U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-SB
GENERAL FORM FOR REGISTRATION OF SECURITIES
OF SMALL BUSINESS ISSUERS
Under Section 12(b) or 12(g) of
The Securities Exchange Act of 1934
Civic Equities Corporation
(Exact name of registrant as specified in its charter)
DELAWARE 98-0224958
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
Suite 2300-1066 West Hastings Street,
Vancouver, British Columbia, Canada V6E 3X2
(Address of registrant's principal executive offices) (Zip Code)
604.601.8240
(Registrant's Telephone Number, Including Area Code)
Securities to be registered under Section 12(b) of the Act:
Title of Each Class Name of Each Exchange on which
to be so Registered: Each Class is to be Registered:
None None
Securities to be registered under Section 12(g) of the Act:
Common Stock, Par Value $.0001
(Title of Class)
Copies to:
Thomas E. Stepp, Jr.
Stepp & Beauchamp, LLP
1301 Dove Street, Suite 460
Newport Beach, California 92660
949.660.9700
Facsimile: 949.660.9010
Page 1 of 18
Exhibit Index is specified on Page 17
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Civic Equities Corporation,
a Delaware corporation
Index to Registration Statement on Form 10-SB
Item Number and Caption Page
1. Description of Business 3
2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 7
3. Description of Property 10
4. Security Ownership of Certain Beneficial Owners and Management 10
5. Directors, Executive Officers, Promoters and Control Persons 11
6. Executive Compensation - Remuneration of Directors and Officers 12
7. Certain Relationships and Related Transactions 13
8. Description of Securities 13
PART II
1. Market Price of and Dividends on the Registrant's Common Equity
and Related Stockholder Matters 13
2. Legal Proceedings 14
3. Changes in and Disagreements with Accountants 14
4. Recent Sales of Unregistered Securities 14
5. Indemnification of Directors and Officers 15
PART F/S
Financial Statements F-1 through F-28
PART III
1(a). Index to Exhibits 17
1(b). Exhibits E-1 through E-16
Signatures 18
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Item 1. Description of Business.
Civic Entities Corporation (the "Company") was incorporated in the State of
Delaware on August 10, 1998 and its principal executive offices are located at
Suite 2300-1066 West Hastings Street, Vancouver, British Columbia, Canada
V6E-3X2. Our telephone number is 604.601.8240.
For purposes of clarification, anytime that "$" appears in this Registration
Statement, it means the currency of the United States of America, unless
otherwise stated. Anytime that "CDN$" appears, it means the currency of Canada,
in Canadian dollars.
The Company's Business.
On or about August 26, 1998, we entered into a Product License Agreement
("License Agreement") with Advanced Materials and Systems Pty Limited, of Lolum
House, Kumul Highway, Port Vila, Vanuatu ("Advanced Materials"). Pursuant to the
License Agreement, we purchased from Advanced Materials a license to
manufacture, market and sell 26 different building products which are utilized
in the construction industry (Described more particularly below under the
heading "Our Products"). The License Agreement granted us the option to purchase
all right, title and interest in the products of Advanced Materials. We have
subsequently entered into an Asset Purchase Agreement ("Purchase Agreement")
whereby we purchased, for 26,000,000 of the Company's $.0001 par value common
stock, all right, title and interest in Advanced Materials' products. John
Whalen, the President and a director of the Company, was also an officer and a
director of Advanced Materials at the time we entered into the License Agreement
and the Purchase Agreement. We valued the assets acquired from Advanced
Materials at $13,000,000.00.
On or about March 30, 2000, we entered into a Share Purchase and Sale Agreement
("Share Purchase Agreement") with Todd Whorley and Richard Demarco whereby Mr.
Whorley and Mr. Demarco agreed to sell to us all of the issued and outstanding
shares of TRG Systems Limited, a British Columbia corporation ("TRG Systems"),
for a purchase price of $1,500,000.00. We have delivered a non-refundable
deposit of $50,000.00 to Mr. Whorley and Mr. Demarco. Such deposit shall be
credited to the total purchase price upon closing. The balance of the purchase
price is due upon the closing set to occur on July 31, 2000. We are currently
negotiating with potential investors in an effort to secure the funds necessary
to complete the purchase of the TRG Systems shares. Upon the closing, John
Whalen will be elected to TRG Systems' Board of Directors. Should the closing
occur, TRG Systems will become a subsidiary of the Company. TRG currently owns
the rights to a satellite communication system more particularly described in
the section entitled "The Company's Subsidiaries". TRG Systems has entered into
a Joint Venture and License Agreement with our subsidiary, Pacific Telco
Limited, a Vanuatu Corporation, described more particularly on page 6, within
the section entitled "The Company's Subsidiaries". There is no guarantee that we
will have the funds required to meet our financial obligations under the Share
Purchase Agreement.
Our Products.
Norsweda Associated Panels.
The Norsweda panels are a patented, prefabricated, insulated range of
lightweight building components. The components consist primarily of concrete
and expanded polystyrene. The panels are designed to allow for 12-story
structures but can be adapted to high-rise buildings. Among the advantages of
Norsweda Panels is flexibility in architectural design, economical construction,
and strength. The panels are engineered to withstand, and in field studies has
withstood, earthquakes of 8.2 on the Richter scale and typhoon winds of 297 km
per hour. The Norsweda panels can be used for many kinds of building
applications including residential, hotel, domestic and commercial developments,
industrial complexes, shopping centers, schools, hospitals, and apartment
buildings. The Norsweda panel types are: the basic wall component; basement wall
component; external wall panel component; and floor component/floor separating
component.
Multicast Modular Pre-Cast Beams, Stairs, Floors, & Elevator Shafts.
The Multicast products involve a range of pre-cast concrete products such as
pre-cast staircases, walls, floors, and elevator shafts. The Multicast product
allows for off-site completion of a number of laborious, typically on-site tasks
that can be manufactured more efficiently off-site under factory controlled
conditions. The products help with saving time and risk
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management. We believe that using pre-cast concrete elevator shafts and
stairwells leads to shorter project completion times and improvements in site
control. The increased dimension accuracy associated with casting in
factory-controlled conditions, assists the efficient completion of projects.
Bathcore(TM) Modular Domestic Bathrooms Systems.
Bathcore(TM) is a range of custom designed bathrooms built off-site in a factory
production and quality control environment. They are built to specific architect
and interior designer specifications and delivered fully complete to the
construction site with only final services connection required. We believe the
Bathcore(TM) system offers architects and builders better reproduction of
designs, reduced risk in bidding, reduced risk of cost and time overruns,
reduced risk of theft and vandalism, and greater quality control.
Frametec-4G(TM) Window and Door Frames.
PVC is the 4th generation window and door material following the evolution of
wood, steel and aluminum. We believe it is more cost-effective and efficient
through mass production. We add a number of high performance additives in an
attempt to meet mechanical and thermal demands in environmental and temperature
extremes. The commercial advantages of Frametec-4G include climatic conditions
flexibility. There are also environmental advantages such as less energy
consumption, less atmospheric pollution, less noise and less thermal loss.
Decostrip(TM) Interior Decorator Finishes.
Decostrip includes a strong, cost-effective range of interior decorative
finishes. It is made of extruded PVC, it enables cornices, architraves, skirting
boards, cable ducting and dado rails to be installed quicker and cheaper on site
than conventional plaster versions. The Decostrip products are regionally
adaptable in style, color and finish.
Ecoshutter(TM) Multipanel Shutter Systems.
Ecoshutter is a PVC shutter system that offers useful and aesthetic integration
into the Frametec-4G window frames. Ecoshutters can provide variable light,
shade and privacy control more practically than conventional shutters, drapes or
curtain combinations. The Ecoshutters can be fitted internally or externally,
with or without curtains, drapes, or pelmet installations.
Transpipes(TM)- PVC Piping Systems.
TransPipes is a range of piping systems designed to be adaptable to meet
regional reticulation regulations of water, electricity and other services
approved under local regulations. The concept of the Transpipes is the
systematic manufacture of the needs of a particular project such as standard
six-level apartment blocks by utilizing off-site manufacturing and
pre-fabrication processes to enable the least amount of on-site work to be
required with the least waste and unbudgeted physical losses.
Modulfit(TM)- Modular Plumbing Fittings.
Modulfit is a range of convenient plumbing and reticulation fittings suitable
for the inclusion in both standard modules and throughout six-level apartment
blocks. The fittings can be made in accordance with local regulations and can
accommodate most reasonable pressure and reliability tests.
PGA Protective Glass Systems.
The PGA glass typically consists of several sheets of standard glass, each
treated by the bonding of a clear shatter resistant film. Three such panes are
mounted into a frame such that the treated frames are spaced with air gaps
making up a typical unit or panel with an overall thickness of approximately 100
millimeters. Such a panel is thicker than the standard solid bullet resistant
glass panel, which is 52 millimeters thick. The PGA products weigh half as much
as conventional glass panels. We believe the major benefit of PGA glass products
is ease of manufacture and handling construction and thus its availability to be
manufactured through the use of existing high volume glass production
facilities. It integrates well with Frametec-4G window frames.
It can be used in cash handling facilities which interface with the public, such
as banks, building societies, pay offices, service stations, 24-hour retail
outlets. It can also be used in areas requiring personal protection and in areas
of security enforcement such as jails, police stations, courts, public
buildings, airports, embassies, home and defense establishments. This product
has been designed with the aim of achieving less total thickness, standardized
product components resulting
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in lower direct costs of production, less weight, lower transport costs, larger
sheet sizes and retro fitting to existing window frame areas.
Coldshield(TM)- Cold Climate Window Heat Retention Systems.
Climate control window films are commonly associated with features such as fade
reduction, glare control security, tenant comfort, heat reduction, and shatter
resistance as well as protection from high winds. In some buildings air
conditioning and energy cost savings are of paramount importance.
Econochem(TM) Construction Chemical Products.
Econochem is a grouping of specialized manufactured construction chemical
products and additives for use in standard six-level housing blocks. The
Econochem products are economically priced to provide a greater level of
protection and sealing for problem areas typically affected by weather, aging
and deterioration.
Econofix(TM) Tiling Adhesives.
