U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-SB/A
AMENDMENT NO. 1
TO
GENERAL FORM FOR REGISTRATION OF SECURITIES
OF SMALL BUSINESS ISSUERS UNDER SECTION
12(B) OR (G) OF THE SECURITIES EXCHANGE ACT OF 1934
INDUSTRIAL RUBBER INNOVATIONS, INC.
(Name of small business issuer in its charter)
FLORIDA 91-1922981
(State or Other Jurisdiction of (IRS Employer
Incorporation or Organization) Identification Number)
6801 MCDIVITT DRIVE
BAKERSFIELD, CALIFORNIA 93313
(Address of Principal Executive Offices) (Zip Code)
(661) 833-8188
(Registrant's Telephone Number, Including Area Code)
SECURITIES TO BE REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT:
(None)
SECURITIES TO BE REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT:
Common Stock, par value $0.001
Title of Class
<PAGE>
TABLE OF CONTENTS
PART I
Item 1 Description of Business.
Item 2 Plan of Operation.
Item 3 Description of Property.
Item 4 Security Ownership of Certain Beneficial Owners
and Management.
Item 5 Directors, Executive Officers, Promoters and
Control Persons.
Item 6 Executive Compensation.
Item 7 Certain Relationships and Related Transactions.
Item 8 Description of Securities.
PART II
Item 1 Market Price of and Dividends on the
Registrant's Common Equity and Other Shareholder
Matters.
Item 2 Legal Proceedings.
Item 3 Changes In and Disagreements With Accountants.
Item 4 Recent Sales of Unregistered Securities.
Item 5 Indemnification of Directors and Officers.
PART F/S
Financial Statements.
PART III
Item 1 Index to Exhibits.
Item 2 Description of Exhibits.
<PAGE>
PART I
ITEM 1 - DESCRIPTION OF BUSINESS
Industrial Rubber Innovations, Inc. develops, manufactures, and
markets specialty synthetic rubber molded products from its
synthetic rubber compounds. Described simplistically, the Company
manufactures a rubber compound in bulk which has the ability to
withstand friction, heat, and wear-and-tear better than the
competition. The bulk product is custom molded, either by the
Company or by a third party who purchases the compound in bulk from
the Company, into products for the end-user. Until August 1999, the
Company marketed and sold its existing inventory of its sole
product, IRI-500. Beginning in August 1999, the Company began
producing its new product, Veraton(TM), whose characteristics
substantially exceed those of IRI-500. Once the Company's existing
inventory of IRI-500 is exhausted, it will focus its manufacturing
and marketing efforts entirely on the Veraton product line. The
Company was organized as a Florida corporation on August 7, 1986 and
is currently based in Bakersfield, California.
On April 26, 1999, the Company, which at the time was designated EPL
Ventures Corp., a Florida corporation, acquired all of the
outstanding common stock of Industrial Rubber Innovations, Inc., a
Nevada corporation, in a business combination described as a
"reverse acquisition." For accounting purposes, the acquisition has
been treated as the acquisition of EPL by IRI-Nevada. As part of
the acquisition, EPL changed its name to Industrial Rubber
Innovations, Inc. Immediately prior to the acquisition, and
following the effectiveness of a 1-for-5 reverse stock split which
was part of the acquisition, EPL had 3,444,000 shares of common
stock outstanding.
As part of EPL's reorganization with IRI-Nevada, EPL issued
3,800,000 shares of its common stock to the shareholders of
IRI-Nevada in exchange for 3,800 shares of IRI-Nevada common stock.
In addition, the Company issued warrants, exercisable until May 1,
2001 and containing registration rights, to purchase an aggregate of
2,000,000 shares of its common stock, one-half at an exercise price
of $0.50 and one-half at an exercise price of $0.75, to the
IRI-Nevada shareholders. EPL had no significant operations prior to
the merger.
Prior to the reorganization, the business of IRI-Nevada was operated
for a period of at least three years as a proprietorship owned by
Steven Tieu, a Director of the Company. The company was engaged in
a limited amount of business activity, primarily the sale in the
United States of a small amount of its IRI-500 product which was
manufactured by contract-manufacturers in China. The Company's
current business plan is primarily an expansion of its sales efforts
in the United States, the introduction of a new and improved Veraton
product line, and the manufacture of its products in the United States.
The Company's independent certified public accountants have stated
in their report included in this Form 10-SB that unless the Company
attains future profitable operations and/or obtains additional
financing, there is substantial doubt about the Company's ability to
continue as a going concern. As stated in Item 3 - Plan of
Operation, the Company is currently seeking additional financing to
fund its operations until it reaches a level of profitability. If
the Company is successful in obtaining such financing and reaching
profitability, it believes that its certified public accountants
would not issue a going concern opinion in its upcoming Fiscal Year
1999 report. However, there can be no assurances that the Company
will be able to raise sufficient capital to meet its needs. If the
Company is not successful in raising the necessary capital, then the
Company believes that its independent certified public accountants
would issue an opinion with a similar going concern modification
regarding the Company's financial condition.
BUSINESS OF ISSUER
There are two types of rubber: natural rubber and synthetic rubber.
According to 1998 statistics, synthetic rubber accounted for
approximately sixty percent (60%) of the world rubber production,
while natural rubber accounted for forty percent (40%) of the
market. Fifty percent (50%) of the world's synthetic rubber
production is from the United States and Europe.
Natural rubber deteriorates when exposed to the heat, pressure, and
corrosive chemicals encountered in many applications. The synthetic
rubber industry produces rubber compounds and products that have
substantially expanded rubber capabilities. These synthetic rubber
attributes, developed in numerous classes of synthetic rubber
compounds, are used extensively in aerospace and defense,
construction, chemical processing, refineries, oil and gas recovery,
and the semiconductor industry. Major research efforts are directed
at, among other things, continuing to improve the ability of
synthetic rubber to withstand applications in increasingly hostile
environments.
<PAGE>
Under the terms of a royalty-free license agreement with Century
Rubber, LLC which gives the Company the exclusive right to
manufacture, market, sell and distribute products using a
proprietary rubber compound formula, the Company develops,
manufactures, and markets specialty synthetic rubber molded
products. Under the terms of the license, the Company has the
unrestricted right to manufacture, market, sell, and distribute
worldwide all products made from or derived from the licensed
formula for an indefinite period of time. The Company also has an
option to acquire a license for all new and future formulas and/or
products developed by Century Rubber, LLC on terms to be
individually negotiated, as well as a right of first refusal to
match the terms of any license agreements negotiated by Century
Rubber, LLC. The license is for an indefinite period, unless
terminated by Century Rubber, LLC due to a breach of the Agreement
by the Company. The members of Century Rubber, LLC are Messrs.
Proulx, Foran, Hun and Tieu, and Ms. Sheo, each a present or former
member of the Company's management. The proprietary formula which
is the subject of the license was transferred to Century Rubber, LLC
by the above identified individuals, then licensed to the Company,
as a method of protecting its proprietary nature from creditors and
competitors. See "Patents, Trademarks, Licenses". As a result of
the transaction, there exists a potential conflict of interest
between Century Rubber, LLC, the Company, and members of the
Company's management.
The attributes of the Company's initial synthetic rubber product
IRI-500, used in oil and gas production wells such as packing,
rings, and cones, include unusual resistance to heat, wear, and
oils. In its production process, the Company blends readily
available raw materials to produce the required product
characteristics. The raw rubber material is then molded into a
specific product. The Company's products have been used primarily in
the top of wells in the oil and gas recovery industry, and products
manufactured from the IRI-500 product line continue to outperform
products made from competitive synthetic rubbers. The Company has a
limited supply of IRI-500 in its inventory, estimated to be
sufficient for approximately two (2) months of the Company's present
client demands, and has begun marketing its new Veraton(TM) product
line.
The Company's new product line, Veraton(TM), will substantially
extend the capabilities of the Company's product line beyond that of
products manufactured with IRI-500. Based on preliminary test
results, Veraton appears to exceed many of the high performance
characteristics of DuPont's top perfluoroelastomer, Kalrez(TM).
Applications using Kalrez(TM) are among the most demanding and
highest priced synthetic rubber products. The Company began
producing Veraton in August 1999.
DISTRIBUTION METHODS
The Company intends to market and distribute its products through a
combination of direct sales to customers currently known by
management and the use of outside distributors.
In June 1999, the Company entered into a non-exclusive agreement
with Petro-Rep Co., an oil field supply company located in Kern
County, California, to market the Company's products. Under the
terms of the Petro-Rep agreement, Petro-Rep will receive up to
60,000 shares of the Company's common stock over a period of twelve
(12) months if the agreement is not earlier terminated. In
addition, Petro-Rep can earn additional shares of the Company's
common stock based on achieving certain sales levels, plus Petro-Rep
has an option to purchase 50,000 shares of common stock at $1.00 per
share during the first year of the agreement. Finally, Petro-Rep
will receive a commission of up to 20% of sales, depending on the
exact terms of each individual sale. Petro-Rep will be reimbursed
for expenses incurred on behalf of the Company. Included in the
agreement are sales projections provided by Petro-Rep, which are
$350,000 in year 1, $600,000 in year 2, and $1,000,000 in year 3 of
the agreement.
In June 1999, the Company entered into an agreement with Gencon
Capital Resources, Ltd. which provides Gencon with the exclusive
distributorship rights for the Company's products in Canada.
Specific compensation to Gencon is not included in the agreement and
will be negotiated on a case-by-case basis depending on market
conditions at the time of sale. It is anticipated by Gencon that
they will generate revenues to the Company of $1,000,000 in the
first year of the agreement and $2,000,000 in the second year of the
agreement.
In July 1999, the Company entered into an agreement with Shenzhen
Yujiang Trade Limited which provided Shenzhen with the exclusive
distributorship rights for the Company's products in China.
Specific compensation to Shenzhen is not included in the agreement
and will be negotiated on a case-by-case basis depending on market
conditions at the time of sale. As part of the agreement Shenzhen
anticipates that they will generate revenues to the Company of
$600,000 in the first year of the agreement, $1,200,000 in the
second year of the agreement, and $2,500,000 in the third year of
the agreement.
<PAGE>
COMPETITION
The Synthetic Rubber Industry as a Whole
The synthetic rubber industry is primarily made up of large,
industrial chemical companies located throughout the world. The
industry is capital intensive for both production and research and
development. Most of the competitive companies have substantially
greater financial resources than the Company, and typically a
significant portion of their revenues are reinvested into research
and development. In addition, many competitive companies have
historic business relationships with their customers or have some
form of mutual ownership or financial relationships.
The Company intends to establish itself as a manufacturer of high
end, high performance synthetic rubber products that can be used in
many of today's demanding process and environmental applications.
It is a highly competitive market. The Company does not intend to
compete in the high volume segment of the industry, where price,
capacity, and production efficiencies control the marketplace.
Instead, the Company intends to differentiate itself by offering
custom molded products with superior characteristics at a price
comparable to the current competition. The Company has reviewed
publicly available information and performed internal research on
the characteristics of competitor's products, and believes that
their products will outperform the competition's products in many
areas, including resistance to heat and wear. The Company's plans
can be described in two phases:
- Phase I. The Company plans to equip its manufacturing
facility and be in production of its oil field-related
products during the first and second quarter of 2000.
- Phase II. Following the implementation of Phase I, the
Company intends to install an on-site testing
laboratory, allowing the Company to complete and enhance
testing on future products for a variety of industries,
not just the oil field-related industries.
Because the Company has the exclusive right to use proprietary
formulas provided to it by Century Rubber, LLC, the Company believes
that no competitor can produce products which match the
characteristics of their products. By offering superior products to
the current competition, at substantially similar prices, the
Company believes it can achieve and maintain profitability within
the industry.
Major competitors include DuPont, which manufactures synthetic
rubber compounds known as Viton(TM) and Kalrez(TM).
Oil and Gas Well Producers
In contrast to the synthetic rubber industry as a whole, the oil and
gas industry uses large volumes of high performance rubber products
and is extremely fragmented. In most cases, petroleum companies
have ceased to stock parts inventories for their field operating
leases, and the parts inventory function has fallen to stocking
distributors. Although there is powerful competition for sales to
this industry, the decentralization of the buying decision to the
lease engineer and the ability to sell to stocking distributors who
will market the product based on its capabilities creates an
opportunity for the Company to generate sales. For these reasons,
this market is currently the Company's primary target.
The five largest competitors currently selling molded rubber
products for oil and gas production wells in California are Skinner
Brothers, Ratigan, Huber, Utex, and E.M. Berry.
RAW MATERIALS AND PRINCIPAL SUPPLIERS
The Company uses readily available chemicals and carbon black in the
production of its rubber compounds. The chemicals are manufactured
by several of the world's large chemical companies in plants located
in the United States and in other countries. These manufacturers
include Dow, Chevron and Mobil, and are available in most countries
through various distributors.
<PAGE>
DEPENDENCE ON KEY CUSTOMERS
The Company is not dependent presently on any one or several
customers for the sale of its rubber compound. Sales of its IRI-500
rubber compound is to many individual oil and gas well operators and
is not dependent on their parent companies for the purchase decision.
PATENTS, TRADEMARKS, LICENSES
The Company's products are currently made from a formula made
available to the Company through a royalty-free license agreement
with Century Rubber, LLC, whose principal members include present
and former members of the Company's management, namely John Proulx,
David H. Foran, Steven Tieu, Benny Hun and Nancy Sheo. See "Certain
Relationships and Related Transactions". Under the terms of the
license, the Company has the unrestricted right to manufacture,
market, sell, and distribute worldwide all products made from or
derived from the licensed formula for an indefinite period of time.
The Company also has an option to acquire a license for all new and
future formulas and/or products developed by Century Rubber, LLC on
terms to be individually negotiated, as well as a right of first
refusal to match the terms of any license agreements negotiated by
Century Rubber, LLC.
The Company currently makes its facilities available and provides
office space to Century Rubber, LLC without charge, but does not
otherwise contribute financially to the research and/or development
of formulas by Century Rubber, LLC. The Company does not charge
Century Rubber, LLC for the use of their facilities or office space,
estimated to have a market value of between $1000 and $3000 per
month, because management believes that having Century Rubber
performing their research within a reasonable distance of the
Company provides a mutually beneficial working relationship. In the
future, the Company may enter into agreements with Century Rubber,
LLC which provide for the payment or reimbursement of certain
expenses and other research and development costs in exchange for
license rights.
Neither Century Rubber, LLC nor the Company generally relies upon
patent protection for their formulas and/or products, believing
instead that treating them as trade secrets affords better
protection. To date, competitors have been unable to reverse
engineer the chemical composition of the Company's IRI-500 or
Veraton(TM) products. Based on the chemical reactions that take
place during the proprietary mixing phase of production, Management
believes that there is a very small likelihood that the trade
secrets will ever be reverse engineered. There can be no assurance
that competitors of the Company do not have competing patents which
may preclude certain aspects of the Company's formulas or designs,
that competitors may reverse engineer and create competitive
products to those of the Company or that other technological
protection can be obtained for the Company's products. No assurance
can be given that patents will be granted on future patent
applications. The Company has one trademark application pending,
that for the trade name "Veraton".
GOVERNMENTAL APPROVALS AND REGULATION
The Company is currently conducting an assessment of the federal,
state and local regulations to which it is subject. The Company has
had several meetings with the City of Bakersfield to assist in
making this determination, and the Company has hired an outside
consultant to assist in the process. An exact list of regulations
to which the Company is subject is expected to be available within
the next ninety (90) days.
The Company believes it is in compliance with federal, state and
local regulations with respect to environmental protection. The
Company does not anticipate that costs of compliance with such
regulations will have a material effect on its capital expenditures,
earnings or competitive position.
