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U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
__________________
FORM 8-K
CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES ACT OF 1934
Date of Report (Date of earliest event reported): September 15, 2000
-----------------------
Adventure Minerals Inc.
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(Exact name of registrant as specified in its charter)
Nevada 0-27295 98-0208988
------ ------- ----------
(State or other (Commission (I.R.S. Employer
jurisdiction File Number) Identification No.)
of incorporation)
1859 Spyglass Place, Suite 414
Vancouver, British Columbia, Canada V6Z 4K6
--------------------------------------------- ----------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (604) 872-4107
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Item 1. Changes in Control of Registrant
On September 13, 2000, Adventure Minerals Inc. (the "Company") entered into
an Agreement and Plan of Reorganization (the "Agreement") with Planet Earth
Recycling Inc. ("PERI") (a copy of which is attached hereto as Exhibit A). The
first step in the reorganization was to merge PERI with and into AVML Sub One
Corporation, a Nevada corporation and a wholly owned subsidiary of the Company,
in exchange for common stock of the Company. For each share of PERI common stock
held by a PERI shareholder, the PERI shareholder received one share of the
common stock of the Company. Upon the effective date of the merger, September
15, 2000, the Company controlled 100% of the issued and outstanding common stock
of PERI.
Prior to the merger, the Company had 10,315,000 shares of common stock
outstanding. On the effective date of the merger, the following became the share
ownership of the Company:
Name No. Shares Ownership
---- ---------- ----------
1. PERI Shareholders 10,000,000 49.22%
2. Existing Shareholders of the Company 10,315,000 50.78%
========== =========
TOTALS 20,315,000 100.00%
As part of the Agreement, the number of directors of the Company was
changed from two to three. On September 15, 2000, the current members of the
Board of the Company, Grayson Hand and Gordon Keevil, resigned and three new
directors, Don Dick, Wayne Hansen, and Gary Martin, were appointed to fill the
vacancies.
On September 15, 2000, Grayson Hand resigned as President, Treasurer and
Secretary of the Company and new officers were appointed by the Board. Frank
Andre became President of the Company, Gary Martin became Secretary of the
Company and Wayne Hansen became Treasurer of the Company.
The following summaries outline the professional backgrounds of the new
directors and executive officers over the past five years:
Frank Andre - President
-----------------------
Frank Andre was elected President of the Company on September 15, 2000. Mr.
Andre also has his own consulting firm, Frank Andre Consulting Services, which
he founded in 1993. From 1999 to September 2000, Mr. Andre worked as on a
consulting basis as a sales and marketing director for Thermo Tech Technologies,
Inc., a waste management and recycling services company. From 1998 to 1999, he
devoted the majority of his time to Ultra Chem Industries Ltd., a British
Columbia, Canada manufacturing company that produces specialty floors and
carpets. In that position, he was primarily responsible for the distribution of
Ultra Chem's products and systems through a network of 50 authorized
distributors in the U.S. and
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Canada. From 1993 to 1998, Mr. Andre consulted in the areas of sales and
marketing for USA Waste Services, Inc. Prior to forming his consulting firm, Mr.
Andre worked as a sales manager for several companies that produce and sell
waste processing systems. Mr. Andre was Chairman of the British Columbia Waste
Management Association from 1988 to 1990.
Donald D. Dick - Director
-------------------------
Donald Dick was appointed a director of the Company on September 15, 2000.
Mr. Dick has been President of Dick Engineering Inc. in Toronto, Ontario since
1976. His company has been involved with several important development projects,
including the following: a new tissue operation for Carrotecnica Centroamerica
in El Salvador; projects for Thermo Tech Waste Systems Inc.; a definition study
for a tissue mill upgrade project for CityForest Corporation in Ladysmith,
Wisconsin; design of green field deinked pulp mill for the Pine Falls Paper Co.;
design of a green field paperboard mill for Trent Valley Paperboard Mills in
Trenton, Ontario; feasibility studies for deinking pulp mills for Kruger Inc.;
and a feasibility study for deinking facilities for Papeles Nacionales S.A.,
Pereira, Colombia. Mr. Dick has a Bachelor of Science in Civil Engineering from
the University of Alberta.
Wayne A. Hansen - Director and Treasurer
----------------------------------------
Wayne Hansen was appointed a director and elected an executive officer of
the Company on September 15, 2000. Since 1996, Mr. Hansen has held the position
of President at Caulfied Capital Management Inc. In that position he provided
management consulting services to entrepreneurs and businesses with a particular
focus on capital formation and acquisition. From 1984 to 1996, Mr. Hansen held
various positions at BDO Dunwoody, an accounting firm, including managing
partner, Asia liaison partner, national firms committee partner and practice
partner. Mr. Hansen has a B.A. from the University of British Columbia and is a
Chartered Accountant.
Gary Martin - Director and Secretary
------------------------------------
Gary Martin was appointed a director and elected an executive officer of
the Company on September 15, 2000. Mr. Martin has been President of Magest Inc.
since 1990. He has over twenty years of experience in the construction industry.
His duties have included field supervision of trade and general contracting
activities, purchasing of materials, recruitment and supervision of field and
shop labor, and administration and co-ordination of subtrade services. From 1994
to 1998, Mr. Martin was a member of the Butler Builders Advisory Council, with
his last two years as Chairman of the Council. He has a degree in Construction
Technology and Estimating from Conestoga College in Ontario.
The second step in the reorganization was the merger of AVML Sub One with
and into the Company on September 19, 2000. This completed the merger of PERI
with and into the Company.
The Company will seek shareholder approval of amendments to its articles of
incorporation, including a change in the Company's name to Planet Earth
Recycling Inc. and a change in its trading symbol. The Company's Board of
Directors will also approve Amended and Restated Bylaws.
