FORM 10-KSB
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
-------------------------
(Mark One)
[X] ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
FOR THE FISCAL YEAR ENDED: December 31, 1999
OR
[ ] TRANSITION REPORT UNDER 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.)
--------------------------------------------------------
(Exact name of small business issuer in its charter)
NEVADA 52-2197688
--------------------------------- ------------------------------------
(State or other jurisdiction (I.R.S. Employer Identification No.)
of incorporation or organization)
624 Wilderness Drive, S.E.,
Calgary, Alberta Canada T2J 1Z2
---------------------------------------- ---------------------------------
(Address of principal executive offices) (Zip Code)
Issuer's telephone number: (403) 225-2198
Securities Registered Under Section 12(b) of the Exchange Act:
--------------------------------------------------------------
None
Securities Registered Under Section 12(g) of the Exchange Act:
Common Stock, $0.001 par value
--------------------------------------------------------------
(Title of class)
Check whether the issuer (1) 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 [ ]
Check if there is no disclosure of delinquent filers in response to Item 405 of
Regulation S-B contained in this form, and no disclosure will be contained, to
the best of the registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-KSB or any
amendment to this Form 10-KSB. [X]
State issuer's revenues for most recent fiscal year: $nil
State the aggregate market value of the voting and non-voting common equity held
by non-affiliates as of December 31, 1999 being $0.25 per share: $100,000.
State the number of shares outstanding of each of the issuer's classes of common
equity, as of December 31, 1999: 2,304,000 shares of Common Stock.
Documents Incorporated by Reference: Portions of issuer's Current Report on Form
8-K is incorporated by reference into this Form 10-KSB
Transitional Small Business Format. Yes [ ] No [X]
<PAGE>
TABLE OF CONTENTS
<TABLE>
Page
----
<S> <C>
PART I............................................................................................................1
Item 1. Description of Business..................................................................................1
Item 2. Description of Property..................................................................................1
Item 3. Legal Proceedings........................................................................................2
Item 4. Submission of Matters to a Vote of Security Holders......................................................2
PART II...........................................................................................................2
Item 5. Market for Common Equity and Related Stockholder Matters.................................................2
Item 6. Management's Discussion and Analysis of Financial Condition And Results of Operations....................2
Item 7. Financial Statements.....................................................................................4
Item 8. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.....................4
PART III..........................................................................................................5
Item 9. Directors, Executive Officers, Promoters and Control Persons; Compliance With
Section 16(a) of the Exchange Act ......................................................................5
Item 10. Executive Compensation..................................................................................7
Item 11. Security Ownership of Certain Beneficial Owners and Management..........................................8
Item 12. Certain Relationships and Related Transactions..........................................................9
Item 13. Exhibits and Reports on Form 8-K........................................................................10
</TABLE>
<PAGE>
NOTE REGARDING FORWARD LOOKING STATEMENTS
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.
<PAGE>
PART I
Item 1. Description of Business
The Company was incorporated on February 9, 1993 in the State of Nevada.
During the year ended December 31, 1999, the Company carried on no active
business and was in a start up phase of its development.
The Company's business and plan of operation was to provide consulting
services to emerging and start up businesses involved in the oil and gas sector.
The Company has not been bankrupt or in similar proceedings, nor has the
Company gone through a material reclassification, or any material changes in the
mode of conducting business.
Events Subsequent to December 31, 1999.
Subsequent to the Company's year ended December 31, 1999 on April 14, 2000,
the Company 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, in consideration for an aggregate of 13,500,000 of the
Company's shares of common stock and changed its name to "China Broadband, Inc."
under the terms of a securities purchase agreement. The Company filed Articles
of Amendment on April 27, 2000. The former shareholders of China Broadband (BVI)
are now the controlling shareholders of China Broadband, Inc.
At the time of the acquisition, China Broadband (BVI) Corp. owned a 50%
interest in Big Sky Network Canada Ltd., a British Virgin Islands corporation
("Big Sky Network"). Big Sky Network seeks 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. Through the local
fixed hybrid optical fibre-coaxial cable architecture of existing cable
television networks in China, we intend to provide broadband (i.e., high
capacity, high speed) data transport and dedicated Internet access to
businesses, individuals, telecommunications carriers, Internet service
providers, Internet content providers, e-commerce providers and systems
integrators. Big Sky Networks has begun forming joint ventures with existing
cable television operators in China. The Company anticipates that its joint
venture partners will provide us with the bandwidth on their existing optical
fibre-coaxial cable systems to enable us to provide high speed data transport
and Internet access, advanced Web hosting, co-location, facilities-based
Internet transport services and other enhanced Internet services on a large
scale. Big Sky Networks has executed and received governmental approval for its
first joint venture with Shekou CATV and has signed letters of intent with
Zhuhai CATV, Cheugdu CATV, Dalian Metropolitan Network Centre and Cixi CATV. Big
Sky Network is also negotiating additional agreements with cable television
operators throughout China. SoftNet Systems, Inc., a Delaware corporation, owns
the remaining 50% interest in Big Sky Network.