RESEARCH AND DEVELOPMENT
During the past twelve months, substantial improvements have been
made to the rubber compounds developed by the Company. These
improvement are a result of continued testing by the Company after
using its licensed formula to create sample products. These testing
and modification efforts have resulted in a rubber compound capable
of withstanding continuous temperatures of up to 1,000 degrees
Fahrenheit. The product development efforts have led to the
addition of capabilities to withstand corrosive materials, such as
Silicone Oil. Other product development efforts have resulted in
Veraton(TM) compound characteristics that include resistance to
radiation.
<PAGE>
As a result of its license with Century Rubber, LLC, the Company has
not engaged in a significant amount of research and development to
date, other than the testing described above. All of the research
efforts have been undertaken by Century Rubber at no direct cost to
the Company. As such, no research and development costs have been
directly borne by customers. Although not currently contemplated by
the Company, it may undertake significant research and development
projects in the future.
COST OF COMPLIANCE WITH ENVIRONMENTAL REGULATIONS
The Company's manufacturing facility in Bakersfield, California is
located in an area zoned appropriately for the mixing of chemicals
and carbon black. Other than requirements for the handling and
storage of chemicals, the only manufacturing requirements that must
be addressed by the Company is installation of an air filtration
system in its manufacturing facility, expected to cost approximately
$50,000.
NUMBER OF EMPLOYEES
As of November 15, 1999, the Company employed approximately 5 people
on a full time basis. Of these 5 employees, three are executive
officers of the Company. See "Directors, Executive Officers,
Promoters and Control Persons". The remaining 2 are an
administrative support staff person and a physical plant worker.
ITEM 2 - PLAN OF OPERATION
The following discussion contains certain forward-looking statements
that are subject to business and economic risks and uncertainties,
and the Company's actual results could differ materially from those
forward-looking statements. The following discussion regarding the
financial statements of the Company should be read in conjunction
with the financial statements and notes thereto.
The Company's prior full fiscal year ending October 31, 1998 is not
indicative of the Company's current business plan and operations.
During the periods ending October 31, 1997, October 31, 1998 and
March 31, 1999, the Company had no revenues and was in its
development stages. After the Company's merger with IRI-Nevada, as
previously discussed, the current business plan was implemented.
Therefore, this plan of operation will focus on the Company's
current business plan and operations. For information concerning
the Company's prior full fiscal years, the Company refers the reader
to the financial statements provided herewith.
Industrial Rubber Innovations, Inc. develops, manufactures, and
markets specialty synthetic rubber molded products from its
synthetic rubber compounds. Described simplistically, the Company
manufactures a rubber compound in bulk which has the ability to
withstand friction, heat, and wear-and-tear better than the
competition. The bulk product is custom molded, either by the
Company or by a third party who purchases the compound in bulk from
the Company, into products for the end-user. Until August 1999, the
Company marketed and sold its existing inventory of its sole
product, IRI-500. Beginning in August 1999, the Company began
producing its new product, Veraton(TM), whose characteristics
substantially exceed those of IRI-500. Once the Company's existing
inventory of IRI-500 is exhausted, it will focus its manufacturing
and marketing efforts entirely on the Veraton product line. The
Company was organized as a Florida corporation on August 7, 1986 and
is currently based in Bakersfield, California.
On April 26, 1999, the Company, which at the time was designated EPL
Ventures Corp., a Florida corporation, acquired all of the
outstanding common stock of Industrial Rubber Innovations, Inc., a
Nevada corporation, in a business combination described as a
"reverse acquisition." For accounting purposes, the acquisition has
been treated as the acquisition of EPL by IRI-Nevada. As part of
the acquisition, EPL changed its name to Industrial Rubber
Innovations, Inc.
Prior to the reorganization, the business of IRI-Nevada was operated
for a period of at least three years as a proprietorship owned by
Steven Tieu, a Director of the Company. The company was engaged in
a limited amount of business activity, primarily the sale in the
United States of a small amount of its IRI-500 product which was
manufactured by contract-manufacturers in China. The Company's
current business plan is primarily an expansion of its sales efforts
in the United States, the introduction of a new and improved Veraton
product line, and the manufacture of its products in the United States.
<PAGE>
In order to fulfill orders for products, the Company is currently
using its existing supply of products in inventory. During the next
twelve months, the Company intends to equip its newly leased
facility with the necessary equipment to begin manufacturing its
products in Bakersfield. Once fully operational, it is anticipated
that the manufacturing facility will employ approximately 12 - 15
people on a full time basis.
Liquidity
The Company currently has a minimal amount of capital available to
it and anticipates the need for at least $1,000,000 during the next
twelve months to be used for working capital purposes, marketing,
and to acquire equipment. It is anticipated that the Company will
undertake a private placement of its common stock in order to raise
the necessary capital. In addition, the Company is in negotiations
for equipment leasing financing in order to complete the acquisition
of equipment for its newly leased facility. In the event that the
Company is unable to raise the necessary capital and/or equipment
leasing financing, its ability to manufacture and market its
products will be severely limited, and its financial results will be
materially harmed.
The Company is the owner of record of an investment interest in
Savant Biomedical, Inc., valued in its financial statements at
$800,000. The Savant interest was acquired by the Company for
$850,000 in fiscal year 1998, prior to the merger transaction with
Industrial Rubber Innovations, Inc. Currently, management of the
Company does not consider the Savant interest to be consistent with
the Company's plan of operation, and is entertaining offers to
purchase the Savant interest. Although a verbal offer has been made
to the Company to purchase the Savant interest for the sum of
$800,000, the Company has not entered into an agreement or letter of
intent with the prospective purchaser and will not consider the
offer to be a material possibility until such time as a binding
agreement has been entered into.
It is not currently contemplated that the Company will perform any
substantial product research or development during the next twelve
months.
The Company's independent certified public accountants have stated
in their report included in this Form 10-SB that unless the Company
attains future profitable operations and/or obtains additional
financing, there is substantial doubt about the Company's ability to
continue as a going concern. As stated in Item 3 - Plan of
Operation, the Company is currently seeking additional financing to
fund its operations until it reaches a level of profitability. If
the Company is successful in obtaining such financing and reaching
profitability, it believes that its certified public accountants
would not issue a going concern opinion in its upcoming Fiscal Year
1999 report. However, there can be no assurances that the Company
will be able to raise sufficient capital to meet its needs. If the
Company is not successful in raising the necessary capital, then the
Company believes that its independent certified public accountants
would issue an opinion with a similar going concern modification
regarding the Company's financial condition.
Capital Expenditures
The Company expects to finance the purchase of the equipment
necessary to complete its newly leased facility through equipment
leasing financing presently being negotiated.
YEAR 2000 DISCLOSURE
The Company has completed a review of its computer systems and
non-information technology ("non-IT") systems to identify all
systems that could be affected by the inability of many existing
computer and microcomputer systems to process time-sensitive data
accurately beyond the year 1999, referred to as the Year 2000 or Y2K
issue. The Company is dependent to a limited extent on third-party
computer systems and applications. The Company also relies on its
own computer and non-IT systems (which consist of personal
computers, internal telephone systems, internal network server,
Internet server and associated software and operating systems). In
conducting the Company's review of its internal systems, the Company
performed operational tests of its systems which revealed no Y2K
problems. As a result of its review, the Company has discovered no
problems with its systems relating to the Y2K issue and believes
that such systems are Y2K compliant. The Company has not obtained
written assurances from any suppliers regarding the status of those
suppliers with respect to the Y2K issue, and the Company does not
currently have any plans to obtain such assurances. Because the
Company has not completed its manufacturing facility, a review for
Y2K compliance has not been conducted with respect to manufacturing.
Costs associated with the Company's review were not material to its
results of operations and are not anticipated to be material in the
future.
<PAGE>
While the Company believes that its procedures have been designed to
be successful, because of the complexity of the Year 2000 issue and
the interdependence of organizations using computer systems, there
can be no assurances that the Company's efforts, or those of third
parties with whom the Company interacts, have fully resolved all
possible Year 2000 issues. Failure to satisfactorily address the
Year 2000 issue could have a material adverse effect on the Company.
The most likely worst case Y2K scenario which management has
identified to date is that, due to unanticipated Y2K compliance
problems, the Company may be unable to obtain raw materials from its
suppliers, in whole or in part. Should this occur, it would result
in a material loss of some or all gross revenue for an
indeterminable amount of time, which could cause the Company to
cease operations. In the event of failure of one or more of its
suppliers due to Y2K issues, the Company's only recourse for any
damages suffered would be through litigation. The Company has not
yet developed a contingency plan to address this worst case Y2K
scenario, and does not intend to develop such a plan in the future.
ITEM 3 - DESCRIPTION OF PROPERTY
On June 3, 1999, the Company entered into a lease for an
approximately 29,300 square foot facility located at 6801 McDivitt
Drive, Bakersfield, California 93313. The lease term begins on
September 1, 1999 and is effective through August 31, 2004. The
monthly base rent shall be equal to $8,500 in year one, $8,775 in
year two, $9,038 in year three, $9,309 in year four, and $9,589 in
year five of the lease. Under the terms of the lease, the Company
has a right of first refusal to purchase the premises and an option
to renew the lease for an additional five (5) year term beginning at
$9,877 per month and increasing at the end of each twelve (12) month
period at a rate of 3% per annum.
The Company is currently in negotiations with equipment suppliers to
provide the necessary equipment to manufacture in its Bakersfield
facility.
<PAGE>
ITEM 4 - SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth, as of November 15, 1999, certain
information with respect to the Company's equity securities owned of
record or beneficially by (i) each Officer and Director of the
Company; (ii) each person who owns beneficially more than 5% of each
class of the Company's outstanding equity securities; and (iii) all
Directors and Executive Officers as a group.
<TABLE>
<CAPTION>
Name and Address of Amount and Nature of
Title of Class Beneficial Owner Beneficial Ownership Percent of Class
<S> <C> <C> <C>
Common Stock David H. Foran 210,000 (1) 2.8 %
6801 McDivitt Drive
Bakersfield, CA 93313
Common Stock Steven Tieu 270,000 (2) 3.5 %
6801 McDivitt Drive
Bakersfield, CA 93313
Common Stock Nancy Sheo 250,000 (3) 3.2 %
6801 McDivitt Drive
Bakersfield, CA 93313
All Officers and
Directors as a Group 730,000 (1)(2)(3) 9.1 %
(3 Persons)
</TABLE>
(1) Includes warrants to acquire 100,000 shares of common
stock, exercisable until May 1, 2001 at an exercise
price of $0.50 per share.
(2) Includes warrants to acquire 200,000 shares of common
stock, exercisable until May 1, 2001 at an exercise
price of $0.75 per share.
(3) Includes warrants to acquire 200,000 shares of common
stock, exercisable until May 1, 2001 at an exercise
price of $0.75 per share.
The Company believes that the beneficial owners of securities listed
above, based on information furnished by such owners, have sole
investment and voting power with respect to such shares, subject to
community property laws where applicable. Beneficial ownership is
determined in accordance with the rules of the Commission and
generally includes voting or investment power with respect to
securities. Shares of stock subject to options or warrants
currently exercisable, or exercisable within 60 days, are deemed
outstanding for purposes of computing the percentage of the person
holding such options or warrants, but are not deemed outstanding for
purposes of computing the percentage of any other person.
<PAGE>
ITEM 5 - DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS
The following table sets forth the names and ages of the current
directors and executive officers of the Company, the principal
offices and positions with the Company held by each person and the
date such person became a director or executive officer of the
Company. The executive officers of the Company are elected annually
by the Board of Directors. The directors serve one year terms until
their successors are elected. The executive officers serve terms of
one year or until their death, resignation or removal by the Board
of Directors. Other than the relationship between Mr. Tieu, who is
the son of Ms. Sheo, there are no family relationships between any
of the directors and executive officers. In addition, there was no
arrangement or understanding between any executive officer and any
other person pursuant to which any person was selected as an
executive officer.
The directors and executive officers of the Company are as follows:
Name Age Positions
David H. Foran 51 Acting President, Chief Financial
Officer,
Secretary, Director (1999)
Steven Tieu 32 Vice President of Technical Support,
Director (1999)
Nancy Sheo 42 Vice President of Development (1999)
DAVID H. FORAN has been the Company's Chief Financial Officer since
April 1999, and its Acting President since September 30, 1999, when
the Company's then-President, John Proulx, resigned. Mr. Foran has
served in numerous financial positions in the mortgage banking
industry, including terms with Associates Financial Services from
1970 to 1974, Citibank from 1974 to 1976, Nova Financial Services
from 1990 to 1996, and Million Plus Realty from 1996 to 1998. While
at Nova Financial Services, Mr. Foran was a Mortgage Consultant
responsible for brokering residential and commercial mortgages
through banks, life insurance companies, and trust companies. While
at Million Plus Realty, Mr. Foran was a Financial Manager
responsible for the financing of real estate projects, raising
capital, and overall financial management. In addition, Mr. Foran
has worked as an independent consultant since 1995, with
responsibilities including structuring and funding transactions, and
accounting and reporting.
STEVEN TIEU learned rubber development and production at his
family's rubber plant in Vietnam, which also manufactured
motorcycles for Honda. Since moving to the United States in the
1980's, Mr. Tieu has used his experience, additional education, and
training to continue as a proprietor in the rubber industry and in
the import-export business. Specifically, from 1990 through 1998,
Mr. Tieu was the proprietor of T&T Rubber, which imported rubber
from China for distribution in the United States.
NANCY SHEO, Steven Tieu's mother, has been involved in all phases of
the Tieu family rubber business since the 1960's. Although she
holds no formal higher education degrees, she has years of practical
experience in the research and development and use of rubber
compounds and the manufacture of rubber products. From 1990 through
1998, Ms. Sheo was an employee and proprietor of T&T Rubber, which
imported rubber from China for distribution in the United States.
ITEM 6 - EXECUTIVE COMPENSATION
On May 15, 1999, the Company entered into a two (2) year Employment
Agreement with John Proulx, the Company's then-President and CEO,
whereby the Company agreed to pay Mr. Proulx an annual salary of
$60,000. On September 30, 1999, Mr. Proulx resigned as an officer,
director, and employee of the Company for personal reasons, and his
employment agreement was terminated.
On May 15, 1999, the Company entered into a two (2) year Employment
Agreement with David H. Foran, the Company's then-Chief Financial
Officer and Secretary, whereby the Company will pay Mr. Foran an
annual salary of $60,000. The Agreement can be terminated at any
time for cause, as defined therein, without penalty or severance.
The Agreement can be terminated by Mr. Foran at any time for good
reason, as defined therein, in which case Mr. Foran would be
entitled to one-year's compensation as severance. The Agreement may
be terminated by the Company after the first year for good reason,
as defined therein, in which case Mr. Foran would be entitled to
one-year's compensation as severance.
<PAGE>
On May 15, 1999, the Company entered into a two (2) year Employment
Agreement with Steven Tieu, the Company's Vice President of
Technical Support, whereby the Company will pay Mr. Tieu an annual
salary of $60,000. The Agreement can be terminated at any time for
cause, as defined therein, without penalty or severance. The
Agreement can be terminated by Mr. Tieu at any time for good reason,
as defined therein, in which case Mr. Tieu would be entitled to
one-year's compensation as severance. The Agreement may be
terminated by the Company after the first year for good reason, as
defined therein, in which case Mr. Tieu would be entitled to
one-year's compensation as severance.
On May 15, 1999, the Company entered into a two (2) year Employment
Agreement with Benny Hun, the Company's then-Vice President of
Production, whereby the Company agreed to pay Mr. Hunn an annual
salary of $60,000. On September 30, 1999, Mr. Hunn resigned as an
officer, director, and employee of the Company for personal reasons,
and his employment agreement was terminated.
On May 15, 1999, the Company entered into a two (2) year Employment
Agreement with Nancy Sheo, the Company's Vice President of
Development, whereby the Company will pay Ms. Sheo an annual salary
of $60,000. The Agreement can be terminated at any time for cause,
as defined therein, without penalty or severance. The Agreement can
be terminated by Ms. Sheo at any time for good reason, as defined
therein, in which case Ms. Sheo would be entitled to one-year's
compensation as severance. The Agreement may be terminated by the
Company after the first year for good reason, as defined therein, in
which case Ms. Sheo would be entitled to one-year's compensation as
severance.
