<PAGE>
U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-KSB
[X] Annual report pursuant to section 13 or 15(d) of the Securities Exchange
Act of 1934 for the fiscal year ended December 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 No. 000-26903
EBONY & GOLD VENTURES, INC.
(Name of Small Business Issuer as specified in its charter)
Nevada 88-0409153
(State or Other Jurisdiction of (IRS Employer
Incorporation or Organization) Identification No.)
2500 - 1177 West Hastings Street
Vancouver, British Columbia, Canada V6E 2K3
(Address of Principal Executive Offices and Zip Code)
Issuer's Telephone Number: (604) 608-1610
2980 S. Rainbow Boulevard, Suite 108 Las Vegas, Nevada 89146
(Former name, former address and former fiscal year, if changed since last
report.)
Securities registered under Section 12(b) of the Act: None
Securities registered under Section 12(g) of the Act: None
Check whether the issuer (1) filed all reports required to be filed by sections
13 or 15(d) of the Exchange Act during the past 12 months (or such shorter
period that the issuer was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days. Yes [X] No [ ]
Check if there is no disclosure of delinquent filers in response to Item 405 of
Regulation S-B in this form, and no disclosure will be contained, to the best of
registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-KSB or any amendment to
this Form 10-KSB. [X]
The Registrant's revenues for its most recent fiscal year: $0.
The aggregate market value of voting stock held by non-affiliates: As of January
26, 2000, the estimated aggregate market value of voting stock held by
nonaffiliates was $6,500.00 (assumes $0.01 per share, no actual trading occurred
on January 26, 2000).
As of December 31, 1999, the Registrant had outstanding 2,100,000 shares of
Common Stock, without par value.
Documents incorporated by reference: None.
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TABLE OF CONTENTS
<TABLE>
<CAPTION>
ITEM NUMBER AND CAPTION Page
<S> <C>
Part I
1. Description of Business 3
2. Description of Properties 7
3. Legal Proceedings 7
4. Submission of Matters to a Vote of Security Holders 7
Part II
5. Market for Common Equity and Related Stockholder 7
Matters
6. Management's Discussion and Analysis of Financial 7
Condition and Results of Operations
7. Financial Statements 8
8. Changes in and Disagreements with Accountants 8 on Accounting and Financial
Disclosure
Part III
9. Directors, Executive Officers, Promoters and Control 8
Persons; Compliance with Section 16(a) of the
Exchange Act
10. Executive Compensation 8
11. Security Ownership of Certain Beneficial Owners and 9
Management
12. Certain Relationships and Related Transactions 9
13. Exhibits and Reports on Form 8-K 10
</TABLE>
2
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FORWARD-LOOKING STATEMENT NOTICE
When used in this report, the words "may," "will," "expect," "anticipate,"
"continue," "estimate," "project," "intend," and similar expressions are
intended to identify forward-looking statements within the meaning of Section
27a of the Securities Act of 1933 and Section 21e of the Securities Exchange Act
of 1934 regarding events, conditions, and financial trends that may affect the
Company's future plans of operations, business strategy, operating results, and
financial position. Persons reviewing this report are cautioned that any
forward-looking statements are not guarantees of future performance and are
subject to risks and uncertainties and that actual results may differ materially
from those included within the forward-looking statements as a result of various
factors. Such factors are discussed under the headings "Item 1. Description of
Business," and "Item 6. Management's Discussion and Analysis of Financial
Condition and Results of Operations," and also include general economic factors
and conditions that may directly or indirectly impact the Company's financial
condition or results of operations.
PART I
ITEM 1. DESCRIPTION OF BUSINESS
General
For the past three years the Company has had no active business operations, and
has been seeking to acquire an interest in a business with long-term growth
potential. The Company was formed as a Nevada corporation in October 1996. It
has been an inactive corporation for at least the past three years.
It is emphasized that the business objectives discussed herein are extremely
general and are not intended to be restrictive on the discretion of the
Company's management.
In February of 2000 the Company approved a forward split of the currently
issued and outstanding stock of the Company, on a basis of 1.3809524 for
every one (1) outstanding share held by each shareholder.
Selection of a Business
The Company anticipates that businesses for possible acquisition will be
referred by various sources, including its officers and directors, professional
advisors, securities broker-dealers, venture capitalists, members of the
financial community, and others who may present unsolicited proposals. The
Company will not engage in any general solicitation or advertising for a
business opportunity, and will rely on personal contacts of its officers and
directors and their affiliates, as well as indirect associations between them
and other business and professional people. By relying on "word of mouth," the
Company may be limited in the number of potential acquisitions it can identify.