Subsequent to the year ended December 31, 1999, the Company raised cash of
$3,750 pursuant to the sale of 15,000 shares of common stock during the
three-month period ended March 31, 2000. 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 gross proceeds of
$11,397,502.50.
Item 2. Description of Property
The Company maintains its principal office at 624 Wilderness Derive, SE,
Calgary, Alberta.
At the Company's year ended December 31, 1999, the Company's business
strategy and plan of operation was to provide consulting services to emerging
and start up businesses primarily in the oil and gas sector. The Company did not
own any interest in oil and gas projects.
The Company does not own any principal plants, mines or other physical
properties.
1
<PAGE>
Item 3. Legal Proceedings
The Company is not currently party to any pending legal proceedings.
Item 4. Submission of Matters to a Vote of Security Holders
No matters were submitted to securities holders during the fourth quarter
covered by this annual report.
PART II
Item 5. Market for Common Equity and Related Stockholder Matters
The Company is authorized to issue an unlimited number of Common Shares of
which 2,304,000 common shares are issued and outstanding as of December 31,
1999. After the Company was incorporated, 100 common shares were issued to its
founder, Philip Herr. Effective July 1, 1998, the Company completed a
1-for-20,000 forward share split. During the year ended December 31, 1998, the
Company completed two offerings pursuant to Rule 504, Regulation D under the
Securities Act, and sold 200,000 and 104,000 shares, respectively, pursuant in
reliance on those exemptions. The share offerings were made in compliance with
the requirements of Rule 504 promulgated by the Commission under the 1933 Act,
and the Company is not excluded from relying on Rule 504 by reason of Rule
504(a)(3).
As of December 31, 1999, there was no public trading market for the
Company's securities. The Company intends to have a Form 15c-211 filed on its
behalf to qualify its common stock for quotation on the NASD over the counter
bulletin board in the third quarter 2000.
Item 6. Management's Discussion and Analysis of Financial Condition
and Results of Operations
During our year ended December 31, 1999, 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.
Year Ended December 31, 1999 compared to December 31, 1998
The Company had no significant business activities and had no revenues from
operations during either the year ended December 31, 1999 or year ended December
31, 1998. During the year ended December 31, 1999, the Company incurred expenses
of $28,034 compared to of $25,095 for the same period in 1998. Accounting and
audit expenses increased only slightly to $4,010 for year ended December 31,
1999 from $3,963 in 1998. Legal expenses decreased to $7,895 for the year ended
December 31, 1999, from $9,527 in 1998. Consulting and management fees were
$4,600 during the year ended December 31, 1999, down from $10,700 in 1998. Rent
expense increased to $6,030 during the year ended December 31, 1999, from $1,000
in 1998. The Company incurred no promotional expenses during the year ended
December 31, 1998, compared to $4,865 during the same period in 1999. The
Company had a loss of $28,034 or $0.01 per share compared to of $25,095 or $0.01
per share for 1998.
2
<PAGE>
Year Ended December 31, 1998 compared to December 31, 1997
The Company had no revenues and a loss of $25,096 or $0.01 per share during
the year ended December 31, 1998. The Company incurred start up expenses of
$25,095 during 1998. The Company had working capital of $30,905 at December 31,
1998.
The Company was inactive from the date of its incorporation through
December 31, 1997. Through December 31, 1997, it raised no significant capital
or incurred significant expenses. Its share capital at December 31, 1997 records
the issue of 100 common shares with paid in share capital of $1.00.
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 December 31, 1999, the Company had cash
and cash equivalents of $16,089, and working capital deficiency of $2,871. From
inception to December 31, 1999, the Company had raised approximately $56,001
from the sale of such securities.
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 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 acquisition 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
3
<PAGE>
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 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 a private placement 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 to fund its plan of
operation through December 31, 2000 is estimated to be approximately $8,000,000
to $10,000,000 (primarily salaries, travel, office, marketing, legal,
accounting, 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 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.
Item 7. Financial Statements
Reference is made to the financial statements, the reports thereon, the
notes thereto, and supplementary data commencing at page F-1 of this Form
10-KSB, which financial statements, reports, notes, and data are incorporated
herein by reference.
Item 8. Changes in and Disagreements with Accountants on Accounting
and Financial Disclosure
As of December 31, 1999, there were no changes in or disagreements with
accountants on accounting or financial disclosure.