On June 3, 1999, the Company's Board of Directors and a majority of
its shareholders approved the Industrial Rubber Innovations, Inc.
Omnibus Stock Option Plan, effective July 1, 1999. Under the terms
of the Option Plan, the Board of Directors has the sole authority to
determine which of the eligible persons shall receive options, the
number of shares which may be issued upon exercise of an option, and
other terms and conditions of the options granted under the Plan to
the extent they don't conflict with the terms of the Plan. An
aggregate of 750,000 shares of common stock are reserved for
issuance under the Plan during the year July 1, 1999 to June 30,
2000. For each subsequent year beginning July 1, 2000, there shall
be reserved for issuance under the Plan that number of shares equal
to 10% of the outstanding shares of common stock on July 1 of that
year. The exercise price for all options granted under the Plan
shall be 100% of the fair market value of the Company's common stock
on the date of grant, unless the recipient is the holder of more
than 10% of the already outstanding securities of the Company, in
which case the exercise price shall be 110% of the fair market value
of the Company's common stock on the date of grant. All options
shall vest equally over a period of five years from the date of
issuance. Currently, the Board of Directors has not issued any
options under the terms of the Plan.
<PAGE>
SUMMARY COMPENSATION TABLE
The Summary Compensation Table shows certain compensation
information for services rendered in all capacities for the fiscal
year ended October 31, 1998 and the eleven months ended September
30, 1999. Other than as set forth herein, no executive officer's
salary and bonus exceeded $100,000 in any of the applicable years.
The following information includes the dollar value of base
salaries, bonus awards, the number of stock options granted and
certain other compensation, if any, whether paid or deferred.
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
Annual Compensation Long Term Compensation
Awards Payouts
Securities
Other Annual Restricted Underlying LTIP All Other
Name and Principal Salary Bonus Compensation Stock Awards Options Payouts($) Compensation
Position Year ($) ($) ($) ($) SARs(#) ($)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
John Proulx (1) 1998 -0- -0- -0- -0- -0- -0- -0-
(President, CEO) (10/31)
1999 22,500 -0- -0- -0- -0- -0- -0-
(9/30)
David H. Foran (2) 1998 -0- -0- -0- -0- -0- -0- -0-
(CFO, Secretary) (10/31)
1999 22,500 -0- -0- -0- -0- -0- -0-
(9/30)
</TABLE>
(1) Mr. Proulx resigned as an officer, director, and employee of
the Company effective September 30, 1999.
(2) Mr. Foran was appointed Acting President of the Company
effective September 30, 1999.
<TABLE>
<CAPTION>
OPTION/SAR GRANTS IN LAST FISCAL YEAR
(INDIVIDUAL GRANTS)
NUMBER OF SECURITIES PERCENT OF TOTAL
UNDERLYING OPTIONS/SAR'S OPTIONS/SAR'S GRANTED TO
GRANTED (#) EMPLOYEES IN FISCAL YEAR EXERCISE OF BASE PRICE
($/SH) EXPIRATION DATE
NAME
<S> <C> <C> <C> <C>
John Proulx - 0 - N/A N/A N/A
David H. Foran - 0 - N/A N/A N/A
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR
AND FY-END OPTION/SAR VALUES
Number of Unexercised
Securities Underlying Value of Unexercised In-The
Options/SARs At FY-END (#) Money Options/SARs
Shares Acquired On Exercisable/Unexercisable At FY-End ($)
Name Exercise (#) Value Realized($) Exercisable/Unexercisable
<S> <C> <C> <C> <C>
John Proulx -0- -0- - 0 - --
David H. Foran -0- -0- - 0 - --
</TABLE>
COMPENSATION OF DIRECTORS
The Directors have not received any compensation for serving in such
capacity, and the Company does not currently contemplate
compensating its Directors in the future for serving in such capacity.
ITEM 7 - CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
On April 26, 1999, the Company, which at the time was designated EPL
Ventures Corp., a Florida corporation acquired all of the
outstanding common stock of Industrial Rubber Innovations, Inc., a
Nevada corporation, in a business combination described as a
"reverse acquisition." For accounting purposes, the acquisition has
been treated as the acquisition of EPL by IRI-Nevada. As part of
the acquisition, EPL changed its name to Industrial Rubber
Innovations, Inc. Immediately prior to the acquisition, and
following the effectiveness of a 1-for-5 reverse stock split which
was part of the acquisition, EPL had 3,444,000 shares of common
stock outstanding.
As part of EPL's reorganization with IRI-Nevada, EPL issued
3,800,000 shares of its common stock to the shareholders of
IRI-Nevada in exchange for 3,800 shares of IRI-Nevada common stock.
In addition, the Company issued warrants, exercisable until May 1,
2001 and containing registration rights, to purchase an aggregate of
2,000,000 shares of its common stock, one-half at an exercise price
of $0.50 and one-half at an exercise price of $0.75, to the
IRI-Nevada shareholders. EPL had no significant operations prior to
the merger.
Effective June 25, 1999, the Company entered into a royalty-free
license agreement with Century Rubber, LLC which gives the Company
the exclusive right to manufacture, market, sell and distribute
products using a proprietary rubber compound formula. Under the
terms of the license, the Company has the unrestricted right to
manufacture, market, sell, and distribute worldwide all products
made from or derived from the licensed formula for an indefinite
period of time. The Company also has an option to acquire a license
for all new and future formulas and/or products developed by Century
Rubber, LLC on terms to be individually negotiated, as well as a
right of first refusal to match the terms of any license agreements
negotiated by Century Rubber, LLC. The license is for an indefinite
period, unless terminated by Century Rubber, LLC due to a breach of
the Agreement by the Company. The members of Century Rubber, LLC
are Messrs. Proulx, Foran, Hun and Tieu, and Ms. Sheo, each a
present or former member of the Company's management. The
proprietary formula which is the subject of the license was
transferred to Century Rubber, LLC by the above identified
individuals, then licensed to the Company, as a method of protecting
its proprietary nature from creditors and competitors. See
"Patents, Trademarks, Licenses". As a result of the transaction,
there exists a potential conflict of interest between Century
Rubber, LLC, the Company, and members of the Company's management.
The Company does not have a conflicts policy and does not anticipate
adopting one.
<PAGE>
ITEM 8 - DESCRIPTION OF SECURITIES
COMMON STOCK
The Company's Articles of Incorporation authorize the issuance of
50,000,000 shares of common stock, $0.001 par value per share, of
which 7,600,227 were outstanding as of November 15, 1999. Pursuant
to the Agreement and Plan of Reorganization dated April 12, 1999,
the Company approved a 1-for-5 reverse stock split of its common
stock. All references to the numbers of shares of the Company's
common stock are adjusted to reflect the 1-for-5 reverse split of
the Company's common stock. Holders of shares of common stock are
entitled to one vote for each share on all matters to be voted on by
the stockholders. Holders of common stock have no cumulative voting
rights. Holders of shares of common stock are entitled to share
ratably in dividends, if any, as may be declared, from time to time
by the Board of Directors in its discretion, from funds legally
available therefor. In the event of a liquidation, dissolution or
winding up of the Company, the holders of shares of common stock are
entitled to share pro rata all assets remaining after payment in
full of all liabilities. Holders of common stock have no preemptive
rights to purchase the Company's common stock. There are no
conversion rights or redemption or sinking fund provisions with
respect to the common stock. All of the outstanding shares of
common stock are fully paid and non-assessable.
PREFERRED STOCK
The Company's Articles of Incorporation authorize the issuance of
5,000,000 shares of preferred stock, $0.001 par value, none of which
are issued and outstanding. The Company's Board of Directors has
authority, without action by the shareholders, to issue all or any
portion of the authorized but unissued preferred stock in one or
more series and to determine the voting rights, preferences as to
dividends and liquidation, conversion rights, and other rights of
such series. The issuance of preferred stock may also include
restricting dividends on the common stock, dilute the voting power
of the common stock, and/or impair the liquidation rights of the
holders of common stock.
TRANSFER AGENT
The transfer agent for the common stock is Interwest Transfer Co.,
1981 4800 South, Suite 100, Salt Lake City, Utah 84117.
<PAGE>
PART II
ITEM 1 - MARKET PRICE OF AND DIVIDENDS ON THE REGISTRANT'S COMMON
EQUITY AND OTHER SHAREHOLDER MATTERS
MARKET INFORMATION
The following table sets forth the high and low bid prices for
shares of the Company's common stock for the periods noted, as
reported by the National Daily Quotation Service and the NASDAQ
Bulletin Board. Quotations reflect inter-dealer prices, without
retail mark-up, mark-down or commission and may not represent actual
transactions. On November 21, 1997, the Company's common stock
began listing on the NASDAQ exchange under the trading symbol EPLV.
Effective on April 27, 1999, the trading symbol for the Company's
common stock changed to IRIB.
BID PRICES
YEAR PERIOD HIGH LOW
1999 First Quarter. . . . . . . . . . 0.07 0.06
Second Quarter . . . . . . . . . 1.94 1.00
Third Quarter. . . . . . . . . . 1.47 0.36
Fourth Quarter . . . . . . . . . 0.49 0.14
(through November 15, 1999)
1998
First Quarter. . . . . . . . . . 5.19 3.90
Second Quarter . . . . . . . . . 3.62 2.12
Third Quarter. . . . . . . . . . 0.44 0.06
Fourth Quarter . . . . . . . . . 0.10 0.06
Pursuant to NASD Eligibility Rule 6530 (the "Rule") issued on
January 4, 1999, issuers who do not make current filings pursuant to
Sections 13 and 15(d) of the Securities Act of 1934 are ineligible
for listing on the NASDAQ Over- the-Counter Bulletin Board.
Pursuant to the Rule, issuers who are not current with such filings
are subject to de-listing pursuant to a phase-in schedule depending
on each issuer's trading symbol as reported on January 4, 1999. The
Company's trading symbol on January 4, 1999 was EPLV. Therefore,
pursuant to the phase-in schedule, the Company was subject to
de-listing on November 18, 1999. One month prior to an issuer's
de-listing date, non complying issuers had their trading symbol
appended with an "E". Consequently, the Company's trading symbol
was revised on October 22, 1999 to IRIBE.
The Company is not currently in compliance with the Rule, and in the
past, has not made filings pursuant to Sections 13 and 15(d) of the
Securities Act of 1934. The Company has filed this Registration
Statement on Form 10-SB in order to become a "reporting" company and
therefore comply with the Rule. Quotation of the Company's
securities was removed from the OTCBB on November 18, 1999, and will
remain removed until such time as the Securities and Exchange
Commission ("SEC") has reviewed the Company's Form 10-SB and has
stated that it has no further comments Once the Company has
complied with the Rule, it will once again become eligible for
listing on the NASDAQ Over-the-Counter Bulletin Board and will seek
to be reinstated on the NASDAQ Over-the-Counter Bulletin Board.
The Securities Enforcement and Penny Stock Reform Act of 1990
requires additional disclosure relating to the market for penny
stocks in connection with trades in any stock defined as a penny
stock. The Commission has adopted regulations that generally define
a penny stock to be any equity security that has a market price of
less than $5.00 per share, subject to certain exceptions. Such
exceptions include any equity security listed on Nasdaq and any
equity security issued by an issuer that has (i) net tangible assets
of at least $2,000,000, if such issuer has been in continuous
operation for three years, (ii) net tangible assets of at least
$5,000,000, if such issuer has been in continuous operation for less
than three years, or (iii) average annual revenue of at least
$6,000,000, if such issuer has been in continuous operation for less
than three years. Unless an exception is available, the regulations
require the delivery, prior to any transaction involving a penny
stock, of a disclosure schedule explaining the penny stock market
and the risks associated therewith.
<PAGE>
NUMBER OF SHAREHOLDERS
The number of beneficial holders of record of the common stock of
the company as of the close of business on November 15, 1999 was
approximately 92. Many of the shares of the Company's common stock
are held in "street name" and consequently reflect numerous
additional beneficial owners.
DIVIDEND POLICY
To date, the Company has declared no cash dividends on its common
stock, and does not expect to pay cash dividends in the next term.
The Company intends to retain future earnings, if any, to provide
funds for operation of its business.
ITEM 2 - LEGAL PROCEEDINGS
The Company may from time to time be involved in various claims,
lawsuits, disputes with third parties, actions involving allegations
of discrimination, or breach of contract actions incidental to the
operation of its business. The Company is not currently involved in
any such litigation which it believes could have a materially
adverse effect on its financial condition or results of operations.
ITEM 3 - CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
Prior to the acquisition of IRI-Nevada, EPL engaged Barry L.
Friedman, P.C., Certified Public Accountants ("Mr. Friedman"), to
audit the Company' s financial statements for the year ended
December 31, 1996 and the ten month period ended October 31, 1997.
Effective March 11, 1999, Davidson & Company, Chartered Accountants,
were engaged by the Company as their principal accountant to audit
the Company's financial statements for the period of incorporation
on August 7, 1986 to October 31, 1998 and not the ten month period
ended October 31, 1997 and the year ended December 31, 1998. There
have been no disagreements between Barry L. Friedman, Davidson &
Company and Management of the type required to be reported under
this Item 3 since the date of their engagement.
ITEM 4 - RECENT SALES OF UNREGISTERED SECURITIES
Prior to the merger of EPL and IRI
In connection with a private offering of securities which was made
by the Company in January 1998, the Company sold an aggregate of
2,200,000 units to sixteen (16) purchasers under Rule 504 of
Regulation D of the Securities Act of 1933. Each Unit contained one
(1) share of common stock and one (1) common stock purchase warrant.
The Warrants were exercisable for a period of one year from the
date of issuance at a price of $1.00 per share. Each Unit was sold
at a price of $0.25 per unit, resulting in net proceeds to the
Company of $550,000.
In connection with the exercise of the Warrants, an aggregate of
500,000 shares of common stock was issued to three (3) existing
shareholders in February 1998, resulting in net proceeds to the
Company of $500,000. The issuance was exempt from registration
under Rule 504 of Regulation D in accordance with the sale of the
Units in January 1998.
In connection with the exercise of the Warrants, an aggregate of
20,000 shares of common stock was issued to one (1) existing
shareholder in May 1998, resulting in net proceeds to the Company of
$20,000. The issuance was exempt from registration under Rule 506
of Regulation D.
<PAGE>
In connection with a private offering of securities which was made
by the Company in April 1999, the Company sold an aggregate of
13,500,000 shares of common stock to ten (10) accredited investors
under Rule 504 of Regulation D of the Securities Act of 1933. Each
share was sold at a price of $0.04 per share, resulting in net
proceeds to the Company of $540,000.
Subsequent to the merger of EPL and IRI
On April 26, 1999, the Company, which at the time was designated EPL
Ventures Corp., a Florida corporation, acquired all of the
outstanding common stock of Industrial Rubber Innovations, Inc., a
Nevada corporation, in a business combination described as a
"reverse acquisition." For accounting purposes, the acquisition has
been treated as the acquisition of EPL by IRI-Nevada. As part of
the acquisition, EPL changed its name to Industrial Rubber
Innovations, Inc. Immediately prior to the acquisition, and
following the effectiveness of a 1-for-5 reverse stock split which
was part of the acquisition, EPL had 3,444,000 shares of common
stock outstanding. As part of EPL's reorganization with IRI-Nevada,
EPL issued 3,800,000 shares of its common stock to the shareholders
of IRI-Nevada in exchange for 3,800 shares of IRI-Nevada common
stock. In addition, the Company issued warrants to purchase an
aggregate of 2,000,000 shares of its common stock to the IRI-Nevada
shareholders. All of the issuances were exempt under Section 4(2)
of the Securities Act of 1933.
