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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 July 31, 2000 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 X No
As of July 31, 2000, there were 14,376,800 shares of common stock outstanding.
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INDEX
PART I - FINANCIAL INFORMATION Page No.
Item 1. Financial Statements
Condensed Consolidated Statement of Loss
and Deficit for three months Ended July 31, 2000 2
Condensed Consolidated Balance Sheet
as of July 31, 2000 3
Condensed Consolidated Statement of Cash Flows for
the three months ended July 31, 2000 5
Notes to Condensed Consolidated Financial Statements 6
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operation 7
PART II - OTHER INFORMATION
Item 1. Legal Proceedings 9
Item 2. Changes in Securities 9
Item 3. Defaults by the Company upon its
Senior Securities 9
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 10
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<TABLE>
<CAPTION>
SUSTAINABLE DEVELOPMENT INTERNATIONAL INC.
(A Development Stage Company)
CONDENSED CONSOLIDATED STATEMENT OF LOSS
(Expressed in U.S. Dollars)
(Unaudited)
Three Months Ending July 31 2000 1999
-------------------------------------------------------------------------
<S> <C> <C>
Expenses
Advertising $ 2,457 $ 352
Amortization 12,359 2,500
Consulting fees 2,292 1,000
Management fees 40,218 3,050
Office 2,071 88
Professional fees 866,665 2,087
Service charges 465 62
Travel 6,024 4,480
Other 4,504 -
---------------- ---------------
937,055 13,619
Other item
Gain on foreign exchange 12,654 -
---------------- ---------------
Net loss $ (924,401) $ (13,619)
================ ===============
--------------------------------------------------------------------------------
Net loss per share, basic and
diluted (Note 1) $ 0.0600 $ 0.0010
================ ===============
Weighted average shares, basic
and diluted 15,369,711 13,720,000
================ ===============
--------------------------------------------------------------------------------
</TABLE>
See accompanying notes to the condensed consolidated financial statements.
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SUSTAINABLE DEVELOPMENT INTERNATIONAL INC.
(A Development Stage Company
CONDENSED CONSOLIDATED STATEMENT OF LOSS
(Expressed in U.S. Dollars)
(Unaudited)
<TABLE>
<CAPTION>
9 months to 9 months to Cumulative to
July 31 July 31 July 31
2000 1999 2000
-----------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Expenses
Advertising $ 16,790 $ 4,491 $ 17,207
Amortization 20,645 7,500 34,812
Consulting fees 5,679 8,151 113,521
Management fees 76,220 22,450 130,220
Office 8,660 1,001 10,388
Professional fees 883,266 16,755 927,128
Service charges 1,510 282 2,518
Travel 7,992 9,153 18,316
Other 16,725 - 16,725
---------------- ---------------- ---------------
1,037,487 69,783 1,270,835
---------------- ---------------- ---------------
Other items
Loss on exploration - - 6,680
Gain on foreign exchange (12,654) - (21,430)
Interest on revenue - - (6,355)
---------------- ---------------- ---------------
(12,654) - (21,105)
---------------- ---------------- ---------------
Net loss $ (1,024,833) $ (69,783) $ (1,249,730)
================ ================ ===============
---------------------------------------------------------------------------------------------------------
Net loss per share, basic and
diluted (Note 1) $ 0.0700 $ 0.0051
================ ================
Weighted average shares, basic
and diluted 14,406,260 13,717,778
================ ================
---------------------------------------------------------------------------------------------------------
</TABLE>
See accompanying notes to the condensed consolidated financial statements.
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<TABLE>
<CAPTION>
SUSTAINABLE DEVELOPMENT INTERNATIONAL INC.
(A Development Stage Company)
CONDENSED CONSOLIDATED BALANCE SHEET
(Expressed in U.S. Dollars)
(Unaudited) July 31 October 31
2000 1999
------------------------------------------------------------------------
<S> <C> <C>
ASSETS
Current
Cash $ 138,865 $ 155,042
Deposit 92,727 16,925
Due from related party 41,516 94,764
Licensing agreements 1,548,605 285,833
Other asset 1,177 -
---------------- ---------------
$ 1,822,890 $ 552,564
================ ===============
--------------------------------------------------------------------------------
LIABILITIES
Current
Payables $ 747,334 $ 93,452
---------------- ---------------
SHAREHOLDERS' EQUITY
Capital stock (Note 2) 2,325,286 684,008
Deficit (1,249,730) (224,896)
---------------- ---------------
1,075,556 459,112
---------------- ---------------
$ 1,822,890 $ 552,564
================ ===============
--------------------------------------------------------------------------------
</TABLE>
See accompanying notes to the condensed consolidated financial statements.
