<PAGE>
FORM 10-QSB
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
[X] Quarterly Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
For the quarterly period ended August 31, 1999
---------------
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 0-21384
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AQUATIC CELLULOSE INTERNATIONAL CORP.
-------------------------------------
(Exact name of registrant as specified in its charter)
Nevada 82-0381904
- -------------- -------------
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification number)
3704 32nd Street, Suite 301 Vernon, B.C. VIT 5N6
-------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's Telephone number, including area code: (800) 565-6544
----------------------------------------------------------------------------
(former, name, address and former fiscal year, if changed since last report)
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
-
State the number of shares outstanding of each of the Registrant's classes of
common stock, as of the latest practicable date.
Outstanding at
Class of Common Stock August 31, 1999
--------------------- ---------------
$.001 par value 36,603,985
Transitional Small Business Disclosure Format Yes ___ No X
---
<PAGE>
FORM 10-QSB
Securities and Exchange Commission
Washington, D.C. 20549
Aquatic Cellulose International Corp.
Index
PART I - FINANCIAL INFORMATION
Item 1. Consolidated Financial Statements
Condensed Consolidated Balance Sheets at
May 31, 1999 and August 31, 1999 (unaudited)
Condensed Consolidated Statements of Operations
for the three months ended August 31, 1998 (unaudited)
and 1999 (unaudited)
Condensed Consolidated Statements of Cash Flows
for the three months ended August 31, 1998 (unaudited)
and 1999 (unaudited)
Notes to Condensed Consolidated Financial Statements
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations.
PART II. - OTHER INFORMATION
Item 3. Legal Proceedings
Item 4. Submission of Matters of a Vote to Security Holders
Item 5. Other Information
Item 6. Exhibits and Reports on Form 8-K
SIGNATURES
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<PAGE>
PART I. FINANCIAL INFORMATION
-----------------------------
ITEM I. FINANCIAL STATEMENTS
AQUATIC CELLULOSE INTERNATIONAL CORP.
(A Development Stage Enterprise)
CONSOLIDATED BALANCE SHEET
$ United States
May 31, 1999 and August 31, 1999
ASSETS
------
<TABLE>
<CAPTION>
May 31, August 31,
1999 1999
---------- -----------
(unaudited)
<S> <C> <C>
Current assets
Cash and cash equivalents $ 100,906 $ 197,864
Accounts receivables, net 7,734 6,706
Share Subscriptions receivable (note 8) 250,000
Prepaid expense
---------- -----------
Total current assets 358,640 204,570
Capital Assets 6,226 6,149
Other Assets
---------- -----------
Total assets $ 364,866 $ 210,719
---------- -----------
LIABILITIES AND SHAREHOLDERS' DEFICIT
-------------------------------------
Current liabilities
Accounts payable and accrued expenses 24,060 21,716
Shareholders' deficit
Capital stock, (note 4) 1,561,034 1,561,034
Deficit accumulated during the Development stage (1,254,793) (1,368,930)
Accumulated deficit 34,565 (3,101)
---------- -----------
Total Shareholders' Deficit 340,806 189,003
Total liabilities and stockholders' deficit $ 364,866 $ 210,719
---------- -----------
</TABLE>
The accompanying notes are an integral part of these financial statements
-3-
<PAGE>
AQUATIC CELLULOSE INTERNATIONAL CORP.
(A Development Stage Enterprise)
Consolidated Statement of Loss and Deficit
$ United States
For the three months ended August 31, 1998 and 1999
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------
From Inception
(March 11, 1996 to 1999 1998
August 31, 1999) (Unaudited) (Unaudited)
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Revenue
Timber $ 3,070 $ - $ -
Expenses
Advertising and promotion 29,209 8,814 -
Amortization 5,889 78 136
Engineering design 92,935 25,487 7,087
Financial and promotional consulting 188,046 - 265
Interest and bank charges 7,814 427 -
Office rent 20,327 1,614 1,600
Office 29,986 2,585 674
Professional fees 62,167 27,389 1,793
Research and development 301,306 - -
Shop and fabrication 7,024 - -
Telephone 39,262 2,914 3,632
Travel 131,628 7,252 2,162
Vehicle and equipment leases 23,861 1,615 2,076
Wages and benefits 440,025 35,962 19,507
- ---------------------------------------------------------------------------------------------------------
1,439,479 114,137 38,932
Loss before other income (1,376,409) (114,137) (38,932)
Other income:
Interest 184 - -
Foreign exchange gain 7,295 - -
--------------------------------------------------------------------------------------------------------
7,479 - -
- ---------------------------------------------------------------------------------------------------------
Loss $(1,368,930) $ (114,137) $ (38,932)
- ---------------------------------------------------------------------------------------------------------
Basis Loss per share $ (0.01) $ (0.00)
Diluted Loss Per Share $ (0.01) $ (0.00)
Weighted average number of shares 19,014,620 9,167,802
- ---------------------------------------------------------------------------------------------------------
</TABLE>
See the accompanying notes to these consolidated statements
-4-
<PAGE>
AQUATIC CELLULOSE INTERNATIONAL CORP.
