UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
Quarterly Report Under Section 13 or 15(d)
of the Securities Exchange Act of 1934.
For the quarter ended January 31, 1999 Commission file number 000-25409
Sustainable Development International, Inc.
(Exact name of registrant as specified in its charter)
Nevada 86-0857752
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
10240-124th Street, Suite 208
Edmonton, Alberta, Canada T5N 3W6
(Address of principal executive offices) (Zip Code)
(780) 488-9193
Registrant's telephone number, including area code
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding 12 months (or for such shorter
period that the registrant was required to file such reports), and (2) has
been subject to such filing requirements for the past 90 days.
Yes No X
As of January 31, 1999, there were 13,700,000 shares of common stock
outstanding.
<PAGE>
INDEX
PART I - FINANCIAL INFORMATION Page No.
Item 1. Financial Statements
Statement of Loss and Deficit for three months 3
Ended January 31, 1999
Balance Sheet as of January 31, 1999 4
Statement of Changes in Financial Position for
the three months ended January 31, 1999 5
Notes to Financial Statements 6-8
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operation 8-11
PART II - OTHER INFORMATION
Item 1. Legal Proceedings 10
Item 2. Changes in Securities 10
Item 3. Defaults by the Company upon its
Senior Securities 10
Item 4. Submission of Matter to a Vote of
Security Holders 10
Item 5. Other Information 10
Item 6. Exhibits and Reports of Form 8-K 10
SIGNATURES 11
<PAGE>
<TABLE>
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
<S> <C>
Expenses
Advertising $ 2,666
Amortiation 2,500
Consulting fees 7,151
Management fees (Note 5) 18,000
Office 746
Professional fees 7,643
Service Charges 193
Travel 4,673
------------
(43,572)
------------
Net loss and deficit, end of period $ (43,572)
============
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<PAGE>
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BALANCE SHEET
<S> <C>
Assets
Current
Cash $203,100
Investment (Note 7) 73,800
Licensing agreement (Note 2) 293,333
-----------
$570,233
===========
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<TABLE>
<S> <C>
Liabilities
Current
Payables and accruals $1907
-----------
Shareholder's Equity
Capital stock (Note 4) 664,008
Deficit (95,682)
-----------
568,326
-----------
$570,233
===========
</TABLE>
Commitment (Note 3)
<PAGE>
<TABLE>
STATEMENT OF CHANGES INFINANCIAL POSITION
<S> <C>
Cash derived from (applied to):
Operating
Net loss $(43,572)
Amortisation 2,500
Change in non-cash operating working capital:
Payables and accruals 1907
-----------
(39,165)
Financing
Issuance of capital stock 0
Investing
Short term Investment - Enviro-Mining Inc. (73,800)
----------
Net increase in cash and balance, end of period $(112,965)
==========
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<PAGE>
1. Commencement of operations
Sustainable Development International, Inc., a Nevada corporation, is a
development stage company formed on May 27, 1998 to encourage sustainable
development by commercializing innovative technologies in environmental
industries.
The company's goal is to acquire technology rights and licenses from patent
holders for proven technologies, then secure a market, and finally raise
the necessary capital to build, own, and operate facilities throughout the
world.
2. Significant accounting policies
Basis of presentation
The company's accounting and reporting policies conform to generally
accepted accounting principles and industry practice in the United States.
The amounts are reported in these financial statements are in United States
dollars.
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
the disclosure of contingent assets and liabilities at the date of the
financial statements and the amounts of revenues and expenses for the
reported period. Actual results could differ from those estimates.
Licensing agreement
Licensing agreements are recorded at cost. Licensing agreements are
assessed for future recoverability or impairment on an annual basis by
estimating future net undiscounted cash flows and residual values or by
estimating replacement or appraised values. If the net carrying amount of
the licensing agreement exceeds the estimated net recoverable amount, the
agreement is written down with a charge against income.
Amortization of licensing agreements is being recorded in the financial
statements on a straight-line basis over the life of the agreement, which
is 30 years.
3. Licensing agreement 1998
Licensing agreement $ 300,000
===========
On June 11, 1998 Sustainable Development International Inc. entered into a
Limited Technology License Agreement with Enviro-Mining Inc., an Alberta,
Canada Corporation. The Agreement commits Sustainable Development
International Inc. to pay an amount equal to or less than $300,000 to
Enviro-Mining Inc. as a production royalty.
<PAGE>
The Agreement could be terminated if Sustainable Development International
Inc. does not commence construction within the first twelve months of the
agreement, at a minimum plant capacity of 90,000 Tons of waste oil input.
4. Capital stock
Authorized:
50,000,000 Common voting shares, $.001 par value
10,000,000 Preferred shares
Issued:
13,700,000 Common voting shares $ 13,700
Additional paid in capital 650,308
---------
$ 664,008
=========
During the period ending October 31, 1998, the company had the following
share transactions. No new shares have been issued in the period ending
January 31, 1999:
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Shares $
<S> <C> <C>
Shares issued to founding shareholders, May 11,500,000 $ 8
1998.
Common shares issued for transfer of Licensing
Agreement at $0.25 per share, June 1998. 1,200,000 300,000
Common shares issued for cash consideration of
$0.25 per share by private placement,
September 1998. 706,596 176,649
Common shares issued for services at $0.25
Per share, June 1998 to October 1998. 93,404 23,351
Common share issued for cash consideration of
$1.00 per share by private placement,
October 1998. 200,000 200,000
------------ -----------
13,700,000 700,008
Expenses on issuance of share capital. - (36,000)
------------ -----------
13,700,000 $664,008
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</TABLE>
<PAGE>
5. Related party transactions
a) In the year ending October 31, 1998, Enviro-Mining Inc., a shareholder
of the company, sold to the company a Licensing Agreement for $300,000.
b) During the period, management fees were paid to the director of the
company totaling $18,000.
c) During the period, a short term investment into Enviro-Mining Inc. was
made in the amount of $73,800. These funds were advanced to assist Enviro-
Mining in acquiring additional oil related technologies. These funds will
be repaid in full with interest in 1999.