Econofix is a product suitable for large-scale wall tilings, particularly useful
in extremely cold climates. Prices are economically priced regionally to provide
a greater level of predictable protection and solving the traditional
maintenance problem areas especially susceptible to the weather, aging and
deterioration. The in-house capacity to supply enables greater internal control
over cost, wastage supervision, and reliability of application rates and
sub-contracting processes as well as quality control processes generally.
H20 Econoproof(TM).
H20 Econoproof is a waterproofing membrane. It is marketed as an alternative to
the conventional torch on, or glue on, sheet membranes. This product has been
designed with the aim of being UV resistant, fully trafficable, highly
serviceable in temperatures from -50C to +70C. We believe the H20 Econoproof is
easy to lay and has less risk of defect leaks, is compatible to new buildings,
environmentally friendly, with a low failure rate.
Econoseal(TM) Concrete Sealer or Protector.
Econoseal is a concrete slab sealer designed to provide an economical protective
coating to typical concrete slabs providing a greater level of predictable
protection and control of maintenance problems, particularly in low and medium
cost housing. Econoseal is economically priced and provides a greater level of
predictable protection and sealing to the traditional maintenance problem areas
particularly susceptible to weather, aging and deterioration.
Commercial Stratacore(TM) Modular Office Block Toilet Systems.
Commercial Stratacore is a range of custom designed toilets built offsite in a
factory production and quality control environment. They are built to
specifications and delivered fully to the construction site with only final
services connection required. Applications include: tower blocks of commercial
and office developments, shopping centers, and mixed landmark developments. Full
tiling or advanced internal panel finishes are available.
HotelSuite(TM) Modular Hotel Bathroom Systems.
HotelSuite is a range of custom designed hotel bathroom modules built offsite in
a factory production and quality control environment. They are built to
specifications and delivered fully assembled to the construction site with only
final services connection required. The HotelSuite system offers architects and
consultants better reproduction of designs, reduced risk in tender assessment,
reduced management time arbitrating with builders and sub-contractors and
reduced risk of project cost and completion time escalation. The HotelSuite
system has also been designed with the aim of offering hotel developers and
building owners reduced total project costs.
Manufacturing and Marketing of Our Products.
We intend to distribute products from our own regional manufacturing plants. We
are currently negotiating a Joint Venture Agreement with certain Asian parties
which we believe will provide us an opportunity to construct a manufacturing
facility located on property contributed by the potential Asian partner. We
intend to raise the necessary funds to build a manufacturing facility through
the offer and sale of the Company's common stock. We intend to build and operate
such plants in conjunction with our joint venture partners. No joint venture
agreements have been signed as
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of the date of this Registration Statement on Form 10-SB. We also anticipate
that our potential joint venture partner will negotiate contracts with local
businessmen to purchase our products.
As an extension of our desire to provide underdeveloped regions with a wide
range of essential components for a complete housing product, our subsidiary,
Pacific Telco Limited, a Vanuatu Corporation, has acquired a license to provide
broadband wireless telecommunication technology which we believe will allow us
to deliver, via satellite, digitally transmitted voice, fax, video, Internet and
data to remote and underdeveloped localities. We believe that communication
capabilities are an important part to any modern household. Many of the areas
where we anticipate our products will be sold have under-developed communication
abilities. For example, China has only recently switched its national phone
system to be IP compatible. Moreover, we hope that we can derive additional
revenue from the installation of wireless products, thus providing an ongoing
revenue stream after the housing projects have been completed.
The Company's Subsidiaries.
Pacific Telco Limited. We own 80% of the issued and outstanding shares of
Pacific Telco Limited, a Vanuatu corporation ("Pacific Telco"). The Company was
issued an 80% ownership interest in Pacific Telco as consideration for the
Company's efforts in organizing and forming Pacific Telco. On or about February
7, 2000, Pacific Telco entered into a Joint Venture and License Agreement ("JVL
Agreement") with TRG Systems Limited, a British Columbia corporation ("TRG
Systems"), wherein Pacific Telco purchased from TRG Systems a principal earth
station and all subsequent ground stations necessary to promote, market,
manufacture, sell, supply and install technology that delivers voice, data, fax,
Internet, video conferencing and data transfer. Specifically, the technology
includes computer software enabling the transmission of information, a routing
system enabling and facilitating an information transmission environment, and
the necessary components allowing for a private network for the transmittal of
confidential information (the technology will be collectively referred to herein
as the "Intellectual Property"). TRG Systems granted to Pacific Telco the
exclusive license to exploit such technology and conduct such activities in the
jurisdictions more particularly described in Schedule D to the JVL Agreement
(attached as an Exhibit to this Registration Statement on Form 10-SB). The JVL
Agreement also states that TRG Systems is to provide Pacific Telco with all
manuals necessary for Pacific Telco to carry on the business of providing such
communication capabilities. TRG Systems also agreed to provide Pacific Telco
with all available information on all improvements and technological advances
related to the Intellectual Property at TRG Systems' cost plus 20%. TRG Systems
also agreed to provide technical assistance at its cost plus 20%. In
consideration of the above, Pacific Telco agreed to pay TRG Systems a one-time
license fee of CDN$250,000.00 within 60 days of the execution of the JVL
Agreement. Moreover, within 90 days of the execution of the JVL Agreement,
Pacific Telco is required to submit a purchase order to TRG Systems for an earth
station and pay TRG Systems another CDN$250,000.00. Pacific Telco is also
obligated to pay TRG Systems CDN$250,000.00 upon certified completion and
testing of the earth station, CDN$200,000.00 upon the delivery of the system and
another CDN$50,000.00 upon the site installation and operational testing of the
system. TRG Systems has the right to terminate the JVL Agreement if Pacific
Telco fails to meet its payment obligations under the JVL Agreement. Under the
JVL Agreement, Pacific Telco is also obligated to pay a license fee of
CDN$25,000.00 for each country that it conducts such activities. If Pacific
Telco conducts activities in The Peoples Republic of China, it is obligated to
pay a CDN$100,000.00 license fee.
Pacific Telco Australia Limited. We own 100% of the issued and outstanding stock
of Pacific Telco Australia Limited, an Australian corporation ("Pacific
Australia"). Pacific Australia was incorporated for the specific purpose of
distributing our products throughout the Australian market. We anticipate that
Pacific Australia's only business will be distributing our products. However,
Pacific Australia does not currently conduct any business activities. The
directors of Pacific Australia are John Whalen, President and a director of the
Company, Elizabeth Cohen, Peter Dalkin and Robert Jupe.
Competition. We believe there are many companies worldwide which offer modular
construction components to the building industry. We believe that none of these
competitors, individually, offer the range of products or the comprehensive
operational manuals developed by us so that those unfamiliar with the
manufacture, installation and
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development of the products will be able to do so with less difficulty. Many
years of research and relationship building have been invested by us in China.
We believe this effort is very difficult to duplicate and offers us a
significant advantage over our competitors. As a result we believe we are poised
to initiate Joint Ventures in China within the next 12 months. China has
announced its intention to build 18,000 cities capable of accommodating 30,000
residents over the next 20 years. We believe we are positioning the Company to
become a part of this development.
We intend to purchase raw materials locally, depending on the region within
which we are operating, supplied by regional government controlled sources. We
believe that we can gain a market share by demonstrating that we can reduce
housing with costs while improving housing standards through prefabricating
quality components, which we believe will save time and money while enabling us
to deliver a quality product. We do not believe we will be dependent on one or a
few major customers. We believe the products lend themselves to a very large
market segment involving numerous countries throughout the world.
Government Regulation. We do not believe government approvals are necessary for
our principal products or services. Moreover, we do not believe there are
existing or probable governmental regulations which will impact our primary
business.
Environmental Regulation. We have not incurred any costs or been affected by
compliance with environmental laws, either federal, state or local.
Employees. We only have one full-time employee, our President, John Whalen, and
no part-time employees.
Reports to Security Holders. We are currently listed on the Pink Sheets and file
all reports and information acquired by the National Association of Securities
Dealers, Inc. We are filing this Registration Statement on Form 10-SB in order
to cause the Company to be listed on the Over-the-Counter Bulletin Board
Quotation Service ("OTCBB") maintained by the National Association of Securities
Dealers, Inc. As soon as this Registration Statement on Form 10-SB becomes
effective, we will be required to provide an annual report to our security
holders, which will include audited financial statements, and quarterly reports,
which will contain unaudited financial statements reviewed by our auditor. The
Company is not yet a reporting company. The public may read and copy any
materials filed with the Securities and Exchange Commission ("SEC") at the SEC's
Public Reference Room at 450 Fifth Street NW, Washington, D.C. 20549. The public
may also obtain information on the operation of the Public Reference Room by
calling the SEC at 1-800-SEC-0330. The SEC maintains an Internet site that
contains reports, proxy and information statements, and other information
regarding issuers that file electronically with the SEC. The address of that
site is http://www.sec.gov.
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations.
Risks Associated with Operations in China. We anticipate that our initial
operations will be conducted in China and accordingly, we will be subject to
risks not typically associated with operations in the United States. These
include risks associated with the political, economic, and legal environment as
well as the foreign currency exchange. Political Environment. The results of our
operations may be adversely affected by changes in the political and social
conditions in China and by, among other things, changes in governmental policies
with respect to laws and regulations, inflationary measures, currency conversion
and remittance abroad, and rates and methods of taxation. While the Chinese
government is expected to continue its economic reform policies, many of the
reforms are new or experimental and may be refined or changed. It is also
possible that a change in the Chinese leadership could lead to changes in
economic policy.
Economic Environment. The economy of the Peoples Republic of China ("PRC")
differs significantly from the United States economy in many respects, including
its structure, levels of development and capital reinvestment, growth rate,
government involvement, resource allocation, self-sufficiency, rate of inflation
and balance of payments position. The adoption of economic reform policies since
1978 has resulted in a gradual reduction in the role of state economic plans in
the allocation of resources, pricing and management of such assets, an increased
emphasis on the utilization of
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market forces, and rapid growth in the PRC economy. However, such growth has
been uneven among various regions of the country and among various sectors of
the economy.