(A Development Stage Enterprise)
Consolidated Statement of Cash Flows
$ United States
(Unaudited)
<TABLE>
<CAPTION>
Three months ended August 31, 1999 and 1998
- --------------------------------------------------------------------------------------------------------
From Inception
(March 11, 1996 to 1999 1998
August 31, 1999) (Unaudited) (Unaudited)
- --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Operating activities
Cash received from timber sales $ 3,070 $ - $ -
Cash received from other income 7,479 - -
Cash paid to suppliers and employees (940,488) (117,431) (86,316)
- --------------------------------------------------------------------------------------------------------
(929,939) (117,431) (86,316)
Financing
Issuance of capital stock 1,162,769 250,000 -
Investing
Purchase of capital assets (12,470) - -
Foreign currency translation adjustment (22,496) (35,611) 47,903
- --------------------------------------------------------------------------------------------------------
Increase (decrease) in cash 197,864 96,958 (38,413)
Cash, beginning of period - 100,906 25,757
- --------------------------------------------------------------------------------------------------------
Cash, end of period $ 197,864 $ 197,864 $(12,656)
- --------------------------------------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
-5-
<PAGE>
AQUATIC CELLULOSE INTERNATIONAL CORP.
(A Development Stage Enterprise )
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
August 31, 1999
Aquatic Cellulose International Corp. was incorporated under the laws of the
State of Nevada. The Company's principal activity is the development under
authority, of equipment for underwater harvesting and/or salvaging of submerged
timber and the procurement of contracts for the harvest and salvage of submerged
timber.
1. Significant Accounting Policies:
(a) Going concern
These financial statements have been prepared on the going concern
basis, which assumes the realization of assets and liquidation of
liabilities in the normal course of business. The application of the
going concern concept is dependent on the Company's ability to
generate future profitable operations and receive continued financial
support from its shareholders and other investors. Management is of
the opinion that sufficient working capital will be obtained from
operations and external financing to meet the Company's liabilities
and commitments as they become payable.
(b) Translation of Financial Statements
The Company's subsidiary, Aquatic Cellulose Ltd., operates in Canada
and its operations are conducted in Canadian currency.
The method of translation applied is as follows:
(i) Assets and liabilities are translated a the rate of exchange in
effect at the balance sheet date, being US $1.00 per Cdn $1.474
(1998 - $1.457).
(ii) Revenues and expenses are translated at the exchange rate in
effect at the transaction date.
(iii) The net adjustment arising from the translation is included in
accumulated other comprehensive income.
(c) Basis of presentation and consolidation
The consolidated financial statements include the accounts of the
Company and its wholly owned subsidiary, Aquatic Cellulose Ltd.
Effective July 12, 1997, the Company completed the acquisition of 100%
of the outstanding common shares of Aquatic Cellulose Ltd. ("ACL"). As
ACL shareholders obtained effective control of the Company through the
exchange of their shares of ACL for shares of the Company, the
acquisition of ACL has been accounted for in these consolidated
financial statements as a reverse acquisition. Consequently, the 1998
consolidated statements of loss and deficit and cash flows reflect the
results of operations and changes in financial position of ACL, the
legal subsidiary, for the year ended May 31, 1998, combined with those
of American Natural Foods Marketing, Inc. ("ANFMI"), the legal parent,
from acquisition on July 12, 1997, in accordance with generally
accepted accounting principles for reverse acquisitions.
(c) Basis of presentation and consolidation (continued)
In addition, the figures for the period from inception to May 31, 1999
presented in the consolidated statements of loss and deficit and cash
flows are those of ACL, the legal subsidiary, together with those of
ANFMI from
-6-
<PAGE>
July 12, 1997. Effective November 10, 1997, the Company changed its
name from ANFMI to Aquatic Cellulose International Corp. ("ACIC").
