<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 February 29, 2000
-----------------
OR
[ ] Transition Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
For the transition period from _______________ to _______________
Commission file number 0-21384
---------
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 February 29, 2000
- --------------------- -----------------
$.001 par value 36,603,985
Transitional Small Business Disclosure Format Yes __ No X
-
-1-
<PAGE>
Aquatic Cellulose International Corp.
Index
PART I - FINANCIAL INFORMATION
Item 1. Consolidated Financial Statements
Condensed Consolidated Balance Sheets at
May 31, 1999 and February 29, 2000 (unaudited)
Condensed Consolidated Statements of Operations
for the three months ended February 29, 1999 (unaudited)
and 2000 (unaudited)
Condensed Consolidated Statements of Cash Flows
for the nine months ended February 29, 1999 (unaudited)
and 2000 (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 1. 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
-2-
<PAGE>
PART I. FINANCIAL INFORMATION
-----------------------------
ITEM I. FINANCIAL STATEMENTS
AQUATIC CELLULOSE INTERNATIONAL CORP.
(A Development Stage Enterprise)
Consolidated Balance Sheets
$ United States
February 29, 2000 and May 31, 1999
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
2000
(Unaudited) 1999
- --------------------------------------------------------------------------------
<S> <C> <C>
Assets
Current assets
Cash $ 16,608 $ 100,906
Accounts receivable 262,474 7,734
Share subscriptions receivable - 250,000
- --------------------------------------------------------------------------------
279,082 358,640
Capital assets (note 2) 6,331 6,226
- --------------------------------------------------------------------------------
$ 285,413 $ 364,866
================================================================================
Liabilities and Stockholders' Equity
Current liabilities
Accounts payable and accrued liabilities $ 45,027 $ 24,060
Stockholders' equity
Capital stock (note 3) 1,561,034 1,561,034
Deficit accumulated during the development stage (1,350,865) (1,254,793)
Accumulated other comprehensive income 30,217 34,565
- --------------------------------------------------------------------------------
240,386 340,806
- --------------------------------------------------------------------------------
$ 285,413 $ 364,866
================================================================================
</TABLE>
See accompanying notes to financial statements
On behalf of the Board:
_____________________ Director
_____________________ Director
-3-
<PAGE>
AQUATIC CELLULOSE INTERNATIONAL CORP.
(A Development Stage Enterprise)
Consolidated Statements of Loss
$ United States
For the nine months ended February 29, 2000 and February 28, 1999
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------
From inception
(March 11, 1996)
to February 29, 2000 2000 1999
(Unaudited) (Unaudited) (Unaudited)
- ---------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Revenue
Timber sales $ 356,195 $353,125 $ -
Expenses
Amortization 6,571 760 2,094
Engineering design 214,216 146,768 30,825
Selling, general and administrative 1,493,752 301,669 414,352
- ---------------------------------------------------------------------------------------------
1,714,539 449,197 447,271
- ---------------------------------------------------------------------------------------------
Loss before other income (1,358,344) (96,072) (447,271)
Other income
Interest 184 - -
Foreign exchange gain 7,295 - -
- ---------------------------------------------------------------------------------------------
7,479 - -
- ---------------------------------------------------------------------------------------------
Loss $(1,350,865) $ (96,072) $ (447,271)
- ---------------------------------------------------------------------------------------------
Weighted average number of shares outstanding 36,603,985 14,345,896
Loss per share $ - $ (0.03)
=============================================================================================
</TABLE>
See accompanying notes to financial statements
-4-
<PAGE>
AQUATIC CELLULOSE INTERNATIONAL CORP.
(A Development Stage Enterprise)
Consolidated Statements of Earnings (Loss)
$ United States
For the three months ended February 29, 2000 and February 28, 1999
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------
2000 1999
(Unaudited) (Unaudited)
- ------------------------------------------------------------------------------
Revenue
<S> <C> <C>
Timber sales $ 353,125 $ -
Expenses
Amortization 343 66
Engineering design 58,457 3,618
Selling, general and administrative 93,139 72,246
---------------------------------------------------------------------------
151,939 75,930
- ------------------------------------------------------------------------------
Earnings (loss) before other income (expense) 201,186 (75,930)
Other income (expense):
Interest - -
Foreign exchange gain (loss) - (896)
---------------------------------------------------------------------------
- (896)
- ------------------------------------------------------------------------------
Earnings (loss) $ 201,186 $ (76,826)
- ------------------------------------------------------------------------------
Weighted average number of shares outstanding 36,603,985 26,072,045
Earnings (loss) per share $ 0.01 $ -
- ------------------------------------------------------------------------------
</TABLE>
See accompanying notes to financial statements
-5-
<PAGE>
AQUATIC CELLULOSE INTERNATIONAL CORP.