Legal System. The PRC Constitution promulgated by the National People's Congress
("NPC") is the backbone for the PRC's legal system and is the highest and most
authoritative set of laws in the country. National laws in the PRC are
promulgated by the NPC or its Standing Committee. The State Council also has the
power to formulate and promulgate administrative regulations, decisions and
orders based on the Constitution and laws.
The power to promulgate local laws, administrative regulations, rules and
regulations is vested in local People's Congresses at the provincial and
municipal levels. These administrative regulations, decisions or orders and any
local laws and administrative regulations, however, must be consistent with the
existing national laws.
Although the PRC is still developing a comprehensive system of laws, a
significant number of laws and regulations governing general economic matters,
foreign investment, protection of intellectual property, taxation, technology
transfer and trade have been developed since the start of its economic reform
policy in 1978. In 1982, the PRC adopted a new Constitution which, among other
things, authorized foreign investment and guaranteed the "lawful rights and
interests" of foreign investors in the PRC. This law was amended in 1988, 1993,
and March 1999 to provide for a "socialist market economy." The most recent
amendments also provide protection for private economic entities.
All foreign individuals, enterprises and other entities are given the same
rights and obligations as PRC citizens, enterprises and other entities in
instituting or defending proceedings in PRC courts. If, however, the rights and
obligations of PRC individuals, enterprises or other entities to institute or
defend legal proceedings are subject to any restrictions in a foreign
jurisdiction, then reciprocal restrictions shall be imposed by the PRC courts on
the rights and obligations of the individuals, enterprises and other entities of
such jurisdictions to institute or defend legal proceedings in the PRC. All
foreign individuals, enterprises and other entities may retain only lawyers
qualified in the PRC to institute or defend any proceedings in PRC courts.
Individuals, enterprises or other entities whose rights are infringed by the
legal acts or omissions of any administrative departments of the government or
any officials of such departments may proceed to litigation under the Law of the
People's Republic of China on Litigation. Under this law, individuals,
enterprises or other entities may ask the court to order the other party to
perform, or refrain from, some act and order the other party to pay damages.
In short, the PRC's legal system is based on written statutes under which prior
court decisions may be cited as authority but do not have binding precedence.
The PRC's legal system is relatively new, and the government is still in the
process of developing a comprehensive system of laws, a process that has been
ongoing since 1979. Considerable progress has been made in the promulgation of
laws and regulations dealing with economic matters such as corporate
organization and governance, foreign investment, commerce, taxation and trade.
Such legislation has significantly enhanced the protection afforded to foreign
investors. However, experience with respect to the implementation,
interpretation and enforcement of such laws is limited.
Foreign Currency Exchange. Renminbi ("RMB") is the Chinese currency. Renminbi is
not freely convertible into foreign currencies at this time. The State
Administration for Foreign Exchange ("SAFE") is responsible for the
administration of foreign exchange in China. Prior to January 1, 1994, China had
a dual foreign exchange system consisting of two independent exchange rates.
Foreign exchange transactions involving Renminbi were conducted either at the
official exchange rate set from time to time by SAFE or, with government
permission, at official foreign exchange adjustment centers ("Swap Centers") at
rates largely determined by supply and demand existing in the different Swap
Centers' local markets. Established in 1986, Swap Centers were designed to
provide marketplaces for importers and exporters to buy and sell foreign
currency for use in Development trade.
Effective January 1, 1994, a new unitary, managed floating-rate system was
introduced to replace the dual foreign exchange system. Under the new system,
the People's Bank of China ("PBOC") sets and publishes a daily exchange rate for
Renminbi ("PBOC Rate"). To determine this rate the PBOC primarily refers to the
supply and demand of Renminbi versus the United States dollar in the prior day's
market. The PBOC also takes into account factors such as
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general conditions in the development foreign exchange markets. Authorized banks
and financial institutions are allowed to quote buy and sell rates for Renminbi
within a specific range around the daily PBOC Rate. Currently, SAFE Renminbi
trading is within a range of 0.15 percent above and below the daily PBOC Rate.
All foreign exchange transactions involving Renminbi must take place either
through the Bank of China or other institutions authorized to buy and sell
foreign currencies, or at swap centers. Sino-foreign equity joint venture
enterprises may also maintain foreign currency accounts. Payment for imported
materials and remittance of earnings outside the PROC are permitted but are
subject to the availability of foreign currencies. For capital transactions in
foreign currencies, approval is required from the State Administration of
Foreign Exchange.
Exchange Rate Fluctuations. Under the current system, the PBOC quotes a daily
exchange rate for Renminbi to United States dollars based on the market rate for
foreign exchange transactions conducted by the designated banks in the China
foreign exchange market during the preceding day. The PBOC also quotes the
exchange rates of Renminbi to other foreign currencies based on the Development
market rate. Since 1994 the exchange rate for Renminbi against United States
dollars has been relatively stable at approximately RMB 8.50 to US$1.00. Because
the exchange rate is based primarily on market forces, the exchange rates for
the Renminbi against other currencies, including United States dollars, are
susceptible to movements based on external factors and there can be no assurance
that the Renminbi may not be subject to devaluation. Any devaluation could
adversely affect the value of the Agreement since Shandong Development's
revenues will be received, and its profits and dividends will be expressed, in
Renminbi.
Liquidity and Capital Resources. At December 31, 1999, we had cash resources of
$5,001.00. At March 31, 2000, we had cash resources of $206,775.00. The increase
was almost exclusively due to the sale of the Company's $.0001 par value common
stock. At December 31, 1999, we had total current assets of $18,201.00 and total
current liabilities of $100,000.00. At December 31, 1999, total current
liabilities exceeded total current assets by $81,799.00. At March 31, 2000, we
had total current assets of $206,775.00 and total current liabilities of
$1,084,732.00. At March 31, 2000, total current liabilities exceeded total
current assets by $877,957.00. The increase in liabilities was primarily the
result of $1,069,932.00 advanced to the Company by its founders. The cash and
equivalents constitute our present internal sources of liquidity. Because we are
not generating any revenues, our only external source of liquidity is the sale
of our capital stock.
Results of Operations. The Company has not yet realized any revenue from
operations. We will require additional cash to implement its business
strategies, including cash for (i) payment of increased operating expenses and
(ii) further implementation of those business strategies. No assurance can be
given, however, that we will have access to the capital markets in the future,
or that financing will be available on acceptable terms to satisfy the cash
requirements of the Company to implement our business strategies. Our inability
to access the capital markets or obtain acceptable financing could have a
material adverse effect on the results of operations and financial condition of
the Company.
Our forecast of the period of time through which our financial resources will be
adequate to support our operations is a forward-looking statement that involves
risks and uncertainties, and actual results could vary as a result of a number
of factors.
We anticipate that we will need to raise additional capital within the next 12
months in order to implement our business strategies. Such additional capital
may be raised through additional public or private financings, as well as
borrowings and other resources. To the extent that additional capital is raised
through the sale of equity or equity-related securities, the issuance of such
securities could result in dilution of our stockholders. There can be no
assurance that additional funding will be available on favorable terms, if at
all. If adequate funds are not available within the next 12 months, we may be
required to curtail our operations significantly or to obtain funds through
entering into arrangements with collaborative partners or others that may
require us to relinquish rights that we would not otherwise relinquish.
We do not anticipate any significant research and development within the next 12
months, nor do we anticipate that we will lease or purchase any significant
equipment within the next 12 months. We do not anticipate a significant change
in the number of our employees within the next 12 months.
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We anticipate that we will begin to realize a positive revenue stream beginning
in or about the fourth quarter of the year 2000.
Item 3. Description of Property.
Property held by the Company. As of the dates specified in the following table,
we held the following property in the following amounts:
<TABLE>
<CAPTION>
================================== =========================== ============================
<S> <C> <C>
Property December 31, 1999 March 31, 2000
---------------------------------- --------------------------- ----------------------------
Cash $5,001.00 $206,775.00
---------------------------------- --------------------------- ----------------------------
Building Products and Systems $13,000,000.00 $13,000,000.00
================================== =========================== ============================
</TABLE>
We do not presently own any interests in real estate.
The Company's Facilities. The Company occupies office space at Suite 2300-1066
West Hastings Street, Vancouver, British Columbia, Canada V6E 3X2. The Company
pays $2,040.00 a month for such space. There is no lease signed on the premises.
John Whalen, President and a director of the Company, provides office services
to the Company without charge.
Item 4. Security Ownership of Certain Beneficial Owners and Management.
(a) Security Ownership of Certain Beneficial Owners. Other than officers and
directors, the following chart represents all owners of 5% or more of the
Company's issued and outstanding common stock:
<TABLE>
<CAPTION>
Title 1 Class Name of Beneficial Owner Amount and Nature of Percent of Class
------------- ------------------------ Beneficial Owner ----------------
-------------------
<S> <C> <C> <C>
Common Stock Paul Coombes 1,991,000 6.2%
Common Stock David Suttie 2,765,000 8.6%
Common Stock Patrick Dougherty 2,860,000 8.9%
Common Stock Nicholas Columb 2,855,000 8.8%
Common Stock Arthur O'Brien 4,965,000(1) 15.4%
Common Stock Peejay Investments Pty 2,750,000 8.5%
Common Stock Technology Investments 2,695,000 8.4%
</TABLE>
(1) Includes 2,700,000 shares of the Company's $.0001 par value common stock
owned by Judith O'Brien.
(b) Security Ownership by Management. As of March 31, 2000, the directors and
principal executive officers of the Company beneficially owned, in the
aggregate, 4,955,000 shares of the Company's common stock, or approximately
15.4% of the issued and outstanding shares, as set forth on the following table:
10
<PAGE>
<TABLE>
<CAPTION>
Title of Class Name of Beneficial Owner Amount and Nature of Percent of Class
-------------- ------------------------ Beneficial Owner ----------------
--------------------
<S> <C> <C> <C>
Common Stock John Whalen 3,620,000(1) 11.2%
67 Union Street Paddington, New
South Wales, Australia
Common Stock Harold Snipstead 1,000,000(2) 3.1%
15781 Goggs Avenue, White Rock,
British Columbia, Canada
Common Stock Zejun Qian 335,000(3) 1.0%
66 Union Street
Dulwich Hill, N.S.W.
