAUDITED)
- ---------------------------------------------------------------------------
EXPENSES
- --------
Bank charges and interest $ 814 $ -
Depreciation 13 26
Office and miscellaneous 2,421 575
Professional fees 11,088 1,796
Travel - 1,582
---------- ----------
14,336 3,979
LOSS ON TERMINATION OF TRAILER PARK
ACQUISITION (Note 3) 69,985 -
---------- ----------
NET LOSS FOR THE PERIOD $ 84,321 $ 3,979
========== ==========
PRO-FORMA LOSS PER SHARE (Note 7) $ - $ -
========== ==========
PRO-FORMA WEIGHTED AVERAGE SHARES
- ---------------------------------
OUTSTANDING (Note 7) 17,700,000 17,700,000
========== ==========
See accompanying notes
20
<PAGE>
FOREST GLADE PROPERTIES INC.
STATEMENT OF STOCKHOLDERS' EQUITY
- ---------------------------------
(in United States dollars)
<TABLE>
<CATPION>
============================================================================================================
Common Stock Additional Total
------------------- Paid in Accumulated Stockholders'
Shares Amount Capital Deficit Equity
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
BALANCE, DATE OF INCORPORATION
(JANUARY 29, 1998) $ - $ - $ - $ - $ -
NET LOSS FOR THE PERIOD ENDED,
JULY 31, 1998 - - - (3,979) (3,979)
ISSUANCE OF COMMON STOCK 100 66 - - 66
ADDITIONAL PAID IN CAPITAL - - 9,564 - 9,564
---------- ---------- ---------- ---------- ----------
BALANCE, JULY 31, 1998 100 66 9,564 (3,979) 5,651
NET LOSS FOR THE PERIOD ENDED
- -----------------------------
OCTOBER 31, 1998 - - - (84,321) (84,321)
ISSUANCE OF COMMON STOCK 20 13 - - 13
ADDITIONAL PAID IN CAPITAL - - 87,778 - 87,778
---------- ---------- ---------- ---------- ----------
BALANCE, OCTOBER 31, 1998
(unaudited) 120 $ 79 $ 97,342 $ (88,300) $ 9,121
========== ========== ========== ========== ==========
</TABLE>
21
<PAGE>
FOREST GLADE PROPERTIES INC.
STATEMENTS OF CASH FLOW
(in United States dollars)
===========================================================================
for the period ended OCTOBER 31 July 31
1998 1998
(3 MONTHS) (6 months)
(UNAUDITED)
- ---------------------------------------------------------------------------
NET INFLOW (OUTFLOW) OF CASH:
OPERATING ACTIVITIES
Net loss $ (84,321) $ (3,979)
Adjustment to reconcile net loss
to net cash used in operating activities
Depreciation 13 26
Loss on termination of trailer park
acquisition 69,985 -
Change in assets and liabilities
(Decrease) increase in accounts
payable and accrued liabilities (8,202) 10,824
---------- ----------
Net cash (used in) provided by operating
activities (22,525) 6,871
---------- ----------
FINANCING ACTIVITIES
Issuance of share capital 13 66
Additional capital contribution from
shareholders 87,778 9,564
---------- ----------
Net cash provided by financing activities 87,791 9,630
---------- ----------
INVESTING ACTIVITIES
Deposit and costs incurred on terminated
trailer park acquisition (56,757) (13,228)
Purchase of fixed asset - (257)
---------- ----------
Net cash used in investing activities (56,757) (13,485)
---------- ----------
INCREASE IN CASH FOR THE PERIOD 8,509 3,016
CASH POSITION, BEGINNING OF PERIOD 3,016 -
---------- ----------
CASH POSITION, END OF PERIOD $ 11,525 $ 3,016
========== ==========
See accompanying notes
22
<PAGE>
FOREST GLADE PROPERTIES INC.
NOTES TO THE FINANCIAL STATEMENTS
July 31, 1998
(Information as of October 31, 1998 and for the three month period then
ended is unaudited.)
(in United States dollars)
===========================================================================
1. DESCRIPTION OF BUSINESS
Forest Glade Properties Inc. (formerly 558539 B.C. Ltd.) is a private
company incorporated under the British Columbia Company Act and will
operate mobile home parks in British Columbia and Alberta, Canada.