Compensation to a finder or business acquisition firm may take various forms,
including one-time cash payments, payments based on a percentage of revenues or
product sales volume, payments involving issuance of securities (including those
of the Company), or any combination of these or other compensation arrangements.
Consequently, the Company is currently unable to predict the cost of utilizing
such services.
The Company will not restrict its search to any particular business, industry,
or geographical location, and management reserves the right to evaluate and
enter into any type of business in any location. The Company may participate in
a newly organized business venture or a more established company entering a new
phase of growth or in need of additional capital to overcome existing financial
problems. Participation in a new business venture entails greater risks since in
many instances management of such a venture will not have proved its ability,
the eventual market of such venture's product or services will likely not be
established, and the profitability of the venture will be unproved and cannot be
predicted accurately. If the Company participates in a more established firm
with existing financial problems, it may be subjected to risk because the
financial resources of the Company may not be adequate to eliminate or reverse
the circumstances leading to such financial problems. In
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seeking a business venture, the decision of management will not be controlled by
an attempt to take advantage of any anticipated or perceived appeal of a
specific industry, management group, product, or industry, but will be based on
the business objective of seeking long-term capital appreciation in the real
value of the Company.
The analysis of new businesses will be undertaken by or under the supervision of
the officers and directors. In analyzing prospective businesses, management will
consider, to the extent applicable, the available technical, financial, and
managerial resources; working capital and other prospects for the future; the
nature of present and expected competition; the quality and experience of
management services which may be available and the depth of that management; the
potential for further research, development, or exploration; the potential for
growth and expansion; the potential for profit; the perceived public recognition
or acceptance of products, services, or trade or service marks; name
identification; and other relevant factors.
The decision to participate in a specific business may be based on management's
analysis of the quality of the other firm's management and personnel, the
anticipated acceptability of new products or marketing concepts, the merit of
technological changes, and other factors which are difficult, if not impossible,
to analyze through any objective criteria. It is anticipated that the results of
operations of a specific firm may not necessarily be indicative of the potential
for the future because of the requirement to substantially shift marketing
approaches, expand significantly, change product emphasis, change or
substantially augment management, and other factors.
The Company will analyze all available factors and make a determination based on
a composite of available facts, without reliance on any single factor. The
period within which the Company may participate in a business cannot be
predicted and will depend on circumstances beyond the Company's control,
including the availability of businesses, the time required for the Company to
complete its investigation and analysis of prospective businesses, the time
required to prepare appropriate documents and agreements providing for the
Company's participation, and other circumstances.
Acquisition of a Business
In implementing a structure for a particular business acquisition, the Company
may become a party to a merger, consolidation, or other reorganization with
another corporation or entity; joint venture; license; purchase and sale of
assets; or purchase and sale of stock, the exact nature of which cannot now be
predicted. Notwithstanding the above, the Company does not intend to participate
in a business through the purchase of minority stock positions. On the
consummation of a transaction, it is likely that the present management and
shareholders of the Company will not be in control of the Company. In addition,
a majority or all of the Company's directors may, as part of the terms of the
acquisition transaction, resign and be replaced by new directors without a vote
of the Company's shareholders.
In connection with the Company's acquisition of a business, the present
shareholders of the Company, including officers and directors, may, as a
negotiated element of the acquisition, sell a portion or all of the Company's
Common Stock held by them at a significant premium over their original
investment in the Company. It is not unusual for affiliates of the entity
participating in the reorganization to negotiate to purchase shares held by the
present shareholders in order to reduce the number of "restricted securities"
held by persons no longer affiliated with the Company and thereby reduce the
potential adverse impact on the public market in the Company's Common Stock that
could result from substantial sales of such shares after the restrictions no
longer apply. As a result of such sales, affiliates of the entity participating
in the business reorganization with the Company would acquire a higher
percentage of equity ownership in the Company. Public investors will not receive
any portion of the premium that may be paid in the foregoing circumstances.
Furthermore, the Company's shareholders may not be afforded an opportunity to
approve or consent to any particular stock buy-out transaction.
In the event sales of shares by present shareholders of the Company, including
officers and directors, is a negotiated element of a future acquisition, a
conflict of interest may arise because directors will be negotiating for the
acquisition on behalf of the Company and for sale of their shares for their own
respective accounts. Where a
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business opportunity is well suited for acquisition by the Company, but
affiliates of the business opportunity impose a condition that management sell
their shares at a price which is unacceptable to them, management may not
sacrifice their financial interest for the Company to complete the transaction.
Where the business opportunity is not well suited, but the price offered
management for their shares is high, management will be tempted to effect the
acquisition to realize a substantial gain on their shares in the Company.
