UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-KSB
Annual report pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
For the fiscal year ended: July 31, 2000
Commission File Number 0-28313
RHINO ECOSYSTEMS, INC.
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(Name of Small Business Issuer as specified in its charter)
Florida 65-0939751
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(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
40 Trowers Road, Woodbridge, Ontario,
Canada L4L 7K6 (Address of
principal executive offices) (Zip
code)
Registrant's telephone number, including area code: (905) 264-0198
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X No ___.
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-B is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-KSB or any amendment to
this Form 10-KSB. ____
Registrant's revenues for its most recent fiscal year were $173,942.
As of July 31, 2000, there were 6,525,539 shares of the registrant's $.0001 par
value common stock issued and outstanding.
Transitional Small Business Disclosure Format Used (Check one) Yes ___ No X
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TABLE OF CONTENTS
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PAGE
PART I
Item 1. Business of the Company.................................................................................4
Item 2. Properties.............................................................................................11
Item 3. Legal Proceedings......................................................................................11
Item 4. Submission of Matters to a Vote of Security Holders....................................................11
PART II
Item 5. Market for the Company's Common Equity And Related Shareholder Matters ................................12
Item 6. Management's Discussion and Analysis of Financial Condition...........................................and
Results of Operations and Plan of Operation............................................................12
Item 7. Financial Statements...................................................................................15
Item 8. Disagreements on Accounting and Financial Disclosures..................................................15
PART III
Item 9. Directors and Executive Officers of the Registrant.....................................................16
Item 10. Executive Compensation.................................................................................17
Item 11. Security Ownership of Certain Beneficial Owners and Management........................................18
Item 12. Certain Relationships and Related Transactions.........................................................19
PART IV
Item 13. Exhibits, Financial Statements and Reports on Form 8-K.................................................19
Signatures.......................................................................................................23
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Forward-Looking Statements
This report contains forward-looking statements within the meaning of the
Section 21E of the Securities Exchange Act of 1934, as amended, and Section 27A
of the Securities Exchange Act of 1933, as amended, and is subject to the safe
harbors created by those sections. These forward-looking statements are subject
to significant risks and uncertainties, including information included under
Parts I and II of this annual report, which may cause actual results to differ
materially from those discussed in such forward-looking statements. The
forward-looking statements within this annual report are identified by words
such as "believes," "anticipates," "expects," "intends," "may," "will" and other
similar expressions regarding the Company's intent, belief and current
expectations. However, these words are not the exclusive means of identifying
such statements. In addition, any statements which refer to expectations,
projections or other characterizations of future events or circumstances, and
statements made in the future tense are forward-looking statements. Readers are
cautioned that actual results may differ materially from those projected in the
forward-looking statements as a result of various factors, many of which are
beyond the control of the Company. The Company undertakes no obligation to
publicly release the results of any revisions to these forward-looking
statements which may be made to reflect events or circumstances occurring
subsequent to the filing of this annual report with the SEC. Readers are urged
to carefully review and consider the various disclosures made by the Company in
this annual report.
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4
PART I
ITEM 1. BUSINESS OF THE COMPANY
General
Rhino was organized by the filing of articles of incorporation with the
Secretary of State of the State of Florida on April 7, 1999. The articles of the
Company authorized the issuance of twenty-five million (25,000,000) shares of
Common Stock at a par value of $0.0001 per share. Rhino shall also include all
references to its majority owned subsidiary, Rhino Ecosystems, Inc., a company
subject to the provisions of the Business Corporations Act of Ontario.
Rhino has invented and tested a patented technology known as the RINO(TM)
System which stands for "Refuse In Nothing Out." We have applied for a trademark
on the corporate logo and name "RINO" and we have a Canadian patent pending,
Patent # 2,178,270, as well as an international PCT application No.