Australia 2203
</TABLE>
(1) Includes 5,000 shares owned by Judith Whalen, Mr. Whalen's wife; 5,000
shares owned by Georgia Whalen, 5,000 shares owned by Phillipa Whalen,
1,190,000 shares owned by Dorothy Stewart, and 5,000 shares owned by Ralph
Whalen.
(2) Includes: 150,000 shares owned by Grace Snipstead, Mr. Snipstead's wife;
125,000 shares owned by Brian Snipstead, Mr. Snipstead's adult son; 62,500
shares owned by Brent Snipstead, Mr. Snipstead's adult son; and 62,500
shares owned by Kristine Tyrell, Mr. Snipstead's adult daughter.
(3) Includes 5,000 shares owned by Diwei Luo, an adult relative of Mr. Qian's;
and 150,000 shares owned by Qian & Associates.
Changes in Control. Management of the Company is not aware of any arrangements
which may result in "changes in control" as that term is defined by the
provisions of Item 403 of Regulation S-B.
Item 5. Directors, Executive Officers, Promoters and Control Persons.
The directors and principal executive officers of the Company are as specified
on the following table:
<TABLE>
<CAPTION>
================================= ============ ============================ =================================
Name and Address Age Position Term as Director
--------------------------------- ------------ ---------------------------- ---------------------------------
<S> <C> <C> <C>
John Whalen 54 President, Director August 10, 1998 (inception) to
present
--------------------------------- ------------ ---------------------------- ---------------------------------
Harold Snipstead 68 Secretary, Director August 10, 1998 (inception) to
present
--------------------------------- ------------ ---------------------------- ---------------------------------
Zejun Qian 33 Director August 10, 1998 (inception) to
present
================================= ============ ============================ =================================
</TABLE>
John Whalen, age 54, is the President, Chief Executive Officer, Chief Financial
Officer and a director of the Company. Mr. Whalen is also a director of Pacific
Telco Limited and Pacific Telco Australia Limited, the Company's two
subsidiaries. In 1971, Mr. Whalen studied Industrial Law at the University of
Sydney in Australia. Mr. Whalen belongs to the Industrial Relations Society of
NSW and the Company Directors Association. From January 1964 to August 1967, Mr.
Whalen held various administrative positions with the Commonwealth Treasury
Department in Australia. From January 1968 to January 1969, Mr. Whalen was a
Personnel Officer for the Public Service Board in Australia. From January 1969
to January 1973, Mr. Whalen was the personal assistant to Commissioner for the
Commonwealth Arbitration Commission. From January 1973 to October 1979, Mr.
Whalen served as Executive Director for Winter Whalen I.R.P.B. Ltd. From October
1979 to September 1983, Mr. Whalen was Executive Director for Barnon Farmlands,
Ltd. From September 1983 to November 1984, Mr. Whalen was Executive Director for
Sola Industries Ltd. From November 1984 to November 1986, Mr. Whalen was the
Executive Director of Australian Natural Foods Ltd. From January 1987 to October
11
<PAGE>
1998, Mr. Whalen was the Director of Nathan Trust Company. Mr. Whalen has had
experience in the development of new companies and capital raising, and has
successfully managed the development and financing of technologically
sophisticated construction product companies. Before joining the Company's Board
of Directors, Mr. Whalen was involved in the acquisition, financing, and
development of the products of the Company. His early experience and training
were in industrial and labor relations in Australia, in both the public and
private sectors. He has been a director of the Company since its inception and
has been primarily responsible for negotiating the joint venture and agency
arrangements of the Company. His principal responsibilities will include the
development of overseas agency and distribution arrangements and new product
review.
Harold Snipstead, age 68, is the Secretary and a director of the Company. From
1954 to 1955, Mr. Snipstead attended the Camrose Lutheran College in Camrose,
Alberta, Canada. In 1972 and continuing through 1973, Mr. Snipstead attended the
British Columbia Institute of Technology where he studied business management.
From July 1970 to January 1987, Mr. Snipstead was the President of Akai Canada,
Inc. From January 1987 to May 1990, Mr. Snipstead was President of Genetron
Marine Corp. From June 1990 to August 1999, Mr. Snipstead was Chief Executive
Officer of Truck Tech Corp. From August 1994 to January 1997, Mr. Snipstead
managed Greco Pacific Investments. Mr. Snipstead has been the Secretary and a
director of the Company since January 1997.
Zejun Qian, age 33, is a director of the Company. Mr. Qian has a Master of
Architectural Design degree from the University of New South Wales, Australia.
From 1989 to 1991, Mr. Qian was the principal architect for Qian & Associates.
From February 1991 to February 1992, Mr. Qian worked as an architect for OD
Architects in Singapore. From June 1995 to present, Mr. Qian has worked as an
architect for P.D. Mayoh. He has extensive experience in architecture and the
construction industry in the Peoples Republic of China ("PRC") and served as a
tutor in the architectural department of Shenzhen University. He has been
associated with the introduction of new construction technologies into various
regions of the PRC over the last three years. His experience and contacts in the
PRC, Australia and Singapore enabled him to become the principal coordinating
advisor of the Company, on a consulting basis, for the establishment of new
joint ventures in the PRC.
There are no orders, judgments or decrees of any governmental agency or
administrator, or of any court of competent jurisdiction, revoking or suspending
for cause any license, permit or other authority to engage in the securities
business or in the sale of a particular security or temporarily or permanently
restraining Mr. Whalen, Mr. Qian or Mr. Snipstead from engaging in or continuing
any conduct, practice or employment in connection with the purchase or sale of
securities, or convicting such person of any felony or misdemeanor involving a
security, or any aspect of the securities business or theft, nor are Mr. Whalen,
Mr. Qian or Mr. Snipstead the officers of any corporation or entity so enjoined.
Item 6. Executive Compensation - Remuneration of Directors and Officers.
Executive Compensation. Specified below, in tabular form, is the aggregate
annual remuneration of the Company's Chief Executive Officer and the four (4)
most highly compensated executive officers other than the Chief Executive
Officer who were serving as executive officers at the end of the Company's last
completed fiscal year. The officers of the Company are reimbursed for expenses
incurred on behalf of the Company.
<TABLE>
<CAPTION>
====================================== ======================================= ===============================
Name of Individual or Identity Capacities in which Remuneration Aggregate Remuneration
of Group was received
-------------------------------------- --------------------------------------- -------------------------------
<S> <C> <C>
John Whalen President and Director $75,000.00(1)
====================================== ======================================= ===============================
</TABLE>
(1) The Company currently owes Mr. Whalen $100,000.00 in accrued, but unpaid,
compensation. The Company and Mr. Whalen have agreed that Mr. Whalen will
be paid when, and if, the necessary funds are available.
Directors' Compensation. The directors of the Company do not receive
compensation in their capacities as directors. However, the directors of the
Company are reimbursed for expenses incurred on behalf of the Company.
12
<PAGE>
Item 7. Certain Relationships and Related Transactions.
On or about August 26, 1998, we entered into a Product License Agreement
("License Agreement") with Advanced Materials and Systems Pty Limited of Lolum
House, Kumul Highway, Port Vila, Vanuatu ("Advanced Materials"). Pursuant to the
License Agreement, we purchased from Advanced Materials the right to
manufacture, market and sell 26 different building products which are utilized
in the construction industry (described more particularly under the heading "Our
Products"). The License Agreement granted us the option to purchase all right,
title and interest in the products of Advanced Materials. We have subsequently
entered into a Asset Purchase Agreement ("Purchase Agreement") whereby we
purchased, for 26,000,000 shares of the Company's $.0001 par value common stock,
all right, title and interest in Advanced Materials' products. John Whalen, the
President and a director of the Company, was also an officer and a director of
Advanced Materials at the time we entered into the License Agreement and the
Purchase Agreement.
With regard to any future related party transaction, the Company plans to fully
disclose any and all related party transactions, including, but not limited to,
(i) disclosing such transactions in prospectus' where required; (ii) disclose in
any and all filings with the Securities and Exchange Commission, where required;
(iii) obtain uninterested directors consent; and (iv) obtain shareholder consent
where required.
Transactions with Promoters. The services of promoters have not been used.
Item 8. Description of Securities.
As of April 19, 2000 there were 120 shareholders holding shares of the Company.
The Company is authorized to issue 50,000,000 shares of common stock, $.0001 par
value, each share of common stock having equal rights and preferences, including
voting privileges. As of April 19, 2000, there were 32,271,299 shares of the
Company's common stock were issued and outstanding. The shares of $.0001 par
value common stock of the Company constitute equity interests in the Company
entitling each shareholder to a pro rata share of cash distributions made to
shareholders, including dividend payments. The holders of the Company's common
stock are entitled to one vote for each share of record on all matters to be
voted on by shareholders. The holders of the Company's common stock are entitled
to receive dividends when, as and if declared by the Company's Board of
Directors from funds legally available therefor; provided, however, that cash
dividends are at the sole discretion of the Company's Board of Directors. In the
event of liquidation, dissolution or winding up of the Company, the holders of
common stock are entitled to share ratably in all assets remaining available for
distribution to them after payment of liabilities of the Company and after
provision has been made for each class of stock, if any, having preference in
relation to the Company's common stock.
Holders of the shares of the Company's common stock have no conversion,
preemptive or other subscription rights, and there are no redemption provisions
applicable to the Company's common stock. All of the outstanding shares of the
Company's common stock are duly authorized, validly issued, fully paid and
non-assessable.
PART II
Item 1. Market Price of and Dividends on the Registrant's Common Equity and
Related Stockholder Matters.
As of April 19, 2000, there were no warrants outstanding.
Pink Sheet Quotations. The Company has been listed on the Pink Sheets since in
or around September, 1999. During the period from October, 1999 to December
1999, the ask and bid price for our stock was $1.50. During the period from
January, 2000 to March 31, 2000, the ask and bid price for our stock went from a
low of $2.00 to a high of $7.00. The Company has not entered into any stock
option agreements.