On June 1, 1999, pursuant to a verbal agreement with an investor in
IRI-Nevada prior to its merger with EPL Ventures Corp., the Company
issued to Pegasus Consulting, an accredited entity, warrants to
acquire 9,333 shares of common stock at a price of $0.75 per share,
exercisable until June 1, 2000. The issuance was exempt under
Section 4(2) of the Securities Act of 1933.
On January 18, 1999, IRI-Nevada entered into a loan agreement with
Gencon Investments, Ltd., an accredited entity, whereby Gencon
loaned to IRI-Nevada the sum of $37,500. In accordance with the
terms of the agreement, on May 25, 1999, the Company issued to
Gencon warrants to acquire 50,000 shares of common stock at a price
of $0.75 per share, exercisable until May 21, 2000. In addition,
and in accordance with the terms of the agreement, on May 25, 1999
the Company issued to two Gencon affiliates, Gordon Reid and Robert
Dent, warrants to acquire 100,000 shares and 150,000 shares,
respectively, of common stock at a price of $0.75 per share,
exercisable until May 21, 2000. All of the issuances were exempt
under Section 4(2) of the Securities Act of 1933.
In July 1999, the Company issued an aggregate of 30,000 shares of
common stock, restricted in accordance with Rule 144, to MRC Legal
Services Corporation and one of its employees as payment for certain
services rendered. The issuance was exempt from registration under
Section 4(2) and Rule 506 of Regulation D.
In September 1999, the Company issued an aggregate 256,227 shares of
common stock, restricted in accordance with Rule 144, to three (3)
accredited purchasers in exchange for an aggregate of $180,482. The
issuance was exempt from registration under Rule 506 of Regulation D.
In October 1999, the Company issued 70,000 shares of common stock,
restricted in accordance with Rule 144, to one (1) accredited
individual in settlement of a dispute. The issuance was exempt from
registration under Rule 506 of Regulation D.
ITEM 5 - INDEMNIFICATION OF DIRECTORS AND OFFICERS
The Corporation Laws of the State of Florida and the Company's
Bylaws provide for indemnification of the Company's Directors for
liabilities and expenses that they may incur in such capacities. In
general, Directors and Officers are indemnified with respect to
actions taken in good faith in a manner reasonably believed to be
in, or not opposed to, the best interests of the Company, and with
respect to any criminal action or proceeding, actions that the
indemnitee had no reasonable cause to believe were unlawful.
Furthermore, the personal liability of the Directors is limited as
provided in the Company's Articles of Incorporation.
The Company does not currently maintain a policy of directors and
officers insurance.
<PAGE>
PART F/S
FINANCIAL STATEMENTS
The Financial Statements required by this Item are included at the
end of this report beginning on Page F-1.
PART III
ITEM 1 - INDEX TO EXHIBITS
EXHIBIT NO. DESCRIPTION
*2 Agreement and Plan of Reorganization dated April 12, 1999
*3.1 Articles of Incorporation of Henry Winkler, Inc. Filed
August 7, 1986
*3.2 Amendment to Articles of Incorporation Filed June 23, 1997
*3.3 Amendment to Articles of Incorporation Filed November 3,
1997
*3.4 Articles of Merger filed with the Florida Secretary of
State on April 26, 1999
*3.5 Bylaws
*10.1 Loan Agreement with Gencon Investments, Ltd. dated
January 18, 1999
*10.2 License Agreement with Century Rubber, LLC dated June
25, 1999
*10.3 Employment Agreement for John Proulx dated May 15, 1999
*10.4 Employment Agreement for David H. Foran dated May 15, 1999
*10.5 Employment Agreement for Benny Hun dated May 15, 1999
*10.6 Employment Agreement for Steven Tieu dated May 15, 1999
*10.7 Employment Agreement for Nancy Sheo dated May 15, 1999
*10.8 Lease of Premises Located at 6801 McDivitt Drive,
Bakersfield, CA
*10.9 Omnibus Stock Option Plan adopted June 3, 1999
10.10 Marketing Consulting Agreement with Petro-Rep Co.
10.11 Manufacturer's Distributorship Agreement with Gencon
Capital Resources Ltd.
10.12 Distribution Agreement with Shenzhen Yujiang Trade Limited.
23.1 Consent of Davidson & Company, Chartered Accountants
23.2 Consent of Barry L. Friedman, P.C.
_____________
* Previously Provided
ITEM 2 - DESCRIPTION OF EXHIBITS
Not applicable
<PAGE>
SIGNATURES
In accordance with Section 12 of the Securities Exchange Act of
1934, the registrant caused this registration statement to be signed
on its behalf by the undersigned, thereunto duly authorized.
INDUSTRIAL RUBBER INNOVATIONS, INC.
Date: December 1, 1999 By: /s/ David H. Foran
David H. Foran
Acting President, Chief
Financial Officer
<PAGE>
EPL VENTURES CORP.
(HENRY WINKLER, INC.)
(A DEVELOPMENT STAGE COMPANY)
FINANCIAL STATEMENTS
October 31, 1997
December 31, 1996
December 31, 1995
<PAGE>
TABLE OF CONTENTS
INDEPENDENT AUDITORS' REPORT 1
BALANCE SHEET 2
STATEMENT OF OPERATIONS 3
STATEMENT OF STOCKHOLDERS' EQUITY 4
STATEMENT OF CASH FLOWS 5
NOTES TO FINANCIAL STATEMENTS 6-7
<PAGE>
BARRY L. FRIEDMAN, P.C.
Certified Public Accountant
1582 Tulita Drive Office (702) 361-8414
Las Vegas, Nevada 89123 Fax No. (702) 896-0278
INDEPENDENT AUDITORS' REPORT
Board of Directors November 6, 1997
EPL VENTURES CORP.
Miami, Florida
I have audited the Balance Sheets of EPL VENTURES
CORP., (formerly Henry Winkler, Inc.), (A Development Stage
Company), as of October 31, 1997, December 31, 1996, and
December 31, 1995, and the related Statements of Operations,
Stockholders' Equity and Cash Flows for the period January 1,
1997, thru October 31, 1997, and the two years ended December
31, 1996, and December 31, 1995. 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 I
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 EPL VENTURES CORP., (formerly Henry Winkler, Inc),
(A Development Stage Company) as of October 31, 1997, December
31, 1996, and December 31, 1995, and the results of its
operations and its cash flows for the period January 1, 1997
thru October 31, 1997, and the two years ended December 31,
1996, and December 31, 1995, 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 3 to the financial statements, the Company
has suffered 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 plans in
regard to these matters are also described in Note 3. The
financial statements do not include any adjustments that might
result from the outcome of this uncertainty.
/s/ Barry L. Friedman
Barry L. Friedman
Certified Public Accountant
<PAGE>
<TABLE>
<CAPTION>
EPL VENTURES CORP.
(Formerly Henry Winkler, Inc.)
(A Development Stage Company)
BALANCE SHEET
ASSETS
October December December
31, 1997 31, 1996 31, 1995
<S> <C> <C> <C>
CURRENT ASSETS:
Cash $ 0 $ 0 $ 0
TOTAL CURRENT ASSETS $ 0 $ 0 $ 0
OTHER ASSETS: $ 0 $ 0 $ 0
Other Assets $ 0 $ 0 $ 0
TOTAL OTHER ASSETS $ 0 $ 0 $ 0
TOTAL ASSETS $ 0 $ 0 $ 0
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts Payable $1,820 $ 0 $ 0
TOTAL CURRENT LIABILITIES (6,820) (5,000) (5,000)
STOCKHOLDERS' EQUITY:
Common stock, $0.10 per value,
authorized 10,000 shares: issued
and outstanding at
December 31, 1995 - 10,000 shares $1,000
December 31, 1996 - 10,000 shares $1,000
Common stock $0.001 par value,
authorized 50,000,000 shares
issued and outstanding at
October 31, 1997
1,000,000 shares $1,000
Additional paid-in capital 4,000 $4,000 $4,000
Deficit accumulated during
development stage (6,820) (5,000) (5,000)
TOTAL STOCKHOLDER'S EQUITY $(1,820) $ 0 $ 0
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $ 0 $ 0 $ 0
</TABLE>
See accompanying notes to financial statements
<PAGE>
<TABLE>
<CAPTION>
EPL VENTURES CORP.
(Formerly Henry Winkler, Inc.)
(A Development Stage Company)
STATEMENT OF OPERATIONS
Jan. 1, Jan. 1, Jan. 1, Aug. 7, 1986
to to to (inception)
Oct. 31, Dec. 31, Dec., 31, to Oct. 31,
1997 1996 1995 1997
<S> <C> <C> <C> <C>
INCOME:
Revenue $ 0 $ 0 $ 0 $ 0
TOTAL INCOME $ 0 $ 0 $ 0 $ 0
EXPENSES:
General, Selling,
and Administrative $ 1,820 $ 0 $ 0 $ 6,820
TOTAL EXPENSES $ 1,820 $ 0 $ 0 $ 6,820
NET PROFIT/LOSS $(1,820) $ 0 $ 0 $(6,820)
NET PROFIT OR
(LOSS) PER SHARE $(.0018) $ 0 $ 0 $(.0068)
AVERAGE NUMBER OF
SHARES OF COMMON
STOCK OUTSTANDING 1,000,000 1,000,000 1,000,000 1,000,000
</TABLE>
See accompanying notes to financial statements
<PAGE>
<TABLE>
<CAPTION>
EPL VENTURES CORP.
(Formerly Henry Winkler, Inc.)
(A Development Stage Company)
October 31, 1997
STATEMENT OF STOCKHOLDERS' EQUITY
Deficit
accumulated
Additional during
Common Stock paid-in development
Shares Amount Capital stage
<S> <C> <C> <C> <C>
Balance,
December 31, 1994 20,000 $ 1,000 $ 4,000 $ (5,000)
Net loss year ended
December 31, 1995 0
Balance,
December 31, 1995 10,000 $ 1,000 $ 4,000 $ (5,000)
Net loss year ended
December 31, 1996 0
Balance,
December 31, 1996 10,000 $ 1,000 $ 4,000 $ (5,000)
On June 23, 1997,
changed from $0.10
par value to
$0.001 par value (1,990) 1,990
On June 23, 1997,
forward stock
split 100:1 1,990,000 1,990 (1,990)
Net loss Jan. 1,
1997 to Oct. 31,
1997 (1,820)
Balance,
October 31, 1997 1,000,000 $ 1,000 $ 4,000 $ (6,820)
</TABLE>
See accompanying notes to financial statements
<PAGE>
<TABLE>
<CAPTION>
EPL VENTURES CORP.
(Formerly Henry Winkler, Inc.)
(A Development Stage Company)
STATEMENT OF CASH FLOWS
Jan. 1, Jan. 1, Jan. 1, Aug. 7, 1986
to to to (inception)
Oct. 31, Dec. 31, Dec., 31, to Oct. 31,
1997 1996 1995 1997
<S> <C> <C> <C> <C>
Cash Flows from
Operating Activities
Net Profit/(Loss) $ (1,820) $ 0 $ 0 $ (6,820)
Increase in
Accounts Payable 1,820 1,820
Cash Flows from
Financing Activities
Issuance of common
stock 5,000
Net increase in cash $ 0 $ 0 $ 0 $ 0
Cash, beginning of
period $ 0 $ 0 $ 0 $ 0
Cash, end of period $ 0 $ 0 $ 0 $ 0
</TABLE>
See accompanying notes to financial statements
<PAGE>
EPL VENTURES CORP.
(Formerly Henry Winkler, Inc.)
(A Development Stage Company)
October 31, 1997, December 31, 1996 and December 31, 1995
NOTES TO FINANCIAL STATEMENTS
NOTE 1 - History and Organization of the Company
The Company was organized August 7, 1986, under the laws of the
State of Florida as Henry Winkler, Inc. The Company currently
has no operations and, in accordance with SFAS #7, is considered
a development company.
On August 14, 1986, the Company issued 10,000 shares of its
$0.10 par value common stock for $5,000.
Effective June 23, 1997, the Board of Directors approved a
forward stock split of 100:1. Thus increasing the number of
outstanding common stock shares from 10,000 common shares to
1,000,000 common shares.
On June 23, 1997, the State of Florida approved the Company's
restated Articles of Incorporation, which increased its
capitalization from 10,000 common shares, $0.10 par value, to
50,000,000 common shares, $.001 par value.
On October 21, 1997, the name of the Company was changed to EPL
VENTURES CORP.
NOTE 2 - Accounting Policies and Procedures
The Company has not determined its accounting policies and
procedures, except as follows:
1. The Company uses the accrual method of accounting.
2. Earnings or loss per shares is calculated using
the weighted average number of shares of common stock outstanding.
3. The Company has not yet adopted any policy
regarding payment of dividends. No dividends have been paid
since inception.
NOTE 3 - Going Concern
The Company's financial statements are prepared using the
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 has no current source of revenue. Without
realization of additional capital, it would be unlikely for the
Company to continue as a going concern. It is management's plan
to seek additional capital through a merger with an existing
operating company.
<PAGE>
EPL VENTURES CORP.
(Formerly Henry Winkler, Inc.)
(A Development Stage Company)
October 31, 1997, December 31, 1996 and December 31, 1995
NOTES TO FINANCIAL STATEMENTS (CON'T)
NOTE 4 - Related Party Transactions
The Company neither owns or leases any real property. Office
services are provided without charge by an officer. 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 5 - WARRANTS AND OPTIONS
There are no warrants or options outstanding t issue any
additional shares of common stock of the Company.
<PAGE>
EPL VENTURES CORP.
FINANCIAL STATEMENTS
(A DEVELOPMENT STAGE COMPANY)
MARCH 31, 1999
<PAGE>
INDEPENDENT AUDITORS' REPORT
To the Board of Directors and Shareholders of
EPL Ventures Corp.
(A Development Stage Company)
We have audited the balance sheets of EPL Ventures Corp. as at March 31,
1999 and October 31, 1998 and the statements of operations, changes in
shareholders' equity and cash flows for the five month period ended March
31, 1999, the year ended October 31, 1998 and the period from incorporation
on August 7, 1986 to March 31, 1999. 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 audits.
We conducted our audits in accordance with generally accepted auditing
standards in the United States of America. Those standards require that we
plan and perform the audits 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. We believe
that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of EPL Ventures Corp. as at
March 31, 1999 and October 31, 1998 and the results of its operations and
its cash flows for the five month period ended March 31, 1999, the year
ended October 31, 1998 and the period from incorporation on August 7, 1986
to March 31, 1999 in conformity with generally accepted accounting
principles in the United States of America.
The accompanying financial statements have been prepared assuming that EPL
Ventures Corp. will continue as a going concern. As discussed in Note 2 to
the financial statements, unless the Company attains future profitable
operations and/or obtains additional financing, there is substantial doubt
about the Company's ability to continue as a going concern. Management's
plans in regards to these matters are discussed in Note 2. The financial
statements do not include any adjustments that might result from the outcome
of this uncertainty.
The audited financial statements as at October 31, 1997 and for the ten
month period ended October 31, 1997 were examined by another auditor who
expressed an opinion without reservation on those statements in his report
dated November 6, 1997.
/s/ Davidson & Company
Vancouver, Canada Chartered Accountants
May 27, 1999
<PAGE>
EPL VENTURES CORP.
(A Development Stage Company)
BALANCE SHEETS
<TABLE>
<CAPTION>
<S> <C> <C>
March 31, October 31,
1999 1998
ASSETS
CASH $ - $ 158
INVESTMENT (Note 4) 800,000 800,000
DUE FROM INDUSTRIAL RUBBER INNOVATIONS INC. 58,500 -
$858,500 $800,158
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT
Bank indebtedness $ 23 $ -
Accounts payable and accrued liabilities 108,931 80,424
108,954 80,424
SHAREHOLDERS' EQUITY
Capital stock
Authorized
50,000,000 common shares
with a par value of $0.001
Issued and outstanding
October 31, 1997 -
1,000,000 common shares with
a par value of $0.001
March 31, 1999 -
3,720,000 common shares with
a par value of $0.001 3,720 3,720
Share subscriptions received 58,500 -
Additional paid-in capital 1,071,280 1,071,280
Deficit accumulated during
the development stage (383,954) (355,266)
749,546 719,734
$ 858,500 $ 800,158
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
EPL VENTURES CORP.