PCT/CA97/00377 on this innovative technology. Patents have been issued in the
United States of America (09/194910) and in Singapore (9806089-0). The RINO(TM)
System provides a simple, inexpensive solution for all restaurants and
food-related industries with regards to compliance with existing and future
environmental legislation. The RINO(TM) System is design to work in conjunction
with existing grease trap filtration systems. The RINO(TM) System will serve as
a pre-grease trap filtration system which captures a large portion of greases
and food solids that are typically sent down the drains of kitchen sinks, in a
disposable filtration bag. The RINO(TM) System has been tested and is in
compliance with the following standards: CSA B 125.0-98 for Plumbing Fixtures,
and ASME A112.18.1M-1996 for Plumbing Fixture Fittings.
Water is heavily used in industrial, commercial and residential settings
during the preparation of food including the cleaning of containers, cookware
and utensils used in cooking. This produces a consequent amount of waste water
which typically contains a substantial amount of organic matter, including
grease. Grease, which enters the public sewage system, may be treated at sewage
treatment plants at a substantial cost. In industrial and commercial settings,
some local governments mandate the use of grease trap collection units to
minimize the volume of grease entering the public sewage system.
Standard grease trap collection units consist of settling tanks for the
collection of grease and other waste solids. These tanks may form part of the
waste water flow path and accordingly may not separate grease and other organic
matter efficiently. Furthermore, standard grease trap collection units may
require the services of a grease removal specialist to empty the trap and
dispose of the grease. Grease traps also generally require regular maintenance
to prevent the build up of excessive grease in the trap and the pipes. Excessive
grease in waste water systems may result in excessive bacteria, which may
attract vermin or insects, may cause blocked pipes and reduced flow rates in
sinks, and may allow noxious odors to enter the kitchen and restaurant seating
areas through waste water drains.
<PAGE>
The patented RINOTM System is in compliance with Canadian Federal and
Provincial Regulatory requirements. In fact, current studies and literature are
leaning toward mandatory implementation of pre-grease trap interceptors of
grease and waste solids (i.e. RINOTM System). Current Canadian study groups such
as the OPIA (Ontario Plumbing Inspectors Association) are also trying to
legislate mandatory implementation of grease interceptors in all industrial and
commercial locations where food is cooked, processed or prepared.
American study groups such as the PDI (Plumbing and Drainage Institute) and
the ASPE (American Society of Plumbing Engineers) also have identified the
problem with grease and waste solids entering the public sewage system.
Test data captured from RINOTM Systems installed in various locations has
been recently tested and audited by an independent engineering and consulting
company. Tests performed have proven the RINOTM System to be highly cost
effective. Preliminary observations based on the testing have identified the
following benefits:
1. reduces the amount of grease and waste solids which flow down the drain;
2. reduces the risk of the clogging or backing up of grease traps and sinks;
3. reduces the number of grease trap cleanings required (which will reduce
down time associated with costly specialists required to clear the
drains);
4. reduces the odors associated with the grease trap (especially during
cleaning);
5. reduces the costs to the municipality for treating the sewage in the
public sewage system;
6. increase in overall management and environmental awareness;
7. reduces closure of restaurant and loss of revenue due to the backing up
of the grease trap, clogged sinks and plumbing.
Business Strategy
During its initial phase of development, Rhino intends to form long term
working relationships with selected component suppliers of the RINO(TM) System.
These relationships will ensure quality components at a competitive price. The
Sales and Marketing strategy for the Company is to establish a series of
independent dealers/distributors across North America during the first three
years of operation and branch out into the Caribbean Island Region, the Far
East, Europe and Australia as these markets develop for the Rhino product line
of Wet Waste Interceptors. These dealership agreements do contain inventory and
sales quotas for a defined territory or region of the country.
Recent Developments
<PAGE>
Rhino dealerships have been established in the various regions of Canada
(the Province of Nova Scotia, Vancouver, British Columbia, Montreal and Quebec
City, Quebec, the Peel Region and Niagara Falls area of Ontario); areas of the
United States (upstate New York, New Jersey, Hawaii, Jacksonville and Orlando,
Florida); and in the Caribbean Islands (the Bahamas and Bermuda). Negotiations
are on-going for other areas of Canada, the United States and Japan.
Products and Features
The RINOTM System is the registered trademark name for the pre-grease trap
interceptor and/or the wet waste interceptor filtration system. An initial
installation provides a collector body and contains one box of 30 removable
filters. Refills of the removable filters are then supplied to the customer as
required via the Company direct or the customers' local Rhino dealer.