In these notes to the consolidated financial statements, the Company,
prior to the business combination with ACL, is referred to as "ANFMI",
and after completion of the business combination and name change, is
referred to as "ACIC".
(d) Capital assets
Capital assets are stated at cost. Amortization is provided using the
following methods and annual rates, which are intended to amortize the
cost of assets over their estimated useful life:
----------------------------------------------------------------------
Asset Method Rate
----------------------------------------------------------------------
Computer equipment Declining balance 30%
Furniture and equipment Declining balance 20%
Leasehold improvements Straight-line 20%
----------------------------------------------------------------------
(e) Start-up costs
Costs incurred in the period prior to revenue being recognized from
the sale of salvage timber are expensed as incurred. These costs
include engineering design, research and development costs, shop and
fabrication, and travel.
(f) Management estimates
The preparation of financial statements in conformity with generally
accepted accounting principles in the United States of America
requires management to make estimates and assumptions that affect the
reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial
statements and the reported amount of revenues and expenses during the
period. Actual results could differ from those estimates.
(g) Financial instruments
The fair values of the Company's cash, accounts and share
subscriptions receivable and accounts payable and accrued liabilities
approximate their carrying values due to the relatively short periods
to maturity of the instruments. It is not practicable to determine the
fair value of notes receivable due to the nature of the amount and the
absence of a market for such instruments. The maximum credit risk
exposure for all financial assets is the carrying amount of those
assets.
(h) Loss per share
Loss per common share is calculated based on the net income and the
weighted average number of shares outstanding during the year. For all
years, the computation of diluted loss per share was anti dilutive,
therefore, the amounts reported for basic and diluted loss were the
same.
(i) Accounting standards change
In June, 1998, the Financial Accounting Standards board issued SFAS
no. 133, "Accounting for Derivative Instruments and Hedging
Activities." Adoption of this statement is not expected to have a
significant impact on our results of operations or financial position.
2. Business Combination:
Effective July 12, 1997, ANFMI and ACL executed their business combination
agreement. ANFMI issued 4,732,800 common shares to the shareholders of ACL
in consideration for all of the issued and outstanding common shares of ACL
on the basis of 1 common share of ANFMI for each common share of ACL. As the
former
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<PAGE>
shareholders of ACL obtained effective control of the Company through the
share exchange, this transaction has been accounted for in these financial
statements as a reverse acquisition and the purchase method of accounting
has been applied. Under reverse acquisition accounting, ACL is considered to
have acquired ANFMI with the results of ANFMI's operations included in the
consolidated financial statements from the date of acquisition. ACL is
considered the continuing entity and consequently, the comparative figures
are those of ACL.
The acquisition has been recorded at the estimated fair value of the
consideration given which, under reverse acquisition accounting, is the net
asset value of ANFMI at the date of acquisition. The acquisition details are
as follows:
Net assets acquired, at book values
Cash $ 469,611
Receivable from related company 217,313
Note payable (217,313)
-------------------------------------------------------------------------
$ 469,611
-------------------------------------------------------------------------
Consideration given for net assets acquired
-------------------------------------------------------------------------
Common shares issued $ 469,611
-------------------------------------------------------------------------
As the continuing entity is deemed to be ACL, share capital of ANFMI has
been reduced by $458,254 as a result of accounting for this combination as a
reverse acquisition. The net effect of $11,357 ($469,611 - $458,254) is
reflected on the statement of stockholders' equity and comprehensive income.
The historical stockholders' equity of the acquirer prior to the merger is
retroactively restated for the equivalent number of shares received in the
merger after giving effect to any difference in par value of the issuers and
acquirer's stock with an offset to paid in capital. The retained earnings
(deficiency) of the acquirer is carried forward after the acquisition.