Management has not adopted any policy for resolving the foregoing potential
conflicts, should they arise, and does not intend to obtain an independent
appraisal to determine whether any price that may be offered for their shares is
fair. Stockholders must rely, instead, on the obligation of management to
fulfill its fiduciary duty under state law to act in the best interests of the
Company and its stockholders.
It is anticipated that any securities issued in any such reorganization would be
issued in reliance on exemptions from registration under applicable federal and
state securities laws. In some circumstances, however, as a negotiated element
of the transaction, the Company may agree to register such securities either at
the time the transaction is consummated, under certain conditions, or at
specified times thereafter. Although the terms of such registration rights and
the number of securities, if any, which may be registered cannot be predicted,
it may be expected that registration of securities by the Company in these
circumstances would entail substantial expense to the Company. The issuance of
substantial additional securities and their potential sale into any trading
market that may develop in the Company's securities may have a depressive effect
on such market.
It may be expected that the parties to the business transaction will find it
desirable to structure the acquisition as a so-called "tax-free" event under
sections 351 or 368(a) of the Internal Revenue Code of 1986, (the "Code"). In
order to obtain tax-free treatment under section 351 of the Code, it would be
necessary for the owners of the acquired business to own 80% or more of the
voting stock of the surviving entity. In such event, the shareholders of the
Company would retain less than 20% of the issued and outstanding shares of the
surviving entity. Section 368(a)(1) of the Code provides for tax-free treatment
of certain business reorganizations between corporate entities where one
corporation is merged with or acquires the securities or assets of another
corporation. Generally, the Company will be the acquiring corporation in such a
business reorganization, and the tax-free status of the transaction will not
depend on the issuance of any specific amount of the Company's voting
securities. It is not uncommon, however, that as a negotiated element of a
transaction completed in reliance on section 368, the acquiring corporation
issue securities in such an amount that the shareholders of the acquired
corporation will hold 50% or more of the voting stock of the surviving entity.
Consequently, there is a substantial possibility that the shareholders of the
Company immediately prior to the transaction would retain less than 50% of the
issued and outstanding shares of the surviving entity. Therefore, regardless of
the form of the business acquisition, it may be anticipated that stockholders
immediately prior to the transaction will experience a significant reduction in
their percentage of ownership in the Company.
Notwithstanding the fact that the Company is technically the acquiring entity in
the foregoing circumstances, generally accepted accounting principles may
require that such transaction be accounted for as if the Company had been
acquired by the other entity owning the business and, therefore, will not permit
a write-up in the carrying value of the assets of the other company.
The manner in which the Company participates in a business will depend on the
nature of the business, the respective needs and desires of the Company and
other parties, the management of the business, and the relative negotiating
strength of the Company and such other management.
The Company will participate in a business only after the negotiation and
execution of appropriate written agreements. Generally such agreements will
require specific representations and warranties by all of the parties thereto,
will specify certain events of default, will detail the terms of closing and the
conditions which must be satisfied by each of the parties prior to such closing,
will outline the manner of bearing costs if the transaction is not closed, will
set forth remedies on default, and will include miscellaneous other terms.
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Operation of Business After Acquisition
The Company's operation following its acquisition of a business will be
dependent on the nature of the business and the interest acquired. The Company
is unable to predict whether the Company will be in control of the business or
whether present management will be in control of the Company following the
acquisition. It may be expected that the business will present various risks,
which cannot be predicted at the present time.
Governmental Regulation
It is impossible to predict the government regulation, if any, to which the
Company may be subject until it has acquired an interest in a business. The use
of assets and/or conduct of businesses that the Company may acquire could
subject it to environmental, public health and safety, land use, trade, or other
governmental regulations and state or local taxation. In selecting a business in
which to acquire an interest, management will endeavor to ascertain, to the
extent of the limited resources of the Company, the effects of such government
regulation on the prospective business of the Company. In certain circumstances,
however, such as the acquisition of an interest in a new or start-up business
activity, it may not be possible to predict with any degree of accuracy the
impact of government regulation. The inability to ascertain the effect of
government regulation on a prospective business activity will make the
acquisition of an interest in such business a higher risk.
Competition
The Company will be involved in intense competition with other business
entities, many of which will have a competitive edge over the Company by virtue
of their stronger financial resources and prior experience in business. There is
no assurance that the Company will be successful in obtaining suitable
investments.
Employees
The Company is a development stage company and currently has no employees.
