FORM 10-QSB
U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 For the quarterly period ended: April 30, 1999
Or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
Commission file number: 0-25151
FOREST GLADE INTERNATIONAL, INC.
(Exact name of registrant as specified in its charter)
NEVADA 52-212-549
(State of incorporation) (IRS Employer ID No.)
444 Victoria Street, Suite 370 Prince
George, B.C., CANADA V2L 2J7
(Address of principal executive offices)(Zip Code)
Registrant's telephone number, including area code: (250) 564-6868
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 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 June 11, 1999, the Registrant had 17,900,000 shares of Common Stock
outstanding.
Transitional Small Business Disclosure Format (check one); Yes No X
THE REGISTRANT MEETS THE CONDITIONS SET FORTH IN THE GENERAL INSTRUCTIONS AND IS
THEREFORE FILING THIS FORM WITH THE REDUCED DISCLOSURE FORMAT.
<PAGE>
Part I Financial Information
Item 1 Financial Statements.
Consolidated Interim Balance Sheets -
April 30, 1999 and July 31, 1998
Consolidated Interim Statements of Operations Three months and
Nine months ended January 31, 1999
Consolidated Interim Statement of Stockholders' Equity Nine
months ended January 31, 1999
Consolidated Interim Statement of Cash Flow -
Nine months ended January 31, 1999
Notes to Consolidated Interim Financial Statements
<PAGE>
Forest Glade International, Inc.
Consolidated Interim Balance Sheets
<TABLE>
<CAPTION>
April 30 July 31
1999 1998
- ------------------------------------------------------------------------------------------------------
(Unaudited)
<S> <C> <C>
Assets
Current
Cash $ 10,285 $ 3,016
Prepaid expenses 5,878 -
-------------------------------
16,163 3,016
Deposit - 13,228
Property and equipment (Note 3) 1,021,941 231
-------------------------------
$1,038,104 $ 16,475
======================================================================================================
Liabilities and Stockholders= Equity
Liabilities
Current
Accounts payable and accrued liabilities $ 57,626 $ 10,824
Security deposits 2,042 -
Current portion of long-term debt 23,181 -
-------------------------------
82,849 10,824
Long-term debt 431,012 -
Due to directors 30,774 -
-------------------------------
544,635 10,824
-------------------------------
Stockholders' equity
Capital stock
Authorized
200,000,000 common shares, par value $0.001
Issued
17,900,000 (July 31, 1998 B 7,700,000) common shares 17,900 7,700
Additional paid-in capital 643,612 1,930
Accumulated deficit (191,492) (3,979)
Accumulated other comprehensive income B foreign
currency translation gains 23,449 -
-------------------------------
493,469 5,651
-------------------------------
$1,038,104 $ 16,475
======================================================================================================
</TABLE>
See accompanying notes to consolidated interim financial statements.
<PAGE>
Forest Glade International, Inc.
Consolidated Interim Statements of Operations
(Unaudited)
April 30 April 30
1999 1999
For the periods ended (3 Months) (9 Months)
- --------------------------------------------------------------------------------
Revenue
Rental $ 33,360 $ 54,366
Expenses
Bank charges 59 896
Consulting fees 6,660 19,692
Depreciation 13,693 22,646
Office and miscellaneous 1,316 7,453
Professional fees 21,818 70,907
Property management 3,698 6,381
Property taxes and utilities 5,953 9,661
Repairs and maintenance 2,524 4,661
Travel and promotion 3,217 12,976
-------------------------------
58,938 155,273
-------------------------------
(25,578) (100,907)
Interest on long-term debt (7,565) (13,135)
Loss on termination of trailer park
acquisition - (73,471)
-------------------------------
Loss for the period $(33,143) $(187,513)
================================================================================
Loss per share $0.00 $0.01
================================================================================
Weighted average shares outstanding 17,900,000 13,922,222
================================================================================
See accompanying notes to consolidated interim financial statements.
<PAGE>
Forest Glade International, Inc.