3. Capital Assets:
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------
Three Months Ended August 31, 1999 1998
- --------------------------------------------------------------------------------------------
Accumulated Net book Net book
Cost amortization value value
- --------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Computer equipment $ 2,323 $1,372 $ 951 $1,367
Furniture and equipment 4,639 1,388 3,231 4,016
Leasehold improvements 4,927 2,980 1,947 2,949
- --------------------------------------------------------------------------------------------
$11,889 $5,740 $6,149 $8,322
- --------------------------------------------------------------------------------------------
</TABLE>
4. Capital Stock:
(a) Authorized:
50,000,000 common shares with a par value of $0.001 per share
10,000,000 preferred shares with a par value of $0.001 per share,
issuable in series
(b) Stock options
----------------------------------------------------------------------
Price per Outstanding Outstanding
-8-
<PAGE>
<TABLE>
<S> <C> <C> <C> <C> <C>
-----------------------------------------------------------------------------------------------------
Expiry Date share May 31, 1998 Issued Exercised May 31, 1999
-----------------------------------------------------------------------------------------------------
February 22, 2004 $0.03 - 3,515,000 3,515,000 -
-----------------------------------------------------------------------------------------------------
</TABLE>
The Company applies APB Opinion No. 25 in accounting for its Stock
Option Plan and, accordingly, no compensation cost has been recognized
for its stock options in the financial statements. Had the Company
determined compensation costs based on the fair value at the grant
date for its stock options under SFAS No. 123, the Company's net loss
would have been increased to the proforma amounts below:
Net Loss
As reported $295,423
Proforma $317,300
Loss per share
As reported $ 0.02
Proforma
5. Notes Receivable:
The Company loaned $105,450 to three Directors for the exercise of Company
stock options during the year (note 4b). These notes are unsecured, do not
bear interest and are due on July 24, 2001.
6. Statement of Cash Flows:
The operating activities on the Company's statement of cash flows for three
months ended August 31, 1999 and 1998 prepared under the indirect method are
as follows:
----------------------------------------------------------------------------
1999 1998
----------------------------------------------------------------------------
Net loss $(114,137) $(38,922)
Non-cash items
Amortization 78 136
Financial and promotional consulting - -
Changes in non-cash working capital (15,560) (3,409)
----------------------------------------------------------------------------
$(129,619) $(42,205)
----------------------------------------------------------------------------
7. Income Taxes:
The Company has non-capital losses available to reduce future years' income
for Canadian tax purposes. Management has determined that utilizing these
losses is unlikely, and therefore the benefit of which has not been recorded
in the accounts of the Company. These losses expire as follows:
----------------------------------------------------------------------------
$ Canada
----------------------------------------------------------------------------
2003 159,077
2005 570,428
2006 382,035
----------------------------------------------------------------------------
$1,111,540
----------------------------------------------------------------------------
-9-
<PAGE>
8. Subsequent Event:
Subsequent to May 31, 1999, the share subscriptions receivable were
collected.
9. 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 Year 2000 dates is processed. In addition, similar
problems may arise in some systems, which use certain dates in 1999 to
represent something other than a date. The effects of the Year 2000 Issue
may be experienced before, on, or after January 1, 2000, and, if not
addressed, the impact on operations and financial reporting may range from
minor errors to significant systems failure, which could affect an entity's
ability to conduct normal business operations. It is not possible to be
certain that all aspects of the Year 2000 Issue affecting the entity,
including those related to the efforts of customers, suppliers, or other
third parties, will be fully resolved.
Item 2. Management's Discussion and Analysis or Plan of Operation
Plan of Operations
The short term objectives of the Company is to finalize fabrication
drawings (engineering is complete and detailed design 90% complete) and
subsequently build the ATH-120 harvester, complete pre-operation "lake trials",
and put the machine to work.
The Company's long term objectives are to establish a reserve base of
inundated and salvage timber to ensure future stability and long term growth.
Also of key importance is the commitment to continued development of the
Company's technology and equipment to maintain our lead position in this
emerging industry.
Over the next twelve months, Management is of the opinion that sufficient
working capital will be obtained from operations and external financing to meet
the Company's liabilities and commitments as they become payable. The Company
has in the past successfully relied on private placements of common stock
securities, bank debt, loans from private investors and the exercise of common
stock warrants in order to sustain operations and anticipates that these same
methods can be relied upon on an as needed basis for any future cash needs.
The Company has basically completed its current research and development
project (ATH-120) and does not have another project lined up nor planned in the
immediate future. However, the Company is committed to continued development of
the Company's technology and therefore the Company plans to provide for research
and development on an as needed basis.
There is no expected or planned sale of plant and/or significant equipment
by the Company.
The Company's work force is expected to remain the current level for the
next twelve months.