Executive officers, who are not compensated for their time contributed to the
Company, will devote only such time to the affairs of the Company as they deem
appropriate, which is estimated to be approximately 20 hours per month per
person. Management of the Company expects to use consultants, attorneys, and
accountants as necessary, and does not anticipate a need to engage any full-time
employees so long as it is seeking and evaluating businesses. The need for
employees and their availability will be addressed in connection with a decision
whether or not to acquire or participate in a specific business industry.
Recent Developments
On January 18, 2000 the Company entered into a non-binding letter of intent
(the "LOI") with booktech.com, inc., a Massachusetts corporation
("booktech.com"), regarding the proposed merger of a subsidiary of the Company
with and into booktech.com whereby booktech.com will become a wholly-owned
subsidiary of the Company (the "Merger"). The parties are currently in
negotiations for a definitive agreement to effect the Merger. In connection
with the Merger, it is currently anticipated that (i) 7,520,690 shares of
common stock of the Company ("Common Stock") will be issued to the former
holders of booktech.com common stock, (ii) 2,135,301 shares of Series A
Preferred Stock (the voting equivalent of 427,060 shares of Common Stock) will
be issued to current creditors of booktech.com in exchange for the release of
the debt obligations of booktech.com, and (iii) 1,100,000 shares of Series B
Preferred Stock (the voting equivalent of 6,600,000 shares of common stock
will be issued to the former holders of booktech.com common stock. In
connection with the proposed Merger, it is also anticipated that the Company
would acquire the assets of Virtuosity, LLC, a Delaware limited liability
company, in exchange for 1,379,310 shares of Common Stock. Finally, in
connection with the proposed Merger, the Company also intends to engage in a
private placement of 4,666,667 shares of Common Stock and 333,333 warrants to
purchase Common Stock for a total aggregate sales price of $7,000,000, that
will be achieved through transactions exempt from the registration
requirements of the Securities Act of 1933.
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ITEM 2. DESCRIPTION OF PROPERTIES
The Company utilizes office space at 2500-1177 West Hastings Street, Vancouver,
British Columbia, Canada V6E 2K3 provided by Joel Dumaresq, an officer and
director. The Company does not pay rent for this office space.
ITEM 3. LEGAL PROCEEDINGS
The Company is not a party to any legal proceedings, and to the best of its
knowledge, no such proceedings by or against the Company have been threatened.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matter was submitted to a vote of security holders in the fourth quarter of
fiscal year 1999.
PART II
ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
The Company's common stock is currently eligible for quotation on the OTC
Bulletin Board operated by the National Association of Securities Dealers,
Inc. Upon consummation of a merger with an operating company, the Company will
seek to have its shares listed for trading on a national exchange or trading
system. There can be no assurance that such listing will be successfully
obtained. There has been no public trading market for the Company's shares for
the past two fiscal years.
Since its inception, no dividends have been paid on the Company's common stock.
The Company intends to retain any earnings for use in its business activities,
so it is not expected that any dividends on the common stock will be declared
and paid in the foreseeable future.
On December 31, 1999, there were approximately 25 shareholders of record of the
Company's Common Stock.
ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Results of Operations
Years Ended December 31, 1999 and 1998
The Company had no revenue during the last two years. The Company had no general
and administrative expenses in 1998, and incurred $17,564 of such expenses in
1999. General and administrative expenses during 1999, consisted of fees and
related expenses associated with reviving the Company. In 1998 and 1999 the
Company recognized no interest expenses. The Company realized a net loss of
$17,564 in 1999. The Company does not expect to generate any revenue unless and
until it acquires an interest in an operating company.
Liquidity and Capital Resources
At December 31, 1999, the Company had working capital deficit of $19,664. This
deficit is largely attributable to debt owed to affiliates of the Company, who
have not pressed the Company for payment in hopes the Company will locate a
business venture in which to participate that will serve as a resource for
payment of the obligations. The Company's current plan is to handle the
administrative and reporting requirements of a public company; and search for
potential businesses, products, technologies and companies for acquisition.
Further, there can
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be no assurance that the Company would be successful in consummating any
acquisition on favorable terms or that it will be able to profitably manage the
business, product, technology or company it acquires. The Company's ability to
pursue its plan is dependent on the continued forbearance of its affiliated
creditors and their willingness to advance additional funds to the Company as
needed.
ITEM 7. FINANCIAL STATEMENTS
The financial statements of the Company appear at the end of this report
beginning with the Index to Financial Statements on page F-1.
ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE
There have been no changes in or disagreements with accountants in the past
three years.
PART III
ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL
PERSONS; COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT
Directors and Officers
The following table sets forth the names, ages, and positions with the Company
for each of the directors and officers of the Company.