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Item 2. Acquisition or Disposition of Assets
On September 13, 2000, the shareholders of AVML Sub One, a wholly owned
subsidiary of the Company, and the shareholders of PERI approved the Agreement,
which included an Agreement and Plan of Merger merging PERI with and into AVML
Sub One (the "Merger"). Upon the effective date of the Merger, September 15,
2000, PERI ceased to exist and all of its assets and liabilities became those of
AVML Sub One.
The offering of the Company's shares to PERI shareholders was conducted
pursuant to an exemption from registration, namely Regulation S of the
Securities Act of 1933, as amended (the "Act"). As a result, the Company's
shares held by former PERI shareholders are "restricted securities" subject to
Rule 144 of the Act.
As part of the Merger, each share of common stock of PERI issued and
outstanding was exchanged for one share of common stock of the Company. The PERI
shareholders exchanged 10,000,000 shares of PERI common stock for 10,000,000
shares of the Company's common stock. Immediately following the effective date
of the Merger on September 15, 2000, the total issued and outstanding shares of
the Company's common stock was 20,315,000 and the major shareholders of the
Company were as follows:
<TABLE>
<CAPTION>
Percentage of
Name and Position Number of Shares Outstanding Shares
----------------- ---------------- ------------------
<S> <C> <C>
Grayson Hand - former Director and 6,000,000 29.53%
Executive Officer of the Company
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Gary Martin - Secretary and Director of the 900,000 4.43%
Company
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Wayne Hansen - Treasurer and Director of 100,000 0.49%
the Company
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Frank Andre - President of the Company 100,000 0.49%
------------------------------------------------------------------------------------------------------------
Don Dick - Director of the Company 0 0.00%
------------------------------------------------------------------------------------------------------------
ALL CURRENT DIRECTORS AND 1,100,000 5.41%
OFFICERS AS A GROUP (4 Persons)
------------------------------------------------------------------------------------------------------------
</TABLE>
The second step in the Agreement was to merge AVML Sub One with and into
the Company, thereby completing the merger of PERI with and into the Company.
The second merger was effective on September 19, 2000. The overall transaction
has been structured to provide favorable tax treatment as a tax-free
reorganization.
Terms of the Merger Between PERI and AVML Sub One
PERI was merged with and into AVML Sub One pursuant to Chapters 78 and 92A
of the Nevada Revised Statutes, as amended, and in accordance with the terms and
conditions of the Agreement and Plan of Merger. A majority of the shares
entitled to vote of record for each of the corporations approved the Merger by
written consent. Therefore, upon execution by the surviving entity of the
Articles of Merger and the filing of the Articles of Merger with the
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Secretary of State of Nevada, the merger became effective (the "Effective Time
of the Merger"). The Articles of Merger were filed with the Secretary of State
of Nevada on September 15, 2000.
The Board of Directors of PERI approved the Merger by resolution on
September 11, 2000. The Boards of Directors of the Company and AVML Sub One
approved the Merger by resolution on September 11, 2000.
The shareholders of PERI approved the merger by unanimous written consent
on September 13, 2000. The shareholder of AVML Sub One approved the merger by
written consent on September 11, 2000. Pursuant to Nevada Revised Statute
92A.130, no shareholder vote was necessary for approval of the merger by the
Company.
Certificate of Incorporation and Bylaws
---------------------------------------
The Articles of Incorporation and Bylaws of AVML Sub One became the
articles of incorporation of the surviving entity and the bylaws of PERI became
the bylaws of the surviving entity.
Officers and Directors
----------------------
The executive officers and directors of AVML Sub One in office at the
Effective Time of the Merger became those of the surviving entity.
Purpose of Merger
-----------------
The main purpose of the merger is to provide shareholders of PERI with a
liquid market for their shares and to transfer the assets and business of PERI
to the Company.
Conversion of Shares
--------------------
The mechanics of the merger consisted of an exchange of all existing common
shares of PERI for common shares of the Company. All shareholders of PERI
received one (1) share of common stock of the Company for every one (1)
outstanding share of common stock of PERI. In the aggregate, 10,000,000 shares
of common stock of the Company were issued to shareholders of PERI. Each
shareholder of PERI had to surrender their current share certificates in PERI
for common share certificates in the Company. By so doing, each shareholder of
PERI took all the rights incident to their current shares and turned them in for
rights incident to the new common shares.
Amendment to the Agreement and Plan of Merger
---------------------------------------------
The Agreement and Plan of Merger may not be amended or supplemented after
having been approved by the shareholders of PERI and AVML Sub One except by a
vote or consent of the shareholders of PERI and AVML Sub One in accordance with
applicable law.
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Effects of the Merger
---------------------
PERI ceased to exist as a separate entity. All of PERI's shareholders
became shareholders of the Company. The liquidity and market value of the
Company's common stock is greater than that of PERI. More importantly, PERI's
shareholders received restricted shares subject to a holding period of at least
one year pursuant to Rule 144 of the Act.
Description of Business of the Company
The Company, a Nevada corporation formed in February, 1999, is a
development stage company engaged in the acquisition, exploration and
development of mineral properties. As part of the acquisition of a majority of
PERI's common stock, the Company will change its name and trading symbol to
reflect the change in the focus of its business activities to recycling products
and services. The Company's executive offices are located at 101 Convention
Center Drive, Suite 1200, Las Vegas, Nevada, 89109 and its telephone number is
604-872-4107.
Further detailed information about the Company can be found in the
Adventure Minerals Inc. Form 10-KSB for year ended April 30, 2000 (filed with
the SEC on June 22, 2000).