-10-
<PAGE>
Results Of Operations
Three Months Year-to-Date
- -------------------------
For the three months ended August 31, 1999 and August 31, 1998. Operating
costs and expenses were $114,137 for the three months ended August 31, 1999 as
compared to $38,932 for the same period ended August 31, 1998, an increase of
$75,205 or 193%.
Engineering expense accounted for $18,390 of the increase in operating
expenses over the same three month period prior year due a step up in the
Company's efforts to complete the ATH-120 harvester's engineering and detailed
design. Profession fees increased $25,596 over the same three month period
prior year due to legal and accounting fees incurred in preparing the documents
that were required to be filed to become a fully reporting entity under the
Securities Exchange Act of 1934. Wages and benefits accounted for $16,455 of the
increase over the same three-month period prior year, which was due to the
hiring of two field employees, in preparation of the Brazil Project. Advertising
and promotion expenses for the three month period ended August 31, 1999 of
$8,814 versus $0 for the same three-month period ended august 31, 1998, is a
result of implementation of the Company's plan to market its harvesting services
now that a Harvester is fully operational and is currently employed on a project
in South America. The remaining increase in operating expenses of $5,960 for the
three month period ended august 31, 1999 over the same period prior year was
mainly attributable to travel expenses incurred in pursing the project
opportunities in South America.
Liquidity and Capital Resources
- -------------------------------
Net cash (used) in Operating Activities for the three month period ended
August 31, 1999 and 1998 was ($117,431) and ($86,316) respectively. The change
in cash from operating activities was $31,115.
Net cash used in investing activities was ($0) and ($0) for the three month
period ended August 31, 1999 and 1998 respectively.
Net cash from financing activities was $250,000 and $0 for the three month
period ended August 31, 1999 and 1998 respectively, reflecting a change of
$250,000.
Foreign currency translation had an negative adjustment of $35,611 for the
three month period ended August 31, 19999 versus a positive adjustment of
$47,903 for the same three month period prior year, reflecting a change of
$83,513.
Net (loss) increased from a loss of $38,932 for the three month period
ended August 31, 1998 to a loss of $114,137 for the three month period ended
August 31, 1999, an increase of $75,205.
Year 2000 Issue
- ---------------
The Company has attempted to evaluate the impact of the year 2000 issue on
its business and does not expect the amounts, if any, to be expensed to be
material. To date, no such costs have been expensed mainly because the Company
uses proprietary software developed by the Company's CEO Gary Ackles. In
-11-
<PAGE>
addition, the Company is not set up to track the internal costs for any Y2K
expenditures, and such costs, if any, would be principally the related payroll
costs for time spent by office personnel. Such Y2K related payroll costs should
not exceed $1,000 U.S.
In its evaluation, the Company has completed its communication with its
significant vendors and customers to determine the extent that year 2000
compliance issues of such parties may effect the Company. At this time, the
Company believes that no one vendor or customer, nor can these vendors or
customers in the aggregate effect the performance of the Company due to its year
2000 readiness. In addition, on an ongoing basis, the Company intents to deal
only with vendors who claim to be year 2000 compliant (which is the Company's
contingency plan).
-12-
<PAGE>
PART II. OTHER INFORMATION
---------------------------
ITEM 1. Legal Proceedings
The Company is not a party to any material pending legal proceedings and, to the
best of its knowledge, no such action by or against the Company has been
threatened.
ITEM 2. Changes in Securities and Use of Proceeds
A total of 26,426,336 shares of common stock, par value $.001 (the
"Shares"), have been issued by the Company within one year prior to the filing
of this Form 10QSB for cash or services rendered to the Company, absent
registration under the Securities Act of 1933, as amended (the "Securities
Act"). Part of these shares were offered pursuant to the exemption provided by
Rule 504 of Regulation D (10,523,336 Shares) where such offering price in the
aggregate did not exceed $1,000,000 and all purchasers were accredited investors
as defined in Rule 501(a) of Regulation D, with the remaining shares offered
pursuant to the exemption provided by Section 4(2) of the Securities Act for
transactions by an issuer not involving a public offering for payment of
services provided by vendors and/or consultants. The Shares issued are as
follows.
In August, 1998, the Company issued 1,000,000 restricted Shares to Big Rock
Marketing Group and 720,000 restricted Shares to Chelsey Technology Corp. valued
at $.03 per share (a 55% discount to market) which amounted to $30,000 and
$21,600 respectively as payment for public relations services rendered to the
Company and represented fair value for services rendered. The shares were issued
pursuant to the exemption provided for under Section 4(2) of the Securities Act
of 1933, as amended, as a "transaction not involving a public offering."