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations.
The following discussion and analysis should be read in conjunction with
the Company's financial statements and the notes thereto contained
elsewhere in this filing.
Overview
SUSTAINABLE DEVELOPMENT INTERNATIONAL, INC., a Nevada corporation (the
"Company") is a development stage company formed in 1998 to encourage
innovative technologies in the environmental industries. The Company's goal
is to acquire technology rights and licenses from patent holders and
others, then secure a market, and raise sufficient capital to build, own,
and operate facilities throughout the world.
The Company is in the process of setting up a subsidiary company
called Umweltservice Europa GmbH to recycle waste lubrication oil. The
Company has obtained the rights in Germany from Enviro-Mining Inc. for
three technologies which when combined can produce a high grade low sulfur
diesel fuel meeting all European specifications under EN 590 legislation.
The EMI Process is a proven alternative to the present disposal methods by
converting automotive waste oil into light heating oil and high quality
diesel fuel. (See "Intellectual Property")
The Company has added separate innovations to the processing package
to provide stability to the products and which meet the lower sulphur
standards required in Europe. The Company has combined these technologies
under the operating name of The EMI Process (EMI). The objective is to
purchase the most appropriate system, which will meet the operating,
technical, and business objectives to be operated by Umweltservice Europa
GmbH.
<PAGE>
Results of Operations for the three months ended January 31, 1999
Total operating expenses from continuing operations were $43,573 for
the three months ended January 31, 1999, a 92 day period, as compared to
the operating expenses of $52,111 for the period of inception of the
Company through its year end of October 31, 1998, a period of 157 days.
Utilizing an average daily calculation of operating expenses of $473.62 for
the period ending January 31, 1999, and an average daily calculation of
operating expenses of $331.92 for the period ending October 31, 1998, this
represented a 43% increase in average daily operating expenses.
The increase in expenses was primarily the result of the Company
increasing its compensation in management fees to a director in the sum of
$18,000 during the period ending January 31, 1999.
Forward-Looking Statements and Associated Risks
This Quarterly Report on Form 10-QSB contains forward-looking
statements made pursuant to the safe harbor provisions of the Securities
Litigation Reform Act of 1995. These forward looking statements are based
largely on the Company's expectations and are subject to a number of risks
and uncertainties, many of which are beyond the Company's control,
including, but not limited to, economic, competitive and other factors
affecting the Company's operations, markets, products and services,
expansion strategies and other factors discussed elsewhere in this report
and the documents filed by the Company with the Securities and Exchange
Commission. Actual results could differ materially from these forward-
looking statements. In light of these risks and uncertainties, there can
be no assurance that the forward-looking information contained in this
report will in fact prove accurate. The Company does not undertake any
obligation to revise these forward-looking statements to reflect future
events or circumstances.
Liquidity and Capital Reserves
As of January 31, 1999 (Unaudited)
As of January 31, 1999, the Company's assets were $570,233 and its
liabilities were $1,907, resulting in an excess of assets of $568,326. Cash
was $203,100 at January 31, 1999 as compared to cash of $330,053 on October
31, 1998, a decrease of $126,953. This represented a 38% decrease in
available cash. This decrease was primarily the result of an increase in
operating expenses and a cash deposit of $73,800 to Enviro-Mining for
purposes of acquiring additional oil related technologies.
The Company has continued to fund its deficit cash flow from private
placements of the Company's common stock. It is anticipated that loans and
the sale of the Company's stock will continue until such time as the
Company generates sufficient revenues from its operations to cover
operating expenses.
<PAGE>
Year 2000 Issues
Certain of the Company's computer systems and software may interpret
the year 2000 as some other date. The operating system generally employed
by the Company is Windows 95, which is year 2000 compliant. The networking,
general ledger and accounts payable and facility point-of-sale and software
programs require software updates or modifications to address the year 2000
problem. The Company is further addressing the matter by replacing certain
older computers and installing off-the-shelf and other third-party software
that is year 2000 compliant, at an estimated cost of less than $1,000. The
Company anticipates that installation of year 2000 compliant software and
hardware will be completed by the end of 1999. The Company does not believe
that the year 2000 problem will have a material affect on the Company's
operations, however, no assurance can be given that the software updates
and new computers will resolve the problem as scheduled or at all.
PART II--OTHER INFORMATION
Item 1. Legal Proceedings.
None
Item 2. Changes in Securities.
None.
Item 3. Defaults by the Company upon its Senior Securities.
None.
Item 4. Submission of Matter to a Vote of Security Holders.
None
Item 5. Other Information.
None
Item 6. Exhibits and Reports of Form 8--K.
None
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by
the undersigned, thereunto duly authorized.
SUSTAINABLE DEVELOPMENT
INTERNATIONAL, INC.
(Registrant)
By:/s/ Harold Jahn By:/s/ Garry Knull
-------------------- ----------------------
Harold Jahn Garry R. Knull
Chairman, CEO, President Treasurer, CFO
Date: March 19, 1999 Date: March 19, 1999
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> OCT-31-1999
<PERIOD-END> JAN-31-1999
<CASH> 203,100
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 203,100
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 570,233
<CURRENT-LIABILITIES> 1,907
<BONDS> 0
0
0
<COMMON> 664,008
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 570,233
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 43,572
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (95,682)
<INCOME-TAX> 0
<INCOME-CONTINUING> (95,682)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (95,682)
<EPS-PRIMARY> (0.007)
<EPS-DILUTED> (0.007)
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