Description of Business of PERI
Summary
-------
PERI, a privately held company, was formed in November, 1999, in the State
of Nevada. PERI is a development stage company with its core business focused on
technologies and services for recycling of waste materials. It has an
integrated, multi-faceted recycling and waste management business, ready to
address a broad range of recyclable materials including glass, plastic, paper,
cardboard, metals and particularly organic wastes. PERI, through its subsidiary,
holds contractual rights to build, support and supply Thermo Master(TM) Plants
which employ a patent protected process to convert organic waste materials to
valuable feed and fertilizer products and holds an exclusive master license to
own and sub-license Thermo Master(TM) Plants in Canada, California, Washington,
Oregon, Nevada, Hawaii and Iowa. PERI's presence in a community means local
employment, effective waste recycling opportunities and environmental
improvements.
PERI is dedicated to recycling in all forms of waste material and employs a
comprehensive approach that begins with waste audits at the generator's business
and continues through to recycling. PERI not only employs recycling technology,
it builds and supports the plants and systems used to deliver the technology.
PERI has a strong commitment to build its business either through further
development of its existing capabilities or through acquisition of technologies
and businesses that will enhance and expand its current business. PERI maintains
a sound base of engineering, scientific expertise, construction management and
techniques, public relations, financial expertise, recycling technology and
waste acquisition systems.
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PERI offers a full range of waste recycling and management services to
waste generators and communities. PERI conducts its business via subsidiaries as
follows:
PLANET EARTH RECYCLING, INC.
----------------------------
|
|
PLANET EARTH OPERATING SERVICES INC.
------------------------------------
|
|
1. EARTH ALLIANCE SYSTEMS INC. (Waste
--------------------------
acquisition - Satellite centers - Tote
services Transfer stations - De-
packaging - Commodity broker glass,
metals, plastics, paper, organics -
Waste audits)
2. PLANET EARTH DESIGN BUILD INC.
-----------------------------
(Engineering - Permitting -
Construction services - Equipment
procurement - Turnkey recycling
systems - Transfer stations - New
technology development)
3. PLANET EARTH BIO CONVERSION INC.
-------------------------------
(Licenses for Thermo Master(TM)
Plants - Exclusive and non-exclusive
territory)
4. PLANET EARTH MANAGEMENT INC.
---------------------------
(Commissioning - Training - Operating
services - Support services - Complete
recycling systems)
The parent company, PERI, is primarily focused on corporate management and
financing. Planet Earth Operating Services Inc. ("PEOSI") delivers all aspects
of the operational side of the business through its several subsidiary
companies. PEOSI is built from a company with a history of 45 years of
successfully providing systems, equipment and services in the agricultural and
environmental industries. It continues to deliver those services to a broad
industry sector and to expand even further. Its waste management and recycling
team brings experience with every major waste management firm known in North
America.
PERI has assembled a team of core consultants with over 300 years of
combined experience in the critical sectors of its business. Within the group of
key consultants resides knowledge and experience in every aspect of engineering,
research and development, construction, mechanical operations, public relations
and marketing, waste acquisition, recycling and financing needed to conduct
business.
As structured, two of the subsidiary companies are expected to generate
revenue by supplying construction and support services to build, operate and
maintain Thermo Master(TM) Plants, Earth Alliance Satellite Centers, transfer
stations, water treatment facilities and other such physical plants. These
companies may provide services directly, but will more likely oversee the
programs and services which are delivered at the local level by local sub-
contractors having the required skills and abilities to do so.
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The other subsidiaries, Earth Alliance Systems Inc. and Planet Earth Bio
Conversion Inc., capitalize on the unlimited potential of the waste and
recycling markets throughout the world. These two companies are structured to
own and operate waste acquisition, recycling, organic waste conversion and
commodity brokering businesses to cover the full spectrum of recycling
opportunities in the marketplace. These two subsidiaries are anticipated to
generate the most revenue for the surviving entity.
PERI is also involved in commodity businesses, whether that be the end
product from Thermo Master(TM) businesses (feed or fertilizer products) or the
recyclable plastics, paper, glass, metals and other recoverable materials. At
present, this function is within Earth Alliance, but may be launched in the
future as a free-standing subsidiary.
Marketplace
-----------
The market opportunity is effectively limitless given a world population of
approximately six billion. Billions of tons of waste are produced annually.
The entire recycling industry is in its technological and functional
infancy. In recent years, there has been a major shift towards policies and
systems that conserve and recover scarce and valuable resources. (Canadian
Council of Ministers of the Environment, U.S. Government, State of California.)
Recycling has gone from the fringe to the mainstream in terms of policy and
programs. Although some nations are ahead of others, there appears to be a
global will, even in less developed nations, to address the pressing
environmental issues.
The first phase of recycling has not really been recycling at all. Two
examples are waste-to-energy power plants and composting. Waste to energy
systems is where heat energy is recovered from the incineration process and used
to create electrical power or steam. Once the incineration is complete, there
may be a net benefit but ultimately the starting resource has been destroyed.
With organics, there is a net negative energy balance; more energy must be put
in to incinerate organics than can be recovered. Also, incineration produces
residues that must be dealt with and emissions are produced that can create
their own problems. Composting appears to recycle organic materials but an
effective composting operation destroys approximately 50% of the solids and
releases greenhouse gases to the environment. Some of the material is recovered
and recycled, but it is still ultimately a downward cycle with a number of
negatives. True recycling minimizes degradation and loss. That is precisely what
PERI's businesses are capable of doing.
PERI is actively researching and reviewing potentials for new advanced
recycling technologies in all sectors. It accomplishes its goal of providing a
full-service recycling solution by performing and supporting its own applied
research, creating appropriate alliances, licensing technologies and acquiring
other businesses.