2. SIGNIFICANT ACCOUNTING POLICIES
Basis of presentation
---------------------
The accompanying financial statements have been prepared in conformity
with accounting principles generally accepted in the United States.
Reporting currency
------------------
The company's functional currency is the Canadian dollar as
substantially all of the company's operations are in Canada. The
company uses the United States dollar as its reporting currency for
consistency with other registrants of the Securities and Exchange
Commission ("SEC"). Additionally, as the company is now a subsidiary
of a U.S. company in the process of registering its securities with
the SEC (Note 7), the U.S. dollar is the appropriate reporting
currency.
Canadian dollar accounts in these financial statements are translated
into U.S. dollars on the following basis:
Monetary assets and liabilities - at the rate of exchange
prevailing at period end
Non-monetary assets - at the rates of exchange prevailing when
the assets were acquired
Sales and expenses - at rates approximating the rates of exchange
prevailing on the dates of the transactions
Exchange gains have not been disclosed separately in these statements
since they are immaterial.
Fixed asset
-----------
Fixed asset is recorded at cost and is depreciated using the
diminishing-balance method at 20% per annum.
23
<PAGE>
Interim Financial Statements
----------------------------
The financial information as at October 31, 1998 and with respect to
the three months then ended is unaudited. In the opinion of
management, it contains all adjustments consisting of normal recurring
accruals, necessary for the fair presentation of the results of that
period. The information is not necessarily indicative of the results
of operations expected for the fiscal year end.
Use of Estimates
----------------
The preparation of financial statements in conformity with generally
accepted accounting principles requires the Company's management to
make estimates and assumptions that affect the amounts reported in the
financial statements and related notes to the financial statements.
Actual results may differ from those estimates.
Financial Instruments
---------------------
The following assumptions were used to estimate the fair value of each
class of financial instruments:
For cash, accounts payable and accrued liabilities the carrying
amounts approximate fair value due to the immediate or short-term
maturity of these financial instruments.
Income taxes
------------
The Company follows the provisions of Statement of Financial
Accounting Standards ("SFAS") No. 109, "Accounting for Income Taxes",
which requires the Company to recognize deferred tax liabilities and
assets for the expected future tax consequences of events that have
been recognized in the Company's financial statements or tax returns
using the liability method. Under this method, deferred tax
liabilities and assets are determined based on the temporary
differences between the financial statement and tax bases of assets
and liabilities using enacted tax rates in effect in the years in
which the differences are expected to reverse.
Loss per share
--------------
Loss per share is computed using the weighted average number of shares
outstanding during the period on a pro-forma basis after giving effect
to the reverse acquisition in Note 7. Effective for the period ended
July 31, 1998, the Company adopted SFAS No. 128, "Earnings Per Share".
24
<PAGE>
3. TERMINATION OF TRAILER PARK ACQUISITION
The Company paid a non-refundable deposit and incurred certain costs
in connection with the potential acquisition of a mobile home park in
Alberta, Canada. Subsequent to October 31, 1998, the Company has
abandoned the acquisition and thus the deposit and all amounts
previously deferred have been written off.
4. FIXED ASSET
OCTOBER 31, July 31,
1 9 9 8 1 9 9 8
ACCUMULATED NET BOOK Net Book
COST DEPRECIATION VALUE Value
--------------------------------- ---------
Office equipment $ 257 $ 39 $ 218 $ 231
======== ======== ======== ========
5. CAPITAL STOCK
Further information with respect to capital stock is as follows:
Authorized
10,000 Class A voting common shares without par value
10,000 Class B voting common shares without par value
10,000 Class C voting common shares without par value
10,000 Class D non-voting common shares without par value
10,000 Class E non-voting common shares without par value
10,000 Class F non-voting common shares without par value
Issued
October 31, July 31,
1998 1998
----------- --------
120 Class A voting common shares
(100 shares - July 31, 1998) $ 79 $ 66
======== ========
On August 11, 1998, 20 Class A voting common shares were issued in a
private placement for $13 cash.
6. INCOME TAXES
The company has a loss for tax purposes in the amount of $3,333 which
is available to reduce future taxable income. This loss expires on
July 31, 2005. A valuation allowance has been made in the financial
statements for the potential benefit arising from this item.