Once the RINOTM unit is installed, the discharge water from the
establishments' sinks will be gravity fed into the cap (i.e. waterfeed OTM CAP)
of the RINO(TM) unit. The discharge water will pass through a collection bag
(i.e. filter bag) that will trap the waste materials while letting the water
pass through the discharge hole into a waste water collection area, which will
be emptied as follows:
1. Gravity Model - waste water will flow through the discharge outlet and
reenter the resident plumbing drainage lines prior to the resident grease trap
interceptor.
2. Pump Models -in height restricted areas, an electrical waste water pump
is used to pump the water out of the RINO(TM) prior to the resident grease trap
interceptor.
The filtration bag can be easily emptied and replaced via a front access
cover on the RINO(TM) unit by any staff member of the respective establishment.
Upon removal of the filtration bag, it can be disposed of through the normal
waste removal collection system. Numerous tests performed to date have proven
the existing filter bag to be the most efficient in terms of its filtering
capabilities. The existing filter bag specifications are as follows:
Needle count: 401
Cylinder size: 3-1/2
Start up yarn: 30/2 stretch nylon
Body yarn: 40/l/S stretch nylon 40/1/Z stretch nylon
Run out yarn: 60/1 cotton
Knit length: 16 inches
Finish length: 12 inches
These specifications have been determined as a result of numerous tests
performed.
Problems with Existing Grease Traps
<PAGE>
The prevailing method of intercepting and removing fats, oil and grease
from waste water is through the use of grease traps. Grease traps are intended
to provide some retention time to cool the warm liquefied grease for separation
in the form of a surface scum or oil layer. Unfortunately, most grease traps are
undersized and provide only minimal grease separation prior to discharge to
sewers. Additionally, emulsified oil, unless the emulsion breaks, will normally
not separate in grease traps. To make things worse, many facilities do not
adequately maintain or service the existing grease traps.
Grease and waste solids which are not removed in grease traps will cool down
in sewers, both private and municipal, and in this way result in gradual grease
buildup within the sewers, leading to flow restrictions or complete blockages.
These blockages lead to bad odors scented in the respective facilities,
increased number of grease trap cleanings, potential down-time (i.e. shut downs)
as a result of costly work required to hire specialists to clean any blockages,
and an overall negative effect on the facilities' operations. Additional
expenses may be incurred due to municipal cost recovery on prosecutions (i.e.
fines) for municipal blockages.
Rhino is committed to reduce and eventually eliminate the above noted
problems efficiently and most importantly cost-effectively. Efforts are being
made to create a low cost and highly effective biodegradable bag. This bag will
reduce any concerns raised by the currently used nylon bag to eliminate any
waste control issues.
Installation of the RINO(TM) System can be accomplished with a minimum of
disruptions to existing plumbing systems. Any local plumber will be able to
easily install a RINO(TM) relatively short period of time.
Physical Requirements
Rhino Ecosystems, Inc., has located itself in an 8,000 square foot facility
nearby its major component suppliers. The location of the facility is in the
central Greater Toronto Area near the 400 series highways, which can accommodate
high volumes of traffic.
Staffing/Training
Rhino has established a central core of eight key team members in the
Administrative, Manufacturing, Sales and Marketing areas. As the need for
additional qualified professionals arise in any area of business, they will be
attracted to Rhino as a company and will be competitively compensated.
Specialized laboratory technicians/engineering firms will be contracted as
required to maintain the Company's commitment to research and development in the
area of eliminating waste water grease and solids and to develop new technology
and/or new product lines.
Manufacturing
The Company is dedicated to quality products. As such, the Company will be
seeking IS09000 accreditation and will be using IS09000 approved suppliers.
<PAGE>
All component manufacturing is subcontracted to companies who work with the
Company's patented and registered designs. Blow Mold Engineering has been
contracted to perform the tooling design and manufacture. Cousins Currie Limited
will be responsible for the production of the plastic shells which in turn will
be equipped with Beckett Pumps. Therefore, the Company will not manufacture its
own products but will assemble the components together, perform quality control
testing, do dealership and telemarketing sales and distribution. Continual
product redesign, research and development testing and servicing will be done
jointly between in-house personnel and outside engineering firms.