PERI has already identified a major role to be played in reducing
greenhouse gas emissions and global warming. PERI's recycling approach reduces
greenhouse gases by removing organics from landfills, where they ultimately
break down to carbon dioxide and methane. Most of the landfill emission is
methane, a greenhouse gas which is 21 times as potent
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as carbon dioxide and by other calculation methods, as much as 62 times higher.
(U.S. Environmental Protection Agency; Commission of the European Communities.)
Earth Alliance diverts these organic waste materials from landfills.
With debt financing secured through the European environmental fund, rapid
plant construction is facilitated. The funds are paid to PERI, ETT and Thermo
Tech(TM) to build plants throughout the world. The fund invests in the cash flow
potential of the business being financed similar in structure to the petroleum
industry funds that work off of the cash flow value of oil properties.
Many North American markets, especially those in PERI's exclusive
territory, are approaching tipping fees of $100/ton. In parts of Europe, fees
can be twice as much. (European Commission Report on Composting.) Waste tipping
fees are a reflection of the environmental pressures within those markets. There
will be large spreads between the standard disposal fees in the market and the
actual prorated per ton costs to build and operate a Satellite Center, a Thermo
Master(TM) Plant or other waste recycling facility. PERI's competitive advantage
is partly due to its lower than industry average waste disposal fees.
The biggest factors in waste disposal are population density and human
activities. Europe has an average population density of 300 people per square
mile. The Netherlands, the most densely populated European nation, has 976
people per square mile. The core block of European nations, including Germany,
France, the U.K., Belgium and the Netherlands, is home to over 224 million
people. (Statistical Office of the European Commission.) There is no longer a
reasonable option for landfill disposal. Even in PERI's U.S. territory, people
are concentrated in coastal communities and the bulk of California's 33 million
people reside between San Francisco and San Diego. Los Angeles County alone
houses almost 10 million. (U.S. Census Bureau.)
It is this environmental pressure that creates the market for Thermo
Master(TM) Plants and for PERI's comprehensive, environmentally sustainable
waste management and recycling services. Opportunities in China are another
market of immense proportion. The population is now estimated to be in excess of
1.2 billion people, all living in a geographical region of approximately the
same size as the United States. Population density in the region of first
interest, the Yangzi Delta, exceeds 1,470 per square mile. (Department of
Foreign Affairs and International Trade for Canada.) PERI's partner in China is
Xin Hua Holdings. Letters of intent have been signed to construct two plants.
Thermo Tech(TM) has structured itself to license the use of its technology
and has set out a plan to roll out plants as rapidly as possible through the
efforts of master licensees as well as its own marketing. Through the master
service agreement with PEOSI, a turnkey waste conversion plant can be delivered
quickly. PERI has structured itself to deliver a comprehensive "one-stop" system
of waste recycling. The combination is unlike anything else in the waste
industry.
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Marketing Plan
--------------
PERI has identified several attractive market opportunities for its
products and services. Even though PERI has focused on Thermo Master(TM) organic
waste conversion technology as a key element in its business plan, PERI is
capable of providing a total recycling system.
. PERI is structured to provide "one-stop-shopping" to waste generators
for a range of essential functions and services.
. PERI provides key project development and support services for Thermo
Master(TM) Plants, Earth Alliance Satellite Centers, transfer
stations, waste water and water treatment systems, as well as other
environmental and recycling processes and facilities.
. PERI, through its subsidiary, is a master licensee for the Thermo
Master(TM) technology and has acquired exclusive rights for all of
Canada plus the states of California, Washington, Oregon, Nevada,
Hawaii and Iowa. PERI also enjoys non-exclusive rights to build and
operate plants throughout the world.
. PERI will be the owner and operator, through Earth Alliance Systems
Inc. of Satellite Centers and an extensive waste acquisition and
recycling business.
. PERI delivers recycling options for the full range of recognized
recyclable materials, including glass, plastic, paper, metals and
cardboard. PERI also offers an option that others cannot - real and
effective recycling of organic wastes.
PERI is an integrated and diversified environmental and recycling business,
possessing the key technologies and systems to provide a comprehensive range of
recycling options to clients. The Thermo Master(TM) technology gives PERI a
market advantage in organic recycling. Over time, PERI plans to acquire or
develop other recycling technologies and businesses complementary to its core
business.
Waste Supply and Recycling Services
-----------------------------------
Earth Alliance Systems Inc. has the expertise to effectively manage a wide
range of recyclable waste materials. It receives, sorts and assembles a full
range of recyclable materials including organics. Earth Alliance supplies,
brokers or processes these materials as is most appropriate. In the case of
organic wastes, Earth Alliance delivers a raw material stream to any given
Thermo Master(TM) Plant on a put or pay contract basis. This assures the
viability of the Plant from the very beginning of operations. Earth Alliance's
proprietary Satellite Centers are the key to efficient waste gathering,
recycling and brokering. The business of any Thermo Master(TM) Plant, whether
owned and operated by PERI or some other entity, is processing of organic waste
materials to produce valuable end products in the form of feed or fertilizer
ingredients. Acquisition of that waste should not be part of the plant's
business. At the same time that it is supplying organics to Thermo Master(TM)
facilities, Earth Alliance is able to handle and direct other recyclables such
as glass, plastic, paper, metals and cardboard, ensuring that these materials
get to firms specializing in their effective recovery and remanufacture.
PERI's business is recycling. PERI's business advantage is that it has the
answer for dealing with organic wastes, not just materials that already have a
recognized option for
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recycling. The organic advantage is access to, or ownership of, the Thermo
Master(TM) bio conversion process.
From the time that a potential plant site is identified, PEOSI provides the
following services under terms agreed upon with the licensee and through its
subsidiaries:
. Assessment of market demographics and organization, including the
ultimate availability of sufficient waste at appropriate prices to
justify the placement of a Thermo Master(TM) Plant. This is a
contracted service. A feasibility report is prepared and delivered.