(A Development Stage Company)
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Incorporation
on August 7, Five Month Ten Month
1986 to Period Ended Year Ended Period Ended
March 31, March 31, October 31, October 31,
1999 1999 1998 1997
EXPENSES
Accounting and Legal fees 38,645 1,431 37,214 -
Administrative fees 19,000 - 19,000 -
Bank and interest charges 3,080 1,279 1,801 -
Consulting fees 59,842 20,700 39,142 -
Filing fees 697 - 697 -
Foreign exchange 2,291 (78) 2,369 -
Office expenses 16,139 3,158 6,161 1,820
Travel and entertainment 7,010 1,341 5,669 -
Telephone 7,250 857 6,393 -
(153,954) (28,688) (118,446) (1,820)
OTHER ITEM
Write-down of investments
(Note 4) (230,000) - (230,000) -
LOSS FOR THE PERIOD $ (383,954) $ (28,688) $ (348,446) $ (1,820)
LOSS PER SHARE $ (0.01) $ (0.14) $ (0.0018)
WEIGHTED AVERAGE NUMBER OF SHARES
OF COMMON STOCK OUTSTANDING 3,720,000 2,501,849 1,000,000
</TABLE>
The accompanying notes are an integral part of these financial statments.
<PAGE>
EPL VENTURES CORP.
(A Development Stage Company)
STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
Deficit
Accumulated
Additional During the
Common Stock Paid-in Share Subscriptions Received Development
Shares Amount Capital Shares Amount Stage Total
Balance, December 31,
1995 10,000 $ 1,000 $ 4,000 - $ - $(5,000) -
Loss for the year - - - - - - -
Balance, December 31,
1996 10,000 1,000 4,000 - - (5,000) -
On June 23, 1997,
changed from $0.10
par value to $0.001
par value - (990) 990 - - - -
On June 23, 1997,
forward stock split
100:1 990,000 990 (990) - - - -
Loss for the period - - - - - (1,820) (1,820)
Balance, October 31,
1997 1,000,000 1,000 4,000 (6,820) (1,820)
Shares issued for cash 1,720,000 2,720 1,067,280 - - - 1,070,000
Loss for the year - - - - - (348,446) (348,446)
Balance, October 31,
1998 3,720,000 3,720 1,071,280 - - (355,266) 719,734
Loss for the period - - - - - (28,688) (28,688)
Shares subscription
received (net of
issuance cost) - - - - 58,500 - 58,500
Balance, March 31,
1999 3,720,000 $ 3,720 $ 1,071,280 - $ 58,500 (383,954) 749,546
</TABLE>
The accompanying notes are an integral part of these financil statements.
<PAGE>
EPL VENTURES CORP.
(A Development Stage Company)
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Cumulative
Amounts From
Incorporation
on August 7, Five Month Ten Month
1986 to Period Ended Year Ended Period Ended
March 31, March 31, October 31, October 31,
1999 1999 1998 1997
CASH FLOWS FROM OPERATING ACTIVITIES
Loss for the period $ (383,954) $ (28,688) $ (348,446) $ (1,820)
Item not involving an outlay of
cash: Write-down of investments 230,000 - 230,000 -
Increase in accounts payable 108,931 28,507 78,604 1,820
Net cash used in operating activities (45,023) (181) (39,842) -
CASH FLOWS FROM FINANCING ACTIVITIES
Issuance of common stock 1,075,000 - 1,070,000 -
CASH FLOWS FROM INVESTING ACTIVITIES
Investment (1,030,000) - (1,030,000) -
Change in cash (bank indebtedness)
for the period (23) (181) 158 -
Cash (bank indebtedness),
beginning of period - 158 - -
Cash (bank indebtedness)
end of period $ (23) (23) 158 -
Supplemental disclosure with respect
to cash flows
Cash paid during the period
for interest - - - -
Cash paid during the period
for income taxes - - - -
</TABLE>
THERE WERE NO NON-CASH TRANSACTIONS FOR THE PERIODS ENDED MARCH 31, 1999,
OCTOBER 31, 1998 AND OCTOBER 31, 1997.
The accompanying notes are an integral part of these financial statements.
<PAGE>
EPL VENTURES CORP.
(A Development Stage Company)
NOTES TO THE FINANCIAL STATEMENTS
MARCH 31, 1999
1. HISTORY AND ORGANIZATION OF THE COMPANY
The Company was organized August 7, 1986, under the laws of the State
of Florida as Henry Winkler, Inc. The Company currently has no
operations and, in accordance with SFAS #7, is considered a
development stage company.
On August 14, 1986, the Company issued 10,000 shares of its $0.10 par
value common stock for $5,000.
On June 23, 1997, the State of Florida approved the Company's restated
Articles of Incorporation, which increased its capitalization from
10,000 common shares, $0.10 par value, to 50,000,000 common
shares, $0.001 par value.
Effective June 23, 1997, the Board of Directors approved a forward
stock split of 100:1. Thus increasing the number of common shares
outstanding from 10,000 common shares to 1,000,000 common
shares.
On October 21, 1997, the name of the Company was changed to EPL
Ventures Corp.
2. GOING CONCERN
The Company's financial statements are prepared using the 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 has no current
source of revenue. Without realization of additional capital, it
would be unlikely for the Company to continue as a going concern.
It is management's plan to seek additional capital through a merger
with an existing operating company.
<TABLE>
<CAPTION>
<S> <C> <C>
March 31, October 31,
1999 1998
Deficit accumulated during the development stage $ (383,954) $ (355,266)
Working capital deficiency (108,954) (80,266)
</TABLE>
3. SIGNIFICANT ACCOUNTING POLICIES
INVESTMENTS
In May 1993, the Financial Accounting Standards Board issued Statement
No. 115 ("SFAS 115"), Accounting for Certain Investments in Debt and
Equity Securities, which is effective for years beginning after
December 15, 1993. Under SFAS 115, the Company's investments are
classified into available-for-sale or trading securities categories
stated at their fair values. The fair market value of securities is
determined through published market value quotations, obtained for the
day of the valuation. Any unrealized holding gains or losses are to
be reported as a separate component of shareholder's equity until
realized for available-for-sale securities,and included in earnings for
trading securities.
ACCOUNTING FOR DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES
In June 1998, the Financial Accounting standards Board issued
Statements of Financial Accounting Standards No. 133 "Accounting for
Derivative Instruments and Hedging Activities"("SFAS 133") which
establishes accounting an reporting standards for derivative
instruments and for hedging activities. SFAS 133 is
effective for all fiscal quarters of fiscal years beginning after
June 15, 1999. The Company does not anticipate that the adoption of
the statement will have a significant impact on its financial statements.
<PAGE>
EPL VENTURES CORP.
(A Development Stage Company)
NOTES TO THE FINANCIAL STATEMENTS
MARCH 31, 1999
3. SIGNIFICANT ACCOUNTING POLICIES (cont'd ..)
REPORTING ON COSTS OF START-UP ACTIVITIES
In April 1998, the American Institute of Certified Public Accountant's
issued Statement of Position 98-5 "Reporting on the Costs of Start-Up
Activities" ("SOP 98-5") which provides guidance on the financial
reporting of start-up costs and organization costs. It requires costs
of start-up activities and organization costs to be expensed as
incurred. SOP 98-5 is effective for fiscal years beginning after
December 15, 1998 with initial adoption reported as the cumulative
effect of a change in accounting principle. The Company has not yet
determined the effect that the adoption of this
statement will have on its financial statements.
LOSS PER SHARE
Loss per share is based on the weighted average number of common
shares outstanding during the period.
COMPARATIVE FIGURES
Certain comparative figures have been adjusted to conform to the
current year's presentation.
4. INVESTMENTS
During the year, the Company invested $850,000 in common shares of
Savant Biomedical Inc. ("Savant"). In addition, the Company holds a
note from Savant in the amount of $180,000. During the year, the
Company wrote-down its investment by the amount of $230,000 due to a
permanent decline in its market value, the amount of which has been
included in the statement of operations.
5. SUBSEQUENT EVENTS
a) The Company issued 13,500,000 common shares in connection with a
private placement offering at a price of $0.04 per common share,
for proceeds totaling $540,000.
b) Effective April 26, 1999 the Company acquired all of the issued
and outstanding share capital of Industrial Rubber Innovations,
Inc. ("IRI"). As consideration, the Company issued 3,800,000
common shares of the Company. Immediately prior to the
acquisition, the Company implemented a five for one
reverse stock split, resulting in a total of 3,444,000 common
shares outstanding. Post-acquisition number of shares
outstanding totaled 7,244,000 common shares. As part of the
acquisition agreement, the Company also issued warrants to
acquire 2,000,000 common shares of the Company to the IRI
shareholders.
Legally, the Company is the parent of IRI. However,as a result
of the share exchange described above, control of the combined
companies passed to the former shareholders of IRI. This type of
share exchange, referred to as a "reverse acquisition", deems
IRI to be the acquiror for accounting purposes. Accordingly,
the net assets of the IRI will be included in the balance sheet
at book values and the deemed acquisition of the Company will be
accounted for by the purchase method with the net assets of the
Company recorded at fair market value at the date of
acquisition.
At April 26, 1999, the Company was inactive with a thin market
for its shares,making it impossible to estimate the actual market
value of the 3,800,000 common shares. Therefore, the cost of
the acquisition will be determined by the fair value of the
Company's net assets.
<PAGE>
EPL VENTURES CORP.
(A Development Stage Company)
NOTES TO THE FINANCIAL STATEMENTS
MARCH 31, 1999
5. SUBSEQUENT EVENTS (cont'd ..)
c) The Company changed its name to Industrial Rubber
Innovations, Inc.
d) The Company entered into five two-year Employment
Agreements with directors and an officer of
the Company. Each director and officer will be paid an
annual salary of $60,000.
These agreements may be terminated by either party after
the first year and would be subject to one
year's compensation as severance.
<PAGE>
EPL VENTURES CORP.
(HENRY WINKLER, INC.)
(A DEVELOPMENT STAGE COMPANY)
FINANCIAL STATEMENTS
--------------------
October 31, 1997
December 31, 1996
December 31, 1995
<PAGE>
TABLE OF CONTENTS
-----------------
INDEPENDENT AUDITORS' REPORT 1
BALANCE SHEET 2
STATEMENT OF OPERATIONS 3
STATEMENT OF STOCKHOLDERS' EQUITY 4
STATEMENT OF CASH FLOWS 5
NOTES TO FINANCIAL STATEMENTS 6-7
<PAGE>
BARRY L. FRIEDMAN, P.C.
Certified Public Accountant
1582 Tulita Drive Office (702) 361-8414
Las Vegas, Nevada 89123 Fax No. (702) 896-0278
INDEPENDENT AUDITORS' REPORT
----------------------------
Board of Directors November 6, 1997
EPL VENTURES CORP.
Miami, Florida
I have audited the Balance Sheets of EPL VENTURES CORP., (formerly Henry
Winkler, Inc.), (A Development Stage Company), as of October 31, 1997, December
31, 1996, and December 31, 1995, and the related Statements of Operations,
Stockholders' Equity and Cash Flows for the period January 1, 1997, thru October
31, 1997, and the two years ended December 31, 1996, and December 31, 1995.
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 I 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 EPL VENTURES CORP.,
(formerly Henry Winkler, Inc), (A Development Stage Company) as of October 31,
1997, December 31, 1996, and December 31, 1995, and the results of its
operations and its cash flows for the period January 1, 1997 thru October 31,
1997, and the two years ended December 31, 1996, and December 31, 1995, 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 3 to the
financial statements, the Company has suffered 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 plans in regard to these matters
are also described in Note 3. The financial statements do not include any
adjustments that might result from the outcome of this uncertainty.
/s/ Barry L. Friedman
Barry L. Friedman
Certified Public Accountant
<PAGE>
<TABLE>
<CAPTION>
EPL VENTURES CORP.
(Formerly Henry Winkler, Inc.)
(A Development Stage Company)
BALANCE SHEET
-------------
ASSETS
------
October December December
31, 1997 31, 1996 31, 1995
------- -------- ---------
<S> <C> <C> <C>
CURRENT ASSETS:
Cash $ 0 $ 0 $ 0
-------- -------- --------
TOTAL CURRENT ASSETS $ 0 $ 0 $ 0
-------- -------- --------
OTHER ASSETS: $ 0 $ 0 $ 0
-------- -------- --------
Other Assets $ 0 $ 0 $ 0
-------- -------- --------
TOTAL OTHER ASSETS $ 0 $ 0 $ 0
-------- -------- --------
TOTAL ASSETS $ 0 $ 0 $ 0
-------- -------- --------
LIABILITIES AND STOCKHOLDERS' EQUITY
- --------------------------------------
CURRENT LIABILITIES:
Accounts Payable $ 1,820 $ 0 $ 0
-------- -------- --------
TOTAL CURRENT LIABILITIES (6,820) (5,000) (5,000)
STOCKHOLDERS' EQUITY:
Common stock, $0.10 per value,
authorized 10,000 shares: issued
and outstanding at
December 31, 1995 - 10,000 shares $ 1,000
December 31, 1996 - 10,000 shares $ 1,000
Common stock $0.001 par value,
authorized 50,000,000 shares
issued and outstanding at
October 31, 1997 - 1,000,000 shares $ 1,000
Additional paid-in capital 4,000 $ 4,000 $ 4,000
Deficit accumulated during
development stage (6,820) (5,000) (5,000)
TOTAL STOCKHOLDER'S EQUITY $(1,820) $ 0 $ 0
-------- -------- --------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $ 0 $ 0 $ 0
-------- -------- --------
</TABLE>
See accompanying notes to financial statements
<PAGE>
<TABLE>
<CAPTION>
EPL VENTURES CORP.
(Formerly Henry Winkler, Inc.)
(A Development Stage Company)
STATEMENT OF OPERATIONS
-----------------------
Jan. 1, Jan. 1, Jan.1, Aug. 7, 1986
to to to (inception)
Oct. 31, Dec. 31, Dec., 31, to Oct. 31,
1997 1996 1995 1997
---- ---- ---- ----
<S> <C> <C> <C> <C>
INCOME:
Revenue $ 0 $ 0 $ 0 $ 0
----------- ---------- ---------- -----------
TOTAL INCOME $ 0 $ 0 $ 0 $ 0
----------- ---------- ---------- -----------
EXPENSES:
General, Selling,
and Administrative $ 1,820 $ 0 $ 0 $ 6,820
----------- ---------- ---------- -----------
TOTAL EXPENSES $ 1,820 $ 0 $ 0 $ 6,820
----------- ---------- ---------- -----------
NET PROFIT/LOSS $ (1,820) $ 0 $ 0 $ (6,820)
----------- ---------- ---------- -----------
NET PROFIT OR
(LOSS) PER SHARE $ (.0018) $ 0 $ 0 $ (.0068)
----------- ---------- ---------- -----------
AVERAGE NUMBER OF
SHARES OF COMMON
STOCK OUTSTANDING 1,000,000 1,000,000 1,000,000 1,000,000
----------- ---------- ---------- -----------
</TABLE>
See accompanying notes to financial statements
<PAGE>
<TABLE>
<CAPTION>
EPL VENTURES CORP.
(Formerly Henry Winkler, Inc.)