<TABLE>
<CAPTION>
Name Age Positions Since
<S> <C> <C> <C>
Joel Dumaresq 35 President, Secretary 2000
and Director
</TABLE>
All directors hold office until the next annual meeting of stockholders and
until their successors are elected and qualify. Officers serve at the discretion
of the Board of Directors.
The following is information on the business experience of each director and
officer.
Mr. Dumaresq is an experienced business executive and investment banking
specialist. His experience ranges from running public and private corporations
to working for a national investment banking firm. For the past two years, Mr.
Dumaresq has worked with the Verus Group on public equity financings, mergers
and acquisitions. Mr. Dumaresq holds a degree in Economics.
Mr. Dumaresq currently serves on the Board of Directors of Wattage Monitor Inc.
and Smartsources.com.
ITEM 10. EXECUTIVE COMPENSATION
The Company has no agreement or understanding, express or implied, with any
officer, director, or principal stockholder, or their affiliates or associates,
regarding employment with the Company or compensation for services. There is no
understanding between the Company and any of its present stockholders regarding
the sale of a portion or all of the common stock currently held by them in
connection with any future participation by the Company in a business. There are
no other plans, understandings, or arrangements whereby any of the Company's
officers, directors, or principal stockholders, or any of their affiliates or
associates, would receive funds, stock, or other assets in connection with the
Company's participation in a business. No advances have been
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made or contemplated by the Company to any of its officers, directors, or
principal stockholders, or any of their affiliates or associates.
There is no policy that prevents management from adopting a plan or agreement in
the future that would provide for cash or stock based compensation for services
rendered to the Company.
On acquisition of a business, current management may resign and be replaced by
persons associated with the business acquired.
ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT
The following table sets forth as of December 31, 1999, the number and
percentage of the outstanding shares of common stock which, according to the
information supplied to the Company, were beneficially owned by (i) each person
who is currently a director of the Company, (ii) each executive officer, (iii)
all current directors and executive officers of the Company as a group and (iv)
each person who, to the knowledge of the Company, is the beneficial owner of
more than 5% of the outstanding common stock. Except as otherwise indicated, the
persons named in the table have sole voting and dispositive power with respect
to all shares beneficially owned, subject to community property laws where
applicable.
<TABLE>
<CAPTION>
Common Shares Percent of Class
PRINCIPAL
SHAREHOLDERS
- ------------------------------- ------------------------------------- ---------------------------------
<S> <C> <C>
Denise E. Cordova 17817 500,000 shares 23.81%
San Rafael Street
Fountain Valley, CA 92908
- ------------------------------- ------------------------------------- ---------------------------------
Mark Horey 350,000 shares 16.67%
8212 Neptune
Beach Las
Vegas, NV 89128
- ------------------------------- ------------------------------------- ---------------------------------
Tricia A. Willis 600,000 shares 28.57%
9087 S. Yosemite Street
#1602
Lone Tree, CO 80124
- ------------------------------- ------------------------------------- ---------------------------------
OFFICERS AND DIRECTORS
- ------------------------------- ------------------------------------- ---------------------------------
Joel Dumaresq, 0 Shares 0.0%
President/Secretary/ Director
- ------------------------------- ------------------------------------- ---------------------------------
All Directors and Officers of 0 Shares 0.0%
the Company in the Aggregate
- ------------------------------- ------------------------------------- ---------------------------------
</TABLE>
ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
None.
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ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K
Copies of the following documents are included as exhibits to this report
pursuant to Item 601 of Regulation S-B.
Exhibits.
<TABLE>
<CAPTION>
Exhibit SEC Ref. Title of Document Location
No. No.
<S> <C> <C> <C>
1 (3)(i) Articles of Incorporation 1
2 (3)(ii) By-Laws 1
3 (27) Financial Data Schedules 2
</TABLE>
1 Items Nos. 1 and 2 are incorporated by reference to the Company's Form 10SB
filed with the Securities and Exchange Commission August 2, 1999.
2 The Financial Data Schedule is presented only in the electronic filing with
the Securities and Exchange Commission.
FORM 8-K FILINGS
No reports on Form 8-K were filed in the last fiscal quarter of 1999.
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SIGNATURES
In accordance with Section 13 or 15(d) of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned thereunto duly
authorized.
EBONY & GOLD VENTURES, INC.
Date: March 24, 2000 By: /s/ Joel Dumaresq, President
In accordance with the Exchange Act, this report has been signed by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.
Dated: March 24, 2000 /s/ Joel Dumaresq, Director
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EBONY & GOLD VENTURES, INC.