4
<PAGE>
PART III
Item 9. Directors, Executive Officers, Promoters and Control Persons;
Compliance With Section 16(a) of the Exchange Act
Executive Officers and Directors
The following table sets forth information, as of December 31, 1999,
regarding the executive officers and directors of the Corporation:
Name Age Position
----------------------- ------------ -------------------------------------------
James Charuk 39 President/Director
Brent Shaw 36 Secretary/Treasurer/Director
Michael Kang 41 Director
The following is a brief biographical information on each of the officers,
directors and significant employees listed above:
James Charuk, age 39, served as the President and a Director of the Company
from June 22, 1998 through April 14, 2000. He is a principal of Western
Atlas International, a Houston, Texas based company specializing in
geoscience and interpretation services for forestry and mining companies.
Born in Canada, he earned a Bachelor of Science degree from Mount Allison
University in Moncton, New Brunswick in 1981. Mr. Charuk's responsibilities
including overseeing an annual budget in excess of $14.0 Million USD for
Western Atlas in the areas of Geoscience and Interpretation Software
Systems and Data Analysis. During 1990/1991 Mr. Charuk was a database
analyst for Chevron Information and Technology of Houston, and from 1985
until 1990 he was a systems analyst for Digitech Information specializing
in oil reservoir analysis.
Brent Shaw, age 36, served as Secretary and a Director of the Company from
July 1, 1998 through April 14, 2000. He has been involved in the
information and implementation of several private ventures in the
restaurant and hospitality businesses. Some of Mr. Shaw's accomplishments
include the setup of Network Beverage Ltd., where he specialized in
catering alcohol for special events. He was instrumental in the formation
of Beverage Concepts, an international alcohol distribution company. During
1996 - 1997, Mr. Shaw purchased the lease of Legends Grill and Tap Room and
has recently reopened this restaurant.
Michael Kang, age 41, served as a Director of the Company from November 1,
1998 through April 14, 2000. He is a founding partner of Capital West
Financial Group, a private investment and capital management firm in
Vancouver, British Columbia. Mr. Kang earned his Bachelor of Commerce
degree from the University of Toronto in 1981. Mr. Kang owned Prism
Graphics Inc., a sheet feed printer in the State of Arizona, which was sold
and founded Capital West of Vancouver, British Columbia. In 1998, Mr. Kang
founded Digital Commerce Inc., ("DCI"), a private Company incorporated in
Nevis, which is developing an internet bank, [email protected], which provides a
variety of banking transactions and services over the internet. In June
1999, DCI completed a reverse takeover of Systems Assurance Corporation, a
Delaware Company which trades on the NASD-OTC Bulletin Board. Systems
Assurance Corporation has changed its name to Digital Commerce
International, Inc. Mr. Kang was appointed a director and assumed the
position of Chairman and Chief Executive Officer of Digital Commerce
International, Inc. on August 13, 1999.
5
<PAGE>
Subsequent to the Company's year ended December 31, 1999, each of the above
named officers and directors resigned. On April 14, 2000, the following persons
were appointed as officers and directors of the Company:
Name Age Position
----------------------- ------------ -------------------------------------------
Matthew Heysel 43 Chairman of the Board, Chief Executive
Officer since April 14, 2000
Daming Yang 42 Director and President since April 14, 2000
Tom Milne 53 Director and Chief Financial Officer
since April 14, 2000
The following is a brief biographical information on each of the officers,
directors and significant employees of the Company as of June 28, 2000:
Matthew Heysel, age 43, was appointed to serve as Chairman of the Board of
Directors and Chief Executive Officer of China Broadband Corp. from April
14, 2000 to the present. He also serves as the chairman of Big Sky Network
Canada Ltd, (a subsidiary of China Broadband Corp.) and has held that
position since May of 1999. Previously, he served as Vice President of
Corporate Finance of Yorkton Securities, a Canadian independent securities
firm, where he was responsible for corporate finance in the oil and gas
sector from April 1997 through April 1999. From October 1999 to the
present, Mr. Heysel has served President and a director of New Energy West
Corp., a junior oil and gas exploration company.
Mr. Daming Yang, age 42, was appointed to serve on our Board of Directors
and as our President since April 14, 2000. He has also served as the
President and a member of the board of directors of Big Sky Network Canada
Ltd., our subsidiary, since May of 1999. From 1993 through 1999, Mr. Yang
served as Vice President and then President of Tongli Energy Technical
Service Co. Ltd., an importer of high-technology equipment to China.