Penny Stock Regulation. The Commission has adopted rules that regulate
broker-dealer practices in connection with transactions in "penny stocks". Penny
stocks are generally equity securities with a price of less than $5.00 (other
than
13
<PAGE>
securities registered on certain national securities exchanges or quoted on the
Nasdaq system, provided that current price and volume information with respect
to transactions in such securities is provided by the exchange or system). The
penny stock rules require a broker-dealer, prior to a transaction in a penny
stock not otherwise exempt from those rules, deliver a standardized risk
disclosure document prepared by the Commission, which (i) contained a
description of the nature and level of risk in the market for penny stocks in
both public offerings and secondary trading; (ii) contained a description of the
broker's or dealer's duties to the customer and of the rights and remedies
available to the customer with respect to violation to such duties or other
requirements of Securities' laws; (iii) contained a brief, clear, narrative
description of a dealer market, including "bid" and "ask" prices for penny
stocks and significance of the spread between the "bid" and "ask" price; (iv)
contains a toll-free telephone number for inquiries on disciplinary actions; (v)
defines significant terms in the disclosure document or in the conduct of
trading in penny stocks; and (vi) contains such other information and is in such
form (including language, type, size and format), as the Commission shall
require by rule or regulation. The broker-dealer also must provide, prior to
effecting any transaction in penny stock, the customer (i) with bid and offer
quotations for the penny stock; (ii) the compensation of the broker-dealer and
its salesperson in the transaction; (iii) the number of shares to which such bid
and ask prices apply, or other comparable information relating to the depth and
liquidity of the market for such stock; and (iv) month account statements
showing the market value of each penny stock held in the customer's account. In
addition, the penny stock rules require that prior to a transaction in a penny
stock not otherwise exempt from those rules; the broker-dealer must make a
special written determination that the penny stock is a suitable investment for
the purchaser and receive the purchaser's written acknowledgement of the receipt
of a risk disclosure statement, a written agreement to transactions involving
penny stocks, and a signed and dated copy of a written suitability statement.
These disclosure requirements may have the effect of reducing the trading
activity in the secondary market for a stock that becomes subject to the penny
stock rules. If any of the Company's securities become subject to the penny
stock rules, holders of those securities may have difficulty selling those
securities.
Item 2. Legal Proceedings.
We are not aware of any pending litigation nor do we have any reason to believe
that any such litigation exists
Item 3. Changes in and Disagreements with Accountants.
There have been no changes in or disagreements with our accountants since the
formation of the Company required to be disclosed pursuant to Item 304 of
Regulation S-B.
Item 4. Recent Sales of Unregistered Securities.
There have been no sales of unregistered securities within the last three (3)
years which would be required to be disclosed pursuant to Item 701 of Regulation
S-B except for the following:
In or about December 1998, we issued 2,000,000 shares of our $.0001 par value
common stock to the Company's founders for services rendered in connection with
the incorporation and organization of the Company. Those shares were issued in
reliance upon an exemption from the registration requirements of the Securities
Act of 1933 ("Act") specified by the provisions of Regulation S of the Act
promulgated by the Securities and Exchange Commission. Specifically, the
issuance was made to "non-U.S. persons outside of the United States of America"
as that is defined under applicable state and federal securities laws. We valued
those services at $200.00.
On or about September 7, 1998, we completed an offering of our $.0001 par value
common stock. Pursuant to that offering, we sold 1,000,000 shares of our $.0001
par value common stock for $.10 per share. The shares were issued in reliance
upon the exemption from the registration and prospectus delivery requirements of
the Securities Act of 1933, as amended ("Act"), which exemption is specified by
the provisions of Regulation S promulgated by the Securities and Exchange
Commission. Gross proceeds from that offering were $100,000.00. The majority of
those funds were used for administration expenses and working capital.
Accompanying those shares were 1,000,000 warrants to purchase shares of the
Company's $.0001 par value
14
<PAGE>
common stock at $1.50 per share. All those warrants have been exercised
resulting in net proceeds to us of $150,000.00.
On or about July 15, 1999, we issued to Advanced Materials and Systems, a
Vanuatu entity, 26,000,000 shares of the Company's common stock. John Whelan,
President and a director of the Company, is an officer and director of Advanced
Materials and Systems, and was an officer and director of Advanced Materials and
Systems at the time of the issuance of our shares. The shares were issued in
reliance upon the exemption from the registration requirements of the Act as set
forth in Regulation S promulgated by the Securities and Exchange Commission.
Specifically, the issuance was made to a "non-U.S. person outside the United
States of America" as that term is defined under applicable federal and state
securities laws. We valued the acquired assets of Advanced Materials and Systems
at $13,000,000.00.
Item 5. Indemnification of Directors and Officers.
Article 11 of the Company's Certificate of Incorporation provides that no
officer or director of the Company shall be personally liable for obligations of
the Company or for any duties or obligations arising out of any acts or conduct
of such an officer or director performed for on behalf of the Company except for
(i) acts or omissions that involve intentional misconduct, fraud or a knowing
violation of law or (ii) payment of dividends in violation of Section 174 of the
Delaware Corporation Law.
We anticipate that we will enter into indemnification agreements with each of
our officers and directors pursuant to which the Company will agree to indemnify
each such officer and director for all expenses and liabilities, including
criminal monetary judgments, penalties and fines, incurred by such officer and
director in connection with any criminal or civil action brought or threatened
against such officer or director by reason of such officer or director being or
having been an officer or director of the Company. In order to be entitled to
indemnification by the Company, such officer or director must have acted in good
faith and in a manner such person believed to be in the best interests of the
Company and, with respect to criminal actions, such officer or director must
have had no reasonable cause to believe his or her conduct was unlawful.
DISCLOSURE OF POSITION OF COMMISSION REGARDING INDEMNIFICATION FOR SECURITIES
ACT LIABILITIES:
INSOFAR AS INDEMNIFICATION FOR LIABILITIES ARISING UNDER THE SECURITIES ACT OF
1933 MAY BE PERMITTED TO DIRECTORS, OFFICERS OR PERSONS CONTROLLING THE COMPANY
PURSUANT TO THE FOREGOING PROVISIONS, THE COMPANY HAS BEEN INFORMED THAT IN THE
OPINION OF THE SECURITIES AND EXCHANGE COMMISSION THAT SUCH INDEMNIFICATION IS
AGAINST PUBLIC POLICY AS EXPRESSED IN THE SECURITIES ACT OF 1933 AND IS,
THEREFORE, UNENFORCEABLE.
PART F/S
Copies of the financial statements specified in Regulation 228.310 (Item 310)
are filed with this Registration Statement, Form 10-SB.
(a) Index to Financial Statements. Page
1. Balance Sheet as at July 31, 1999 F-1
2. Statement of Operations for the Period from August 21, 1998 F-2
to July 31, 1999
3. Statement of Changes in Stockholders' Equity for the Period F-3
from August 21, 1998 to July 31, 1999
15
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
4. Statement of Cash Flows for the Period from August 21, 1998 F-4
to July 31, 1999
5. Notes to Financial Statements F-5 through F-6
6. Independent Auditor's Report F-7
7. Audited Balance Sheet as at September 30, 1999 F-8
8. Statement of Operations for the Period from July 31, 1999 F-9
to September 30, 1999
9. Statement of Changes in Stockholders' Equity for the Period F-10
from July 31, 1999 to September 30, 1999
10. Statement of Cash Flows for the Period from July 31, 1999 F-11
to September 30, 1999
11. Notes to Audited Financial Statements F-12 through F-13
12. Independent Auditors Report F-14
13. Balance Sheet as at December 31, 1999 F-15
14. Statement of Operations for the Period from October 1, 1999 F-16
to December 31, 1999
15. Statement of Changes in Stockholders' Equity for the Period from F-17
October 1, 1999 to December 31, 1999
16. Statement of Cash Flows for the Period from October 1, 1999 F-18
to December 31, 1999
17. Notes to Financial Statements F-19 through 21
18. Independent Auditor's Report F-22
19. Balance Sheet as at March 31, 2000 F-23
20. Statement of Operations for the Period from January 1, 2000 F-24
to March 31, 2000
21. Statement of Changes in Stockholders' Equity for the Period F-25
from January 1, 2000 to March 31, 2000
22. Statement of Cash Flows for the Period from January 1, 2000 F-26
to March 31, 2000
23. Notes to Financial Statements F-27 through F-28
</TABLE>
16
<PAGE>
PART III
Item 1. Index to Exhibits
Copies of the following documents are filed with this Registration Statement on
Form S-B, as exhibits:
<TABLE>
<CAPTION>
<S> <C>
(1) Purchase and Sale Agreement Between Todd Whorley, E-1 through E-8
Richard Dewarco and the Company
(2) Joint Venture and License Agreement Between E-9 through E-16
TRG Systems Limited and Pacific Telco Limited
</TABLE>
17
<PAGE>
SIGNATURES
In accordance with the provisions of Section 12 of the Securities Exchange
Act of 1934, the Company has duly caused this Registration Statement on Form
10-SB to be signed on its behalf by the undersigned, thereunto duly authorized,
in the City of Vancouver, British Columbia, Canada, on July __, 2000.
Civic Equities Corporation,
a Delaware corporation
By:
---------------------
John Whalen
Its: President
18
<PAGE>
CIVIC EQUITIES CORPORATION
(A Development Stage Company)
BALANCE SHEET -- July 31, 1999
(in U.S. Dollars)
ASSETS NOTES $
CURRENT ASSETS
Cash 18,224
---------
Total Current Assets $ 18,224
=========
LIABILITIES
CURRENT LIABILITIES
Advances from Founders 100,000
---------
100,000
---------
STOCKHOLDERS' EQUITY
Stockholders' Equity
Common stock, authorised shares and
subscribed shares issued and outstanding 2 59,700
Accumulated deficit during development
stage (141,476)
---------
(81,776)
---------
Total Stockholders' Equity $ 18,224
=========
See accompanying notes to financial statements
F-1
<PAGE>
CIVIC EQUITIES CORPORATION
(A Development Stage Company)
STATEMENT OF OPERATIONS
(In U.S. Dollars)
For the Period from August 21, 1998 to July 31, 1999
$ $
Revenue--fees 18,000
--------
Operating expenses
Audit & Accounting 5,000
Establishment costs 23,150
Salaries 50,000
Technical preparation and engineering
services 43,966
Travel and accommodation 28,284
Promotional Expenses 9,076
------
Total Operating expenses 159,476
--------
Loss before income taxes 141,476
Income taxes NIL
--------
Net Operating Loss for the period 141,476
--------
Accumulated Loss--July 31, 1999 $141,476
========
See accompanying notes to financial statements.