The company evaluates its valuation allowance requirements on an
annual basis based on projected future operations. When circumstances
change and this causes a change in management's judgement about the
realizability of deferred tax assets, the impact of the change on the
valuation allowance is generally reflected in current income. No
provision has been made in the financial statements for the tax loss
for the three month period ending October 31, 1998.
The tax effects of the temporary differences that give rise to the
company's deferred tax asset are as follows:
July 31, 1998
Tax loss carry forwards $ 1,500
Valuation allowance (1,500)
----------
$ -
==========
25
<PAGE>
7. SUBSEQUENT EVENTS
(a) On September 30, 1998, the company's shareholders entered into a
share exchange agreement, which closed on November 17, 1998, with
Forest Glade International Inc. ("International"), a Nevada
company incorporated in August 1998, in the process of
registering securities with the SEC. The agreement will result
in the company becoming a wholly-owned subsidiary of
International. At the date of acquisition, the net assets of
International were $Nil. The capital structure of International
prior to completion of the share exchange is as follows:
Authorized
200,000,000 common shares, par value $0.001
Issued
10,000,000 common shares
The share exchange resulted in the exchange of 7.7 million common
shares of International for 100% of the issued shares of the
company. It is expected that the transaction will be accounted
for as a reverse acquisition. Accordingly, future financial
statements will be accounted for as a continuation of the
company. Pro-forma loss per share has been computed as if the
share exchange occurred on January 29, 1998 (the date of
incorporation).
b) On August 12, 1998 the company entered into an agreement for the
purchase of a mobile home park in British Columbia from a company
50% controlled by a shareholder of the company for $1,500,000 CDN
($988,470 USD) based on the value established by an independent
appraisal. Acquisition of this park will be financed by assumption
of an existing first mortgage in the amount of $681,554 CAD at
prime plus 1% interest with monthly payments of principal and
interest of $6,800 CAD. The property is pledged as security for
the loan. The balance of the purchase price is to be financed by
way of the seller taking 200,000 common shares in International at
$2.73 per share. This purchase (to be accounted for using the
purchase method) and share transfer closed on December 31, 1998.
8. COMPARATIVE FIGURES
Certain of July 31, 1998's comparative figure have been reclassified
to conform to the current year's presentation.
26
<PAGE>
BRUCE F. JAMIESON INC. #407 - 325 HOWE STREET
CERTIFIED GENERAL ACCOUNTANT VANCOUVER, B.C. V6C 1Z7
Telephone: (604) 684-3354
Fax: (604) 684-3499
AUDITOR'S REPORT
To the Directors of
514592 B.C. Ltd.
- -------------------
I have audited the balance sheet of 514592 B.C. Ltd. as at April 30, 1998,
the statement of loss and deficit, and the statement of changes in
financial position for the year then ended. 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 in Canada. Those standards require that I 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 principles
used and significant estimates made by management, as well as evaluating
the overall financial statement presentation.
In my opinion, these financial statements present fairly, in all material
respects, the financial position of the company as at April 30, 1998 and
the results of its operations and the changes in its financial position for
the year then ended in accordance with generally accepted accounting
principles in Canada.
"Bruce F. Jamieson"
CERTIFIED GENERAL ACCOUNTANT
Vancouver, Canada
October 30, 1998
27
<PAGE>
514592 B.C. LTD.
BALANCE SHEETS
OCTOBER 31, 1998
(With comparative audited figures as at April 30, 1998)
(In Canadian Dollars)
(UNAUDITED)
(Prepared by Management)
October 31, April 30,
1998 1998
(Unaudited)
-----------------------------
ASSETS
------
Current Assets
Cash $ 9,463 $ 21,025
Prepaid expenses 1,648 -
-----------------------------
11,111 21,025
Capital Assets (Note 4) 900,647 925,917
-----------------------------
$ 911,758 $ 946,942
=============================
LIABILITIES
-----------
Current Liabilities
Accounts payable and accrued liabilities $ 7,109 $ 10,599
Bank loan (Note 5) 20,000 20,000
Deferred revenue and security deposits 2,797 4,350
Current portion of long-term debt 32,670 31,680
-----------------------------
62,576 66,629
Long-term Debt (Note 6) 648,884 661,318
Shareholders' Loans (Note 7) 300,000 300,000
-----------------------------
1,011,460 1,027,947
-----------------------------
SHAREHOLDERS' EQUITY (DEFICIENCY)
---------------------------------
Share Capital (Note 8) 1 1
Deficit (99,703) (81,006)
-----------------------------
(99,702) (81,005)
-----------------------------
$ 911,758 $ 946,942
=============================
Capital Assets Sales Agreement (Note 3)
Approved on behalf of the Board:
"Annette Schattenkirk" "Orv Schattenkirk"
- ------------------------------------ -------------------
Director Director
The accompanying notes are an integral part of these
financial statements.