Mr. Tom Milne, age 53, was appointed to serve on our Board of Directors, as
Vice President of Finance, and as Chief Financial Officer since April 14,
2000. He also has served as the Chief Financial Officer of Big Sky Network
Canada Ltd, our subsidiary, since May of 1999. From 1985 through 1997, Mr.
Milne was Vice President of Corporate Finance, Treasurer, and director of
Nova Finance International. He was the Vice President of Finance and Chief
Financial Officer of Arakis Energy (now Talisman Energy Corp.), an oil and
gas company; Vice President of McLeod Young Wier Ltd. (now Scotia Capital
Markets); and Treasurer of Elf Acquitaine Group (UK) PLC. Since March 1998,
Mr. Milne has served as Chief Executive Officer of Precise Details, Inc.
Mr. Milne currently serves on the board of directors of Talisman Energy
Corp., Nova Finance International, and Elf Acquitaine Group (UK) PLC.
The Articles of Incorporation of the Company provide for the holders of
share of common stock to elect the members of the Board of Directors at the
Annual Meeting of Stockholders. The Company's Articles of Incorporation provide
for its Directors to serve terms of one year each.
6
<PAGE>
Item 10. Executive Compensation
COMPENSATION OF DIRECTORS AND OFFICERS
The following table sets forth the compensation paid to our directors and
officers during the fiscal year ended December 31, 1999.
<TABLE>
Summary Compensation Table
(in United States Dollars)
Annual Compensation Long Term Compensation
----------------------------------------------------------------------------------
Awards Payouts
----------------------------------------
Restricted
Securities Shares or
Fiscal Other Annual under Restricted LTIP
Name and Principal Year Salary Bonus Compensation Options/SARs Share Units Payouts All Other
Position Ended (US$) (US$) (US$) Granted (#) (US$) (US$) Compensation
---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
James Charuk, 1999 nil nil nil nil nil nil nil
President/Director
Brent Shaw, 1999 nil nil nil nil nil nil nil
Secretary/Treasurer/
Director
Michael Kang, 1999 nil nil nil nil nil nil nil
Director
-----------------------
</TABLE>
We do not have a long-term incentive plan under which cash or non-cash
compensation intended to serve as an incentive for performance (whereby
performance is measured by reference to financial performance or the price of
our securities) was paid or distributed to the executive officers listed above
during the most recently completed financial year.
During our most recently completed financial year ended December 31, 1999,
we did not have a pension plan for our directors, officers or employees.
Director Compensation
None of our directors have received any cash compensation, directly or
indirectly, for their services rendered during our most recently completed
financial year. The Company does not have any non-cash compensation plans for
its directors and the Company does not propose to pay or distribute any non-cash
compensation during the current financial year, other than by granting stock
options.
Options to Purchase Securities
During our most recently completed financial year ended December 31, 1999,
we did not grant any SAR or stock options.
Employment Agreements
As of December 31, 1999, the Company did not have any employment agreements
with its employees or officers.
7
<PAGE>
Indebtedness of Directors and Senior Officers
None of the Company's directors or senior officers or any of our associates
or affiliates, are or have been indebted to the Company at any time since the
beginning of the last completed financial year.
Item 11. Security Ownership of Certain Beneficial Owners and Management
The following table sets forth certain information concerning the number of
shares of our common stock owned beneficially as of December 31, 1999 by: (i)
each person (including any group) known to us to own more than five percent (5%)
of any class of our voting securities, (ii) each director and officer, and (iii)
officers and directors as a group. Unless noted, the parties named below have
sole voting and investment power with respect to the shares indicated:
Name and Address Number of
of Beneficial Owner shares Percentage of Class(1)
--------------------------------------------------------------------------------
James Charuk 800,000 40%
3503 Cedar Locust Court
Sugarland, Texas
Brent Shaw 800,000 40%
2008-1128 Quebec St.
Vancouver, BC
Philip Herr 400,000 20%
c/o Suite, 4960 S. Virginia Street
Reno, Nevada 89502
MDI Small Cap Fund 100,000 5%
P.O. Box 228, Temple Building,
Tropicana Plaza, Leeward Highway,
Providenciales, Turks & Caicos Islands,
B.W.I.
Murdoch & Company 100,000 5%
6 Front Street Hamilton,
Bermuda
All Directors and Officers as a Group 1,600,000 80%
---------------------------
(1) Based on 2,304,000 shares of common stock issued and outstanding as of
December 31, 1999. On April 14, 2000, the Company completed a reverse-split
of its common stock on a .65104 for 1 basis reducing its issued and
outstanding share capital to 1,500,000 shares of common stock. The Company
also acquired all of the issued and outstanding shares in the capital of
China Broadband (BVI) Corp., by issuing 13,500,000 shares of common stock
for, pursuant to a securities purchase agreement. Subsequent to the
Company's acquisition of China Broadband (BVI) on April 14, 2000, the
Company completed a private placement of 3,336,667 shares of our common
stock for proceeds of $11,397,502. As of June 30, 2000, the Company had
18,336,667 shares of common stock issued and outstanding.