(A Development Stage Enterprise)
Consolidated Statements of Cash Flows
$ United States
For the nine months ended February 29, 2000 and February 28, 1999
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------
From inception
(March 11, 1996)
to February 29, 2000 2000 1999
(Unaudited) (Unaudited) (Unaudited)
- -------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Operating activities
Cash received from timber sales $ 101,455 $ 98,385 $ -
Cash received from other income 7,479 - -
Cash paid to suppliers and employees (1,250,527) (427,470) (269,663)
---------------------------------------------------------------------------------------------
(1,141,593) (329,085) (269,663)
Financing
Issuance of capital stock 912,769 - 275,911
Receipt of share subscriptions receivable 250,000 250,000 -
---------------------------------------------------------------------------------------------
1,162,769 250,000 275,911
Investing
Purchase of capital assets (12,470) - (79)
Foreign currency translation adjustment 7,902 (5,213) 2,334
- ------------------------------------------------------------------------------------------------
Increase (decrease) in cash 16,608 (84,298) 8,503
Cash, beginning of period - 100,906 25,747
- ------------------------------------------------------------------------------------------------
Cash, end of period $ 16,608 $ 16,608 $ 34,250
- ------------------------------------------------------------------------------------------------
</TABLE>
Non-cash financing and investing activities (note 4)
See accompanying notes to financial statements
-6-
<PAGE>
AQUATIC CELLULOSE INTERNATIONAL CORP.
(A Development Stage Enterprise)
Consolidated Statement of Stockholders' Equity and Comprehensive Income
$ United States
For the nine months ended February 29, 2000
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------
Deficit
Accumulated Accumulated
Capital Stock During the Other Total
----------------------
Number Development Comprehensive Stockholders
of Shares Amount Stage Income Equity
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
ACIC
ANFMI balance, May 31, 1997 145,649 $ 60,626 $ (279,524) $ 2,759 $ (216,139)
Issued for cash 4,974,351 469,611 - - 469,611
------------------------------------------------------------------------------------------------------------------
ANFMI balance, July 12, 1997, prior
to business combination with ACL 5,120,000 530,237 (279,524) 2,759 253,472
Adjustment to record business
combination
Reduction in the book value of
ANFMI's share capital
to that of ACL - (458,254) - - (458,254)
------------------------------------------------------------------------------------------------------------------
5,120,000 71,983 (279,524) 2,759 (204,782)
Shares of ANFMI issued to
acquire shares of ACL (above)
recorded at the carrying value of
AMFMI net assets 4,732,800 469,611 - - 469,611
- -------------------------------------------------------------------------------------------------------------------
ACIC balance, July 12, 1997,
after business combination 9,852,800 541,594 (279,524) 2,759 264,829
Issued during the period from
July 13, 1997 to May 31, 1998:
Conversion of note payable to
common shares 300,000 195,776 - - 195,776
Issued for cash 24,849 2,295 - - 2,295
- -------------------------------------------------------------------------------------------------------------------
10,177,649 739,665 (279,524) 2,759 462,900
Comprehensive income:
Loss - - (491,800) - (491,800)
Foreign currency translation adjustment - - - 30,509 30,509
Comprehensive income (loss) - - (491,800) 30,509 (461,291)
- -------------------------------------------------------------------------------------------------------------------
ACIC balance, May 31, 1998 10,177,649 739,665 (771,324) 33,268 1,609
Issued for cash 14,113,336 383,323 - - 383,323
Issued upon exercise of options 3,515,000 105,450 - - 105,450
Issued for services 6,798,000 188,046 - - 188,046
Subscribed shares 2,000,000 250,000 - - 250,000
Notes receivable - (105,450) - - (105,450)
- -------------------------------------------------------------------------------------------------------------------
26,426,336 821,369 - - 821,369
Comprehensive income:
Loss - - (483,469) - (483,469)
Foreign currency translation adjustment - - - 1,297 1,297
- -------------------------------------------------------------------------------------------------------------------
Comprehensive income (loss) - - (483,469) 1,297 (482,172)
- -------------------------------------------------------------------------------------------------------------------
ACIC balance, May 31, 1999 36,603,985 1,561,034 (1,254,793) 34,565 340,806
Comprehensive income:
Loss - - (96,072) - (96,072)
Foreign currency translation adjustment - - - (4,348) (4,348)
- -------------------------------------------------------------------------------------------------------------------
Comprehensive income (loss) - - (96,072) (4,348) (100,420)
- -------------------------------------------------------------------------------------------------------------------
ACIC balance, February 29, 2000 36,603,985 $ 1,561,034 $(1,350,865) $ 30,217 $ 240,386
- -------------------------------------------------------------------------------------------------------------------
</TABLE>
-7-
<PAGE>
Refer to note 1c) for basis of presentation and consolidation.