Consolidated Interim Statement of Stockholder's Equity
(Unaudited)
For the nine-month period ended April 30, 1999
<TABLE>
Accumulated
Foreign
Additional Currency Total
Common Stock Paid-in Accumulated Translation Stockholders'
Shares Amount Capital Deficit Gains Equity
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Balance, August 1, 1998 B Forest Glade Properties Inc. 100 $ 66 $ 9,564 $ (3,979) $ - $ 5,651
Adjustment for the issuance
of common stock on reverse acquisition of
Forest Glade Properties Inc. (Note 2) 7,699,900 7,634 (7,634) - - -
------------------------------------------------------------------------------
7,700,000 7,700 1,930 (3,979) - 5,651
Additional paid-in capital - - 117,996 - - 117,996
Adjustment for the issuance of initial
shares of Forest Glade International, Inc.
on incorporation 10,000,000 10,000 (9,987) - - 13
Issuance of common stock on acquisition of
property and equipment
(Note 2) 200,000 200 533,673 - - 533,873
------------------------------------------------------------------------------
17,900,000 17,900 643,612 (3,979) - 657,533
------------------------------------------------------------------------------
Net loss for the period - - - (187,513) - (187,513)
See accompanying notes to consolidated interim financial statements.
<PAGE>
Foreign currency translation adjustments - - - - 23,449 23,449
Total comprehensive income - - - (187,513) 23,449 (164,064)
Balance, April 30, 1999 17,900,000 $ 17,900 $643,612 $(191,492) $ 23,449 $ 493,469
====================================================================================================================================
</TABLE>
See accompanying notes to consolidated interim financial statements.
<PAGE>
Forest Glade International, Inc.
Consolidated Interim Statement of Cash Flow
(Unaudited)
For the nine-month period ended April 30, 1999
<TABLE>
Cash provided by (used in)
Operating activities
<S> <C>
Net loss for the period $ (187,513)
Adjustment to reconcile net loss to net cash used in operating activities
Depreciation 22,646
Loss on termination of trailer park acquisition 73,471
Expenses satisfied by contributed capital 30,218
Change in assets and liabilities
Increase in prepaid expenses (5,878)
Increase in accounts payable and accrued liabilities 28,689
---------------
Net cash used in operating activities (38,367)
---------------
Investing activity
Deposit and costs incurred on terminated trailer park acquisition (60,243)
---------------
Financing activities
Repayment of long-term debt (9,738)
Issuance of common stock 13
Additional capital contribution 87,778
Advances from directors 29,538
---------------
Net cash provided by financing activities 107,591
---------------
Increase in cash for the period 8,981
Effect of foreign exchange on cash (1,712)
Cash, beginning of period 3,016
---------------
Cash, end of period $ 10,285
===============================================================================================
Supplemental information
Property and equipment acquired for long-term debt and common shares $996,714
Interest paid $ 13,135
===============================================================================================
</TABLE>
See accompanying notes to consolidated interim financial statements.
<PAGE>
Forest Glade International, Inc.
Notes to the Consolidated Interim Financial Statements
(Unaudited)
April 30, 1999
- --------------------------------------------------------------------------------
1. Basis of Presentation
The consolidated interim financial statements included herein are stated in
U.S. dollars and have been prepared by the Company, without audit, in
accordance with accounting principles generally accepted in the United
States and pursuant to the rules and regulations of the Securities and
Exchange Commission. Certain information and footnote disclosures normally
included in financial statements prepared in accordance with generally
accepted accounting principles have been condensed or omitted pursuant to
such rules and regulations, although the Company believes that the
disclosures are adequate to make the information presented not misleading.
These statements reflect all adjustments, consisting of normal recurring
adjustments which, in the opinion of management, are necessary for fair
presentation of the information contained therein. It is suggested that
these consolidated interim financial statements be read in conjunction with
the financial statements of Forest Glade Properties Inc. for the period
from the date of incorporation (January 29, 1998) to July 31, 1998 and
notes thereto included in the Company=s registration on Form 10-SB. The
Company follows the same accounting policies in preparation of interim
reports.
Results of operations for the interim periods are not indicative of annual
results.