F-2
<PAGE>
CIVIC EQUITIES CORPORATION
(A Development Stage Company)
STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
(In U.S. Dollars)
For the Period from August 21, 1998 to July 31, 1999
<TABLE>
<CAPTION>
Common Stock Additional
-------------------------- Paid-in Subscription Accumulated
Shares Amount Capital Receivable Deficit Total
---------------------------------------------------------------------------------------
$ $ $ $ $
---------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Common stocks to be
issued to the founders for
services provided 2,000,000 200 -- -- -- 200
Subscription of common
stocks 595,000 60 59,440 -- -- 59,500
Offering costs (1) -- -- -- -- -- --
Net loss for the period -- -- -- -- (141,476) (141,476)
---------------------------------------------------------------------------------------
Balance, July 31, 1999 $2,595,000 $260 $59,440 -- ($141,476) ($ 81,776)
=======================================================================================
</TABLE>
Note: (1) Costs to date have been borne by the Founders.
See accompanying notes to financial statements
F-3
<PAGE>
CIVIC EQUITIES CORPORATION
(A Development Stage Company)
STATEMENT OF CASH FLOWS
(In U.S. Dollars)
For the period from August 21, 1998 to July 31, 1999
NOTE $
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss for the period 141,476
--------
Net Cash used in Operating Activities 141,476
--------
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from subscriptions of common stock 59,700
Advances from Founders 2 100,000
--------
Net Cash provided by Financing Activities 3 159,700
--------
NET INCREASE IN CASH 18,224
CASH, beginning period --
--------
CASH, end of period $ 18,224
========
See accompanying notes to financial statements.
F-4
<PAGE>
CIVIC EQUITIES CORPORATION
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
(In U.S. Dollars)
July 31, 1999
1. ORGANISATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Organisation.
Civic Equities Corporation (the Company) was incorporated in August 1998
under the laws of the state of Delaware, U.S.A. The Company is currently in
the development stage and has acquired a license to manufacture and sell a
line of building products. The products range from concrete panels and
modular prefabricated products to complete apartment blocks and low cost
housing manufactured in factory conditions.
Basis of Accounting
The accompanying financial statements are presented using the accrual
method of accounting. The Company's fiscal year-end is June 30.
Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosures of contingent assets and liabilities at the date of the
financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those
estimates.
Offering Costs
Offering costs consist of expenditures incurred for the offering of the
sales of common stocks. Such costs are borne by the founders
Fair Value of Instruments
The Company's financial instruments consist of cash, which is its actual
carrying value.
Foreign Exchange
Most of the Company's transactions have been in U.S. currency. Therefore,
the Company's exposure to foreign currency exchange risks is currently
considered minimal.
Income Taxes
Since the Company is in its development stage and has no income, no income
tax expense is reported on the financial statements.
F-5
<PAGE>
CIVIC EQUITIES CORPORATION
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
(In U.S. Dollars)
July 31, 1999
2. COMMON STOCK TRANSACTIONS
Upon inception of the Company, the two founders of the Company were
allotted 2,000,000 shares of common stock at a par value of $0.0001 per
share in exchange for services rendered mostly in connection with
soliciting subscriptions. The value of such services approximated $200 and
were accounted for as offering costs.
On September 10, 1998, the Company offered for sale 1,000,000 shares at
$0.10 per share, of which 595,000 were subscribed. Total subscription
proceeds were $59,500. The sales of the common stocks were exempted under
Rule 504 of Regulation D of the Securities Exchange Act of 1934.
All of the above common stocks totaling 2,595,000 were authorised to be
issued by the Board of Directors on October 29, 1998 and were issued to the
stockholders on October 30, 1998.
3. RELATED PARTY TRANSACTIONS
(a) Founders' Capital
The two founders of the Company were allotted 2,000,000 shares of
common stock in exchange for services rendered mostly in connection
with soliciting subscriptions (see note 2).
(b) License Agreement
On August 31, 1998, the Company entered into a license agreement with
Advanced Materials and Systems (the licensor), a Vanuatu Entity, one
officer of which is also a founder and director of the Company. The
licensor grants the Company exclusive rights to promote, market, sell,
supply and install the products. In consideration, the Company agrees
to pay to the licensor, 5% of the monthly cash sales of the product.
The licensor will also provide technical advice in relation to the
products as requested by the Company at a cost of $150 per hour. The
agreement may be terminated by the company at any time with a 14-day
notice period. The agreement may be terminated by the licensor under
certain conditions as stated in the agreement.
F-6
<PAGE>
INDEPENDENT AUDITORS' REPORT
To the Board of Directors
Civic Equities Corporation
Three Mill Road
Suite 206
WILMINGTON DELAWARE 19806-2146
We have audited the accompanying balance sheet of Civic Equities Corporation (a
development stage Delaware, U.S. corporation) as of September 30, 1999, and the
related statements of operations, changes in stockholders' equity and cash flows
for the period from July 31, 1999 to September 30, 1999. 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 U.S. generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and 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.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Civic Equities Corporation as
of September 30, 1999, and the results of its operations and its cash flows for
the period from July 31, 1999 to September 30, 1999 in conformity with U.S.
generally accepted accounting principles.
BROWNE, EDWARDS & PARTNERS
Chartered Accountants
SYDNEY; 2nd OCTOBER 1999 BY: PETER J EDWARDS
Principal
F-7
<PAGE>
CIVIC EQUITIES CORPORATION
(A Development Stage Company)
BALANCE SHEET -- September 30, 1999
(In U.S. Dollars)
<TABLE>
<CAPTION>
07/31/99
ASSETS NOTES $ $
CURRENT ASSETS
<S> <C> <C>
Cash 18,224 18,224
------------ ------------
Total Current Assets 18,224 18,224
------------ ------------
LIABILITIES
FIXED ASSETS 2
Investments 1,500,000 --
Building Products & Systems 11,500,000 --
------------ ------------
13,000,000 --
------------ ------------
CURRENT LIABILITIES
Advances from Founders 100,000 100,000
------------ ------------
100,000 100,000
------------ ------------
NET ASSETS $ 12,918,224 $ (81,176)
------------ ------------
STOCKHOLDERS' EQUITY
Stockholders' Equity
Common stock, authorised shares and subscribed
Shares issued and outstanding 3 13,059,700 59,700
Accumulated deficit during development stage (141,476) (252,476)
------------ ------------
TOTAL STOCKHOLDERS' EQUITY $ 12,918,224 $ (51,8O0)
============ ============
</TABLE>
See accompanying notes to financial statements
F-8
<PAGE>
CIVIC EQUITIES CORPORATION
(A Development Stage Company)
STATEMENT OF OPERATIONS
(In U.S. Dollars)
For the Period from July 31, 1999 to September 30, 1999
07/31/99
$ $
Revenue -- fees -- --
--------
Operating expenses
Audit & Accounting -- 5,000
Establishment costs -- 10,400
Salaries -- --
Technical preparation and engineering
services -- 5,500
Travel and accommodation -- --
Promotional Expenses -- 9,076
--------
Operating expenses
Total Operating expenses NIL 29,976
-------- --------
Loss before income taxes NIL 29,976
Income taxes NIL NIL
-------- --------
Net Operating Loss for the period NIL 29,976
Loss Brought Forward 141,476 111,500
-------- --------
Accumulated Loss-- September 30, 1999 $141,476 $141,476
======== ========
See accompanying notes to financial statements.
F-9
<PAGE>
CIVIC EQUITIES CORPORATION
(A Development Stage Company)
STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
(In U.S. Dollars)
For the Period from July 31, 1999 to September 30, 1999
<TABLE>
<CAPTION>
Common Stock Additional
--------------------------- Paid-In Subscription Accumulated
Shares Amount Capital Receivable Deficit Total
-----------------------------------------------------------------------------------------------
$ $ $ $ $
-----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Common stocks to be
issued to the founders for
services provided -- -- -- -- -- --
Subscription of common
stocks -- -- -- -- -- --
Common stock allotted (1) 26,000,000 13,000,000 -- -- -- 13,000,000
Offering costs (2) -- -- -- -- -- --
Net loss brought forward -- -- -- -- 141,476 141,476
Net loss for the period -- -- -- -- -- --
-----------------------------------------------------------------------------------------------
Balance, July 31, 1999 26,000,000 $13,000,000 -- -- $ 141,476 $12,918,224
===============================================================================================
</TABLE>
Note: (1) This represents common stock of 26,000,000 units allotted to acquire
the Company's interests in the ownership of 25 Building Products and
other commercial documentation.
(2) Costs to date have been borne by the Founders.
See accompanying notes to financial statements.
F-10
<PAGE>
CIVIC EQUITIES CORPORATION
(A Development Stage Company)
STATEMENT OF CASH FLOWS
(In U.S. Dollars)
For the period from July 31, 1999 to September 30, 1999
NOTE $
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss for the period NIL
--------
Net Cash used in Operating Activities NIL
--------
NET DECREASE IN CASH NIL
CASH, beginning of period 18,224
--------
CASH, end of period $ 18,224
========
See accompanying notes to financial statements.
F-11
<PAGE>
CIVIC EQUITIES CORPORATION
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
(In U.S. Dollars)
September 30, 1999
1. ORGANISATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Organisation.
Civic Equities Corporation (the Company) was incorporated in August 1998
under the laws of the state of Delaware, U.S.A. The Company is currently in
the development stage and has acquired a line of building products. The
products range from concrete panels and modular prefabricated products to
complete apartment blocks and low cost housing manufactured in factory
conditions. These include a package of insulated concrete panels, modular
prefabricated products and a range of construction chemicals.
Basis of Accounting
The accompanying financial statements are presented using the accrual
method of accounting. The Company's fiscal year-end is June 30,
Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosures of contingent assets and liabilities at the date of the
financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those
estimates.