28
<PAGE>
514592 B.C. LTD.
STATEMENTS OF LOSS AND DEFICIT
FOR THE SIX MONTHS ENDED OCTOBER 31, 1998
(With comparative unaudited figures for the six months ended October 31,
1997, audited figures for the year ended April 30, 1998 and unaudited
figures for the year ended April 30, 1997)
(In Canadian Dollars)
(UNAUDITED)
(Prepared by Management)
<TABLE>
<CAPTION>
For Six For Six For Year For Year
Months Ended Months Ended Ended Ended
October 31, October 31, April 30, April 30,
1998 1997 1998 1997
(Unaudited) (Unaudited) (Unaudited
------------------------------------------------------
<S> <C> <C> <C> <C>
REVENUE:
Rental $ 87,177 $ 81,429 $ 160,291 $ 146,685
Commissions - 15,328 25,210 5,500
------------------------------------------------------
87,177 96,757 185,501 152,185
------------------------------------------------------
EXPENSES:
Amortization 25,270 27,500 55,127 28,732
Interest on long-term debt 30,135 18,270 43,196 53,244
Office & miscellaneous 4,180 5,672 13,528 14,684
Professional fees - 3,882 12,294 5,101
Property management 7,104 7,420 13,406 13,250
Property taxes 5,342 4,607 9,936 10,274
Repairs and maintenance 10,484 41,345 38,583 19,155
Travel 5,386 1,638 6,781 10,473
Utilities 17,973 17,247 36,804 34,124
-------------------------------------------------------
105,874 127,581 229,655 189,037
-------------------------------------------------------
LOSS for the Period/Year 18,697 30,824 44,154 36,852
-------------------------------------------------------
DEFICIT, Beginning of Period/Year 81,006 36,852 36,852 -
-------------------------------------------------------
DEFICIT, End of Period/Year $ 99,703 $ 67,676 $ 81,006 $ 36,852
=======================================================
</TABLE>
The accompanying notes are an integral part of these
financial statements.
29
<PAGE>
514592 B.C. LTD.
STATEMENTS OF CHANGES IN FINANCIAL POSITION
FOR THE SIX MONTHS ENDED OCTOBER 31, 1998
(With comparative unaudited figures for the six months ended October 31,
1997, audited figures for the year ended April 30, 1998 and unaudited
figures for the year ended April 30, 1997)
(In Canadian Dollars)
(UNAUDITED)
(Prepared by Management)
<TABLE>
<CAPTION>
For Six For Six For Year For Year
Months Ended Months Ended Ended Ended
October 31, October 31, April 30, April 30,
1998 1997 1998 1997
(Unaudited) (Unaudited) (Unaudited)
------------------------------------------------------
<S> <C> <C> <C> <C>
OPERATING ACTIVITIES:
Net loss for the period/year $ (18,697) $ (30,824) $ (44,154) $ (36,852)
Add non-cash item:
Amortization 25,270 27,500 55,127 28,732
------------------------------------------------------
6,573 (3,324) 10,973 (8,120)
Increase in prepaid expenses (1,648) (1,536) - -
Increase (decrease) in accounts
accounts payable and
accrued liabilities (3,490) (11,066) (5,648) 16,247
Increase (decrease) in deferred
revenue and security deposits (1,553) 274 3,041 1,309
------------------------------------------------------
(118) (15,652) 8,366 9,336
------------------------------------------------------
FINANCING ACTIVITIES:
Bank Loan - - 20,000 -
Increase (decrease) in
long-term debt (11,444) (15,730) (32,344) 725,342
Shareholders' loans - - - 300,000
Issuance of common shares - - - 1
------------------------------------------------------
(11,444) (15,730) (12,344) 1,025,343
------------------------------------------------------
INVESTING ACTIVITIES:
Purchase of capital assets - (322) (4,323) (1,005,453)
------------------------------------------------------
Net change in cash during the
period/year (11,562) (31,704) (8,301) 29,326
Cash, beginning of period/year 21,025 29,326 29,326 -
------------------------------------------------------
Cash (Deficiency), end of
period/year $ 9,463 $ (2,378) $ 21,025 $ 29,326
======================================================
The accompanying notes are an integral part of these
financial statements.