In October, 1998, the Company issued 1,000,000 restricted Shares to Big
Rock Marketing Group and 500,000 restricted Shares to P. Daoust valued at
approximately $.03 per Share (approximately 50% of market value) as compensation
for public relations services rendered to the Company and represented fair value
for services rendered. The value was a negotiated settlement amount. The shares
were issued pursuant to the exemption provided for under Section 4(2) of the
Securities Act of 1933, as amended, as a "transaction not involving a public
offering."
In November, 1998, the Company issued 1,028,000 restricted Shares to
various consultants for services rendered to the Company valued at approximately
$.03 per share (approximately market value and these shares represented fair
value for services rendered). The shares were issued pursuant to the exemption
provided for under Section 4(2) of the Securities Act of 1933, as amended, as a
"transaction not involving a public offering."
In December, 1998, the Company issued 3,250,000 restricted shares to
various consultants for public relations services rendered valued at $.03 share
(approximately market value and these shares represented fair value for services
rendered) per share and 240,000 restricted Shares valued at $0.146
(approximately market value which was rising and these shares represented fair
value for services rendered) to Sean Ackles
-13-
<PAGE>
as compensation rendered in his position as an Officer of the Company. Mr.
Ackles related services were performed in the prior year. These shares were
issued pursuant to the exemption provided for under Section 4(2) of the
Securities Act of 1933, as amended, as a "transaction not involving a public
offering."
In January, 1999, the Company issued 1,350,000 restricted shares to various
consultants and vendors for services and product rendered. These shares were
valued at approximately $.03 per share (approximately market value and
represented fair value for services rendered). These shares were issued pursuant
to the exemption provided for under Section 4(2) of the Securities Act of 1933,
as amended, as a "transaction not involving a public offering."
In February, 1999, the Company issued 10,523,336 shares to various investors
pursuant to the exemption to registration provided under Rule 504 of Regulation
D of the Securities Act of 1933, as amended. These shares were sold at $.03 per
share (sale price was set at approximately a 30% discount to market at the time
of filing).
In April 1999, the Company issued 3,515,000 restricted shares to various
Officers of the Company who exercised options granted in February, 1999 for
services rendered in their positions. These shares were valued at $.03 per share
which was market value on the date the options were granted. In addition the
Company also issued 3,000,000 restricted shares valued at $.10 per share to
Consultants for public relations services rendered to the Company (issuance
price was a negotiated settlement price). These shares were issued pursuant to
the exemption provided for under Section 4(2) of the Securities Act of 1933, as
amended, as a "transaction not involving a public offering." (see note 4 to the
financial statements).
In May, 1999, the Company issued 500,000 restricted Shares valued at $.10
per share (price reflected market price) to a Consultant for public relations
services rendered to the Company and these shares represented fair value for
services rendered. These shares were issued pursuant to the exemption provided
for under Section 4(2) of the Securities Act of 1933, as amended, as a
"transaction not involving a public offering."
Item 6. Exhibits and Reports on Form 8-k:
(a) Exhibits
27 Financial Data Schedule
-14-
<PAGE>
SIGNATURES
----------
Pursuant to the requirements of Section 13 or 15(d) 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.
Registrant: AQUATIC CELLULOSE INTERNATIONAL CORP.
Signature Title Date
- ------------ -------- -------
By: /s/ Gary Ackles Chief Executive Officer, November 22, 1999
-----------------
Gary Ackles Director - Chairman
By: /s/ Claus Wagner-Bartak Director November 22, 1999
-------------------------
Claus Wagner-Bartak
-------------------
-15-
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> MAY-31-2000
<PERIOD-START> JUN-01-1999
<PERIOD-END> AUG-31-1999
<CASH> 197,864
<SECURITIES> 0
<RECEIVABLES> 6,706
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 204,570
<PP&E> 6,149
<DEPRECIATION> 0
<TOTAL-ASSETS> 210,719
<CURRENT-LIABILITIES> 21,716
<BONDS> 0
0
0
<COMMON> 1,561,304
<OTHER-SE> (1,372,031)
<TOTAL-LIABILITY-AND-EQUITY> 210,719
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 114,137
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (114,137)
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (114,137)
<EPS-BASIC> (0.01)
<EPS-DILUTED> (0.01)
</TABLE>