. Upon completion of agreements to proceed with the project, Earth
Alliance begins contracting with waste generators and haulers,
offering a full range of services including waste audits.
. As directed by the geography and demographics of the specific market,
Earth Alliance sites and constructs the optimum number of Satellite
Centers to receive organic wastes and provide de-pack and other
recycling services.
. Organic waste is supplied to the plant under a pre-agreed, put or pay
contract and other recyclables are directed to appropriate users.
Earth Alliance is equipped to collect and prepare all manner of wastes for
recycling, including organic wastes. It is structured to serve customers with
unique needs, especially small generators that have relatively few options for
responsible organic waste management. PERI has developed its toter bin exchange
service and a proprietary satellite waste receiving and preparation facility
where it can take bulk wastes and grind them into a densified slurry that can be
transported economically over greater distances. It is able to receive and
depackage food materials, sending the organics for processing at the Thermo
Master(TM) Plant and the containers to suitable materials recycling facilities.
The Satellite Center provides a superior option for specialized communities such
as resort towns located in environmentally sensitive areas. PERI provides:
. Competitive prices to waste generating clients of all sizes;
. Effective recycling options for waste generators;
. Access by waste generators to state-of-the-art organic recycling;
. Reduction of negative consequences of organic waste disposal including
leachate run-off, production of odors and greenhouse gases; and
. Contracted waste delivery at reasonable prices and in a ready process
form for Thermo Master(TM) Plants.
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Pre-Construction Services
-------------------------
Thermo Master(TM) Plants are built according to a standard turnkey design
package. PERI has established a master services agreement to construct and
support Thermo Master(TM) Plants. Planet Earth Design Build Inc. delivers the
actual turnkey plant to its owners based on a formal executed contract. Each
plant must be sited and built according to local codes and regulations, and it
must be engineered and constructed to meet the needs of that particular
business. PEOSI can provide these services directly, but will more likely
coordinate and manage the projects with specific services provided by local sub-
contractors. Upon notification that negotiations have been finalized regarding
the establishment of a new Thermo Master(TM) Plant in a specific market, PEOSI
prepares for construction of that plant. Included in that preparation are the
following tasks:
. Review the local market and prepare a short list of suitable
locations, assuming that the licensee has not already provided a site;
. Review local, state and federal regulations pertaining to
establishment of a Thermo Master(TM) Plant in a particular location;
. Contract with local engineering firms to conduct necessary site
assessment studies;
. Acquire the approvals and permits required to build and operate a
plant of the specific description and size intended;
. Contract with local engineers to prepare site drawings and
construction drawings in accord with local codes; and
. Initiate procurement programs for plant equipment and systems.
With respect to actual construction of the plant, PEOSI delivers or
arranges the following services:
. Provide or contract general contracting services for the project;
. Arrange all sub-contracts required to deliver a finished plant;
. Continue with procurement programs to assure timely delivery of plant
materials and equipment;
. Coordinate and oversee the efforts of all contractors responsible for
delivering the finished and operational plant;
. Manage budgets and time-lines to ensure delivery on budget and on
time; and
. Ensure the mechanical commissioning of all systems is completed by the
responsible party.
The same concepts apply to Earth Alliance Satellite Centers or any other
facility that PEOSI delivers on a turnkey basis for any client. As much as
possible, PEOSI uses local experts, contractors and service suppliers, thus
increasing overall business within the community. PERI hires local staff for all
its ongoing facilities and services, whether that be employees for Satellite
Centers, its own Thermo Master(TM) businesses or support services for plants
owned by other entities. When a plant is constructed and ready for start-up and
process commissioning, PEOSI will deliver the following through Planet Earth
Management Inc.:
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. A complete set of all necessary systems and procedures manuals;
. Training in the use of key equipment and systems;
. Training for management and staff regarding process and operations;
. Training on quality and process monitoring procedures and equipment;
. Start-up and process commissioning; and
. Ongoing and comprehensive longer-term maintenance service and
programs.
Intellectual Property Protection
--------------------------------
PERI is an integrated and comprehensive recycling business, dealing in
every aspect of the sector. Thermo Tech(TM) Technologies Inc., through its
subsidiary, is a technology company that has developed and holds the rights to
the world's most advanced and largest commercial system for organic waste
recycling. The Thermo Master(TM) technology is patent protected to 2016 through
U.S. Patent 5,810,903 and to 2017 by New Zealand Patent No. 334753. Another 16
international versions of the same patent have been submitted through the Patent
Cooperation Treaty and designated as fully acceptable for patenting at the
national level. These patents are currently pending. Patents are also pending on
other aspects of the process.
Thermo Tech(TM) and PERI Alliance
---------------------------------
Thermo Tech(TM) has restructured to operate as the marketer and the
licensor of its technology. PERI supplies, under the master service agreement,
everything needed to establish plants and keep them maintained and operating
effectively, with a secure supply of waste. PERI can deliver the entire package
of services to Thermo Tech(TM) and the owners of specific plants in a cost-
effective manner while achieving its own goals of profitable operations. Plants
can be sized from 100 tons up to 1,200 tons per day processing capacity. That is
why the alliance between the companies makes so much sense.
PERI has its own expert team members to direct and manage various
components of its business. Each one brings a wealth of experience in their own
field of engineering, construction, financial systems, process technology,
technology development, operational management and waste procurement systems.
PERI has the necessary business links to other key third party suppliers that
can provide such services as specialized environmental permitting, plant site
assessment, and design and systems engineering. All services are provided
according to the master agreement on a cost plus basis, thus ensuring positive
cash-flow to PERI. Plant construction costs are covered by debt financing.
Operating services are paid for by plant revenues.