(A Development Stage Company)
FINANCIAL STATEMENTS
December 31, 1999
December 31, 1998
December 31, 1997
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C>
INDEPENDENT AUDITOR'S REPORT....................................................................................F-2
ASSETS..........................................................................................................F-3
LIABILITIES AND STOCKHOLDERS'EQUITY.............................................................................F-4
STATEMENT OF OPERATIONS.........................................................................................F-5
STATEMENT OF CHANGES IN STOCKHOLDER EQUITY......................................................................F-6
STATEMENT OF CASH FLOWS.........................................................................................F-7
NOTES TO FINANCIAL STATEMENTS...................................................................................F-8
</TABLE>
F-1
<PAGE>
BARRY L. FRIEDMAN, P.C.
CERTIFIED PUBLIC ACCOUNTANT
1528 TULITA DRIVE OFFICE (702) 361-8414
LAS VEGAS, NEVADA 89123 FAX NO. (702) 896-0278
INDEPENDENT AUDITOR'S REPORT
Board of Directors February 15, 2000
EBONY & GOLD VENTURES, INC.
Las Vegas, Nevada
I have audited the accompanying Balance Sheets of Ebony & Gold
Ventures, Inc. (A Development Stage Company), as of December 31, 1999, December
31, 1998, and December 31, 1997, and the related statements of operations,
stockholders' equity and cash flows for the three years ended December 31, 1999,
December 31, 1998, and December 31, 1997. These financial statements are the
responsibility of the Company's management. My responsibility is to express an
opinion on these financial statements based on my audit.
I conducted my audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about 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 principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
I believe that my audit provides a reasonable basis for my opinion.
In my opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of Ebony & Gold
Ventures, Inc. (A Development Stage Company), as of December 31, 1999, December
31,1998, and December 31, 1997, and the related statements of operations,
stockholders' equity and cash flows for the three years ended December 31, 1999,
December 31, 1998, and December 31, 1997, in conformity with generally accepted
accounting principles.
The accompanying financial statements have been prepared assuming the
Company will continue as a going concern. As discussed in Note #5 to the
financial statements, the Company has suffered recurring losses from operations
and has no established source of revenue. This raises substantial doubt about
its ability to continue as a going concern. Management's plan in regard to these
matters is described in Note #5. These financial statements do not include any
adjustments that might result from the outcome of this uncertainty.
/s/ Barry L. Friedman
- -----------------------------
Barry L. Friedman
Certified Accountant
F-2
<PAGE>
EBONY & GOLD VENTURES, INC.
(A Development Stage Company)
BALANCE SHEET
ASSETS
<TABLE>
<CAPTION>
December 31, 1999 December 31, 1998 December 31, 1997
<S> <C> <C> <C>
CURRENT ASSETS $ 0 $ 0 $ 0
----------------------- ----------------------- ----------------------
TOTAL CURRENT ASSETS $ 0 $ 0 $ 0
----------------------- ----------------------- ----------------------
OTHER ASSETS $ 0 $ 0 $ 0
----------------------- ----------------------- ----------------------
TOTAL OTHER ASSETS $ 0 $ 0 $ 0
----------------------- ----------------------- ----------------------
TOTAL ASSETS $ 0 $ 0 $ 0
----------------------- ----------------------- ----------------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-3
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EBONY & GOLD VENTURES, INC.
(A Development Stage Company)
BALANCE SHEET
LIABILITIES AND STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
December 31, 1999 December 31, 1998 December 31, 1997
---------------------- --------------------- ---------------------
<S> <C> <C> <C>
CURRENT LIABILITIES
Officers Advances (Note #5) $ 17,564 $ 0 $ 0
---------------------- --------------------- ---------------------
TOTAL CURRENT LIABILITIES $ 17,564 $ 0 $ 0
---------------------- --------------------- ---------------------
STOCKHOLDERS' EQUITY (Note #4)
Common stock
No Par value
Authorized 21,000 shares
Issued and outstanding at
December 31, 1997-- $ 2,100
21,000 shares
December 31, 1998-- $ 2,100
21,000 shares
Common Stock
$.001 par value
Authorized 25,000,000 shares
Issued and outstanding at
December 31, 1999- $ 2,100
2,100,000 shares
Additional Paid In Capital 0 0 0
Deficit Accumulated During The Development
Stage -19,664 -2,100 -2,100
---------------------- --------------------- ---------------------
TOTAL STOCKHOLDERS' EQUITY $ -17,564 $ 0 $ 0
---------------------- --------------------- ---------------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY: $ 0 $ 0 $ 0
---------------------- --------------------- ---------------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-4
<PAGE>
EBONY & GOLD VENTURES, INC.