- --------------------------------------------------------------------------------
2. Business Acquisitions
a) The Company was incorporated under the laws of the State of Nevada on
August 27, 1998 and was inactive until November 17, 1998 when it
acquired all the issued and outstanding shares of Forest Glade
Properties Inc. (AProperties@), an inactive Canadian company
incorporated on January 29, 1998. Upon the closing of this
transaction, the Company issued 7.7 million common shares to the
shareholders of Properties resulting in Properties becoming a wholly
owned subsidiary of the Company. The transaction was accounted for
using the purchase method as a reverse acquisition as the former
shareholders of Properties controlled the Company upon conclusion of
this transaction. Accordingly, these financial statements have been
accounted for as a continuation of Properties. The net assets of the
Company at the date of acquisition were $Nil.
On December 1, 1998, Properties acquired a mobile home park in British
Columbia, Canada from a company 50% controlled by a director of the
Company for CDN$1,528,000 ($996,714 USD) based on the value
established by an independent appraisal. Acquisition of this park was
financed as follows:
<PAGE>
2. Business Acquisitions - Continued
Forest Glade International, Inc.
Notes to the Consolidated Interim Financial Statements
(Unaudited)
April 30, 1999
- --------------------------------------------------------------------------------
Assumption of existing long-term debt $442,602
Issuance of 200,000 common shares 533,873
Accrued liabilities on acquisition 20,239
-----------------
$996,714
-----------------
The purchase was accounted for using the purchase method.
The long-term debt is collateralized by the mobile home park and guarantees
by the vendors and is repayable in monthly installments of approximately
$4,500 including interest at Royal Bank of Canada Prime rate plus 1% per
annum until fully repaid in 2011.
The summarized unaudited pro-forma results of operations set forth below
for the nine months ended April 30, 1999 assume that the above acquisitions
occurred as of August 1, 1998 and include expenses for amortization of
property and equipment acquired.
Nine-Months Ended
April 30, 1999
------------------
Revenue $ 93,851
Pro-forma net loss $194,221
Pro-forma net loss per common share $ 0.01
<PAGE>
Forest Glade International, Inc.
Notes to the Consolidated Interim Financial Statements
(Unaudited)
April 30, 1999
- --------------------------------------------------------------------------------
3. Property and Equipment
Property and equipment is recorded at cost. Depreciation is provided over
the estimated useful lives of the property and equipment on the declining
balance basis at rates set out below:
Accumulated
Rate Cost Depreciation
- --------------------------------------------------------------------------------
Land - $ 346,776 $ -
Building 4% 15,521 258
Equipment 20% 8,631 736
Pads 8% 674,490 22,483
--------------------------------------------
1,045,418 23,477
--------------------------------------------
Net book value $1,021,941
============================================
4. New Accounting Pronouncements
a) Subsequent to July 31, 1998, the Company adopted SFAS No. 130.
AReporting Comprehensive Income@, which establishes standards for
reporting and display of comprehensive income, its components and
accumulated balances. The Company is disclosing this information on
its Statement of Stockholders= Equity. Comprehensive income is
comprised of net income (loss) and all changes to stockholders= equity
except those resulting from investments by owners and distributions to
owners. SFAS No. 130 did not change the current accounting treatments
for components of comprehensive income.
b) In June 1998, the Financial Accounting Standards Board issued SFAS No.
133, Accounting for Derivative Instruments and Hedging Activities.
SFAS No. 133 requires companies to recognize all derivatives contracts
as either assets or liabilities on the balance sheet and to measure
them at fair value. If certain conditions are met, a derivative may be
specifically designated as a hedge, the objective of which is to match
the timing of gain or loss recognition on the hedging derivative with
the recognition of (i) the changes in the fair value of the hedged
assets or liability that are attributable to the hedged risk or (ii)
the earnings effect of the hedged forecasted transaction. For a
derivative not designated as a hedging instrument, the gain or loss is
recognized in income in the period of change. SFAS No. 133 is
effective for all fiscal quarters of fiscal years beginning after June
14, 1999.
<PAGE>
4. New Accounting Pronouncements - Continued
Historically, the Company has not entered into derivatives contracts
either to hedge existing risks or for speculative purposes.