PERI provides all services to its own plants and to Thermo Tech(TM) plants
as per the master services agreement. PERI has an exclusive agreement to supply
its comprehensive range of services to European Thermo Technology Ltd. ("ETT"),
which is based in London, England. ETT has been established to exploit the
European market comprised of the United Kingdom, Germany, France, Spain,
Portugal, Italy, Greece, Norway, Sweden, Finland, Switzerland, the Netherlands,
Luxembourg, Ireland, Denmark and Belgium. As other
13
<PAGE>
master licensees emerge, PERI will establish similar arrangements for project
and support services.
Sources of Revenue
------------------
All four subsidiary businesses are structured to operate as separate profit
centers. The subsidiaries have been structured as distinct entities to ensure
that PERI's management can track each subsidiary's performance. The products and
services expected to produce the majority of the revenue for PERI consist of the
following:
(1) Market assessment, engineering, construction, commissioning and
training services required to establish and bring into operation a particular
Thermo Master(TM) Plant (or other environmental facility);
(2) Long-term contracted support services to operating plants;
(3) Secure supplies of waste to plants on a contractual basis and
comprehensive recycling and management services to the waste generation market
in general; and
(4) Broker the end products from Thermo Master(TM) Plants.
Employees
---------
As of September 15, 2000, PERI had 8 employees, and 20 independent
contractors. Of these employees and contractors, 5 were classified as executive,
9 as administrative personnel, 6 production, and 8 sales and marketing. PERI's
employees do not belong to a collective bargaining unit, and PERI is not aware
of any labor union organizing activity.
Corporate Headquarters
----------------------
PERI's corporate offices are located at 435 Martin Street, Blaine,
Washington, 98320, where it leases approximately 653 square feet at a monthly
lease rate of US$1,360.42. PERI also has offices at 20436 Fraser Highway,
Langley, British Columbia, Canada, V3A 4G2. There it leases approximately 16,000
square feet at a monthly lease rate of US$18,500.
Press Release on Merger
-----------------------
The Company issued a press release with respect to the Merger on September
21, 2000, a copy of which is attached as Exhibit 99.1 to this Form 8-K.
14
<PAGE>
Item 7. Financial Statements, Pro Forma Information and Exhibits
Financial Statements
--------------------
Accompanying this Form 8-K are the financial statements of PERI required by
Regulation S-B, Item 310(c).
Index to Financial Statements of PERI
<TABLE>
<S> <C>
Independent Auditors' Report, dated September 6, 2000........................................................ F-1
Consolidated Balance Sheet as at June 30, 2000 (audited) .................................................... F-2
Consolidated Statement of Income and Retained Earnings for the seven months
ended June 30, 2000 (audited)................................................................................ F-3
Consolidated Statement of Changes in Financial Position for the seven months
ended June 30, 2000 (audited) ............................................................................... F-4
Notes to Financial Statements for the seven months ended June 30, 2000 (audited)............................. F-5
</TABLE>
Pro Forma Financial Information
-------------------------------
Accompanying this Form 8-K are the pro forma financial statements required
by Regulation S-B, Item 310(d).
Index to Pro Forma Financial Statements
<TABLE>
<S> <C>
Pro Forma Balance Sheet as at April 30, 2000 (unaudited)..................................................... F-9
Pro Forma Statement of Operations for the year ended April 30, 2000 (unaudited).............................. F-10
</TABLE>
Exhibits
--------
Exhibit Index
2.1 Agreement and Plan of Reorganization, executed September 13,
2000, by and between Adventure Minerals Inc., AVML Sub One
Corporation and Planet Earth Recycling Inc.
2.2 Agreement and Plan of Merger, executed September 13, 2000, and
effective September 15, 2000, merging Planet Earth Recycling Inc.
with and into AVML Sub One Corporation
15
<PAGE>
2.3 Agreement and Plan of Merger, executed September 18, 2000 and
effective September 19, 2000, merging AVML Sub One Corporation
with and into Adventure Minerals Inc.
99.1 Press release on the merger, dated September 21, 2000.
Item 8. Change in Fiscal Year
Effective September 15, 2000, the Company has changed, by resolution of
the Board of Directors, its fiscal year end from April 30/th/ to June 30/th/.
Hereafter, the Company will file quarterly reports on Form 10-QSB for periods
ending September 30/th/, December 30/th/ and March 30/th/, and an annual report
on Form 10-KSB for the year ending June 30/th/. The Company's Form 10-QSB for
the period ending September 30, 2000, will cover the transition period of August
1, 2000, to September 30, 2000.
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 hereunto duly authorized.
ADVENTURE MINERALS INC.
Dated: September 29, 2000 By: /s/ Frank Andre
------------------------- -------------------------
Name: Frank Andre
Title: President
16
<PAGE>
--------------------------------------------------------------------------------
AUDITORS' REPORT
--------------------------------------------------------------------------------
To the Shareholder of Planet Earth Recycling Inc.:
We have audited the consolidated balance sheet of Planet Earth Recycling Inc. as
at June 30, 2000 and the consolidated statements of income and retained earnings
and changes in financial position for the seven months then ended. These
financial statements are the responsibility of the company's management. Our
responsibility is to express an opinion on these financial statements based on
our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform an audit to obtain reasonable
assurance whether the financial statements are free of material misstatement. An
audit includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. An audit also includes assessing the
accounting principals used and significant estimates made by management, as well
as evaluating the overall financial statement presentation.
In our opinion, these financial statements present fairly, in all material
respects, the financial position of the company as at June 30, 2000 and the
results of its operations and the changes in its financial position for the
period ended in accordance with generally accepted accounting principles.