Offering Costs
Offering costs consist of expenditures incurred for the offering of the
sales of common stocks. Such costs are borne by the founders.
Fair Value of Instruments
The Company's financial instruments consist of cash, which is its actual
carrying value.
Foreign Exchange
Most of the Company's transactions have been in U.S. currency. Therefore,
the Company's exposure to foreign currency exchange risks is currently
considered minimal.
Income Taxes
Since the Company is in its development stage and has no income, no income
tax expense is reported on the financial statements
F-12
<PAGE>
CIVIC EQUITIES CORPORATION
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
(In U.S. Dollars)
September 30, 1999
2. FIXED ASSETS
During the period the Company issued common stock to satisfy:
Acquisition costs of acquiring ownership of 25 Building products and
building systems adapted for use in the People's Republic of China,
South East Asia, the European Community and the Indian Sub-Continent
and the USA, Mexico and the North American Free Trade area totalling
$13,000,000
3. COMMON STOCK TRANSACTIONS
Upon inception of the Company, the two founders of the Company were
allotted 2,000,000 shares of common stock at a par value of $0.0001 per
share in exchange for services rendered mostly in connection with
soliciting subscriptions. The value of such services approximated $200 and
were accounted for as offering costs.
On September 10, 1998. the Company offered for sale 1,000,000 shares at
$0.10 per share, of which 595,000 were subscribed. Total subscription
proceeds were $59,500. The sales of the common stocks were exempted under
Rule 504 of Regulation D of the Securities Exchange Act of 1934.
All of the above common stocks totaling 2,595,000 were authorised to be
issued by the Board of Directors on October 29, 1998 and were issued to the
stockholders on October 30, 1998.
4. RELATED PARTY TRANSACTIONS
(a) Founders' Capital
The two founders of the Company were allotted 2,000,000 shares of
common stock in exchange for services rendered mostly in connection
with soliciting subscriptions (see note 2).
(b) On September 29th 1999 the Company tendered for the acquisition of the
complete product range of Advanced Materials and Systems and certain
commercial documentation and acquired these assets for a consideration
satisfied by the issue of 26,000,000 ordinary shares in the Company.
F-13
<PAGE>
INDEPENDENT AUDITORS' REPORT
To the Board of Directors
Civic Equities Corporation
Three Mill Road
Suite 206
WILIMINGTON DELAWARE 19806-2146
We have audited the accompanying balance sheet of Civic Equities Corporation (a
development stage Delaware, U.S. corporation) as of December 31, 1999, and the
related statements of operations, changes in stockholders' equity and cash flows
for the period from October 1, 1999 to December 31, 1999, 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 U.S. generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. Our audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. Our audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Civic Equities Corporation as
of December 31, 1999, and the results of its operations and its cash flows for
the period from October 1, 1999 to December 31, 1999 in conformity with U.S.
generally accepted accounting principles.
BROWNE, EDWARDS & PARTNERS
Chartered Accountants
SYDNEY: 27th JANUARY 2000 BY: PETER J EDWARDS
Principal
F-14
<PAGE>
CIVIC EQUITIES CORPORATION
(A Development Stage Company)
BALANCE SHEET -- December 31, 1999
(In U.S. Dollars)
<TABLE>
<CAPTION>
09/30/99
ASSETS NOTES $ $
<S> <C> <C> <C>
CURRENT ASSETS
Cash 5,001 18,224
Prepayments 13,000 --
------------ ------------
Total Current Assets 18,001 18,224
------------ ------------
FIXED ASSETS
Building Products & Systems 2 13,000,000 13,000,000
------------
13,000,000 13,000,000
------------ ------------
Total Assets 13,018,001 13,000,000
============ ============
LIABILITIES
CURRENT LIABILITIES
Advances from Founders 100,000 100,000
------------ ------------
100,000 100,000
------------ ------------
NET ASSETS $ 12,918,001 $ 12,918,224
------------ ------------
STOCKHOLDERS' EQUITY
Stockholders' Equity
Common stock, authorised shares and subscribed
shares issued and outstanding 3 13,2500,000 13,059,700
Accumulated deficit during development stage (331,999) (141,476)
------------ ------------
TOTAL STOCKHOLDERS' EQUITY $ 12,918,001 $ 12,918,224
============ ============
</TABLE>
See accompanying notes to financial statements
F-15
<PAGE>
CIVIC EQUITIES CORPORATION
(A Development Stage Company)
STATEMENT OF OPERATIONS
(In U.S. Dollars)
For the Period from October 1, 1999 to December 31, 1999
09/30199
$ $
Revenue -- fees -- --
-------- --------
Operating expenses
Audit & Accounting 5,000 5,000
Establishment costs -- 10,400
Legals 3,025 --
Salaries 141,520 5,500
Technical preparation and engineering
services, Patent Fees 14,410 --
Travel and accommodation 19,620 --
Promotional Expenses -- 9,076
Overhead Expenses 6,068 --
-------- --------
Total Operating expenses 190,523 29,976
-------- --------
Loss before income taxes 190,523 29,976
Income taxes NIL NIL
-------- --------
Net Operating Loss for the period 190,523 29,976
Loss Brought Forward 141,476 111,500
-------- --------
Accumulated Loss -- December 31, 1999 $331,999 $141,476
======== ========
See accompanying notes to financial statements.
F-16
<PAGE>
CIVIC EQUITIES CORPORATION
(A Development Stage Company)
STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
(In U.S. Dollars)
For the Period from October 1, 1999 to December 31, 1999
<TABLE>
<CAPTION>
Common Stock Additional
--------------------------- Paid-In Subscription Accumulated
Shares Amount Capital Receivable Deficit Total
-----------------------------------------------------------------------------------------------
$ $ $ $ $
-----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Common stocks issued to the
founders for services
provided 2,000,000 2,000,000 -- -- -- 2,000,000
Subscription of common
stocks 1,000,000 100,000 -- -- -- 100,000
Warrants Exercised (1) 1,000,000 150,000 -- -- -- 150,000
Common stock allotted (2) 26,000,000 13,000,000 -- -- -- 13,000,000
Offering costs (3) -- -- -- -- -- --
Net loss brought forward -- -- -- -- 141,476 141,476
Net loss for the period -- -- -- -- 190,523 190,523
-----------------------------------------------------------------------------------------------
Balance, December 31, 1999 30,000,000 $13,250,200 -- -- $ 331,976 $12,918,001
===============================================================================================
</TABLE>
Note: (1) During the period shareholders exercised warrants attached to the
Common Stock on the basis is one warrant exercisable at 150 for each
unit of Common Stock held.
(2) This represents Common Stock of 26,000,000 units allotted to acquire
the Company's interests in the ownership of 25 Building Products and
other commercial documentation,
(3) Costs to date have been borne by the Founders.
See accompanying notes to financial statements.
F-17
<PAGE>
CIVIC EQUITIES CORPORATION
(A Development Stage Company)
STATEMENT OF CASH FLOWS
(In U.S. Dollars)
For the period from October 1,1999 to December 31, 1999
NOTE $
ASH FLOWS FROM OPERATING ACTIVITIES
Net loss for the period 190,523
--------
Net Cash used in Operating Activities 177,523
--------
NET DECREASE IN CASH 13,223
CASH, beginning of period 18,224
--------
CASH, end of period $ 5,001
--------
See accompanying notes to financial statements.
F-18
<PAGE>
CIVIC EQUITIES CORPORATION
(A Development Stage Company)
N0TES TO FINANCIAL STATEMENTS
(In U.S. Dollars)
December 31, 1999
1. ORGANISATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Organisation.
Civic Equities Corporation (the Company) was incorporated in August 1998
under the laws of the state of Delaware, U.S.A. The Company is currently in
the development stage and has acquired a line of building products. The
products range from concrete panels and modular prefabricated products to
complete apartment blocks and low cost housing manufactured in factory
conditions. These include a package of insulated concrete panels, modular
prefabricated products and a range of construction chemicals.
Basis of Accounting
The accompanying financial statements are presented using the accrual
method of accounting. The Company's fiscal year-end is June 30.
Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosures of contingent assets and liabilities at the date of the
financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those
estimates.
Offering Costs
Offering costs consist of expenditures incurred for the offering of the
sales of common stocks. Such costs are borne by the founders.
Fair Value of Instruments
The Company's financial instruments consist of cash, which is its actual
carrying value.
Foreign Exchange
Most of the Company's transactions have been in U.S. currency. Therefore,
the Company's exposure to foreign currency exchange risks is currently
considered minimal
Income Taxes
Since the Company is in its development stage and has no income, no income
tax expense is reported on the financial statements.
F-19
<PAGE>
CIVIC EQUITIES CORPORATION
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
(In U.S. Dollars)
December 31, 1999
2. FIXED ASSETS
Since the last balance date the period the Company issued common stock to
satisfy; Acquisition costs of acquiring ownership of 25 Building products
and building systems adapted for use in the People's Republic of China
South East Asia, the European Community and the Indian Sub-Continent and
the USA, Mexico and the North American Free Trade area totaling
$13,000,000.
3. COMMON STOCK TRANSACTIONS
Upon inception of the Company, the two founders of the Company were
allotted 2,000,000 shares of common stock at a par value of $0.0001 per
share in exchange for services rendered mostly in connection with
soliciting subscriptions. The value of such services approximated $200 and
were accounted for as offering costs.
On September 10, 1998, the Company offered for sale 1,000,000 shares at
$0.10 per share, of which 595,000 were subscribed. Total subscription
proceeds were $59,500. The sales of the common stocks were exempted under
Rule 504 of Regulation D of the Securities Exchange Act of 1934.
All of the above common stocks totaling 2,595,000 were authorised to be
issued by the Board of Directors on October 29, 1998 and were issued to the
stockholders on October 30, 1998.
During the period subscriptions were received for 405,000 shares at $0.10
per share together with the issue of 1,000,000 warrants at $0.15 per
warrant.
4. RELATED PARTY TRANSACTIONS
(a) Founders Capital
The two founders of the Company were allotted 2,000,000 shares of
common stock in exchange for services rendered mostly in connection
with soliciting subscriptions (see note 2).