Benefits of not manufacturing are as follows:
1. Decrease in working capital required to conduct business;
2. Increase focus on sales and marketing;
3. Able to increase capacity quickly with a reduction in capital costs;
4. Increase in overall flexibility.
The RINO(TM) System is a pre-grease trap wet waste interceptor filtration
system. Once the RINO(TM) System is sold and installed, RINO(TM) filter bags
will be sold to RINO(TM) users on a continual basis.
Product Positioning and Pricing
The use of the RINO(TM) System reduces the amount of grease and waste
solids entering into the public sewage system. The savings in reducing grease
and waste solids have been proven through a significant number of studies
performed. Studies have proven that existing grease traps normally require
cleaning frequency of once every two weeks without RINO(TM), and one cleaning
every six weeks with RINO(TM) This results in cleanings required approximately
three times less frequently. Since the cost per cleaning is $120 in the test
market of Metropolitan Toronto, an approximate annual saving of using the
RINO(TM) System, taking into consideration the cost of bags at $1.75 per bag, is
expected to be approximately $1,162 per year after installation and unit cost.
Such a saving equates to a payback of approximately one year for the pump
unit and approximately eight months for the gravity unit based on the projected
installed sale price of a RINO(TM) System. Savings will also be in the form of
reduced down time, no loss of customers due to odors and no requirement to hire
a plumber to clean drains, and reduced risk of fines as a result of violations
of sewer use by-laws, which could cost up to $50,000 per violation.
The publication "Best Management Practices" from the Canadian Ministry of
Environment and Energy directed to the restaurant sector are recommending that
restaurants reduce the amount of solids that are flushed down the drain. Various
government regulations exist to prevent solids and grease from entering into the
sewage system.
<PAGE>
The Market and Product Distribution
The potential markets are restaurants, and food producing and processing
facilities. The primary initial markets in Canada are Toronto, Montreal and
Vancouver. Upon successful entrance into the Canadian market, the Company
intends to focus its marketing efforts in American states such as California,
Florida and New York.
Marketing Strategy
The RINO(TM) System will be marketed through an information campaign
directed at all public health and water pollution control officials, restaurants
and other food preparation or processing facilities, and to all plumbing
materials distribution outlets.
The Company's sales and technical representatives will also attend all
relevant seminars and conferences held by the Federal, Provincial and Municipal
Ministries of Health and Environment in Canada to talk to decision makers in
each community. Representatives will also attend trade shows held by plumbing
associations to increase the overall awareness of the product. Contacts made and
requests developed through these sources will be followed up by the marketing
department.
Promotional material, such as brochures, CD ROM, documentation videos and
an Internet web page is currently available for public viewing and distribution
by the Rhino sales team. As well, there is a telephone marketing program being
implemented that will generate leads for all sales staff.
A professional exhibit has been designed and built for use at various
conferences and trade shows. This information exhibit focuses on the mechanics
of the RINO(TM) System, the problems the system resolves, and the spin-off
benefits and savings that result from the use of the system. Research papers
supporting these benefits will be made available.
Sales
Rhino expects to sell the majority of its product line of wet waste
interceptors through it's ever increasing group of dealers/distributors across
North America.
Direct Sales
The Company expects that a portion of its sales will come from direct sales
to owner-managed restaurants across Canada and the United States.
Commission-only sales personnel who will be affiliated with but not directly
working for the Company will achieve these sales. These sales people will
acquire RINO(TM) Units through the Rhino product distribution channels at
standard company wide pre-set pricing.
<PAGE>
Restaurant Chains
The large number of franchise restaurants chains in North America will
require a combined effort from all of the Company's senior management team as
well as local dealer sales agents to adequately service this potential sales
market. Most of the fast food chains have central purchasing and distribution
for most of their standard equipment and supply requirements. Selling to the
head office, the need and benefits to the total organization will result in
large quantity orders to a customer.