30
<PAGE>
514592 B.C. LTD.
NOTES TO FINANCIAL STATEMENTS
OCTOBER 31, 1998
Information as of October 31, 1998 and for the six months ended October
31, 1998 and 1997 and for the year ended April 30, 1997 is unaudited)
(In Canadian Dollars)
1. NATURE OF BUSINESS
514592 B.C. Ltd. (the "Company") was incorporated on February 27, 1996
under the Company Act of British Columbia, Canada. The Company was
established for the purpose of operating a mobile home park in British
Columbia which was acquired on May 1, 1996. The operations of this
mobile home park constitutes substantially all of the operations of
the Company.
2. SIGNIFICANT ACCOUNTING POLICIES
(a) Basis of Presentation
These financial statements are stated in Canadian dollars and
have been prepared in conformity with accounting principles
generally accepted in Canada. These financial statements comply
with Item 17 reporting requirements of the Securities and
Exchange Commission in the United States. There are no
reconciling items between accounting principles generally
accepted in Canada and in the United States that would be
disclosed under the requirements of Item 17.
(b) Financial Information
The financial information as of October 31, 1998 and with respect
to the six months ended October 31, 1997 and 1998, and with
respect to the year ended April 30, 1997 is unaudited and
prepared by management. In the opinion of management, it
contains all adjustments consisting of normal recurring accruals,
necessary for the fair presentation of the results of such
periods. The information is not necessarily indicative of the
results of operations expected for the fiscal year end.
(c) Uncertainty Due to the Year 2000 Issue
The Year 2000 Issue arises because many computerized systems use
two digits rather than four to identify a year. Date-sensitive
systems may recognize the year 2000 as 1900 or some other date,
resulting in errors when information using year 2000 dates is
processed. In addition, similar problems may arise in some
systems which use certain dates in 1999 to represent something
other than a date. The effects of the Year 2000 Issue may be
experienced before, on or after January 1, 2000. If the Year
2000 Issue is not addressed by the Company and its major
customers, suppliers and other third party
31
<PAGE>
business associates, the impact on the Company's operations and
financial reporting may range from minor errors to significant
systems failure which could affect the Company's ability to
conduct normal business operations. It is not possible to be
certain that all aspects of the Year 2000 Issue affecting the
Company, including those related to the efforts of customers,
suppliers, or other third parties, will be fully resolved.
(d) Use of Estimates
The preparation of financial statements in conformity with
generally accepted accounting principles requires the Company's
management to make estimates and assumptions that affect the
amounts reported in the financial statements and related notes
to the financial statements. Actual results may differ from
those estimates.
(e) Financial Instruments
The carrying value of financial instruments, not otherwise
disclosed separately in the financial statements, approximate
their fair values. These financial instruments include cash,
prepaid expenses, and accounts payable and accrued liabilities,
bank loan and deferred revenue and security deposits and their
fair value approximates their carrying value since they are short
term in nature and are receivable or payable on demand.
3. CAPITAL ASSETS SALES AGREEMENT
On August 12, 1998, the Company entered into an Agreement whereby it
agreed to sell all of its capital assets to Forest Glade Properties
Inc. (formerly: 558539 B.C. Ltd.), a corporation related by virtue of
a common director, for a price of $1,500,000 (Cdn.) by way of
assumption or payout of the long-term debt and with the balance of the
purchase price being financed by the Company taking shares at a deemed
value of $2.73 (U.S.) per share of the shares of Forest Glade
International Inc. of Las Vegas, Nevada, a corporation with which
Forest Glade Properties Inc. has entered into a share exchange
agreement to become its subsidiary. The closing date is expected to
be November 30, 1998.
