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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 10-QSB
|X| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended March 31, 2000
OR
|_| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from ___________ to ______________.
Commission file number 0-28345
China Broadband Corp.
(formerly Institute for Counseling, Inc.)
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(Exact name of small business issuer in its charter)
NEVADA 52-2197688
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(State or other jurisdiction (I.R.S. Employer Identification No.)
of incorporation or organization)
624 Wilderness Drive, S.E.,
Calgary, Alberta
Canada T2J 1Z2
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(Address of principal place of business or intended principal place of business)
(403) 225-2198
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(Issuer's telephone number)
Not Applicable
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(Former name, former address and former fiscal year,
if changed since last report)
Check whether the issuer: (1) has filed all reports required to be filed by
Section 13 or 15(d) of the Securities Exchange Act of 1934 during the past 12
months (or for such shorter period that the registrant was required to file such
reports), and (2) has been subject to such filing requirements for the past 90
days. Yes [X] No [ ]
The number of outstanding common shares, with $0.001 par value, of the
registrant at March 31, 2000 was 2,319,500.
Transitional Small Business Disclosure Format (check one): Yes [ ] No [X]
<PAGE>
CHINA BROADBAND CORP.
(formerly Institute for Counseling, Inc.)
INDEX TO THE FORM 10-QSB
For the quarterly period ended March 31, 2000
<TABLE>
Page
<S> <C> <C> <C>
Part I - FINANCIAL INFORMATION ...........................................1
ITEM 1. FINANCIAL STATEMENTS .........................................1
Institute for Counseling, Inc. .............................1
Balance Sheet .........................................1
Statement of Loss and Deficit .........................2
Statement of Cash Flow ................................3
Statement of Stockholders' Equity (Deficiency) ........4
Notes to the Financial Statements .....................5
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS .........................7
Part II - OTHER INFORMATION ...............................................9
ITEM 1. LEGAL PROCEEDINGS ............................................9
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS ....................9
ITEM 3. DEFAULTS UPON SENIOR SECURITIES ..............................9
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS ..........9
ITEM 5. OTHER INFORMATION ............................................9
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K .............................9
SIGNATURES
</TABLE>
<PAGE>
Part I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
INSTITUTE FOR COUNSELLING INC.
(A Development Stage Company)
BALANCE SHEETS
March 31, 2000 and December 31, 1999
(Stated in US Dollars)
(Unaudited)
<TABLE>
ASSETS March 31, December 31,
2000 1999
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<S> <C> <C>
Current
Cash $ 6,396 $ 16,089
Accounts receivable 1,376 3,032
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$ 7,772 $ 19,121
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LIABILITIES
Current
Accounts payable $ 11,663 $ 16,250
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STOCKHOLDERS' EQUITY (DEFICIENCY)
Common stock - Note 2 59,751 56,001
Deficit accumulated during the development stage (63,642) (53,130)
------------ ------------
(3,891) 2,871
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$ 7,772 $ 19,121
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</TABLE>
Commitments - Note 2
Subsequent Events - Note 3
SEE ACCOMPANYING NOTES
1
<PAGE>
INSTITUTE FOR COUNSELLING INC.
(A Development Stage Company)
STATEMENTS OF LOSS AND DEFICIT
ACCUMULATED DURING THE DEVELOPMENT STAGE
for the three month periods ended March 31, 2000 and 1999 and for the
period February 9, 1993 (Date of Incorporation) to March 31, 2000
(Stated in US Dollars)
(Unaudited)
<TABLE>
February 9, 1993
(Date of Incor-
(3 months) (3 months) poration) to
March 31, March 31, March 31,
2000 1999 2000
------------ ----------- ---------------
<S> <C> <C> <C>
Expenses
Accounting and audit $ 3,256 $ - $ 11,229
Foreign exchange 634 121 918
Legal 1,348 4,000 18,671
Filing fees - 355 355
Management services - - 10,700
Consulting 3,200 - 7,800
Rent 2,074 1,505 9,104
Promotion - 4,865 4,865
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Net loss for the period 10,512 10,846 $ 63,642
Deficit, beginning of the period 53,130 25,096
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Deficit, end of the period $ 63,642 $ 35,942
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Net loss per share $ 0.005 $ 0.005
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Weighted average number of shares
outstanding (on a post forward split basis) 2,311,500 2,304,000
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</TABLE>
SEE ACCOMPANYING NOTES
2
<PAGE>
INSTITUTE FOR COUNSELLING INC.