Competition
As the RINO(TM) System is patented in some areas of the world and is patent
pending in other parts of the world, Rhino believes that the RINO(TM) process is
very difficult, if not impossible, to duplicate in the foreseeable future.
Currently, there are no existing pre-grease trap wet waste interceptor
filtration systems comparable to the patented RINO(TM) System in place anywhere
in North America and as a result the lead time created by Rhino should protect
the Company from any future external developments. Other competitors, however,
could develop with greater financial and technical resources. Should such
competition develop, the Company's operations could be impaired.
Competitive Advantage
The Company's competitive advantages are numerous. The main advantage is
the technological lead the Company has taken in the study of the pre-grease trap
wet waste interceptor system problem which creates the opportunity for the
RINO(TM) System. The technology has also been granted pioneer status, meaning
"first use of scientific concept to solve a commercially valuable problem."
The advantages of the RINO(TM) System over existing grease traps are:
1. reduces the amount of grease and waste solids which flow into the public
sewage system
2. expensive costs associated with hiring a specialist to pump out backed up
material from the drain and resulting in potential down-time
3. reduces the number of grease trap cleanings
4. reduces odors associated with the grease trap, particularly during
cleaning
5. reduction in costs to the municipality for treating the sewage in the
public sewage system. The Company is quite hopeful that the RINO (TM)
System will be endorsed by all water pollution control governmental
bodies
6. increase in overall environmental awareness.
<PAGE>
ITEM 2. PROPERTIES
We do not own any real property.
The Company leases its principal business operations at 40 Trowers Road,
Woodbridge, Ontario, Canada L4L 7K6. The lease expires in March 2001. Our rent
is $3300.00 per month. The Company's toll free telephone number is (877)746-6224
and the web site address is www.rhinoeco.com.
ITEM 3. LEGAL PROCEEDINGS
The Company is not involved in any litigation and the officers and
directors are not aware of any threatened or pending litigation that would have
a material, adverse effect on the Company.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
During the fourth quarter of the fiscal year covered by this report, no
matters were submitted to a vote of security holders, through the solicitation
of proxies or otherwise.
<PAGE>
PART II
ITEM 5. MARKET FOR THE COMPANY'S COMMON EQUITY AND RELATED SHAREHOLDER MATTERS
Market Information
The Company's common stock is traded on the Over the Counter Bulletin Board
under the symbol "RHNC". The CUSIP number is 76217W108. The following is a table
of the high and low bid prices of the Company's stock for each of the trading
quarters of the fiscal year ended July 31, 2000:
Quarter Ended.... High Low
6/14/00(1) $3.00 $1.50
7/31/00... $1.18 $1.00
These quotations reflect interdealer prices, without retail mark-up,
mark-down or commission and may not represent actual transactions.
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1. Trading on the National Daily Quotation Bureau began on June 14, 2000.
Security Holders
As of July 31, 2000, the Company had approximately 180 shareholders of
record.
Dividends
There have been no cash dividends declared or paid since the inception of
the Company, and no cash dividends are contemplated to be paid in the
foreseeable future. The Company may consider a potential dividend in the future
in either common stock or the stock of future operating subsidiaries.
ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS AND PLAN OF OPERATION
The following discussion and analysis of the Company's consolidated
financial condition and results of operation for the fiscal year ended July 31,
2000 and 1999, should be read in conjunction with the Company's consolidated
financial statements included elsewhere herein. When used in the following
discussions, the words "believes," "anticipates," "intends," "expects," and
similar expressions are intended to identify forward-looking statements. Such
statements are subject to certain risks and uncertainties, which could cause
results to differ materially from those projected.
<PAGE>
Results of Operations
The Company is primarily engaged in the design, development, assembly,
marketing and sale of a unique patented wet waste interceptor plumbing product
called the RINO(TM) System. During the fiscal years July 31, 2000 ("fiscal
2000"), as well as prior years, the Company's management has concentrated its
time and efforts on ensuring that the Rhino wet waste interceptor product line
be designed and developed into a product line that can be manufactured
efficiently and consistently to meet a wide variety of end users needs.