8
<PAGE>
Changes In Control
As of December 31, 1999, the Company had no arrangements pending, which
might result in a change in control. Subsequent to December 31, 1999, the
Company entered into a securities purchase agreement that resulted in a change
of control. See "Management's Discussion and Analysis of Financial Condition and
Results of Operations - Subsequent Events."
SEC Filings.
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
officers, directors and 10 percent shareholders to file reports of ownership and
changes in ownership with the Securities and Exchange Commission (the
"Commission"). Officers, directors and 10 percent shareholders are required by
Commission regulations to furnish the Company with all Section 16(a) reports
they file.
Based solely on the Company's review of copies of such reports and written
representations from the Company's officers and directors, the Company believes
that all required reports were filed on time during the year ended December 31,
1999, except the following persons failed to file Form 3 initial reports and
Form 5 annual reports: James Charuk, Brent Shaw and Philip Herr.
Item 12. Certain Relationships and Related Transactions
There have been no material transactions in the past two years or proposed
transactions to which the Company has been or proposed to be a party in which
any officer, director, nominee for officer or director, or security holder of
more than 5% of the Company's outstanding securities is involved.
The Company has no promoters other than its President, James Charuk, its
Secretary/Treasurer, Brent Shaw, and Director, Michael Kang. There have been no
transactions, which have benefited or are intended to benefit Messrs. Charuk,
Shaw or Kang.
Transactions Between The Company And Management
Each of the officers and directors of the Company are engaged in other
business, either individually or through partnerships and corporations in which
they have an interest, hold an officer or serve on Boards of Directors to which
they devote substantial time. Certain conflicts of interest may arise between
the Company and its officers and directors with respect to the time commitment
which management is able to devote to the Company.
The Company will attempt to resolve any such conflicts of interest in favor
of the Company. The officers and directors of the Company are accountable to it
and its shareholders as fiduciaries, which requires that such officers and
directors exercise a good faith and integrity in handling the Company's affairs.
A shareholder may be able to institute legal action on behalf of the Company or
on behalf of itself and all other similarity situated shareholders to recover
damages or for other relief in cases of the resolution of conflicts in any
manner prejudicial to the Company.
9
<PAGE>
Item 13. Exhibits and Reports on Form 8-K
(a) Exhibits
Exhibit
Number Description
------ -----------
3.01(1) Certificate of Incorporation of the Company consisting of the
Articles of Incorporation filed with the Secretary of the State
of Nevada on February 9, 1993
3.02 Amendment to Certificate of Incorporation of the Company filed
with the Secretary of the State of Nevada on April 14, 2000
3.03(2) Bylaws
10.1(3) Purchase Agreement for the Acquisition of CB-BVI
10.2(4) Joint Venture Contract between Big Sky and China Merchants
27.1 Financial Data Schedule.
-------------------------
(1) Previously filed on December 2, 1999 on Form 10-SB as Exhibit 3.01.
(2) Previously filed on December 2, 1999 on Form 10-SB as Exhibit 3.02.
(3) Previously filed on April 28, 2000 as Exhibit 2.
(4) Previously filed on April 28, 2000 as Exhibit 10.
(b) Reports on Form 8-K
Reports on Form 8-K on April 28, 2000
10
<PAGE>
PART F/S
INSTITUTE FOR COUNSELLING INC.
(A Development Stage Company)
REPORT AND FINANCIAL STATEMENTS
December 31, 1999 and 1998
(Stated in US Dollars)
11
<PAGE>
TERRY AMISANO LTD. AMISANO HANSON
KEVIN HANSON, C.A. CHARTERED ACCOUNTANTS
INDEPENDENT AUDITORS' REPORT
To the Directors,
Institute for Counselling Inc.
We have audited the accompanying balance sheets of Institute for Counselling
Inc. (A Development Stage Company) as at December 31, 1999 and 1998 and the
statements of loss and deficit accumulated during the development stage,
stockholders' equity and cash flows for the years ended December 31, 1999, 1998
and 1997 and for the period February 9, 1993 (Date of Incorporation) 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 audits.
We conducted our audits in accordance with United States generally accepted
auditing standards. Those standards require that we plan and perform an audit to
obtain reasonable assurance whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audit provides a reasonable basis for our
opinion.