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<TABLE>
<CAPTION>
SUSTAINABLE DEVELOPMENT INTERNATIONAL INC.
(A Development Stage Company)
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(Expressed in U.S. Dollars)
(Unaudited) 9 months ended 9 months ended
July 31 July 31
2000 1999
---------------------------------------------------------------------------
<S> <C> <C>
Increase (decrease) in cash
OPERATING
Net loss $ (1,024,833) $ (69,783)
Amortization 20,645 7,500
Expenses paid through
issuance of shares 831,600 -
---------------- ---------------
(172,588) (62,283)
Change in
Payables 653,881 (8,039)
---------------- ---------------
481,293 (70,322)
---------------- ---------------
FINANCING
Issuance of capital stock 809,678 -
Advances from (to) related parties 53,248 (55,549)
---------------- ---------------
862,926 (55,549)
---------------- ---------------
INVESTING
Purchase of licensing agreements (1,283,417) -
Purchase of other asset (1,177) -
Payment of deposit on potential
acquisitions (75,802) -
---------------- ---------------
(1,360,396) -
---------------- ---------------
Net decrease in cash (16,177) (125,871)
Cash
Beginning of period 155,042 330,053
---------------- ---------------
End of period $ 138,865 $ 204,182
================ ===============
--------------------------------------------------------------------------------
</TABLE>
See accompanying notes to the condensed consolidated financial statements.
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SUSTAINABLE DEVELOPMENT INTERNATIONAL INC.
(A Development Stage Company)
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Expressed in U.S. Dollars)
(Unaudited)
July 31, 2000
--------------------------------------------------------------------------------
1. GENERAL
The unaudited condensed consolidated financial statements have been prepared on
the same basis as the audited consolidated financial statements and, in the
opinion of management, reflect all adjustments (consisting of normal recurring
adjustments) necessary for a fair presentation for each of the periods
presented. The results of operations for interim periods are not necessarily
indicative of results to be achieved for full fiscal years.
As contemplated by the Securities and Exchange Commission (SEC) under Rule 10-01
of Regulation S-X, the accompanying consolidated financial statements and
related footnotes have been condensed and do not contain certain information
that will be included in the Company's annual consolidated financial statements
and footnotes thereto. For further information, refer to the consolidated
financial statements and related footnotes for the year ended October 31, 1999
included in the Company's Annual Report on Form 10-KSB.
BASIS OF PRESENTATION
The condensed consolidated financial statements include the accounts of
Sustainable Development International Inc., its 70% owned subsidiary,
Watergas Inc., its 80% owned subsidiary, Intercontinental Granite Inc., and its
100% owned subsidiary, Sustainable Health Inc.
INCOME TAXES
Income taxes for the interim periods were computed using the effective tax rate
estimated to be applicable for the full fiscal year, which is subject to ongoing
review and evaluation by management.
LOSS PER SHARE
The Company reports earnings per share in accordance with the provisions of SFAS
No. 128, Earnings Per Share. SFAS No. 128 requires presentation of basic and
diluted earnings per share in conjunction with the disclosure of the methodology
used in computing such earnings per share. Basic earnings per share excludes
dilution and is computed by dividing income available to common shares by the
weighted average common shares outstanding during the period. Diluted earnings
per share takes into account the potential dilution that could occur if
securities or other contracts to issue common stock were exercised and converted
into common stock.
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SUSTAINABLE DEVELOPMENT INTERNATIONAL INC.