/s/ Raber Mattuck
---------------------
CHARTERED ACCOUNTANTS
Vancouver, British Columbia
September 6, 2000
F-1
<PAGE>
PLANET EARTH RECYCLING INC.
CONSOLIDATED BALANCE SHEET
AS AT JUNE 30, 2000
(AUDITED)
U.S. $
-----------
ASSETS
------
CURRENT ASSETS
Cash in Bank $ 1,875,315
Accounts Receivable - Trade 488,830
Accounts Receivable - Other 25,757
Prepaid expenses 71,741
-----------
$ 2,461,643
CAPITAL ASSETS (Notes 2 (d) and 3) 20,881
LICENSE (Note 2 (e) and 9 (b)) 975,000
-----------
TOTAL ASSETS $ 3,457,524
-----------
LIABILITIES & SHAREHOLDER'S EQUITY
----------------------------------
CURRENT LIABILITIES
Accounts Payable $ 140,489
Deferred Revenue (Notes 2 (c) and 4) 1,392,573
Note Payable (Note 5) 1,000,000
-----------
2,533,062
-----------
SHAREHOLDER'S EQUITY
--------------------
CAPITAL STOCK (Note 1) 1
RETAINED EARNINGS 924,461
-----------
924,462
-----------
$ 3,457,524
===========
F-2
<PAGE>
PLANET EARTH RECYCLING INC.
CONSOLIDATED STATEMENT OF INCOME AND RETAINED EARNINGS
For the 7 month period ended JUNE 30, 2000
(AUDITED)
U.S. $
-----------
REVENUE $ 1,095,814
EXPENSES
Advertising and promotion 2,881
Automotive expenses 350
Depreciation and amortization 25,532
Donation 5,103
(Gain) Loss US$ exchange 39,267
Interest Expense 18,027
Management consultants 24,138
Office and general 10,968
Professional fees 1,802
Rent 17,323
Telephone 1,565
Travel 3,036
Wages and benefits 25,967
-----------
175,959
-----------
INCOME BEFORE INTEREST INCOME 919,855
INTEREST INCOME 4,606
-----------
NET INCOME AND RETAINED EARNINGS $ 924,461
===========
F-3
<PAGE>
PLANET EARTH RECYCLING INC.
CONSOLIDATED STATEMENT OF CHANGES IN FINANCIAL POSITION
For the 7 month period ended JUNE 30, 2000
(AUDITED)
U.S. $
-----------
CASH RESOURCES PROVIDED BY (USED IN)
OPERATING ACTIVITES
Net Income $ 924,461
Items not involving funds
Amortization 25,532
Deferred revenue realized (596,817)
Cash generated from (used for) operating working capital
Accounts receivable - trade (488,830)
Accounts receivable - other (25,757)
Prepaid expenses (71,741)
Accounts payable and accrued liabilities 140,489
-----------
(92,663)
-----------
CASH RESOURCES PROVIDED BY (USED IN)
FINANCING ACTIVITIES
Share capital 1
Note Payable 1,000,000
Fund received from contract advance 1,989,390
-----------
2,989,391
-----------
CASH RESOURCES PROVIDED BY (USED IN)
INVESTING ACTIVITIES
Acquisition of license (1,000,000)
Purchase of capital assets (21,413)
-----------
(1,021,413)
-----------
INCREASE (DECREASE) IN CASH 1,875,315
CASH AND TERM DEPOSITS, beginning of year -
-----------
CASH AND TERM DEPOSITS, end of year $ 1,875,315
===========
F-4
<PAGE>
PLANET EARTH RECYCLING INC.
NOTES TO FINANCIAL STATEMENTS
FOR THE 7 MONTHS ENDED JUNE 30, 2000
(AUDITED)
1. Nature of Business and Status of Activities
Planet Earth Recycling Inc. (the "Company") was incorporated in Nevada, USA
on November 29, 1999, and is a private company.
Planet Earth Recycling Inc. is an integrated, multi-faceted recycling and
waste management business, ready to address a broad range of recyclable
material including glass, plastic, paper, cardboard, metals and
particularly organic wastes. The Company holds contractual rights to build,
support, and supply Thermo Master(TM) Plants which employ a patent
protected process to convert organic waste materials to valuable feed and
fertilizer products.
The Company's has investments in one subsidiary, Planet Earth Operating
Systems Inc., which in turn has investments in four subsidiaries, which are
consolidated and summarized as follows:
<TABLE>
<CAPTION>
Company Nature of Business
<S> <C>
Planet Earth Operating Services Inc. (100% owned) Operating Company
(a) Earth Alliance Systems Inc. (100% owned) Total Recycling
(b) Planet Earth Bio Conversion Inc. (100% owned) Licensor of technology
(c) Planet Earth Design Build Inc. (100% owned) Engineering and Construction
(d) Planet Earth Management Inc. (100% owned) Commissioning and Operating
</TABLE>
2. Significant Accounting Policies
(a) Principles of Accounting These consolidated financial statements
have been prepared in accordance with
accounting principles generally accepted
in Canada applicable to a going concern,
which assumes that the Company will
continue operation for a reasonable
period of time and will be able to
realize its assets and discharge its
liabilities and commitments in the normal
course of operations.
These principles can differ in certain
material respects from those accounting
principles generally accepted in the
United States but no material differences
exist in these statements.
F-5
<PAGE>
PLANET EARTH RECYCLING INC.
NOTES TO FINANCIAL STATEMENTS
FOR THE 7 MONTHS ENDED JUNE 30, 2000
(b) Basis of Consolidation These financial statements have been
prepared using the purchase method of
consolidation. The assets and liabilities
of acquired companies are initially
recorded at their cost. The results of
operations of the acquired companies are
included from the dates of acquisition.
All significant intercompany transactions
and balances have been eliminated on
consolidation.