Accordingly, the Company does not expect adoption of the new standards
on January 1, 2000 to affect its financial statements.
c) In April 1998, the American Institute of Certified Public Accountants
issued Statement of Position 98-5, AReporting on the Costs of Start-Up
Activities@, (ASOP 98-5@) which provides guidance on the financial
reporting of start-up costs and organization costs. It requires costs
of start-up activities and organization costs to be expensed as
incurred. SOP 98-5 is effective for fiscal years beginning after
December 15, 1998 with initial adoption reported as the cumulative
effect of a change in accounting principle. Adoption of this standard
will not have a material effect on the financial statements.
<PAGE>
Item 2 - Management's Discussion and Analysis or Plan of Operation.
Overview
The Registrant was incorporated in August 1998 under the laws of the State of
Nevada. On November 15, 1998, the Registrant completed its acquisition of Forest
Glade Properties Inc. ("Properties"), a Canadian company incorporated in January
1998, for the purpose of owning and operating mobile home parks in British
Columbia and Alberta, Canada. Both the Registrant and Properties were inactive
as of the date of the share exchange. Upon closing the share exchange on
November 15, 1998, the Registrant issued 7.7 million common shares to the
shareholders of Properties in exchange for all the issued and outstanding common
shares of Properties. At the conclusion of this transaction, Properties became a
wholly owned subsidiary of the Registrant.
On December 1, 1998, Properties closed the acquisition of the Mountain View Park
("the Park") in Sparwood, British Columbia for a purchase price of $1,528,000
CDN ($996,714 USD) based on the value determined by North Country Appraisals
(1985) Ltd., an independent appraiser certified by the Appraisal Institute of
Canada. The purchase price was satisfied by the assumption of a first mortgage
on the Park in the amount of $678,757 ($442,602 USD), liabilities of $30,797
($20,239 USD) and the issuance of 200,000 common shares of the Registrant to the
vendor. Since May 1996, the Park was owned by 514592 BC Ltd., a private Canadian
company 50% controlled by Gil Rahier, a director of the Registrant. Historical
cost of the mobile home park to 514592 BC Ltd. was $1,009,776 CDN (approximately
$740,000 USD). 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 USD).
The Park is a 33.23-acre facility with 136 mobile home pads located in
Southeastern British Columbia, 610 miles east of Vancouver, forty-five miles
north of the US-Canada border. At present, 85 sites are rented resulting in a
62% occupation rate. The occupation 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 one year. In
the Park's last full fiscal year prior to acquisition ended April 30, 1998, it
generated revenue of $132,000 and earnings before interest, taxes and
depreciation ("EBITDA") of $38,540.
Finally, during the second quarter of the Registrant's 1999 fiscal year, it
filed its 10-SB registration statement with the Securities and Exchange
Commission ("SEC") and applied for listing status on the NASD Electronic
Bulletin Board Market. Management has been working with the Company's
professional advisors to clear comments raised by the SEC and the NASD to obtain
its listing. On June 4, 1999, the Company cleared its final amended 10-SB
registration statement with the SEC and has requested final clearance from the
NASD.
Results of Operations
The results of operations of the Company in U.S. dollars for the nine-month
period ended April 30, 1999 are as follows. Prior to the acquisition of the
Mountain View Park in December 1998, the Company was essentially inactive.
<PAGE>
Rental revenue $ 54,366
Expenses $ 241,879
Net loss for the period $ 187,513
Rental revenue consists of monthly pad rentals of 85 sites from the newly
acquired Park for the five months from acquisition of the Park on December 1,
1998 to April 30, 1999. The Registrant presently has no other sources of
revenue. Expenses for the nine-month period ended April 30, 1999 totaled
$241,879, which can be broken down as follows:
Operating expenses of the Park, excluding depreciation
and interest $24,014
Depreciation of Pads and other fixed assets $22,646
Interest on long-term debt on acquisition of the Park $13,135
Write off of deposit and expenses associated with a
terminated trailer park acquisition $73,471
Professional fees associated with the Registrant's 10-SB
registration and NASDAQ application $70,907
Other general and administrative $37,706
As a result, the net loss for the nine-month period ended April 30, 1999 was
$187,513, including a loss for the three months ended April 30, 1999 of $33,143
down from the loss recognized for the previous quarter ended January 31, 1999 of
$77,278. The majority of costs noted above were incurred in connection with the
Registrant's 10-SB application and the acquisition of the Park. The expenses
associated with the terminated trailer park acquisition represents the deposit
forfeited to the vendor and costs incurred in connection with a planned
acquisition of a mobile home park in Alberta, Canada in October 1998.