(A Development Stage Company)
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Expressed in U.S. Dollars)
(Unaudited)
July 31, 2000
--------------------------------------------------------------------------------
2. CAPITAL STOCK
The company has the following changes to their issued share capital:
<TABLE>
<CAPTION>
Number of shares Dollar Value
<S> <C> <C>
At year ended October 31, 1999 13,720,000 $ 684,008
Common shares issued for services,
December, 1999 56,800 60,350
Pending regulatory approval - for
acquisition of subsidiary
Intercontinental Granite Inc. 100,000 100,000
Pending regulatory approval - for
acquisition of subsidiary Watergas Inc. 500,000 500,000
----------- -----------
Balance April 30, 2000 14,376,800 1,344,358
----------- -----------
Common shares issued under February
2000 offering memorandum 298,700 149,328
Common shares issued for services,
May 2000 1,260,000 831,600
----------- -----------
15,935,500 $ 2,325,286
=========== ==============
</TABLE>
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, is a
development stage company formed on May 27, 1998 to provide innovative
technologies, products and services to improve efficiency, quality and
environmental concerns in a variety of fields, with a particular emphasis on
solutions to environmental problems, reductions in energy consumption, health
and wellness and responsible resource
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development. The Company is divided into four divisions: Energy, Funding,
Natural Resources and Alternative Energy.
On March 21, 2000, the company entered into an agreement to form Watergas
Incorporated. The company will own 70% of Watergas Incorporated for nominal
consideration, which will be in the business of producing, merchandising,
marketing, distribution, promotion and selling of products manufactured by The
WGI Process (Hydrogen/Oxygen Generator).
On May 2, 2000, SDI enters into a Letter of Intent to acquire Cer-Tech Tile
Distributors and Galeria Design Centre for Intercontinental Granite. After
numerous discussions, reviews of financials, external consulting, the
acquisition is to be solely for Galeria Design Centre, and to expand the
business as a new 100% owned division of SDI, not acquired under
Intercontinental Granite Inc. As a retail center, Galeria must be marketed
within its unique industry, not to be integrated into the unrelated granite
mining industry. As of the end of Quarter 3, SDI has not completed its terms and
conditions for the acquisition, yet both parties are making best efforts to
complete the transaction process in quarter 4.
On June 1,2000, SDI closes a Private Placement Memorandum (PPM) for an aggregate
of $1,000,000 USD, the proceeds from the PPM will be used to acquire capital
equipment for its operations and to continue with project developments.
On August 14th, 2000, Sustainable Development International Inc. has ended its
relationship with the Health Network development through its division
Sustainable Health (Alberta) Inc. with outside partners Pro-Active (Alberta)
Incorporated and Pro-Active Health (Delaware) Incorporated. The equity position
of Pro-Active Inc. owned by Sustainable Health shall be sold to the minority
partner for $1.00 US to conclude this relationship.
SDI, over the past nine-month period, will be writing off an investment of under
$20,000 US as its contribution for the development, and has no further
obligations or commitments. Sustainable Health Inc. will remain dormant with no
active operations for the coming 12 months. Both parties see advantages to
proceeding separately and are comfortable with the dissolution.
Sustainable Development International is consolidating its efforts to meet the
increasing project work load it now faces in its Energy Solutions divisions.
RESULTS OF OPERATIONS FOR THE THREE MONTHS ENDED JULY 31, 2000.
Total operating expenses from continuing operations were $924,401 for the three
months ended July 31, 2000, a 92 day period, as compared to the operating
expenses of $224,896 for the period of inception of the Company through its year
end of October 31, 1999, a period of 522 days. Utilizing an average daily
calculation of operating expenses of $10,047.84 for the period ending July 31,
2000, and an average daily calculation of operating expenses of $473.38 for the
annual period ending October 31, 1999, this represented a 2120% increase in
average daily operating expenses.
The increase in expenses was primarily the result of the Company increasing its
business activities in generating sales during the period ending July 31, 2000.
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
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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 July 31, 2000 (Unaudited)
As of July 31, 2000, the Company's assets were $1,822,890 and its liabilities
were $747,334, resulting in an excess of assets of $1,075,556. Cash was $138,865
at July 31, 2000 as compared to cash of $155,042 on October 31, 1999, a decrease
of $16,177. This represented a 12% decrease in available cash. This decrease was
primarily the result of an increase in operating expenses.
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.
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.
Common shares issued under February
2000 offering memorandum 298,700
Common shares issued for services,
May 2000 1,260,000
Item 3. Defaults by the Company upon its Senior Securities.
None.
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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
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/ Neil Driscoll
-------------------- ----------------------
Harold Jahn Neil Driscoll
Chairman, CEO, President Treasurer, CFO
Date: September 14, 2000 Date: September 14, 2000
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EXHIBIT INDEX
Exhibit
Number Description
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Ex-27 Financial Data Schedule