(A Development Stage Company)
STATEMENTS OF CASH FLOWS
for the three month periods ended March 31, 2000 and 1999 and for the
period February 9, 1993 (Date of Incorporation) to March 31, 2000
(Stated in US Dollars)
(Unaudited)
<TABLE>
February 9, 1993
(Date of Incor-
(3 months) (3 months) poration) to
March 31, March 31, March 31,
2000 1999 2000
------------ ----------- ---------------
<S> <C> <C> <C>
Cash Flows from Operating Activities
Net loss for the period $ (10,512) $ (10,846) $ (63,642)
Changes in non-cash working capital
balances related to operations
Accounts receivable 1,656 (462) (1,376)
Accounts payable (4,587) (13,528) 11,663
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(13,443) (24,836) (53,355)
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Cash Flows from Financing Activity
Common stock issued 3,750 - 59,751
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Increase (decrease) in cash during the period (9,693) (24,836) 6,396
Cash, beginning of the period 16,089 53,925 -
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Cash, end of the period $ 6,396 $ 29,089 $ 6,396
============ =========== ===============
</TABLE>
SEE ACCOMPANYING NOTES
3
<PAGE>
INSTITUTE FOR COUNSELLING INC.
(A Development Stage Company)
STATEMENT OF STOCKHOLDERS' EQUITY (DEFICIENCY)
for the period February 9, 1993 (Date of Incorporation) to March 31, 2000
(Stated in US Dollars)
(Unaudited)
<TABLE>
Deficit
Accumulated
Common Stock During the
(Note 3) Development
# $ Stage Total
----------- ----------- -------------- -----------
<S> <C> <C> <C> <C>
Issue of initial founders stock upon
Incorporation 100 $ 1 $ - $ 1
Net loss from incorporation to
December 31, 1993 - - (1) (1)
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Balance, December 31, 1993, 1994, 1995,
1996 and 1997 100 1 $ (1) $ -
Twenty thousand for one forward
Split of outstanding shares 1,999,900 - - -
Stock issued pursuant to an
offering memorandum - at $0.25 104,000 26,000 - 26,000
Stock issued for cash - at $0.15 200,000 30,000 - 30,000
Net loss for the period ended
December 31, 1998 - - (25,095) (25,095)
----------- ----------- -------------- -----------
Balance, December 31, 1998 2,304,000 56,001 (25,096) 30,905
Net loss for the period ended
December 31, 1999 - - (28,034) (28,034)
----------- ----------- -------------- -----------
Balance, December 31, 1999 2,304,000 $ 56,001 $ (53,130) $ 2,871
Stock issued pursuant to an
offering memorandum - at $0.25 15,000 3,750 - 3,750
Net loss for the period ended
March 31, 2000 - - (10,512) (10,512)
----------- ----------- -------------- -----------
Balance, March 31, 2000 2,319,000 $ 59,751 $ (63,642) $ (3,891)
=========== =========== ============== ===========
</TABLE>
SEE ACCOMPANYING NOTES
4
<PAGE>
INSTITUTE FOR COUNSELLING INC.
(A Development Stage Company)
NOTES TO THE FINANCIAL STATEMENTS
March 31, 2000
(Stated in US Dollars)
(Unaudited)
Note 1 Interim Reporting
While the information presented in the accompanying interim three
months financial statements is unaudited. it includes all adjustments
which are, in the opinion of management, necessary to present fairly
the financial position, results of operations and cash flows for the
interim period presented. All adjustments are of a normal recurring
nature. It is suggested that these interim financial statements be
read in conjunction with the company's December 31, 1999 annual
audited financial statements.
Note 2 Common Stock - Note 3
a) Authorized:
50,000,000 common shares, par value $0.001 per share.
On March 22, 2000, the company amended the articles of
incorporation to change the common shares from no par value to
par value of $0.001. This change has no effect on stock issued to
March 31, 2000.
b) Commitment:
In March 2000, the company entered into a purchase agreement to
acquire 100% of the outstanding shares of China Broadband (BVI)
Corp ("CBB") for 13,500,000 common new shares. CBB owns a 50%
interest in Big Sky Network Canada Ltd., a company duly
incorporated under the laws of the British Virgin Islands.
Prior to closing this transaction, the company has agreed to
effect a share consolidation on the basis of consolidating one
old share for 0.65104 new shares and changed its name to China
Broadband Corp.
Note 3 Subsequent Events
Subsequent to March 31, 2000, the company:
i) consolidated its capital stock on a one old share for 0.65104 new
share basis and changed its name to China Broadband Corp.; and
ii) issued 13,500,000 post-consolidated common shares pursuant to the
acquisition of China Broadband (BVI) Corp. (Note 2).
iii) issued 500,000 post-consolidated common shares pursuant to
private placement agreements at $0.20 per share.
5
<PAGE>
Institute for Counselling Inc.