In our opinion, these financial statements present fairly, in all material
respects, the financial position of the company as at December 31, 1999 and 1998
and the results of its operations and its cash flows for the years ended
December 31, 1999, 1998 and 1997 and for the period February 9, 1993 (Date of
Incorporation) to December 31, 1999 in accordance with generally accepted
accounting principles in the United States.
The accompanying financial statements referred to above have been prepared
assuming that the company will continue as a going concern. As discussed in Note
1 to the financial statements, the company is in the developmental stage and has
no established source of revenue and is dependent on its ability to raise
capital from shareholders or other sources to sustain operations. These factors,
along with other matters as set forth in Note1, raise substantial doubt that the
company will be able to continue as a going concern. The accompanying financial
statements do not include any adjustments that might result from the outcome of
this uncertainty.
Vancouver, Canada "AMISANO HANSON"
March 24, 2000 Chartered Accountants
Suite 604 - 750 West Pender Street, Vancouver, BC, Canada, V6C 2T7
Telephone: (604) 689-0188
Facsimile: (604) 689-9773
E-MAIL: [email protected]
12
<PAGE>
INSTITUTE FOR COUNSELLING INC.
(A Development Stage Company)
BALANCE SHEETS
December 31, 1999 and 1998
(Stated in US Dollars)
<TABLE>
ASSETS
1999 1998
------------ ------------
<S> <C> <C>
Current
Cash $ 16,089 $ 53,925
Accounts receivable 3,032 1,606
------------ ------------
$ 19,121 $ 55,531
============ ============
LIABILITIES
Current
Accounts payable $ 16,250 $ 24,626
------------ ------------
STOCKHOLDERS' EQUITY
Common stock - Note 3 56,001 56,001
Deficit accumulated during the development stage (53,130) (25,096)
------------ ------------
2,871 30,905
------------ ------------
$ 19,121 $ 55,531
============ ============
</TABLE>
Nature and Continuance of Operations - Note 1
Commitments - Note 3
Subsequent Event - Notes 3 and 6
SEE ACCOMPANYING NOTES
13
<PAGE>
INSTITUTE FOR COUNSELLING INC.
(A Development Stage Company)
STATEMENTS OF LOSS AND DEFICIT
ACCUMULATED DURING THE DEVELOPMENT STAGE
for the years ended December 31, 1999, 1998 and 1997 and for the
period February 9, 1993 (Date of Incorporation) to December 31, 1999
(Stated in US Dollars)
--------------------
<TABLE>
February 9, 1993
(Date of Incor-
poration) to
December 31,
1999 1998 1997 1999
----------- ----------- ----------- --------------
<S> <C> <C> <C> <C>
Expenses
Accounting and Audit $ 4,010 $ 3,963 $ - $ 7,973
Foreign exchange 279 5 - 284
Legal 7,895 9,527 - 17,323
Filing fees 355 - - 355
Management services - 10,700 - 10,700
Consulting 4,600 - - 4,600
Rent 6,030 1,000 - 7,030
Promotion 4,865 - - 4,865
----------- ----------- ----------- --------------
Net loss for the period 28,034 25,095 - $ 53,130
==============
Deficit, beginning of period 25,096 1 1
----------- ----------- -----------
Deficit, end of period $ 53,130 $ 25,096 $ 1
=========== =========== ===========
Net loss per share $ 0.01 $ 0.01 $ -
=========== =========== ===========
Weighted average number of shares
outstanding (on a post forward split basis) 2,304,000 2,000,000 2,000,000
=========== =========== ===========
</TABLE>
SEE ACCOMPANYING NOTES
14
<PAGE>
INSTITUTE FOR COUNSELLING INC.
(A Development Stage Company)
STATEMENTS OF CASH FLOWS
for the years ended December 31, 1999, 1998 and 1997 and for the
period February 9, 1993 (Date of Incorporation) to December 31, 1999
(Stated in US Dollars)
--------------------
<TABLE>
February 9, 1993
(Date of Incor-
poration) to
December 31,
1999 1998 1997 1999
----------- ----------- ----------- --------------
<S> <C> <C> <C> <C>
Cash Flows from Operating Activities
Net loss for the period $ (28,034) $ (25,095) $ - $ (53,130)
Changes in non-cash working capital
balances related to operations
Accounts receivable (1,426) (1,606) - (3,032)
Accounts payable (8,376) 24,626 - 16,250
----------- ----------- ----------- --------------
(37,836) (2,075) - (39,912)
----------- ----------- ----------- --------------
Cash Flows from Financing Activity
Common stock issued - 56,000 - 56,001
----------- ----------- ----------- --------------
- 56,000 - 56,001
----------- ----------- ----------- --------------
Increase (decrease) in cash during the period (37,836) 53,925 - 16,089
Cash, beginning of the period 53,925 - - -
----------- ----------- ----------- --------------
Cash, end of the period $ 16,089 $ 53,925 $ - $ 16,089
=========== =========== =========== ==============
</TABLE>
SEE ACCOMPANYING NOTES
15
<PAGE>
INSTITUTE FOR COUNSELLING INC.