4. CAPITAL ASSETS
Capital assets are recorded at cost and are amortized using the
declining balance method at the following rates:
Building - 4%
Equipment - 20%
Pads - 8%
One half of the normal rate of amortization is applied in the year of
acquisition
October 31, 1998 (Unaudited)
-------------------------------------
Accumulated Net Book
Cost Amortization Value
-------------------------------------
Land $ 298,830 $ - $ 298,830
32
<PAGE>
Building 14,323 948 13,375
Equipment 11,123 3,915 7,208
Pads 685,500 104,266 581,234
-------------------------------------
$1,009,776 $ 109,129 $ 900,647
=====================================
April 30, 1998
-------------------------------------
Accumulated Net Book
Cost Amortization Value
-------------------------------------
Land $ 298,830 $ - $ 298,830
Building 14,323 678 13,645
Equipment 11,123 3,115 8,008
Pads 685,500 80,066 605,434
-------------------------------------
$1,009,776 $ 83,859 $ 925,917
=====================================
5. BANK LOAN
The bank loan is payable on demand and bears interest of prime rate
plus 1% (October 31, 1998 - 8%, April 30, 1998 - 7.5%).
6. LONG-TERM DEBT
The long-term debt consists of a demand loan bearing interest at prime
rate plus 1 % (October 31, 1998 - 8 % and April 30, 1998 - 7.5%) and
is secured by a General Security Agreement providing a floating charge
over all of the Company's assets a registered mortgage against company
assets, and an assignment of rents (rental income). The debt is
repayable by monthly payments of $6,800 including principal and
interest.
October
31, 1998 April
(Unaudited) 30, 1998
------------------------------
Balance $ 681,554 $ 692,998
less: current portion 32,670 31,680
------------------------------
$ 648,884 $ 661,318
==============================
Under the present terms and conditions, principal payments due in the
next five years are as follows:
April 30, 1999 $ 31,680
April 30, 2000 $ 33,890
April 30, 2001 $ 36,480
April 30, 2002 $ 39,270
April 30, 2003 $ 42,270
33
<PAGE>
7. SHAREHOLDERS' LOANS
The amount due to the shareholders is non-interest bearing, unsecured
and has no specific terms of repayment. The shareholders have
indicated that they will not request payment of this amount within the
next fiscal year. Consequently, this amount has been classified as a
non-current liability in the accompanying financial statements.
8. SHARE CAPITAL
The authorized share capital of the Company is comprised of:
1,000 Class "A" Voting common shares without par value
9,000 Class "B" Non-voting common shares without par value
Issued for cash:
100 Class "A" voting common shares $ 1
===
9. TAX LOSSES CARRY FORWARD
The Company has accumulated losses of $72,890 for income tax purposes
which may be deducted in the calculation of taxable income in future
years. The losses expire as follows:
2004 $24,453
2005 $48,437
---------
$72,890
=========
The potential tax benefit which may result from application of these
losses is not reflected in these financial statements. The
realization of this tax benefit in future years will be recorded as an
adjustment to the tax provision in the year realized.
34
<PAGE>
PART III
Item 1. Index to Exhibits
3. (i) Articles of Incorporation*
(ii) By-laws*
10.1 Offering Sales Agency Agreement among Forest Glade
International, Inc.. and Pacific Rim Investment Inc.*
10.2 Share Purchase Agreement dated September 30, 1998*
10.3 Mobile Home Park Purchase Agreement*
10.4 Royal Bank of Canada Offer to Finance*
21 Subsidiaries of the Registrant*
27 Financial Data Schedule*
* previously filed
35
<PAGE>
Signatures
In accordance with Section 12 of the Securities Exchange Act of 1934, the
registrant caused this amendment no. 2 to the registration statement to be
signed on its behalf by the undersigned, thereunto duly authorized.
FOREST GLADE INTERNATIONAL, INC.
(Registrant)
By:
WAYNE LOFTUS
- ------------
Wayne Loftus, President, Chairman of the Board
May 14, 1999
GIL RAHIER
- ----------
Gil Rahier, Chief Financial Officer, Director
May 14, 1999
FRANK DENIS
- -----------
Frank Denis, Director
May 14, 1999
MICHAEL JENKS
- -------------
Michael Jenks, Director
May 14, 1999
STAN POLSON
- -----------
Stan Polson, Director
May 14, 1999
36
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