Plan of Operation
Management believes that its current cash flow is sufficient to provide its
current cash requirements for the next twelve months. However, 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. By acquiring existing parks, the Registrant
will avoid the expense and delay inherent in developing a new park and
attracting tenants. Assuming the Registrant's NASDAQ OTC listing is approved,
management believes that it can acquire parks using various combinations of debt
and equity financing to best manage the cash flow of the Company by keeping
financing charges and cash outflow requirements to an optimal level. Until
additional parks are acquired, providing the cash flow necessary to sustain the
Registrant's cash flow requirements, the Registrant will continue to rely on
certain of the directors to finance any deficiency of cash from operations.
Proceeds of equity offerings are planned to generate cash flow for future
acquisitions.
The Registrant does not presently have any agreements, arrangements or
understandings for the acquisition of other mobile home parks. Potential
acquisitions have been delayed while the Registrant is in the process of
establishing a public market for its securities. It does not anticipate
completing any acquisitions until a public market has been established.
<PAGE>
Liquidity and Capital Resources
Net cash used in operating activities for the nine month period ended April 30,
1999 was $38,367 resulting from the net loss for the period of $187,513 before
non-cash expenses and expenses incurred and unpaid as at April 30, 1999.
The Company's investing activities for the nine-month period ended April 30,
1999 consisted of $60,243 expended in connection with the abandoned acquisition
of a trailer park in Alberta, Canada. The acquisition of the Mountain View Park
in Sparwood, British Columbia was funded by the assumption of an existing
long-term debt with the Royal Bank of Canada in the amount of $442,602 and the
issuance of 200,000 common shares of the Registrant. The long-term debt is
repayable in monthly installments of $4,500 including interest at the Royal Bank
of Canada prime rate plus 1% per annum until fully repaid in 2011.
Financing activities for the nine month period ended April 30, 1999 totaled
$107,591 consisting of advances from the directors of the Company by way of
additional capital contributions and loans.
Cash at April 30, 1999 amounted to $10,285, an increase of $7,269 from July 31,
1998. Management believes that cash flow generated from the Mountain View Park
and additional equity financing will provide funding for new acquisitions and
will provide cash flow to sustain existing operations.
Part II - Other Information
Item 1 - Legal Proceedings: There are no proceedings to report.
Item 2. - Changes in Securities: None.
Item 3. - Default Upon Senior Securities: There are no defaults to report.
Item 4. - Submission of Matters to a Vote of Security Holders: None during the
quarter.
Item 5. - Other Information: None
Item 6. - Exhibits and Reports on Form 8-K: none
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
FOREST GLADE INTERNATIONAL, INC.
Dated: June 11, 1999
WAYNE LOFTUS
Wayne Loftus, President
GIL RAHIER
Gil Rahier, Chief Financial Officer
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JUL-31-1999
<PERIOD-START> FEB-01-1999
<PERIOD-END> APR-30-1999
<CASH> 10,285
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 16,163
<PP&E> 1,021,941
<DEPRECIATION> 0
<TOTAL-ASSETS> 1,038,104
<CURRENT-LIABILITIES> 82,849
<BONDS> 461,786
0
0
<COMMON> 17,900
<OTHER-SE> 475,569
<TOTAL-LIABILITY-AND-EQUITY> 1,038,104
<SALES> 54,366
<TOTAL-REVENUES> 54,366
<CGS> 0
<TOTAL-COSTS> 155,273
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 73,471
<INTEREST-EXPENSE> 13,135
<INCOME-PRETAX> (187,513)
<INCOME-TAX> 0
<INCOME-CONTINUING> (187,513)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (187,513)
<EPS-BASIC> (0.01)
<EPS-DILUTED> (0.01)
</TABLE>