(A Development Stage Company)
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
Oct. 30, 1996
Year Ended Year Ended Year Ended (Inception) to
Dec. 31, 1999 Dec. 31, 1998 Dec. 31, 1997 Dec. 31, 1999
<S> <C> <C> <C> <C>
INCOME
Revenue $ 0 $ 0 $ 0 $ 0
------------------- --------------------- -------------------- ---------------------
EXPENSES
General, Selling and
Administrative $ 17,564 $ 0 $ 0 $ 19,664
------------------- --------------------- -------------------- ---------------------
TOTAL EXPENSE $ 17,564 $ 0 $ 0 $ 19,664
------------------- --------------------- -------------------- ---------------------
NET PROFIT/LOSS (-) $ -17,564 $ 0 $ 0 $ -19,664
------------------- --------------------- -------------------- ---------------------
Net Profit/Loss (-)
Per Weighted share (Note 1)
$ -.0084 $ NIL $ NIL $-.0094
------------------- --------------------- -------------------- ---------------------
Weighted average Number of
Common Shares outstanding
2,100,000 2,100,000 2,100,000 2,100,000
------------------- --------------------- -------------------- ---------------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-5
<PAGE>
EBONY & GOLD VENTURES, INC.
(A Development Stage Company)
STATEMENT OF CHANGES IN STOCKHOLDER EQUITY
<TABLE>
<CAPTION>
Additional Accumulated Deficit
Common Shares Stock Amount paid-in Capital
------------------ -------------------- -------------------- -----------------------
<S> <C> <C> <C> <C>
Balance
December 31, 1996 21,000 $ 2,100 $ 0 $ -2,100
Net loss year ended
December 31, 1997 0
------------------ -------------------- -------------------- -----------------------
Balance
December 31, 1997 21,000 $ 2,100 $ 0 $ -2,100
Net loss year ended
December 31, 1998 0
------------------ -------------------- -------------------- -----------------------
Balance
December 31, 1998 21,000 $ 2,100 $ 0 $ -2,100
February 19, 1999
Changed from no par value to
$.001 -2,079 +2,079
February 19, 1999
Forward stock split 100:1 2,079,000 +2,079 -2,079
Net loss year ended
December 31, 1999 -17,564
------------------ -------------------- -------------------- -----------------------
Balance
December 31, 1999 2,100,000 $ 2,100 $ 0 $ 19,664
------------------ -------------------- -------------------- -----------------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-6
<PAGE>
EBONY & GOLD VENTURES, INC.
(A Development Stage Company)
STATEMENT OF CASH FLOWS
<TABLE>
<CAPTION>
Oct. 30, 1996
Year Ended Year Ended March 13, 1997 to (Inception) to
Dec. 31, 1999 Dec. 31, 1998 Dec. 31, 1997 Dec. 31, 1999
--------------------- -------------------- -------------------- ----------------------
<S> <C> <C> <C> <C>
Cash Flows from Operating
Activities
Net Loss $ -17,564 $ 0 $ 0 $ -19,664
Adjustment to Reconcile net
loss to net cash provided
by operating activities
Changes in assets and
liabilities
Officers Advances +17,564 0 0 +17,564
--------------------- -------------------- -------------------- ----------------------
Net cash used in operating
activities $ 0 $ 0 $ 0 $ -2,100
Cash flows from investing
activities 0 0 0 0
Issuance of Common Stock
for cash $ 0 $ 0 $ 0 $ +2,100
--------------------- -------------------- -------------------- ----------------------
Net Increase (Decrease) $ 0 $ 0 $ 0 $ 0
Cash, beginning of period:
0 0 0 0
--------------------- -------------------- -------------------- ----------------------
Cash, end of period: $ 0 $ 0 $ 0 $ 0
--------------------- -------------------- -------------------- ----------------------
</TABLE>
F-7
<PAGE>
EBONY & GOLD VENTURES, INC.
NOTES TO FINANCIAL STATEMENTS
December 31, 1999 December 31, 1998 December 31, 1997
NOTE 1--HISTORY AND ORGANIZATION OF THE COMPANY
The Company was organized October 3, 1996, under the laws of the State
of Nevada as Ebony & Gold Ventures, Inc. The Company currently has no
operations and in accordance with SFAS #7, is considered a development
company.
NOTE 2--SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
ACCOUNTING METHOD
The Company records income and expenses on the accrual method.
ESTIMATES
The preparation of financial statements in conformity with
generally accepted accounting principles requires management
to make estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosure of contingent
assets and liabilities at the date of the financial statements
and the reported amounts of revenue and expenses during the
reporting period. Actual results could differ from those
estimates.