(A Development Stage Company)
October 31, 1997
STATEMENT OF STOCKHOLDERS' EQUITY
---------------------------------
Deficit
accumulated
Additional during
Common Stock paid-in development
Shares Amount Capital stage
------ ------ ------- -------------
<S> <C> <C> <C> <C>
Balance,
December 31, 1994 20,000 $ 1,000 $ 4,000 $(5,000)
Net loss year ended
December 31, 1995 0
Balance,
December 31, 1995 10,000 $ 1,000 $ 4,000 $(5,000)
Net loss year ended
December 31, 1996 0
Balance,
December 31, 1996 10,000 $ 1,000 $ 4,000 $(5,000)
On June 23, 1997,
changed from $0.10
par value to
0.001 par value (1,990) 1,990
On June 23, 1997,
forward stock
split 100:1 1,990,000 1,990 (1,990)
Net loss Jan. 1,
1997 to Oct. 31,
1997 (1,820)
Balance,
October 31, 1997 1,000,000 $ 1,000 $ 4,000 $(6,820)
---------- -------- -------- --------
</TABLE>
See accompanying notes to financial statements
<PAGE>
<TABLE>
<CAPTION>
EPL VENTURES CORP.
(Formerly Henry Winkler, Inc.)
(A Development Stage Company)
STATEMENT OF CASH FLOWS
-----------------------
Jan. 1, Jan. 1, Jan. 1, Aug. 7, 1986
to to to (inception)
Oct. 31, Dec. 31, Dec., 31, to Oct. 31,
1997 1996 1995 1997
---------- --------- ---------- -----------
<S> <C> <C> <C> <C>
Cash Flows from
Operating Activities
Net Profit/(Loss) $ (1,820) $ 0 $ 0 $ (6,820)
Increase in
Accounts Payable 1,820 1,820
Cash Flows from
Financing Activities
Issuance of common
stock 5,000
Net increase in cash $ 0 $ 0 $ 0 $ 0
Cash, beginning of
period $ 0 $ 0 $ 0 $ 0
---------- --------- ---------- -----------
Cash, end of period $ 0 $ 0 $ 0 $ 0
---------- --------- ---------- -----------
</TABLE>
See accompanying notes to financial statements
<PAGE>
EPL VENTURES CORP.
(Formerly Henry Winkler, Inc.)
(A Development Stage Company)
October 31, 1997, December 31, 1996 and December 31, 1995
NOTES TO FINANCIAL STATEMENTS
-----------------------------
NOTE 1 - History and Organization of the Company
The Company was organized August 7, 1986, under the laws of the State of Florida
as Henry Winkler, Inc. The Company currently has no operations and, in
accordance with SFAS #7, is considered a development company.
On August 14, 1986, the Company issued 10,000 shares of its $0.10 par value
common stock for $5,000.
Effective June 23, 1997, the Board of Directors approved a forward stock split
of 100:1. Thus increasing the number of outstanding common stock shares from
10,000 common shares to 1,000,000 common shares.
On June 23, 1997, the State of Florida approved the Company's restated Articles
of Incorporation, which increased its capitalization from 10,000 common shares,
$0.10 par value, to 50,000,000 common shares, $.001 par value.
On October 21, 1997, the name of the Company was changed to EPL VENTURES CORP.
NOTE 2 - Accounting Policies and Procedures
The Company has not determined its accounting policies and procedures, except as
follows:
1. The Company uses the accrual method of accounting.
2. Earnings or loss per shares is calculated using the weighted average
number of shares of common stock outstanding.
3. The Company has not yet adopted any policy regarding payment of
dividends. No dividends have been paid since inception.
NOTE 3 - Going Concern
The Company's financial statements are prepared using the 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 has no current source of revenue. Without
realization of additional capital, it would be unlikely for the Company to
continue as a going concern. It is management's plan to seek additional capital
through a merger with an existing operating company.
<PAGE>
EPL VENTURES CORP.
(Formerly Henry Winkler, Inc.)
(A Development Stage Company)
October 31, 1997, December 31, 1996 and December 31, 1995
NOTES TO FINANCIAL STATEMENTS (CON'T)
-------------------------------------
NOTE 4 - Related Party Transactions
The Company neither owns or leases any real property. Office services are
provided without charge by an officer. 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 5 - WARRANTS AND OPTIONS
There are no warrants or options outstanding t issue any additional shares of
common stock of the Company.
<PAGE>
INDUSTRIAL RUBBER INNOVATIONS, INC.
(FORMERLY EPL VENTURES CORP.)
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED FINANCIAL STATEMENTS
(PREPARED BY MANAGEMENT)
PERIOD FROM INCORPORATION ON
NOVEMBER 19, 1998 TO JULY 31, 1999
<PAGE>
<TABLE>
<CAPTION>
INDUSTRIAL RUBBER INNOVATIONS, INC.
(formerly EPL Ventures Corp.)
(A Development Stage Company)
CONSOLIDATED BALANCE SHEET
(Prepared by Management)
AS AT JULY 31, 1999
<S> <C>
ASSETS
CURRENT
Cash $ 38,548
Accounts receivable 53,730
Inventory 137,571
Prepaid expenses 17,000
-----------
Total current assets 246,849
CAPITAL ASSETS (Note 5) 118,466
INVESTMENTS (Note 6) 730,683
-----------
TOTAL ASSETS $1,095,998
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT
Accounts payable and accrued liabilities $ 89,166
Loan from shareholder 30,000
Loan payable 108,946
-----------
Total current liabilities 228,112
-----------
STOCKHOLDERS' EQUITY
Capital stock (Note 10)
Authorized
50,000,000 common shares with a par value of $0.001
5,000,000 preferred shares with a par value of $0.001
Issued and outstanding
7,274,000 common shares with a
par value of $0.001 7,278
Additional paid in capital 1,227,962
Deficit accumulated during the development stage (367,354)
-----------
867,886
----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $1,095,998
</TABLE>
COMMITMENTS (Note 12)
SUBSEQUENT EVENTS (Note 13)
ON BEHALF OF THE BOARD:
===========================
________________________ Director
The accompanying notes are an integral part of these consolidated financial
statements.
<PAGE>
<TABLE>
<CAPTION>
INDUSTRIAL RUBBER INNOVATIONS, INC.
(formerly EPL Ventures Corp.)
(A Development Stage Company)
CONSOLIDATED STATEMENTS OF OPERATIONS
(Prepared by Management)
Period from
Incorporation
on
Three Month November 19,
Period Ended 1998 to
July 31, July 31,
1999 1999
<S> <C> <C>
SALES $ 29,090 $ 34,470
COST OF GOODS SOLD (21,238) (23,703)
----------- -----------
7,852 10,767
OPERATING EXPENSES
Accounting and legal fees 133,593 148,174
Amortization 5,830 17,489
Automobile expenses 6,919 12,045
Bank charges 566 1,152
Consulting fees 31,540 31,540
Insurance 13,487 13,852
Management fees 30,000 65,050
Office expenses 17,386 21,326
Product packaging 10,321 10,321
Rent 675 6,216
Supplies 11,524 11,524
Telephone and utilities 6,090 12,948
Testing mold 6,989 11,089
Travel and entertainment 25,349 52,895
----------- -----------
300,269 415,621
----------- -----------
LOSS BEFORE EXTRAORDINARY ITEM (292,417) (404,854)
----------- -----------
EXTRAORDINARY ITEM
Gain on settlement of debt (Note 7) 37,500 37,500
----------- -----------
LOSS FOR THE PERIOD $ (254,917) $ (367,354)
BASIC LOSS PER SHARE BEFORE EXTRAORDINARY ITEM $ (0.04) $ (0.11)
EXTRAORDINARY ITEM 0.01 0.01
----------- -----------
BASIC AND DILUTED LOSS PER SHARE $ (0.03) $ (0.10)
WEIGHTED AVERAGE NUMBER OF SHARES OF COMMON STOCK OUTSTANDING 7,266,258 3,394,748
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
<PAGE>
<TABLE>
<CAPTION>
INDUSTRIAL RUBBER INNOVATIONS, INC.
(formerly EPL Ventures Corp.)
(A Development Stage Company)
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
(Prepared by Management)
Deficit
Accumulated
Additional During the Total
Common Stock Paid-in Development Stockholders'
Shares Amount Capital Stage Equity
<S> <C> <C> <C> <C> <C>
Balance, October 31, 1998 - $ - $ - $ - $ -
Capital stock issued
for cash 3,800 4 - - 4
Capital stock of Industrial Rubber
Innovations Inc. (Nevada) (3,800) - - - -
Capital stock of Industrial Rubber
Innovations Inc.
April 25, 1999 3,444,000 3,444 1,611,556 - 1,615,000
Deficit of Industrial Rubber
Innovations Inc. - - (417,354) - (417,354)
Capital stock issued pursuant to the
acquisition of Industrial Rubber
Innovations Inc. (Nevada) (Note 8) 3,800,000 3,800 (3,800) - -
Capital stock issued for legal services 30,000 30 37,560 - 37,590
Loss for the period - - - (367,354) (367,354)
------------- -------- --------------- ---------- -----------
Balance, July 31, 1999 7,274,000 $ 7,278 $ 1,227,962 $(367,354) $ 867,886
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
<PAGE>
<TABLE>
<CAPTION>
INDUSTRIAL RUBBER INNOVATIONS, INC.
(formerly EPL Ventures Corp.)
(A Development Stage Company)
CONSOLIDATED STATEMENT OF CASH FLOWS
(Prepared by Management)
PERIOD FROM INCORPORATION ON NOVEMBER 19, 1998 TO JULY 31, 1999
<S> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Loss for the period $(367,354)
Items not involving an outlay of cash:
Amortization 17,489
Issuance of common stock for legal services 37,590
Changes in non-cash working capital items:
Increase in accounts receivable (53,730)
Increase in inventory (137,571)
Increase in prepaid expenses (17,000)
Increase in accounts payable 76,204
Increase in loan to shareholder 30,000
Increase in loan payable 75,480
----------
Net cash used in operating activities (338,892)
----------
CASH FLOWS FROM FINANCING ACTIVITIES
Issuance of common stock 4
Loan proceeds 441,000
----------
Net cash provided by financing activities 441,004
----------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of capital assets (135,955)
Proceeds from sale of investment 69,317
Acquisition of cash on purchase of subsidiary 3,074
----------
Net cash used in investing activities (63,564)
----------
CHANGE IN CASH FOR THE PERIOD 38,548
CASH, BEGINNING OF PERIOD -
----------
CASH, END OF PERIOD $ 38,548
</TABLE>
SUPPLEMENTAL DISCLOSURE WITH RESPECT TO CASH FLOWS (Note 11)
The accompanying notes are an integral part of these consolidated financial
statements.
<PAGE>
INDUSTRIAL RUBBER INNOVATIONS, INC.
(formerly EPL Ventures Corp.)
(A Development Stage Company)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Prepared by Management)
JULY 31, 1999
1. HISTORY AND ORGANIZATION OF THE COMPANY
The Company was organized on August 7, 1986, under the laws of the State of
Florida as Henry Winkler, Inc.
On October 21, 1997, the name of the Company was changed to EPL Ventures
Corp.
Effective April 26, 1999, the Company acquired all of the issued and
outstanding common stock of Industrial Rubber Innovations, Inc. ("IRI
(Nevada)"). IRI (Nevada) was organized on November 19, 1998, under the laws of
the State of Nevada, and is in the business of selling specialty synthetic
rubber mold products.
Concurrent with this acquisition, the Company changed its name to
Industrial Rubber Innovations, Inc. ("IRI").
In the opinion of management, the accompanying consolidated financial
statements contain all adjustments necessary (consisting only of normal
recurring accruals) to present fairly the financial information contained
therein. These statements do not include all disclosures required by generally
accepted accounting principles. The results of operations for the period ended
July 31, 1999 are not necessarily indicative of the results to be expected for
the year ending October 31, 1999.
2. BASIS OF PRESENTATION
As the new shareholders of IRI hold approximately 52% of the outstanding
shares of the Company after the combination, the business combination of the two
companies has been accounted for as a capital transaction accompanied by a
recapitalization of IRI (Nevada). Application of the recapitalization results
in the following:
a) Consolidated financial statements for the combined entity issued for
July 31, 1999 are issued under the name of the legal parent, IRI, but are
considered a continuation of the financial statements of the legal subsidiary,
IRI (Nevada). Earnings from operations of IRI (legal parent) will be recorded
in the consolidated financial statements commencing April 26, 1999.
b) As IRI (Nevada) is deemed to be the acquiror for accounting
purposes, its assets and liabilities are included in the consolidated financial
statements at their historical carrying values in the accounts of the Company.
c) The net assets of IRI are deemed to be acquired by IRI (Nevada) at
their fair value on the date of acquisition (Note 8).
d) The number of shares issued and outstanding at July 31, 1999 are
those of IRI.
<PAGE>
INDUSTRIAL RUBBER INNOVATIONS, INC.
(formerly EPL Ventures Corp.)
(A Development Stage Company)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Prepared by Management)
JULY 31, 1999
3. GOING CONCERN
The Company's financial statements are prepared using the 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 has minimal sources of revenue. Without
realization of additional capital, it would be unlikely for the Company to
continue as a going concern.
July 31,
1999
=====
Deficit accumulated during the development stage $ (367,354)
Working capital 18,737
4. SIGNIFICANT ACCOUNTING POLICIES
USE OF ESTIMATES
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amount of assets and liabilities,
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amount of revenues and expenses during the period.
Actual results could differ from these estimates.
PRINCIPLES OF CONSOLIDATION
The consolidated financial statements include Industrial Rubber
Innovations, Inc. (Nevada), which was incorporated on November 19, 1998, and
Industrial Rubber Innovations, Inc. All significant intercompany balances and
transactions have been eliminated upon consolidation.
CASH AND CASH EQUIVALENTS
The Company considers all investments with a maturity of three months or
less to be cash equivalents.
LOSS PER SHARE
Loss per share is provided in accordance with Statement of Financial
Accounting Standards No. 128 "Earnings Per Share". Due to the Company's simple
capital structure, with only common stock outstanding, only basic loss per share
is presented. 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.
INVENTORY
Inventory is valued at the lower of cost and net realizable value.
<PAGE>
INDUSTRIAL RUBBER INNOVATIONS, INC.
(formerly EPL Ventures Corp.)
(A Development Stage Company)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Prepared by Management)
JULY 31, 1999
4. SIGNIFICANT ACCOUNTING POLICIES (cont'd )
CAPITAL ASSETS
Capital assets are recorded at cost. Amortization is provided over the
estimated useful life of the asset using the following methods:
Molds and dies 5 year straight-line
Computer equipment 5 year straight-line
Machinery and equipment 10 year straight-line
INVESTMENTS
Under Statement of Financial Accounting Standards No. 115 ("SFAS 115"),
Accounting for Certain Investments in Debt and Equity Securities, the Company's
investments are classified into available-for-sale or trading securities
categories stated at their fair values. The fair market value of marketable
equity securities is determined through published market value quotations,
obtained for the day of the valuation. Any unrealized holdings gains or losses
are to be reported as a separate component of shareholders' equity until
realized for available-for-sale securities, and included in earnings for
trading securities. All of the Company's equity securities at July 31, 1999
were classified as available-for-sale securities.
REVENUE RECOGNITION
Revenue is derived from the sales of speciality synthetic rubber molded
products and compounds. Revenue from sales is recognized when the goods are
shipped and collectibility is reasonably assured.
INCOME TAXES
Income taxes are provided in accordance with Statement of Financial
Accounting Standards No. 109, "Accounting for Income Taxes". A deferred tax
asset or liability is recorded for all temporary differences between financial
and tax reporting and net operating loss carryforwards. Deferred tax expenses
(benefit) results from the net change during the year of deferred tax assets and
liabilities.
Deferred tax assets are reduced by a valuation allowance when, in the
opinion of management, it is more likely than not that some portion or all of
the deferred tax assets will not be realized. Deferred tax assets and
liabilities are adjusted for the effects of changes in tax laws and rates on the
date of enactment.
STOCK-BASED COMPENSATION
Statement of Financial Accounting Standards No. 123, "Accounting for
Stock-Based Compensation," encourages, but does not require, companies to record
compensation cost for stock-based employee compensation plans at fair value.
The Company has chosen to account for stock-based compensation using Accounting
Principles Board Opinion No. 25, "Accounting for Stock Issued to Employees."