AQUATIC CELLULOSE INTERNATIONAL CORP.
(A Development Stage Enterprise)
Notes to Consolidated Financial Statements
$ United States
- --------------------------------------------------------------------------------
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. As at February 29, 2000, the Company, as a
development stage company, has suffered recurring losses and negative cash
flow from operations, conditions that raise significant doubt about the
Company's ability to continue as a going concern. 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 $1.4496
(May 31, 1999 -US $1.00 per Cdn $1.474).
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.
-8-
<PAGE>
AQUATIC CELLULOSE INTERNATIONAL CORP.
(A Development Stage Enterprise)
Notes to Consolidated Financial Statements, page 2
$ United States
- --------------------------------------------------------------------------------
1. Significant accounting policies (continued):
c) Basis of presentation and consolidation (continued)
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
figures for the period from inception to February 29, 2000 presented
in the consolidated statements of loss and deficit and cash flows and
the figures in the consolidated statement of stockholders' equity and
comprehensive income are those of ACL, the legal subsidiary, together
with those of ANFMI from July 12, 1997 in accordance with generally
accepted accounting principles for reverse acquisitions. Effective
November 10, 1997, the Company changed it's name from ANFMI to Aquatic
Cellulose International Corp. ("ACIC").
d) Capital assets
Capital assets are recorded 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:
<TABLE>
<CAPTION>
----------------------------------------------------------------------
Asset Method Rate
----------------------------------------------------------------------
<S> <C> <C>
Computer equipment Declining balance 30%
Furniture and equipment Declining balance 20%
Leasehold improvements Straight-line 20%
----------------------------------------------------------------------
</TABLE>
e) Revenue recognition
The Company recognizes revenue from the harvesting of salvage timber
at the point in time when the actual sale has been completed for the
recovered timber.
f) 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.
g) 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.
h) 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. The maximum credit risk exposure for
all financial assets is the carrying amount of those assets.
-9-
<PAGE>
AQUATIC CELLULOSE INTERNATIONAL CORP.
(A Development Stage Enterprise)
Notes to Consolidated Financial Statements, page 3
$ United States
- --------------------------------------------------------------------------------
1. Significant accounting policies (continued):
i) Earnings (loss) per share
Earnings (loss) per common share is calculated based on the net income
and the weighted average number of shares outstanding during the
period. For all periods, the computation of diluted earnings (loss)
per share was anti dilutive, therefore, the amounts reported for basic
and diluted earnings (loss) per share were the same.
j) Income taxes
Income taxes are accounted for under the asset and liability method.
Deferred tax assets and liabilities are recognized for the future tax
consequences attributable to differences between the financial
statement carrying amounts of existing assets and liabilities and
their respective tax bases and operating loss carryforwards are
available future tax deductions
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
effect on deferred tax assets and liabilities of a change in tax rates
is recognized in income in the period that includes the enactment
date. When it is not considered to be more likely than not that a
deferred tax asset will be realized, a valuation allowance is provided
for the excess.
k) Commitments and contingencies
Liabilities for loss contingencies, including environmental
remediation costs, arising from claims, assessments, litigation, fines
and penalties and other sources are recorded when it is probable that
a liability has been incurred and the amount of the assessment and/or
remediation can be reasonably estimated. Recoveries from third parties
which are probable of realization are separately recorded, and are not
offset against the related environmental liability, in accordance with
Financial Accounting Standards Board Interpretation No. 39,
"Offsetting of Amounts Related to Certain Contracts."
l) 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. Capital assets:
<TABLE>
<CAPTION>
---------------------------------------------------------------------------
2000 1999
---------------------------------------------------------------------------
Accumulated Net book Net book
Cost amortization value value
---------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Computer equipment $ 2,361 $1,378 $ 983 $ 967
Furniture and equipment 4,717 1,372 3,345 3,290
Leasehold improvements 5,010 3,007 2,003 1,969
---------------------------------------------------------------------------
$12,088 $5,757 $6,331 $6,226
---------------------------------------------------------------------------
</TABLE>
-10-
<PAGE>
AQUATIC CELLULOSE INTERNATIONAL CORP.