(A Development Stage Company)
STATEMENTS OF STOCKHOLDERS' EQUITY
for the period February 9, 1993 (Date of Incorporation) to December 31, 1999
(Stated in US Dollars)
--------------------
<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)
----------- ----------- -------------- -----------
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
=========== =========== ============== ===========
</TABLE>
SEE ACCOMPANYING NOTES
16
<PAGE>
INSTITUTE FOR COUNSELLING INC.
(A Development Stage Company)
NOTES TO THE FINANCIAL STATEMENTS
December 31, 1999, 1998 and 1997
(Stated in US Dollars)
----------------------
Note 1 Nature and Continuance of Operations
The company was incorporated in Nevada on February 9, 1993, as
Institute for Counselling Inc. The company is a development stage
company and is seeking new business opportunities.
These financial statements have been prepared on a going concern
basis. The company has accumulated a deficit of $53,130 since
inception. Its ability to continue as a going concern is dependent
upon the ability of the company to generate profitable operations in
the future and/or to obtain the necessary financing to meet its
obligations and repay its liabilities arising from normal business
operations when they come due. The outcome of these matters cannot be
predicted, with any certainty, at this time. These financial
statements do not include any adjustments to the amounts and
classification of assets and liabilities that may be necessary should
the company be unable to continue as a going concern.
Note 2 Summary of Significant Accounting Policies
The financial statements of the company have been prepared in
accordance with generally accepted accounting principles in the United
States. Because a precise determination of many assets and liabilities
is dependent upon future events, the preparation of financial
statements for a period necessarily involves the use of estimates,
which have been made using careful judgement. Actual results may vary
from these estimates.
The financial statements have, in management's opinion, been properly
prepared within reasonable limits of materiality and within the
framework of the significant accounting policies summarized below:
Development Stage Company
The company is a development stage company as defined in Statement of
Financial Accounting Standards No. 7. All losses accumulated since
inception has been considered as part of the company's development
stage activities.
Income Taxes
The company uses the liability method of accounting for income taxes
pursuant to Statement of Financial Accounting Standards, No. 109
"Accounting for Income Taxes".
Loss Per Share
Loss per share has been calculated upon the weighted average number of
shares outstanding during the year.
17
<PAGE>
Institute for Counselling Inc.
(A Development Stage Company)
Notes to the Financial Statements
February 9, 1993 (Date of Incorporation to December 31, 1999
(Stated in US Dollars) - Page 2
Note 2 Summary of Significant Accounting Policies - (cont'd)
Fair Value of Financial Instruments
The carrying value of cash, accounts receivable and accounts payable
approximate fair value because of the short maturity of those
instruments.
Note 3 Common Stock
a) Authorized:
50,000,000 common shares, no par value
b) Issued:
<TABLE>
# $
----------- ---------
<S> <C> <C>
Issue of initial founders stock upon incorporation
- at $0.01 100 1
----------- ---------
Balance, December 31, 1997 and 1996 100 1
Twenty thousand for one forward split of outstanding stock
1,999,900 -
Stock issued for cash - at $0.15 200,000 30,000
Stock issued pursuant to an offering memorandum
- at $0.25 104,000 26,000
----------- ---------
Balance, December 31, 1998 and 1999 2,304,000 56,001
</TABLE>
c) Commitments:
Offering Memorandum
The company has allotted 15,000 common shares for future issuance
at $0.25 per common share pursuant to an offering memorandum
dated September 5, 1998. Subsequent to December 31, 1999 the
company received $3,750 for this issuance.
18
<PAGE>
Institute for Counselling Inc.
(A Development Stage Company)
Notes to the Financial Statements
February 9, 1993 (Date of Incorporation to December 31, 1999
(Stated in US Dollars) - Page 3
Note 4 Deferred Tax Assets
The Financial Accounting Standards Board issued Statement Number 109
in Accounting for Income Taxes ("FAS 109") which is effective for
fiscal years beginning after December 31, 1992. FAS 109 requires the
use of the asset and liability method of accounting of income taxes.
Under the assets and liability method of FAS 109, deferred tax assts
and liabilities are recognized for the future tax consequences
attributable to temporary differences between the financial statements
carrying amounts of existing assets and liabilities and their
respective tax bases. Deferred tax assets and liabilities are measured
using enacted tax rates expected to apply to taxable income in the
years in which those temporary differences are expected to be
recovered or settled.