(b) License Agreement
On August 31, 1998 the Company entered into a license agreement with
Advanced Materials and Systems (the licensor), a Vanuatu Entity, one
officer of which is also a founder and director of the Company. The
licensor grants the Company exclusive rights to promote, market, sell,
supply and install the products. In consideration, the Company agrees
to pay to
F-20
<PAGE>
CIVIC EQUITIES CORPORATION
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
(In U.S. Dollars)
December 31, 1999
the licensor, 5% of the monthly cash sales of the product. The
licensor will also provide technical advice in relation to the
products as requested by the Company at a cost of $150 per hour. The
agreement may be terminated by the company at any time with a 14-day
notice period. The agreement may be terminated by the licensor under
certain conditions as stated in the agreement.
(c) On July 15th 1999 the Company tendered for the acquisition of the
complete product range of Advanced Materials and Systems and acquired
the range for a consideration satisfied by the issue of 23,000
ordinary shares in the Company.
F-21
<PAGE>
[LETTERHEAD BROWNE, EDWARDS & PARTNERS]
INDEPENDENT AUDITORS' REPORT
To the Board of Directors
Civic Equities Corporation
Three Mill Road
Suite 206
WILMINGTON DELAWARE 19806-2146
We have audited the accompanying balance sheet of Civic Equities Corporation (a
development stage Delaware, U.S. corporation) as of March 31, 2000, and the
related statements of operations, changes in stockholders' equity and cash flows
for the period from January 1, 2000 to March 31, 2000. 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 U.S. generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. Our audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. Our audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Civic Equities Corporation as
of March 31, 2000, and the results of its operations and its cash flows for the
period from January 1, 2000 to March 31, 2000 in conformity with U.S. generally
accepted accounting principles.
/s/ Browne, Edwards & Partners
BROWNE, EDWARDS & PARTNERS
Chartered Accountants
BY: /s/ Peter Edwards
SYDNEY: 6th JUNE 2000 PETER EDWARDS
Principal
F-22
<PAGE>
CIVIC EQUITIES CORPORATION
(A Development Stage Company)
BALANCE SHEET -- March 31, 2000
(In U.S. Dollars)
<TABLE>
<CAPTION>
12/31/99
ASSETS NOTES $ $
<S> <C> <C>
CURRENT ASSETS
Cash 206,775 5,001
Prepayments -- 13,200
------------ ------------
Total Current Assets 206,775 18,201
------------ ------------
FIXED ASSETS
Building Products & Systems 2 13,000,000 13,000,000
Investments 640,831 --
------------ ------------
13,640,831 13,000,000
------------ ------------
Total Assets 13,847,606 13,081,201
============ ============
LIABILITIES
CURRENT LIABILITIES
Advance from Founders 1,069,932 100,000
Accrued Charges 15,000 --
------------ ------------
1,084,732 100,000
------------ ------------
NET ASSETS $ l2,762,874 $ 12,918,201
============ ============
STOCKHOLDERS' EQUITY
Stockholders' Equity
Common stock, authorised shares and subscribed
shares issued and outstanding 3 13,250,200 13,250,200
Accumulated deficit during development stage (487,326) (331,999)
------------ ------------
TOTAL STOCKHOLDERS' EQUITY $ 12,762,874 $ 12,918,201
============ ============
</TABLE>
See accompanying notes to financial statements
F-23
<PAGE>
CIVIC EQUITIES CORPORATION
(A Development Stage Company)
STATEMENT OF OPERATIONS
(in U.S. Dollars)
For the Period from January 1, 2000 to March 31, 2000
12/31/99
$ $
Revenue - fees -- --
-------- --------
Operating expenses
Audit & Accounting 5,000 5,000
Directors Fees 6,560 --
Legals -- 3,025
Salaries -- 141,250
Technical preparation and engineering -- --
services, Patent Fees -- 14,410
Travel and accommodation 19,210 19,620
Management and Representation 98,571 6,068
Overhead Expenses 22,371 --
Share Registry Fees 3,615 --
-------- --------
Total Operating expenses 155,327 190,523
-------- --------
Loss before income taxes 155,327 190,523
Income taxes NIL NIL
-------- --------
Net Operating Loss for the period 155,327 190,523
Loss Brought Forward 331,999 141,476
-------- --------
Accumulated Loss-- March 31, 1999 $487,326 $331,999
======== ========
See accompanying notes to financial statements
F-24
<PAGE>
CIVIC EQUITIES CORPORATION
(A Development Stage Company)
STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
(in U.S. Dollars)
For the Period from January 1, 2000 to March 31, 2000
<TABLE>
<CAPTION>
Common Stock
------------------------ Additional Subscription Accumulated
Shares Amount Paid-In Receivable Deficit Total
Capital
--------------------------------------------------------------------------------
$ $ $ $ $
--------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Common stocks to be
issued to the founders for 2,000,000 200 -- -- -- 200
services provided
Subscription of common 1,000,000 100,000 -- -- -- 100,000
stocks
Warrants Exercised (1) 1,000,000 150,000 -- -- -- 150,000
Common stock-allotted (2) 26,000,000 13,000,000 -- -- -- 13,000,000
Offering costs (3) -- -- -- -- -- --
Net loss brought forward -- -- -- -- 331,999 331,999
Net loss for the period -- -- -- -- 155,327 155,327
--------------------------------------------------------------------------------
Balance, March, 2000 30,000,000 $13,250,200 -- -- $ 487,326 $12,762,874
================================================================================
</TABLE>
Note: (1) During the period shareholders exercised warrants attached to the
Common Stock on the basis that one warrant exercisable at 15C for
each unit of Common Stock held.
(2) This represents common stock of 26,000,000 units allotted to
acquire the Company's interests in the ownership of 25 Building
Products and other commercial documentation.
(3) Costs to date have been borne by the Founders.
See accompanying notes to financial statements.
F-25
<PAGE>
CIVIC EQUITIES CORPORATION
(A Development Stage Company)
STATEMENT OF CASH FLOWS
(In U.S. Dollars)
For the period from January 1, 2000 to March 31, 2000
$ $
CASH FLOWS FROM SHAREHOLDERS 992,932
Net Cash used in Operating Activities 150,327
Net Cash used in Asset Acquisition 640,831
--------
791,158
--------
NET INCREASE IN CASH 201,774
--------
CASH, beginning of period $ 5,001
--------
CASH, end of period $206,775
========
See accompanying notes to financial statements.
F-26
<PAGE>
CIVIC EQUITIES CORPORATION
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
(In U.S. Dollars)
March 31, 2000
1. ORGANISATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Organisation.
Civic Equities Corporation (the Company) was incorporated in August 1998
under the laws of the state of Delaware, U.S.A. The Company is currently in
the development stage and has acquired a line of building products. The
products range from concrete panels and modular prefabricated products to
complete apartment blocks and low cost housing manufactured in factory
conditions. These include a package of insulated concrete panels, modular
prefabricated products and a range of construction chemicals.
Basis of Accounting
The accompanying financial statements are presented using the accrual
method of accounting. The Company's fiscal year-end is June 30.
Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosures of contingent assets and liabilities at the date of the
financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those
estimates.
Offering Costs
Offering costs consist of expenditures incurred for the offering of the
sales of common stocks. Such costs are borne by the founders.
Fair Value of Instruments
The Company's financial instruments consist of cash, which is its actual
carrying value.
Foreign Exchange
Most of the Company's transactions have been in U.S. currency. Therefore,
the Company's exposure to foreign currency exchange risks is currently
considered minimal.
Income Taxes
Since the Company is in its development stage and has no income, no income
tax expense is reported on the financial statements.
F-27
<PAGE>
CIVIC EQUITIES CORPORATION
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
(In U.S. Dollars)
March 31, 2000
2. FIXED ASSETS
Since the last balance date the period the Company:
a. Issued common stock to satisfy the acquisition costs of acquiring
ownership of 25 Building Products and Building Systems adapted for use
in the People's Republic of China, South East Asia, the European
Community and the Indian Sub-Continent and the USA, Mexico and the
North American Free Trade area totaling $13,000,000
b. During the quarter the Company acquired Shares in a Company listed on
the Canadian Venture Exchange and an unlisted Canadian Company.
Contribution to date $290,000
c. In addition the Company acquired by license the rights for VipSatNet,
a satellite Telecommunications Technology together with payment with
the first installment for the satellite hub for Australia and Asia for
contribution to date $433,331
3. COMMON STOCK TRANSACTIONS
a. Upon inception of the Company, the two founders of the Company were
allotted 2,000,000 shares of common stock at a par value of $0.0001
per share in exchange for services rendered mostly in connection with
soliciting subscriptions. The value of such services approximated $200
and were accounted for as offering costs.
b. On September 10, 1998, the Company offered for sale 1,000,000 shares
at $0.10 per share, of which 595,000 were subscribed. Total
subscription proceeds were $59,500, The sales of the common stocks
were exempted under Rule 504 of Regulation D of the Securities
Exchange Act of 1934.
c. All of the above common Stocks totaling 2,595,000 were authorised to
be issued by the Board of Directors on October 29, 1998 and were
issued to the stockholders on October 30, 1998.
d. During the prior period subscriptions were received for 405,000 shares
at $0.10 per share together with the issue of 1,000,000 warrants at
$0.15 per warrant.
4. RELATED PARTY TRANSACTIONS
(a) Founders' Capital
The two founders of the Company were allotted 2,000,000 shares of
common stock in exchange for services rendered mostly in
connection with soliciting subscriptions (see note 2.)
(b) License Agreement
On August 31, 1998 the Company entered into a license agreement
with Advanced Materials and Systems (the licensor), a Vanuatu
Entity, a director of which is also a founder and director of the
Company. The licensor grants the Company exclusive rights to
promote, market, sell, supply and install the products. In
consideration. the Licensee agrees to pay to the Licensor a fee
based on sales of the Company's Products
(c) On July 15th 1999 the Company tendered for the acquisition of the
complete product range of Advanced Materials and Systems and
acquired the range for a consideration satisfied by the issue of
26,000,000 ordinary shares in the Company.
F-28