During 2000, the Company started an aggressive sales and marketing program
throughout North America. The Company has attended hospitality, restaurant and
plumbing related trade shows aimed at increasing the public's awareness of the
Company's patented wet waste interceptor product line and to attract new
dealers/distributors for the product line.
During this time period, the Company attended shows in Toronto, Myrtle
Beach, Nashville, Moncton, New York, Boston, and Chicago. The Company is
concentrating on the hospitality and food service market sector as this is a
market area that can realize an immediate savings from the installation of a
Rhino Wet Waste Interceptor.
To aid in qualifying the show attendance at the Rhino booth at these
various trade shows, a telemarketing/sales team within the Company is being used
to promote its product line before and after each show. Rhino
dealers/distributors have been established in the Bahamas, Bermuda, Hawaii,
upstate New York, New Jersey, Nova Scotia, British Columbia, Metro-Toronto,
Niagara Falls Region, Montreal, and Quebec City, Canada, as a result of this
sales and marketing campaign. Additional dealer/distributor locations are in the
final stages of completion.
The Company intends to continue this sales and marketing approach to raise
the general public's awareness of the Rhino wet waste interceptor product line
and to obtain a distribution network of exclusive and non-exclusive dealers. The
Company intends to supply quality, manufactured product line to a professionally
trained and dedicated dealer network.
As of the end of fiscal 2000, the Company has had no significant revenue
derived from operations. The Company's cumulative net loss to year ended July
31, 2000 totals $1,787,389. Positive results are intended to be derived from
future sales of the Company's products through the establishment of exclusive
and non-exclusive dealerships throughout North America and the Caribbean. The
Company intends to enlarge the dealership base and resulting sales throughout
the remainder of fiscal 2001.
Fiscal Year 2000 Compared to Fiscal Year 1999
<PAGE>
Sales during fiscal 2000 totaled $173,942, which is an improvement of 499%
over fiscal 1999. The cost of sales as a percentage of sales during fiscal 2000
was 37.8%, which is compared to fiscal 1999 rate of 46.2%. The slight change in
rate is related to product mix of sales between the two years and an increase in
the cost of plastic components which could not completely be passed on to the
dealers or end users of the Rhino Wet Waste Interceptors.
Expenses associated with the sales and marketing of the Rhino Wet Waste
Interceptors increased between fiscal 1999 and fiscal 2000 by $218,319 or 33%.
This rise in expenditures was due to the company's attendance during fiscal 2000
of seven trade shows which raised the public's awareness of the Rhino Wet Waste
Interceptor product line and increased the Rhino dealers from four in fiscal
1999 to eight by the end of fiscal 2000.
The benefits of attendance at trade shows continue to assist the company in
increased sales throughout this first quarter of fiscal 2001 and a continual
increase in signed Rhino dealerships. The company plans to attend appropriate
trade shows during fiscal 2001, to continue on the task of raising the publics
awareness of the Rhino product line of Wet Waste Interceptors.
The increase in professional consultant fees and wages is a direct result of
the increase in the number of employees and/or contract professions used during
the year to attend trade shows, tele-market the company's products, assemble the
Rhino product line, and test and certify the Rhino product line to industry
standards. (CSA B 125.0-98 Plumbing Fixtures and ASME A112.18.1M-1996 Plumbing
Fixture Fittings)
Liquidity and Capital Resources
During the past four fiscal years, the Company has financed its operations
primarily through cash provided through various short and long term credit
facilities and through the private sale of its securities pursuant to applicable
offering exemptions. The Company's management believes that sufficient funds
will be raised from future operations so as to minimize the need for future
equity capitalization.
In addition, management of the Company believes the needs for additional
capital going forward will be derived somewhat from internal revenues and
earnings generated from the sale of its products and services. If the Company is
unable to begin to generate revenues from its anticipated products, management
believes the Company will need to raise additional funds to meet its cash
requirements.