The following table summarizes the significant components of the
company's deferred tax assets:
Total
-----------
Deferred Tax Assets
Non-capital loss carryforwards $ 53,130
==========
Total deferred tax assets $ 26,565
Valuation allowance for deferred tax asset (26,565)
-----------
$ -
===========
The amount taken into income as deferred tax assets must reflect that
portion of the income tax loss carryforwards which is likely to be
realized from future operations. The company has chosen to provide an
allowance of 100% against all available income tax loss carryforwards,
regardless of their time of expiry.
Note 5 Income Taxes
No provision for income taxes has been provided in these financial
statements due to the net loss. At December 31, 1999, the company has
net operating loss carryforwards, which expire commencing in 2007
totalling approximately $53,130, the potential tax benefit of which
has not been recorded in the financial statements.
19
<PAGE>
Institute for Counselling Inc.
(A Development Stage Company)
Notes to the Financial Statements
February 9, 1993 (Date of Incorporation to December 31, 1999
(Stated in US Dollars) - Page 4
Note 6 Subsequent Events - Note 3
Subsequent to December 31, 1999, 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 treasury 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 (this will result in 1,500,000 new shares issued
and outstanding prior to the closing). In addition, prior to closing,
the company agreed to change its name to China Broadband Corp.
Closing of the purchase agreement is subject to shareholder approval,
which must be obtained prior to March 31, 2000 or the purchase
agreement will be terminated.
Note 7 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 entity, including
those related to customers, suppliers or other third parties, have
been fully resolved.
Note 8 New Accounting Standards
In April 1998, the Accounting Standards Executive committee issued SOP
98-5, "Reporting on the cost of start-up activities". This statement
is effective for fiscal years beginning after December 15, 1998.
Adopting this standard does not have a material impact on the
company's financial position, results of operations or cash flows.
In June 1998, the Financial Accounting Standards board issued SFAS No.
133, "Accounting for Derivative Instruments and Hedging Activities,"
which standardized the accounting for derivative instruments. SFAS is
effective for all fiscal quarters of all fiscal years beginning after
June 15, 1999. Adopting this standard will not have a significant
impact on the company's financial positions, results of operations or
cash flows.
20
<PAGE>
SIGNATURES
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints Matthew Heysel and Thomas Milne, as his
true and lawful attorney-in-fact and agent with full power of substitution and
substitution, for him and in his name, place, and stead, in any and all
capacities, to sign any or all amendments to this Registration Statement on Form
10-KSB and to file the same, with all exhibits thereto, and other documents in
connection therewith, with the Securities and Exchange Commission, grant unto
said attorney-in-fact and agent, full power and authority to do and perform each
and every act and thing requisite and necessary to be done in and about the
foregoing as fully to all intents and purposes as he might or could do in
person, hereby ratifying and confirming all that said attorney-in-fact and
agent, or his substitutes, may lawfully do or cause to be done by virtue hereof.
In accordance with Section 13 or 15(d) of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
Date: July 9, 2000
China Broadband Corp.
(formerly Institute for Counseling, Inc.)
/s/ Matthew Heysel
----------------------------------------------
Matthew Heysel, Chief Executive Officer
In accordance with the Exchange Act, this report has been signed below by
the following persons on behalf of the registrant and in the capacities and on
the dates indicated.
Signature Title Date
--------- ----- ----
/s/ Matthew Heysel Chairman of the Board, July 3, 2000
-------------------------- Chief Executive Officer
Matthew Heysel and Director
(Principal Executive Officer)
/s/ Thomas Milne Chief Financial Officer July 3, 2000
-------------------------- (Principal Financial Officer
Thomas Milne and Accounting Officer)
/s/ Daming Yang
-------------------------- Director and President July 3, 2000
21
<PAGE>
EXHIBIT INDEX
Exhibit
Number Description
------ -----------
3.01(1) Certificate of Incorporation of the Company consisting of the
Articles of Incorporation filed with the Secretary of the State
of Nevada on February 9, 1993
3.02 Amendment to Certificate of Incorporation of the Company filed
with the Secretary of the State of Nevada on April 14, 2000
3.03(2) Bylaws
10.1(3) Purchase Agreement for the Acquisition of CB-BVI
10.2(4) Joint Venture Contract between Big Sky and China Merchants
27.1 Financial Data Schedule.
-------------------------
(1) Previously filed on December 2, 1999 on Form 10-SB as Exhibit 3.01.
(2) Previously filed on December 2, 1999 on Form 10-SB as Exhibit 3.02.
(3) Previously filed on April 28, 2000 as Exhibit 2.
(4) Previously filed on April 28, 2000 as Exhibit 10.