CASH AND EQUIVALENTS
The Company maintains a cash balance in a non-interest-bearing
bank that currently does not exceed federally insured limits.
For the purpose of the statements of cash flows, all highly
liquid investments with the maturity of three months or less
are considered to be cash equivalents. There are no cash
equivalents as of December 31, 1999.
INCOME TAXES
Income taxes are provided for using the liability method of
accounting in accordance with Statement of Financial
Accounting Standards No. 109 (SFAS #109) "Accounting for
Income Taxes." A deferred tax asset or liability is recorded
for all temporary difference between financial and tax
reporting. Deferred tax expense (benefit) results from the net
change during the year of deferred tax assets and liabilities.
LOSS PER SHARE
Net loss per share is provided in accordance with Statement of
Financial Accounting Standards No. 128 (SFAS #128) "Earnings
Per Share." Basic loss per share is computed by dividing
losses available to common stockholders by the weighted
average number of common shares outstanding during the period.
Diluted loss per share reflects per share amounts that would
have resulted if dilative common stock equivalents had been
converted to common stock. As of December 31, 1998, the
Company had no dilative common stock equivalents such as stock
options.
F-8
<PAGE>
NOTE 2--SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
YEAR END
The Company has selected December 31st as its year-end.
YEAR 2000 DISCLOSURE
The year 2000 issue is the result of computer programs being
written using two digits rather than four to define the
applicable year. Computer programs that have time sensitive
software may recognize a date using "00" as the year 1900
rather than the year 2000. This could result in a system
failure or miscalculations causing disruption of normal
business activities. Since the Company currently has no
operating business and does not use any computers, and since
it has no customers, suppliers or other constituents, there
are no material Year 2000 concerns.
NOTE 3--INCOME TAXES
There is no provision for income taxes for the period ended December
31, 1999, due to the net loss and no state income tax in Nevada, the
state of the Company's domicile and operations. The Company's total
deferred tax asset as of December 31, 1999, is as follows:
<TABLE>
<S> <C>
Net operation loss carry forward $ 19,664
Valuation allowance $ 19,664
Net deferred tax asset $ 0
</TABLE>
The federal net operating loss carry forward will expire between 2016
and 2019.
This carry forward may be limited upon the consummation of a business
combination under IRC Section 381.
NOTE 4--STOCKHOLDERS' EQUITY
COMMON STOCK
The authorized common stock of Ebony & Gold Ventures, Inc. consists of
25,000,000 shares with a par value of $0.001 per share.
PREFERRED STOCK
Ebony & Gold Ventures, Inc. has no preferred stock.
On October 15, 1996, the Company issued 21,000 shares of its no par
value common stock in consideration of $2,100 in cash.
On February 19, 1999, the State of Nevada approved the Company's
restated Articles of Incorporation, which increased its capitalization
from 25,000 common shares to 25,000,000 common shares. The no par value
was changed to $0.001.
On February 19, 1999, the Company forward split its common stock 100:1,
thus increasing the number of outstanding common stock shares from
21,000 shares to 2,100,000.
F-9
<PAGE>
NOTE 5--GOING CONCERN
The Company's financial statements are prepared using generally
accepted accounting principles applicable to a going concern which
contemplates the realization of assets and liquidation of liabilities
in the normal course of business. However, the Company does not have
significant cash or other material assets, nor does it have an
established source of revenues sufficient to cover its operating costs
and to allow it to continue as a going concern. It is the intent of the
Company to seek a merger with an existing, operating company. Until
that time, the stockholders/officers and/or directors have committed to
advancing the operating costs of the Company interest free.
NOTE 6--RELATED PARTY TRANSACTIONS
The Company neither owns nor leases any real or personal property. An
officer of the corporation provides office services without charge.
Such costs are immaterial to the financial statements and accordingly,
have not been reflected therein. The officers and directors of the
Company are involved in other business activities and may, in the
future, become involved in other business opportunities. If a specific
business opportunity becomes available, such persons may face a
conflict in selecting between the Company and their other business
interests. The Company has not formulated a policy for the resolution
of such conflicts.
NOTE 7--WARRANTS AND OPTIONS
There are no warrants or options outstanding to acquire any additional
shares of common stock.
F-10
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-2000
<PERIOD-START> JAN-01-1998
<PERIOD-END> DEC-31-1999
<CASH> 0
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 0
<CURRENT-LIABILITIES> (17,564)
<BONDS> 0
0
0
<COMMON> 2,100
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 0
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 17,564
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (17,564)
<EPS-BASIC> (.008)
<EPS-DILUTED> (.008)
</TABLE>