<PAGE>
This document and other documents filed by the Company with the Securities
and Exchange Commission (the "SEC") contain certain forward-looking statements
under the Private Securities Litigation Reform Act of 1995 with respect to the
business of the Company. These forward-looking statements are subject to certain
risks and uncertainties, including those mentioned above, which may cause actual
results to differ significantly from these forward-looking statements. The
Company undertakes no obligation to publicly release the results of any
revisions to these forward-looking statements which may be necessary to reflect
events or circumstances after the date hereof or to reflect the occurrence of
unanticipated events. An investment in the Company involves various risks,
including those mentioned above and those which are detailed from time to time
in the Company's SEC filings.
Year 2000 Issue
The two-digit coding of dates in many currently installed computer systems
and software products has had no effect on our operations, and we do not believe
that this issue will result in any effect on our Company's financial condition
or results of operations.
ITEM 7. FINANCIAL STATEMENTS
The audited consolidated balance sheet of the Company for its years ended
July 31, 2000 and 1999 and related consolidated statements of operations,
stockholders' equity and cash flows for the years ended July 31, 2000, 1999 and
1998 are included, following Item 13, in sequentially numbered pages numbered
F-1 through F-__. The page numbers for the financial statement categories are as
follows:
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Index Page
Report of Independent Auditors F-1
Consolidated Balance Sheets as of July 31, 2000 and 1999 F-
Consolidated Statements of Operations
for the Years Ended July 31, 2000, 1999 and 1998 F-
Consolidated Statement of Stockholders' Equity [Deficiency] and
Comprehensive Loss for the Years Ended July 31, 2000, 1999 and 1998 F-
Consolidated Statements of Cash Flows
for the Years Ended July 31, 2000, 1999 and 1998 F-
Notes to Consolidated Financial Statements F-
</TABLE>
ITEM 8. DISAGREEMENTS ON ACCOUNTING AND FINANCIAL DISCLOSURES
The Company has had no disagreements on accounting issues and financial
disclosures.
<PAGE>
PART III
ITEM 9. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The following sets forth the names, ages and positions held of all of the
Directors and Executive Officers of the Company.
Name Age Position
Mark Wiertzema 49 President and CFO
Gordan Novak 50 Vice President
Jan Walsh 43 Secretary/Treasurer
Mark Wiertzema, President and Chief Financial Officer
Mark Wiertzema currently serves as President and Chief Financial Officer of
the Company. Mr. Wiertzema graduated from the University of Iowa, where he
received both his graduate and post-graduate degrees. Mr. Wiertzema has over 25
years of experience in financial and strategic management of regional, national
and international corporations. During the last 15 years, Mr. Wiertzema has had
a managerial position in an independent company that collects, transports,
re-directs, re-deploys, re-uses and recycles non-hazardous solid and liquid
waste products from large municipalities.
Gordan Novak, Vice President
Since February, 1999, serves as Vice President of the Company. Mr. Novak is
Vice President of Light Steel Technologies, Inc., which licenses proprietary
light steel building technology and has established a number of joint ventures
in Czech Republic, Croatia, Germany, Russia and Ukraine. Mr. Novak was an
advisor to Queen of Diamonds Resources, Inc., where he negotiated the purchase
of mineral rights in Guyana. He also negotiated exclusive first right of refusal
for all mineral resources (excluding oil) in Somalia, and signed exclusive
contract for export of that country's scrap metal. In 1996, he acted as advisor
to Alba Resources, Inc., negotiating 50% joint venture agreements for two base
metal properties in Newfoundland. Mr. Novak has had over 28 years of business
experience.
Jan Walsh, Secretary/Treasurer
Jan Walsh, since March, 1999, has served as Secretary/Treasurer of the
Company. Ms. Walsh works extensively on the development and maintenance of
corporate images through imaginative corporate logo design, print literature and
corporate informational videos. Ms. Walsh is a graduate of the Ontario College
of Art & Design and is an accomplished professional caricature artist. Her
professional objective is to create a better future in the world's ecology
through waste management efficiencies, practices and industrial pollution
prevention.