(A Development Stage Company)
Notes to the Financial Statements
March 31, 2000
(Stated in US Dollars)
(Unaudited) - Page 2
Note 3 Subsequent Events - (cont'd)
iv) issued 1,535,000 post-consolidated common shares pursuant to
private placement agreements at $1.00 per share
v) issued 1,301,667 post-consolidated common shares pursuant to
private placement agreements at $7.50 per share.
Note 4 Comparative Figures
The comparative figures for the three months ended March 31, 1999 were
prepared by management and were neither audited nor reviewed.
Note 5 Uncertainty Due to the Year 2000 Issue
The Year 2000 Issue arises because many computerized systems use two
digits rather than four to identify a year. Date-sensitive systems may
recognize the year 2000 as 1900 or some other date, resulting in
errors when information using the year 2000 date is processed. In
addition, similar problems may arise in some systems which use certain
dates in 1999 to represent something other than a date. Although the
change in date has occurred, it is not possible to conclude that all
aspects of the Year 2000 Issue that may affect the company, including
those related to customers, suppliers or other third parties, have
been fully resolved.
6
<PAGE>
ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
Certain statements and information contained in this Report constitute
forward-looking statements within the meaning of Section 21E of the Securities
Exchange Act of 1934. Such forward-looking statements involve known and unknown
risks, uncertainties and other factors that may cause the actual results,
performance or achievement of the Company, or developments in the Company's
industry, to differ materially from the anticipated results, performance or
achievements expressed or implied by such forward-looking statements. Such
factors include, but are not limited to: the Company's limited operating history
and history of losses, the Company's relative concentration of customers, the
risks related to the Company's ability to commercialize its technology, risks
associated with changes in market demand for the Company's technology, risks
involving the management of growth and integration of acquisitions, competition,
product development risks and risks of technological change, dependence on
third-party marketing relationships and suppliers, the Company's ability to
protect its intellectual property rights and the other risks and uncertainties
detailed in the Company's Securities and Exchange Commission filings.
During our year ended March 31, 2000, the Company's business strategy was
to provide consulting services to emerging and start up businesses involved in
the oil and gas sector. The Company also examined oil and gas projects of merit
with the intention of acquiring financing and developing those projects.
Subsequent to March 31, 2000, China Broadband Corp. (formerly Institute for
Counseling, Inc.) acquired all of the issued and outstanding shares in the
capital of China Broadband (BVI) Corp., a company incorporated under the laws of
the British Virgin Islands, and began implementing a business strategy to become
a leading facilities-based provider of high capacity, high speed Internet, data
and voice services in the major urban markets throughout the People's Republic
of China.
Three Month Period Ended March 31, 2000 compared to the Three Month Period ended
March 31, 1999.
The Company had no significant business activities and had no revenues from
operations during either the three-month period ended March 31, 2000 or the
three-month period ended March 31, 1999. During the fiscal quarter ended March
31, 2000, the Company had expenses of $10,512, compared to expenses of $10,846
for the same period in 1999. Accounting and audit expenses increased to $3,256
for the three-month period ended March 31, 2000 compared to nil for the same
period in 1999 as a result of the Company becoming a reporting issuer under the
Securities Exchange Act of 1934, as amended. Legal expenses decreased to $1,348
for the three-month period ended March 31, 2000, compared to $4,000 during the
same period in 1999. Consulting expenses were $3,200 during the three-month
period ended March 31, 2000 compared to nil for the same period 1999. Rent
expense increased to $2,074 for the three-month period ended March 31, 2000,
compared to $1,505 during the same period in 1999. The Company incurred no
promotional expenses during the three-month period ended March 31, 1999 compared
to $4,865 during the same period in 1999. The Company had a loss of $10,512 or
$0.005 per share for the three month period ended March 31, 2000, compared to a
loss of $10,846 or $0.005 for the three month period ended March 31, 1999.
Since the Company is in its development stage, all losses accumulated since
inception have been considered as part of the Company's development stage
activities.
Liquidity and Capital Resources
Since inception, the Company has financed its operations primarily through
sales of its equity securities. As of March 31, 2000, the Company had cash and
cash equivalents of $6,396, and working capital of $3,891. From inception to
March 31, 2000, the Company had raised approximately $59,751 from the sale of
such securities, including $3,750 pursuant to the sale of 15,000 shares of
common stock during the three-month period ended March 31, 2000.