Accordingly compensation cost for stock options is measured as the excess, if
any, of the quoted market price of the Company's stock at the date of the grant
over the amount an employee is required to pay for the stock. As the Company
does not currently have any stock options outstanding, there is no impact on the
financial statements.
<PAGE>
INDUSTRIAL RUBBER INNOVATIONS, INC.
(formerly EPL Ventures Corp.)
(A Development Stage Company)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Prepared by Management)
JULY 31, 1999
4. SIGNIFICANT ACCOUNTING POLICIES (cont'd )
COMPREHENSIVE INCOME
In 1998, the Company adopted Statement of Financial Accounting Standards
No. 130 ("SFAS 130"), "Reporting Comprehensive Income". This statement
establishes rules for the reporting of comprehensive income and its components.
The adoption of SFAS 130 had no impact on total stockholders' equity as of July
31, 1999.
ACCOUNTING FOR DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES
In June 1998, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 133 "Accounting for Derivative Instruments
and Hedging Activities" ("SFAS 133") which establishes accounting and reporting
standards for derivative instruments and for hedging activities. SFAS 133 is
effective for all fiscal quarters of fiscal years beginning after June 15, 1999.
The Company does not anticipate that the adoption of the statement will have a
significant impact on its financial statements.
REPORTING ON COSTS OF START-UP ACTIVITIES
In April 1998, the American Institute of Certified Public Accountant's
issued Statement of Position 98-5 "Reporting on the Costs of Start-Up
Activities" ("SOP 98-5") which provides guidance on the financial reporting of
start-up costs and organization costs. It requires costs of start-up activities
and organization costs to be expensed as incurred. SOP 98-5 is effective for
fiscal years beginning after December 15, 1998 with initial adoption reported as
the cumulative effect of a change in accounting principle. The Company adopted
SOP 98-5 during the current period.
5. CAPITAL ASSETS
<TABLE>
<CAPTION>
Accumulated Net Book
Cost Amortization Value
<S> <C> <C> <C>
Molds and dies $ 90,765 $ 13,615 $ 77,150
Computer equipment 6,471 970 5,501
Machinery and equipment 38,719 2,904 35,815
-------- ------------- --------
$135,955 $ 17,489 $118,466
</TABLE>
6. INVESTMENT
Investment consists of 850,000 common shares valued at $620,000 of a
private company as well as a note receivable from the private company in the
amount of $180,000. The Company has accounted for its investment in these
shares as an available for sale security.
<PAGE>
INDUSTRIAL RUBBER INNOVATIONS, INC.
(formerly EPL Ventures Corp.)
(A Development Stage Company)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Prepared by Management)
JULY 31, 1999
7. LOAN PAYABLE
The Company entered into a Loan Agreement dated January 18, 1999, whereby
the Company is obligated to pay $37,500 plus interest at a rate of 20% per annum
by May 19, 1999.
During the period, the loan was settled by the issuance of 300,000 warrants
entitling the holder to acquire 300,000 shares of common stock of the Company at
a price of $0.75 per share.
In addition, a shareholder of the Company gave 100,000 free trading shares
to the creditor as part of the settlement. As a result, a gain on settlement of
debt in the amount of $37,500 was recognized during the period.
8. BUSINESS COMBINATION
On April 26, 1999, IRI acquired all of the issued and outstanding share
capital of IRI (Nevada). As consideration, IRI issued 3,800,000 common shares
and 2,000,000 warrants. Legally, IRI is the parent of IRI (Nevada). However,
as a result of the share exchange described above, control of the combined
companies passed to the new shareholders of IRI. This type of share exchange,
has been accounted for as a capital transaction accompanied by a
recapitalization of IRI rather than a business combination. Accordingly, the
net assets of IRI (Nevada) are included in the balance sheet at book values,
with the net assets of IRI recorded at fair market value at the date of
acquisition. The revenues and expenses and assets and liabilities reflected in
the financial statements prior to the date of acquisition are those of IRI
(Nevada). Revenue and expenses or assets and liabilities incurred subsequent to
the date of acquisition include the amounts of IRI.
The cost of an acquisition should be based on the fair value of the
consideration given, except where the fair value of the consideration given is
not clearly evident. In such a case, the fair value of the net assets acquired
is used.
At April 26, 1999, IRI was inactive with a thin market for its shares,
making it impossible to estimate the actual market value of the 3,800,000 common
shares. In addition, the Company has not assigned a value to the warrants
issued, due to the going concern rights associated with investing in a
development stage company and risks associated with restricted securities.
Therefore, the cost of the acquisition, $1,197,646, has been determined by the
fair value of IRI's net assets.
The total purchase price of $1,197,646 was allocated as follows:
Cash $ 3,074
Investment 800,000
Loan receivable 441,000
Accounts payable and accrued liabilities (46,428)
--------
$ 1,197,646
============
<PAGE>
INDUSTRIAL RUBBER INNOVATIONS, INC.
(formerly EPL Ventures Corp.)
(A Development Stage Company)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Prepared by Management)
JULY 31, 1999
9. WARRANTS
The Company has outstanding:
i) 2,000,000 warrants entitling the holder to acquire common shares of
the Company ("Warrants"). One half of the Warrants shall be exercisable for a
period of 24 months at an exercise price of $0.50 per share and the balance
shall be exercisable for a period of 24 months at an exercise price of $0.75 per
share.
ii) 300,000 warrants enabling the holder to acquire common shares of
the Company at a price of $0.75 per share until May 21, 2000.
10. CAPITAL STOCK
During the period ended July 31, 1999, the Company issued 3,800,000 common
shares to acquire IRI (Nevada) (Note 8).
11. SUPPLEMENTAL DISCLOSURE WITH RESPECT TO CASH FLOWS
July 31,
1999
Cash paid during the period for interest $ -
Cash paid during the period for income taxes -
The following non-cash transactions occurred during the period from
incorporation on November 19, 1998 to July 31, 1999:
i) The Company issued 3,800,000 shares of common stock of the Company
at a deemed value of $1,197,646 to acquire 100% of the outstanding shares of
Industrial Rubber Innovations, Inc. (Nevada).
ii) The Company issued 30,000 shares of common stock at a deemed value
of $37,590 for legal services.
12. COMMITMENTS
a) The Company entered into five two-year Employment Agreements with
directors and an officer of the Company. Each director and officer will be paid
an annual salary of $60,000. These agreements may be terminated by either party
after the first year and would be subject to one year's compensation as
severance.
b) The Company entered into a five-year lease agreement dated June 3, 1999
beginning September 1, 1999, whereby the Company has minimum lease payments as
follows:
2000 $ 102,000
2001 105,300
2002 108,456
2003 111,708
2004 115,068
<PAGE>
INDUSTRIAL RUBBER INNOVATIONS, INC.
(formerly EPL Ventures Corp.)
(A Development Stage Company)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Prepared by Management)
JULY 31, 1999
13. SUBSEQUENT EVENTS
The following events occurred subsequent to the period end:
i) In September 1999, the Company issued 256,227 common shares pursuant
to a private placement agreement, restricted in accordance to Rule 144, in
exchange for total proceeds of $180,482.
ii) In October 1999, the Company issued 70,000 common shares,
restricted in accordance to Rule 144, as part of the settlement of a dispute.
<PAGE>
INDUSTRIAL RUBBER INNOVATIONS, INC.
(FORMERLY EPL VENTURES CORP.)
AND
INDUSTRIAL RUBBER INNOVATIONS, INC. (NEVADA)
PRO-FORMA CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
JULY 31, 1999
<PAGE>
INDUSTRIAL RUBBER INNOVATIONS, INC.
(FORMERLY EPL VENTURES CORP.)
AND
INDUSTRIAL RUBBER INNOVATIONS, INC. (NEVADA)
PRO-FORMA CONSOLIDATED FINANCIAL STATEMENTS
The following unaudited pro-forma consolidated statement of operations for the
nine month period ended July 31, 1999 (the "Pro-forma Financial Statements") of
Industrial Rubber Innovations, Inc. (formerly EPL Ventures Corp.) (the
"Company") give effect to the following transaction as of the beginning of the
period indicated for purposes of the statements of operations:
i) the acquisition by the Company of 100% of the outstanding capital
stock of Industrial Rubber Innovations, Inc. (Nevada) on April 26, 1999 through
the issuance of 3,800,000 common shares and 2,000,000 share purchase warrants.
ii) as the new shareholders of IRI hold approximately 52% of the
outstanding shares of the Company after the combination, the business
combination of the two companies has been accounted for as a capital transaction
accompanied by a recapitalization of IRI (Nevada).
Pro-forma adjustments to the statements of operations reflect adjustments only
for dates prior to the date a transaction was consummated.
The Pro-forma Financial Statements have been prepared by the Company based upon
the financial statements of the Company and Industrial Rubber Innovations, Inc.
(Nevada). The Pro-forma Financial Statements give effect to the acquisition as
a capital transaction accompanied by a recapitalization of Industrial Rubber
Innovations, Inc. (Nevada) and to certain assumptions and adjustments described
more fully in the accompanying notes. These Pro-forma Financial Statements may
not be indicative of the results that actually would have occurred if the
transactions had been completed on the dates indicated or of the results which
may be obtained in the future. The Pro-forma Financial Statements should be
read in conjunction with the financial statements and notes thereto of the
Company and Industrial Rubber Innovations, Inc. (Nevada) included elsewhere in
this Form 10-SB.
<PAGE>
<TABLE>
<CAPTION>
INDUSTRIAL RUBBER INNOVATIONS, INC.
(formerly EPL Ventures Corp.)
PRO-FORMA CONSOLIDATED STATEMENT OF OPERATIONS
INDUSTRIAL
RUBBER
INNOVATIONS,
INC.
INDUSTRIAL (NEVADA)
RUBBER Period from
INNOVATIONS, Incorporation
INC. on
Nine Month November 19,
Period Ended 1998 to
July 31, July 31, Pro-forma
1999 1999 Consolidated
----------- ---------- --------------
<S> <C> <C> <C>
SALES $ - $ 34,471 $ 34,471
COST OF GOODS SOLD - (23,703) (23,703)
----------- ---------- --------------
- 10,768 10,768
----------- ---------- --------------
OPERATING EXPENSES
Accounting and legal fees 117,076 45,740 162,816
Amortization - 17,489 17,489
Automobile - 12,045 12,045
Bank charges 405 871 1,276
Consulting fees 37,200 31,540 68,740
Insurance - 13,852 13,852
Management fees - 65,050 65,050
Office 8,436 12,023 20,459
Product packaging - 10,321 10,321
Rent - 6,216 6,216
Supplies - 11,524 11,524
Travel and entertainment 1,342 48,395 49,737
Telephone and utilities 858 12,948 13,806
Testing mould - 11,089 11,089
----------- ---------- --------------
(165,317) (299,103) (464,420)
----------- ---------- --------------
OTHER ITEMS
Miscellaneous income 77 15 92
Interest expense (1,155) - (1,155)
----------- ---------- --------------
(1,078) 15 (1,063)
----------- ---------- --------------
LOSS BEFORE EXTRAORDINARY ITEM (166,395) (288,320) (454,715)
EXTRAORDINARY ITEM
Gain on settlement of debt - 37,500 37,500
----------- ---------- --------------
LOSS FOR THE PERIOD $ (166,395) $(250,820) $ (417,215)
BASIC LOSS PER SHARE BEFORE EXTRAORDINARY ITEM $ (0.02) $ (0.04) $ (0.06)
EXTRAORDINARY ITEM - 0.01 0.01
----------- ---------- --------------
BASIC AND DILUTED LOSS PER SHARE $ (0.02) $ (0.03) $ (0.05)
WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING 7,274,000
</TABLE>
See notes to the pro-forma consolidated financial statements.
<PAGE>
INDUSTRIAL RUBBER INNOVATIONS, INC.
(formerly EPL Ventures Corp.)
NOTES TO THE PRO-FORMA CONSOLIDATED FINANCIAL STATEMENTS
JULY 31, 1999
1. BASIS OF PRESENTATION
BUSINESS COMBINATION OF INDUSTRIAL RUBBER INNOVATIONS, INC. ("IRI") AND
INDUSTRIAL RUBBER INNOVATIONS, INC. (NEVADA) ("IRI NEVADA")
Effective April 26, 1999, a business combination occurred between IRI and
IRI (Nevada), whereby IRI legally acquired IRI (Nevada) as a wholly-owned
subsidiary and continues to operate under the name of Industrial Rubber
Innovations, Inc. The terms of the combination provided that the common shares
of IRI (Nevada) were exchanged for an aggregate of 3,800,000 common shares of
IRI as well as 2,000,000 share purchase warrants.
ACCOUNTING FOR THE BUSINESS COMBINATION
As new shareholders of IRI hold approximately 52% of the outstanding shares
of IRI after the combination, the business combination of the two companies is
to be accounted for as a capital transaction accompanied by a recapitalization
of IRI (Nevada).
Application of the recapitalization results in the following:
i) Consolidated financial statements for the combined entity issued
with a financial statement date after April 26, 1999 will be issued under the
name of the legal parent IRI but are considered a continuation of the financial
statements of the legal subsidiary IRI (Nevada). Earnings from the operations
of IRI (legal parent) will be recorded in the Company's financial statements
commencing April 26, 1999;
ii) As IRI (Nevada) is deemed to be the acquirer for accounting
purposes, its assets and liabilities are included in the consolidated financial
statements at their historical carrying values;
iii) The number of shares issued and outstanding at July 31, 1997 are
those of IRI; and
iv) Control of the net assets and operations of IRI is deemed to be
acquired by IRI (Nevada) with an ascribed purchase price of $1,197,646.
The accounting for the business combination on this basis can be summarized
as follows:
Deemed consideration $ 1,197,646
============
Assigned value of net assets of EPL:
Cash $ 3,074
Investment 800,000
Loan 441,000
Accounts payable and accrued liabilities (46,428)
--------
$ 1,197,646
============
The cost of an acquisition should be based on the fair value of the
consideration given, except where the fair value of the consideration given is
not clearly evident. In such a case, the fair value of the net assets acquired
is used.
At April 26, 1999, IRI was inactive with a thin market for its shares,
making it impossible to estimate the actual market value of the 3,800,000 common
shares. In addition, the Company has not assigned a value to the warrants
issued, due to the going concern rights associated with investing in a
development stage company and risks associated with restricted securities.
Therefore, the cost of the acquisition, $1,197,646, has been determined by the
fair value of IRI's net assets.
<PAGE>
INDUSTRIAL RUBBER INNOVATIONS, INC.
(formerly EPL Ventures Corp.)
NOTES TO THE PRO-FORMA CONSOLIDATED FINANCIAL STATEMENTS
JULY 31, 1999
2. PRO-FORMA FINANCIAL INFORMATION
Management has prepared and provided certain pro-forma interim consolidated
financial information to assist readers to understand the nature and effect of
the combination of IRI and IRI (Nevada) on a capital transaction accompanied by
a recapitalization of IRI (Nevada).
The pro-forma financial information is unaudited and has been prepared from
the unaudited interim financial statements of IRI and IRI (Nevada) for the nine
month period ended July 31, 1999.
PRO-FORMA STATEMENT OF OPERATIONS AND EARNINGS PER SHARE:
The pro-forma consolidated statement of operations reflect a simple
combination of the results of operations of IRI and IRI (Nevada) for the nine
month period ended July 31, 1999 and includes the impact of the calculation of
pro-forma basic and fully diluted earnings per share which is based on the
number of shares that would have been outstanding for the period had the
business combination taken place at the beginning of the fiscal period.
3. PRO-FORMA TRANSACTIONS
The pro-forma consolidated financial statement was prepared on the
assumption that the following transactions occurred:
a) On April 26, 1999, the Company issued 3,800,000 common shares
and warrants to be acquire 2,000,000 common shares of the Company in exchange
for all of the issued and outstanding common shares (3,800 common shares) of IRI
(Nevada).
b) Effective April 26, 1999, IRI (Nevada) was acquired by the
Company.