(A Development Stage Enterprise)
Notes to Consolidated Financial Statements, page 4
$ United States
- --------------------------------------------------------------------------------
3. Capital stock:
The Company's authorized capital stock consists of:
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
4. Statement of cash flows:
The cash flow from operations on the Company's statement of cash flows
prepared under the indirect method for the nine months ended February 29,
2000 and February 28, 1999 are as follows:
<TABLE>
<CAPTION>
---------------------------------------------------------------------------
2000 1999
(Unaudited) (Unaudited)
---------------------------------------------------------------------------
<S> <C> <C>
Net loss $ (96,072) $(447,271)
Non-cash items
Amortization 760 2,094
Financial and promotional consulting - 169,241
Changes in non-cash working capital
(Increase) decrease in accounts receivable (254,740) 10,509
Increase (decrease) in accounts payable 20,967 (4,236)
--------------------------------------------------------------------------
$(329,085) $(269,663)
--------------------------------------------------------------------------
</TABLE>
There were no non-cash financing or investing activities for the nine
months ended February 29, 2000. During the nine months ended February 28,
1999, the Company issued shares in exchange for services amounting to
$169,241.
5. 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:
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
$ Canada
- --------------------------------------------------------------------------------
<S> <C>
2003 159,077
2005 570,428
2006 382,035
- --------------------------------------------------------------------------------
$1,111,540
- --------------------------------------------------------------------------------
</TABLE>
-11-
<PAGE>
6. Comparative figures:
Certain of the comparative figures have been restated to conform with the
presentation adopted in the current year.
Item 2. Management's Discussion and Analysis or Plan of Operation
Plan of Operations
The short term objectives of the Company are the following:
1. Continue expansion of the Brazilian project. This expansion will
require additional equipment and labor plus training and support. Implementation
of these items have already started.
2. Seek out and develop key alliances, acquisitions and joint ventures.
3. Establish new lumber markets, especially with respect to rare and
exotic species.
4. Expand international operations to a third continent to further
elevate company awareness and for more rapid revenue growth.
5. To complete the pre-operation trials of the ATH-120 harvester, begin
its mass production and place these machines into operation.
The Company's long term objectives are as follows:
1. To increase lumber reserves to a level that will allow indefinite
sustainability and long term growth.
2. To continue on going upgrades of the patented robotic technology in
order to maintain and improve its dominant position in this rapidly 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.
The Company is committed to continue improving the technology and
therefore, plans to continue upgrades of the revoluntionary harvesting system
and support equipment.
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.
Results of Operations
Three Months Year-to-Date
- -------------------------
The Company had revenue of $353,125 for the year three months ended
February 29, 2000 as compared to no revenue for the prior year ended February
28, 1999. This revenue was derived from the Brazil project. Operating costs
and expenses were $151,939 for the three months ended February 29, 2000 as
compared to $75,930 for the same period ended February 28, 1999, an increase of
$76,009 or 100%.
-12-
<PAGE>
Engineering expense accounted for $54,839 of the increase in operating
expenses over the same three months period prior year. This increase in
engineering expense relates to the upgrading of downstream infrastructure being
used to support the harvesting of the Brazil project. Selling, general and
administrative increased $20,893 over the same three months period prior year.
This increase was a result of increased consulting expenses relating to the
Brazilian project.
Liquidity and Capital Resources
- -------------------------------
Net cash (used) in Operating Activities for the nine months period ended
February 29, 2000 and 1999 was $(329,085) and ($269,663) respectively.
Net cash used in investing activities was $0 and $(79) for the three months
period ended February 29, 2000 and 1999 respectively.
Net cash from financing activities was $250,000 and $275,911 for the three
months period ended February 29, 2000 and 1999 respectively, reflecting a change
of $(25,911).
Foreign currency translation had an adjustment of $(5,213) for the three
months period ended February 29, 2000 versus an adjustment of $2,334 for the
same three-month period prior year, reflecting a change of $(7,547).
Net (loss) decreased from a loss of $(76,826) for the three months period
ended February 29, 1999 to a loss of $201,186 for the three months period ended
February 29, 2000, an increase of $278,012.
Year 2000 Issue
- ---------------
The Company experienced no impact from the year 2000 issue on its business.
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 36,603,985 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
13
<PAGE>
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 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
14
<PAGE>
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
15
<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, April 19, 2000
---------------
Gary Ackles Director - Chairman
By: /s/ Claus Wagner-Bartak Director April 19, 2000
-----------------------
Claus Wagner-Bartak
-------------------
16
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> MAY-31-2000
<PERIOD-START> DEC-01-1999
<PERIOD-END> FEB-29-2000
<CASH> 16,608
<SECURITIES> 0
<RECEIVABLES> 262,474
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 279,082
<PP&E> 6,331
<DEPRECIATION> 0
<TOTAL-ASSETS> 285,413
<CURRENT-LIABILITIES> 45,027
<BONDS> 0
0
0
<COMMON> 1,561,034
<OTHER-SE> (1,320,648)
<TOTAL-LIABILITY-AND-EQUITY> 285,413
<SALES> 353,125
<TOTAL-REVENUES> 353,125
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<INCOME-PRETAX> 201,186
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 201,186
<EPS-BASIC> 0.01
<EPS-DILUTED> 0.01
</TABLE>