Subsequent Events
On April 14, 2000, the Company completed a reverse-split of its common
stock on a .65104 for 1 basis reducing the Company's issued and outstanding
share capital to 1,500,000 shares of common stock. The Company also
7
<PAGE>
acquired all of the issued and outstanding shares in the capital of China
Broadband (BVI) Corp., a company incorporated under the laws of the British
Virgin Islands, consisting of 15,000,000 common shares in consideration for an
aggregate of 13,500,000 of our shares of common stock, pursuant to a securities
purchase agreement. On April 27, 2000, the Company filed Articles of Amendment
to the Articles of Incorporation in the State of Nevada. The former shareholders
of China Broadband (BVI) became the controlling shareholders of China Broadband,
Inc. The Company owns a 50% interest in Big Sky Network Canada Ltd., a British
Virgin Islands corporation, and SoftNet Systems, Inc., a Delaware corporation,
owns the remaining 50% interest. SoftNet Systems acquired its 50% interest in
Big Sky Network by committing $2 million to fund Big Sky Network's deployment of
Internet access on Shekou CATV and by providing $500,000 to Big Sky Network for
working capital.
At the time of our acquisition of China Broadband (BVI), China Broadband
(BVI) had the following assets:
o $2.5 million in cash;
o an executed cooperation joint venture agreement with Shekou CATV,
approved by regulators in China;
o letters of intent to enter into similar cooperation joint venture
agreements with Zhuhai CATV, Cheugdu CATV, Dalian Metropolitan Network
Centre and Cixi CATV; and
o a management team experienced in negotiating cooperation joint venture
agreements to implement a cable broadband fulfillment strategy in
China.
Because the Company had only approximately 1,500,000 (post reverse-split)
shares issued and outstanding on the date of our acquistion of China Broadband
(BVI), the 13,500,000 new shares issued to the former shareholders of China
Broadband (BVI) represented a majority holding of the Company's stock and
consequently such shareholders obtained control of the corporation. In instances
like this, accounting principles require that the transaction be reflected in
financial statements as a "reverse acquisition" where the subsidiary essentially
acquires the parent. In this form of accounting, the statements are created by
aggregating the accounts of the subsidiary, as would have been the case if
shareholders of China Broadband (BVI) had retained ownership, and then adding
the accounts of the parent for the relevant period when all the companies came
under common control. In this case, common control started immediately after the
completion of the acquisition, effectively April 14, 2000. Consequently, the
financial statements of the Company for periods subsequent to the acquisition
will include the accounts of China Broadband (BVI) and Big Sky Network for the
full fiscal period, but only the financial information for China Broadband Corp.
for the period following the date of acquisition. Also, according to proper
accounting practice to portray China Broadband Corp. and China Broadband (BVI)
as if they were operating as a single entity, transactions between the companies
will be eliminated.
Subsequent to the Company's acquisition of China Broadband (BVI) on April
14, 2000, the Company completed three private placements of 3,336,667 shares of
our common stock for proceeds of $11,397,502.50.
PLAN OF OPERATION
As of June 30, 2000, the Company's management anticipates that the Company
currently has sufficient working capital to fund the Company's plan of operation
through the year ended December 31, 2000. The Company's costs to fund its plan
of operation for the fiscal year ending December 31, 2000 is estimated to be
approximately $8 million to $10 million (primarily salaries, travel, office and
other similar expenses). These funds are intended to permit us to expand our
marketing efforts through additions to staff and to develop and execute a
comprehensive market exposure program to implement our business strategy of
becoming a leading facilities-based provider of high capacity, high speed
Internet, data and voice services in the major urban markets throughout the
People's Republic of China.
The Company anticipates that its operating expenses and capital expenditure
may increase significantly during the year ending December 31, 2001, the next
phase of the Company's development. The amount and timing of expenditures during
the year ending December 31, 2001 will depend on the success of any contracts it
secures, and there is no assurance the Company will receive significant revenues
or operate profitably. Current cash resources are
8
<PAGE>
not anticipated to be sufficient to fund the next phase of the Company's
development and management intends to seek additional private equity or debt
financing. There can be no assurances that any such funds will be available, and
if funds are raised, that they will be sufficient to achieve the Company's
objective, or result in commercial success.
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
None.
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
a) Sales of Unregistered Securities
None.
b) Use of Proceeds from Sales of Registered Securities
Not Applicable.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
The Company issued 15,000 shares of common stock at $0.25 per share
pursuant to an exemption from registration under Rule 506 of Regulation D
promulgated under the Securities Act of 1933, as amended, during the three-month
period ended March 31, 2000.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
ITEM 5. OTHER INFORMATION
As of March 31, 2000, there were no changes in or disagreements with
accountants on accounting or financial disclosure.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
Exhibit
Number Description
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27 Financial Data Schedule
9
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
China Broadband Corp.
(formerly Institute for Counseling, Inc.)
Date: July 3, 2000 By: /s/ Matthew Heysel
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Name: Matthew Heysel
Title: Chief Executive Officer
Date: July 3, 2000 By: /s/ Thomas Milne
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Name: Thomas Milne
Title: Chief Financial Officer
(Principal Financial and
Accounting Officer)
10
<PAGE>
EXHIBIT INDEX
Exhibit
Number Description
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27 Financial Data Schedule