Marketing Consulting Agreement
made between
Industrial Rubber Innovations, Inc. (IRI)
and
Petro-Rep Co. (PRC)
where hereby both parties agree to the following terms and
conditions.
PRC will assist in the marketing of products to the oil industry in
the United States for IRI. PRC will introduce IRI sales and
technical staff to PRC's list of contacts, customers and manufacturers.
Either party can terminate this agreement after six months at any
time for any reason whatsoever, including the attached sales
projection summary and commission structure, in writing, without
giving any notice to the other.
A. IRI will give PRC 2,500 shares of IRI common stock per month for
the first six months after this agreement takes effect. At the end
of six months IRI will give PRC a further bonus of 15,000 shares
bringing the total amount of shares given to PRC to 30,000. At the
end of 12 months and provided that this agreement has not been
terminated by either party, IRI will give PRC a further bonus of
30,000 shares bringing the total amount of shares given to PRC to
60,000. These shares will be in the form of 144 stock and have a
hold period of 12 months after the date of issue.
B. IRI will provide a continuing share and option package to PRC
based on a 12 month, 24 month, and 36 month sales projection summary
provided by IRI to PRC. The said share and option package will be
determined by the sales projection summary and PRC meeting those
projections.
C. It is further understood that PRC will remain on a buy-sell
basis for the first six months after which IRI and PRC will discuss
the possibility of Titus Gay becoming part of IRI.
Projected Sales Summary and Commission Structure
IRI has set projected sales targets for PRC for 36 months. The
sales targets are as follows:
PRC is expected to reach a sales target of $350,000 in the first 12
months, $600,000 in the second 12 months and $1,000,000 in the third
12 months from the date that this agreement is signed.
<PAGE>
1. On sales generated in other parts of the United States, other
than California, PRC will be paid a 20% commission on gross revenues
that PRC services and a 5% commission on sales where PRC does not
service but only makes an introduction to the end user.
2. On sales generated in other countries PRC will be paid on the
same basis as in (1) above.
3. PRC will be compensated up to $2,500 per month on a pre-approved
expense basis for the first six months.
4. In the event that IRI or PRC terminates this agreement or in the
event of the death of Titus Gay, this agreement will survive Mr Gay
for a period of ten years on 1 and 2 above and will be paid to his
estate.
On all sales generated and serviced by PRC and at the end of each 12
month period, IRI will issue to PRC, shares of IRI common stock
equal to 2.5% of the said sales. ie; If PRC generates $500,000 in
gross revenues in the first 12 months then IRI will issue to PRC
12,500 shares. PRC is aware that all stock issued to PRC from IRI
is 144 stock with a 12 month hold period before it is free trading.
PRC has the option of purchasing a further 50,000 shares of IRI
common stock at the price of $1.00 per share for the 12 month period
following the date this agreement is signed.
Although PRC is expected to reach targets as outlined above, IRI
will issue stock to PRC on sales generated as per the example above
whether or not PRC reaches the sales targets.
Dated this 21st day of June 1999.
Industrial Rubber Innovations Inc. Petro-Rep Co.
/s/ Steven Tieu /s/ Titus Gay
Steven Tieu Titus Gay
Director President
Industrial Rubber Innovations, Inc.
6801 McDivitt Dr., Bakersfield, CA 93313 Tel: (661) 833-8188 Fax:
(661) 833-8088
MANUFACTURER'S DISTRIBUTORSHIP AGREEMENT
THIS AGREEMENT is made and entered into by and between INDUSTRIAL
RUBBER INNOVATIONS IN INC., with its principal place of business
located in Bakersfield, California ("IRI") and, GENCON CAPITAL
RESOURCES LTD or ASSIGNEE, with its principal place of business
located in Vancouver, British Columbia Canada. ('GENCON")
WHEREAS, IRI, its affiliates and its subsidiaries, are engaged in
the manufacture and sale of certain oil field related products in
the Territory; and
WHEREAS, GENCON is knowledgeable about the business in which IRI is
engaged and is willing to DISTRIBUTE and or MARKET IRI's oil field
related products (as hereinafter defined); and
NOW, THEREFORE, in consideration of the premises and the covenants
hereinafter made by the parties it its agreed as follows:
1. Appointment and Territory. IRI hereby appoints GENCON as its
sole and exclusive distributor for the sale of the products (as
hereinafter defined) in the geographic territory, consisting of
all of Canada.
2. Products. The products covered by this Agreement are all the
oil field related products manufactured by IRI. GENCON IS
AUTHORIZED BY IRI to solicit orders for the products at the
prices and terms set out by GENCON.. IRI reserves the right to
modify, later, improve, change, or discontinue any improved, or
changed. Should GENCON choose to have IRI manufacture any
products with their private labeling, it is understood that
those products will be the sole property of GENCON. This
agreement does not prevent IRI from doing private labeling for
other customers it may have that are involved in the same line
of products nor prevent IRI from selling raw material to any
company that could in turn manufacture similar oil field
related products under their private labels. It is understood
that these private labeled products can no be sold in the
territory.
3. Sales and Promotion. In the performance of GENCON duties under
this Agreement, GENCON shall:
(i) Diligently promote the sale of, and stimulate
interest in the products, and in particular, maintain
an adequate staff of salespeople;
(ii) Furthermore, GENCON is expected to have a
performance of $500,000.00 US dollars in sales
of rubber products during the 14 months
following from the date on which both parties
have signed this agreement.
<PAGE>
4. Additional Duties. In addition to the duties directly related
to promotion and sales of the Products, GENCON shall do the
following:
(i) Submit to IRI in a timely manner reports calculated
to keep IRI informed of the nature and magnitude of
potential business in the territory;
(ii) Maintain in strict confidence all information of
competitive significance which is divulged to
GENCON by IRI including engineering, financial
data, sales, pricing policy and product
development plans.
5. Duties of IRI. IRI shall assist GENCON as follows:
(i) Provide GENCON with sales and technical information
regarding the Products covered hereby;
(ii) Provide sales and service assistance;
(iii) Furnish GENCON with IRI's current price list and
product price schedules;
(iv) Promptly inform GENCON of all specification and
or price changes;
(v) Furnish GENCON reasonable amounts or promotional
sales and technical information, literature and
brochures and to the extent practicable, provide such
information in advance of initial production or sales
of such product, and refer to GENCON leads, prospects
and related information which are directed to IRI or
which IRI receives regarding potential purchasers of
the Products within the territory.
(vi) IRI shall maintain inn effect a 1,000,000
liability insurance for the full duration of
this agreement.
6. Terms of Sales. All prices shall be F.O. B. Bakersfield CA,
and shall be payable in currency of the United States of
America. The terms and conditions of sales shall be 30 days
from invoice. IRI reserves the right to change its terms of
sale at any time without the consent of GENCON.
7. Returns and Allowances. GENCON shall not have the authority on
behalf of IRI to accept the return of, or make any allowances
with respect to any of the products without the prior written
approval of IRI.
<PAGE>
8. Independent Company. GENCON is an independent company
operating at its own risk and for its own profit and is not
governed in its activities by the policies of IRI or
instructions nor is it furnished by IRI with any facilities,
materials, equipment or compensation for expenses. GENCON
shall not have the power to make any contract, sale or other
commitment for IRI, nor shall it be , nor shall it represent
itself to be, an agent for IRI. GENCON is fully and
exclusively responsible for its activities and the activities
of its employees and agents, and shall maintain insurance
adequate to cover all risks and liabilities which may occur on
account of its activities, and shall indemnify and save
harmless IRI from any damages to or losses of property of
GENCON or its employees. GENCON acknowledges that it is fully
and exclusively responsible for compliance with all laws,
regulations and governmental administrative orders pertaining
to its activities. GENCON is fully and exclusively responsible
for the payment of all taxes and license fees due on account of
its activities.
9. Term. The term of this Agreement shall be fourteen (14) months
from the date on which both parties have signed this Agreement.
The term of this Agreement shall be automatically renewed each
succeeding year. If either parties violate any provision in
this Agreement, or becomes insolvent, this Agreement
immediately and without any notice whatsoever may be terminated
without any notice whatsoever by either party.
10. Assignment. This Agreement is personal in nature and GENCON's
rights hereunder cannot be assigned nor can the performance of
its duties be delegated by GENCON without the prior written
consent or IRI, except as follows: This agreement can only be
assigned to a company that is owned and controlled by Gord Reid
and/or Bob Dent and at least one of the two must have an active
role in the management of the company.
11. Governing Law. This Agreement is being delivered and
considered executed in the Province of British Columbia, and
shall be construed and enforced in accordance with and the
rights of the parties shall be governed by the laws of the
Province of British Columbia. GENCON submits itself to the
jurisdiction of any court sitting in the Province of British
Columbia, Canada, and further agrees that venue in any suit
arising out of this Agreement shall be fixed in Vancouver,
British Columbia.
12. Captions. Captions used herein are inserted for reference
purposes only and shall not affect the interpretation or
construction of this Agreement.
13. Counterparts. This Agreement may be executed simultaneously in
two or more counterparts, any one of which need not contain the
signatures of more than one party, but all such counterparts
taken together will constitute one and the same agreement.
14. Entire Agreement. This Agreement contains the entire
understanding between the parties with respect to the subject
matter hereof and supersedes all prior written or oral
negotiations and agreements between them regarding the subject
matter hereof.
<PAGE>
15. Amendments. This Agreement may not be altered, modified, or
amended except in writing signed by the party against whom such
alteration, modification or amendment is sought.
IN WITNESS WHEREOF, GENCON CAPITAL RESOURCES LTD. or ASSIGNEE and
INDUSTRIAL RUBBER INNOVATIONS INC.
have executed this Agreement as of this 29th day of June 1999.
INDUSTRIAL RUBBER INNOVATIONS INC.
per: /s/ unknown
GENCON CAPITAL RESOURCES LTD or ASSIGNEE
per: /s/ unknown
Distribution Agreement
This Agreement is made between "Industrial Rubber Innovations Inc.
of Bakersfield California, U.S.A. (IRI)" and "Shenzhen Yujiang Trade
Limited (SYTL) of Shenzhen PRC".
Whereas IRI manufactures specialty rubber and SYTL wishes to
distribute IRI's rubber in China and where both parties agree to the
following terms and conditions;
1. IRI will grant to SYTL the exclusive right to distribute all
IRI products in China.
2. The initial term of this agreement will be 12 months from the
date of signing by both parties, afterwhich both parties will
determine what their future relationship will be.
3. SYTL is to remit all monies owed to IRI within 30 days of
receipt of IRI invoice.
4. Both parties agree that SYTL's expected sales are $600,000USD
in the first 12 months, $1,200,000USD in the second 12 months
and $2,5000,000USD in the third 12 months of this agreement.
5. This agreement is exclusive to SYTL and SYTL agrees no to sell
any competitor products manufactured or produced by any other
company that are similar to IRI products or that would
otherwise be detrimental to the marketing efforts of IRI.
6. SYTL is responsible for its own marketing including hiring and
training sales staff, servicing end users and shipping and
handling.
7. IRI will provide SYTL with brochures and other marketing
material in English. SYTL will be responsible for all costs
related to translation to other languages; all translated
marketing material must be approved by Steven Tieu of IRI.
8. SYTL agrees that should it be involved in any dispute in
relation to any matter whatsoever in China it will save
harmless IRI and IRI's name.
9. On all raw material shipped to SYTL to be manufactured into
finished product in China, IRI must approve the manufacturer
who will finish the product for quality control.
10. On all finished product manufactured directly by IRI, IRI will
be responsible for replacing any defective product. If the
product is "IRI raw material" and manufactured by another
manufacturer in China, chosen by SYTL, then the said
manufacturer will be responsible for all finished products they
manufacture.
11. Should IRI decide to change any price on either raw material or
finished product IRI will give SYTL 30 days written notice of
any change.
12. This agreement may be cancelled by either party for any reason
at an time.
Signed this 8th, day of July 1999 in Shenzhen PRC.
/s/ unknown
Industrial Rubber Innovations, Inc.
(SEAL)
/s/ unknown
Shenzhen Yujiang Trading Limited
(SEAL)
CONSENT OF
INDEPENDENT CHARTERED ACCOUNTANTS
The undersigned independent chartered accounting firm hereby
consents to the inclusion of its report on the financial statements
of EPL Ventures Corp. (a Development Stage Company) as of March 31,
1999 and for the five month period then ended and to the reference
to it as experts in accounting and auditing relating to said
financial statements and under the heading Part II, Item 3 Changes
in and Disagreements with Accountants in the Registration Statement
and Prospectus Amendment No. 1, Form 10-SB for EPL Ventures Corp.
dated December 1, 1999.
/s/ Davidson & Company
Vancouver, Canada
Chartered Accountants
December 3, 1999
<PAGE>
CONSENT OF
INDEPENDENT CHARTERED ACCOUNTANTS
The undersigned independent chartered accounting firm hereby
consents to the inclusion of its report on the financial statements
of Industrial Rubber Innovations Inc. (a Development Stage Company)
as of March 31, 1999 and for the period from incorporation on
November 19, 1998 to March 31, 1999 and to the reference to it as
experts in accounting and auditing relating to said financial
statements and under the heading Part II, Item 3 Changes in and
Disagreements with Accountants in the Registration Statement and
Prospectus Amendment No. 1, Form 10-SB for Industrial Rubber
Innovations Inc. dated December 1, 1999.
/s/ Davidson & Company
Vancouver, Canada
Chartered Accountants
December 3, 1999
December 1, 1999
Securities and Exchange Commission
450 Fifth
Street, NW Washington, DC
USA 20549
Dear Sirs:
Re: EPL Ventures Corp. (the "Company")
We were the previous principal auditors of the above Company. On
November 6, 1997, I reported on the financial statements of the
Company for the years ended December 31, 1995, December 31, 1996,
and the ten month period ended October 31, 1997, and subsequently
issued an audit opinion under generally accepted auditing standards
in the United States.
We have reviewed the registration statement on Form 10-SB/A (the
"Form 10") to be filed by the Company and agree with the statements
disclosed by the Company under Part II, Item 3, Changes in and
Disagreements with Accountants on Accounting and Financial
Disclosure. There was no adverse opinion or disclaimer of opinion.
The opinion was not qualified due to uncertainty, audit scope or
accounting principles. We consent to the use of our report and to
the reference to our firm in the registration statement on Form
10-SB/A.
Yours very truly,
/s/ Barry L. Friedman
Barry L. Friedman C.P.A.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION
EXTRACTED FROM THE COMPANY'S STATEMENTS OF OPERATIONS,
BALANCE SHEETS AND STATEMENTS OF CASH FLOWS AND IS
QUALIFIED BY REFERENCE TO SUCH FINANCIAL STATEMENTS
CONTAINED WITHIN THE COMPANY'S FORM 10-SB/A FOR THE PERIOD
ENDED MARCH 31, 1999.
</LEGEND>
<CIK> 0001091882
<NAME> INDUSTRIAL RUBBER INNOVATIONS, INC.
<MULTIPLIER> 1
<CAPTION>
<S> <C>
<PERIOD-TYPE> 5-MOS
<FISCAL-YEAR-END> OCT-31-1999
<PERIOD-START> NOV-01-1998
<PERIOD-END> MAR-31-1999
<CASH> 1981
<SECURITIES> 0
<RECEIVABLES> 4381
<ALLOWANCES> 0
<INVENTORY> 37434
<CURRENT-ASSETS> 43796
<PP&E> 15477
<DEPRECIATION> 0
<TOTAL-ASSETS> 59273
<CURRENT-LIABILITIES> 130328
<BONDS> 0
0
0
<COMMON> 4
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 59273
<SALES> 4381
<TOTAL-REVENUES> 4381
<CGS> (2066)
<TOTAL-COSTS> (2066)
<OTHER-EXPENSES> 73374
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (71059)
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (71059)
<EPS-BASIC> (18.70)
<EPS-DILUTED> 0
</TABLE>