(c) Revenue Recognition Revenue is recognized when services are
performed.
(d) Capital Assets Plant and equipment is recorded at cost.
Amortization is recorded on active and
idle assets, computed using the 20%
straight-line method to amortize the cost
of the assets over their estimated useful
lives.
(e) Licenses License rights are recorded at cost and
are amortized on a straight-line basis
over the license period (10 years) which
is the Company's estimated period of
benefit for these costs.
3. Capital Assets
Cost Acc. Amort. Net Book Value
Office Equipment $21,413 $532 $20,881
Amortization for the period amounted to $532.
The estimated useful life of the office equipment is five years.
4. Deferred Revenue
The Company entered into a consulting contract on April 1, 2000, to provide
consulting and administrative services at a fixed monthly fee of
$300,000.00 CDN ($198,939 US) plus all costs charged at 15%. On April 28,
2000 the first ten months were paid in advance($3,000,000 CDN; $1,989,390
US). As at June 30, 2000 $1,392,573 US of that advance remained unearned
(Note 8 (c)).
5. Note Payable
The Company, in connection with its acquisition of the license agreement
(Note 9 (b)) is indebted by way of a $1,000,000 US note payable, due on
demand at seven percent (7%) rate of interest payable both before and after
maturity. Interest of $18,027 US has been accrued but unpaid to June 30,
2000.
F-6
<PAGE>
PLANET EARTH RECYCLING INC.
NOTES TO FINANCIAL STATEMENTS
FOR THE 7 MONTHS ENDED JUNE 30, 2000
6. Share Capital
The Company has authorized share capital of 25,000,000 common shares par
value of $0.01US. Only 1 share has been issued.
7. Commitments
The Company rents its head office and administrative offices under
operating leases. Rental payments during the period amounted to $17,323
U.S$. Aggregate minimum rental payments are $672,341 U.S.$ and approximate
future rent payments for the next five years relative to signed lease
agreements are as follows:
U.S. $
------
2001 $182,805
2002 $167,841
2003 $167,841
2004 $153,854
8. Subsequent Event
a) On June 24, 2000, the Company entered into a letter of intent with a
corporation in Ontario, Canada to purchase their business of organic
waste collection and recycling. The agreed purchase price was
$1,600,000 CDN ($1,061,008 US). As at the report date the purchase has
not yet been completed.
b) On August 18, 2000, the Company entered into a letter of intent with a
corporation in New York, USA to purchase their Assets for $2,250,000
US and assume the corporation's liabilities in exchange for $1,100,000
US. The corporation is in the business of environmental research, soil
mixing and organic sludge. As at the report date the purchase has not
yet been completed.
9. Significant Agreements
The Company has entered into several significant agreements during the
operating period as follows:
a) Master Service Agreement. The Company has a Master Service Agreement
with a corporation that allows it to have the right to construct,
commission, maintain, operate, supply and broker the end product of
all Thermo Master(TM) Plants built for any licensee in the world.
These services are provided at a cost plus 15% rate.
F-7
<PAGE>
PLANET EARTH RECYCLING INC.
NOTES TO FINANCIAL STATEMENTS
FOR THE 7 MONTHS ENDED JUNE 30, 2000
9. Significant Agreements - Cont.
b) License Agreement. The Company entered into a License Agreement on
March 28, 2000 to utilize the Thermo Master(TM) technology in Canada,
Washington, Oregon, Nevada, Idaho, California and Hawaii. The Company
has an exclusive right to build a Thermo Master(TM) Plant in any of
its territories. The License is $1,000,000 US and was satisfied by
with of a Note payable (Note 5). Amortization of $25,000 has been
recorded during the period (Note 2 (e)). The License Agreement also
calls for an additional payment of $1,000,000 US for every plant
constructed by or on behalf of the Licensee.
c) Consulting Agreement. The Company has entered into a ten month
Consulting Agreement for monthly consulting and administrative
services (see Note 4). This contract is renewable in October, 2000 for
the full rate or a reduced rate for a further nine-month period.
Currently the Company derives all its Revenue from these contracts, which
are with one Corporation.
F-8
<PAGE>
ADVENTURE MINERALS INC.
PRO FORMA
BALANCE SHEET
As At April 30, 2000
(All Funds in U.S. $)
(Unaudited)
ASSETS
------
Cash $ 2,041,515
Deposit in Trust 47,297
Mineral Properties 1,681
Exploration Advance 8,299
-----------
-----------
TOTAL ASSETS $ 2,098,792
-----------
LIABILITIES & SHAREHOLDERS EQUITY
---------------------------------
Accounts Payable, Accrued Liabilities $ 54,215
Deferred Revenue 1,824,324
-----------
Total Liabilities 1,878,539
Share Capital 2,034
Additional Paid in Capital 52,217
Retained Earnings 166,002
-----------
Total Equity 220,253
-----------
TOTAL LIABILITIES & EQUITY $ 2,098,792
-----------
F-9
<PAGE>
ADVENTURE MINERALS INC.
PRO FORMA
STATEMENT OF OPERATIONS
For the Year Ended April 30, 2000
(All Funds in U.S. $)
(Unaudited)
REVENUES
Consulting Contract $ 202,703
Interest Income 4,512
-----------
207,215
OPERATING EXPENSES
Selling, General and Administrative 11,348
Mineral Property Exploration Expenditures 532
Professional Fees 23,271
Stock Transfer Fees 660
Travel 1,324
-----------
37,135
-----------
NET INCOME FROM OPERATIONS $ 170,080
Accumulated Deficit, Beginning of Period (4,078)
-----------
Accumulated Retained Earnings, End of Period $ 166,002
===========
Net Income Per Share $ 0.01
-----------
Pro Forma Weighted Average 20,165,000
-----------
F-10