<PAGE>
Section 16(A) Beneficial Ownership Reporting Compliance
Section 16(A) of the Securities Exchange Act of 1934, as amended, requires
the Company's directors and executive officers, and persons who beneficially own
more than 10% of the Company's common stock to file with the Securities and
Exchange Commission reports of ownership of common stock and other equity
securities in the Company. Officers, directors and more than 10% stockholders
are required by SEC regulations to furnish the Company with copies of all
Section 16(a) reports they file. Since the Company currently does not have a
class of equity securities registered pursuant to Section 12 of the Exchange
Act, there is no obligation upon the Company's offices, directors and 10% or
greater stockholders to file any such reports pursuant to Section 16(a) of the
Exchange Act.
ITEM 10. EXECUTIVE COMPENSATION
The following table provides information regarding the executive
compensation of persons serving as Rhino's executive officers during the fiscal
years ended 2000, 1999 and 1998.
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------------------------
SUMMARY COMPENSATION TABLE
--------------------------------------------------------------------------------------------------------------------
---------------------------------------- ---------- ----------------------- -------------------- -------------------
<S> <C> <C> <C> <C>
Annual Compensation Long-Term
Compensation All
Name and Fiscal Salary Bonus Options by Other Compensation
Principal Position Year # of Shares
---------------------------------------- ---------- ----------------------- -------------------- -------------------
---------------------------------------- ---------- ------------- --------- -------------------- -------------------
Mark Wiertzema 2000 $64,800
President & CFO 1999 $65,800
1998 $64,800
---------------------------------------- ---------- ------------- --------- -------------------- -------------------
---------------------------------------- ---------- ------------- --------- -------------------- -------------------
Gordan Novak 2000 N/A
Vice President 1999
1998
---------------------------------------- ---------- ------------- --------- -------------------- -------------------
---------------------------------------- ---------- ------------- --------- -------------------- -------------------
Jan Walsh 2000 N/A
Secretary/Treasurer 1999
1998
---------------------------------------- ---------- ------------- --------- -------------------- -------------------
</TABLE>
The Company had no employment agreements or stock options with any of its
executive officers as of July 31, 2000. Through July 31, 2000, none of the
officers or directors except Mr. Wiertzema received a salary or other cash
compensation.
<PAGE>
Compensation Committee
Mark Wiertzema and Gordan Novak are members of the Compensation Committee,
which reviews and makes recommendations with respect to compensation of
officers, employees and consultants, including granting of options.
ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
AND MANAGEMENT
As of the date of this report, we have a total of 25,000,000 shares of
Common Stock authorized at a par value of $.0001, and there are 6,525,539 shares
of Common Stock outstanding. The following table sets forth information as of
the date hereof with respect to the beneficial ownership of our Common Stock by
(a) each person known by us to be the beneficial owner of more than 5% of our
outstanding Common Stock, (b) the directors and officers of Rhino, and (c) the
directors and officers of the Company.
Number of % of Shares
Name and Address Shares Owned Outstanding
Mark Wiertzema 894,885 14%
13203 Guelph Line - R.R. # 1
Campbellville, Ontario L0P 1B0 Canada
Gordan Novak 53,333 1%
Hamilton, Ontario, Canada
Jan Walsh 12,000 *
65 Harbour Square, Suite 2502
Toronto, Ontario M5J 2L4, Canada
All Directors and Officers as a group 960,218 15%
---------
* Less than 1%
ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
There are no transactions to which we are a party or certain matters
affecting us have or will result in a material benefit to certain of our
directors and executive officers, or may create conflicts of interest. Normal
business transactions that have occurred between Rhino shareholders and the
Company are discussed in the audited financial statements and are insignificant
in nature.
<PAGE>
No director, officer or principal security holder of Rhino has or has had a
direct or indirect material interest in any transaction to which we are or were
a party. We believe that the terms of each of the transactions described above
were no less favorable to us than could have been obtained from third parties.
PART IV
ITEM 13. EXHIBITS, FINANCIAL STATEMENTS AND REPORTS ON FORM 8-K
(a) Index to financial statements and financial statement schedules
The audited balance sheets of the Company as of July 31, 2000 and 1999 and
the related statements of operations, stockholders' equity and cash flows for
the years ended July 31, 2000, 1999 and 1998 follow in sequentially numbered
pages F-1 through F-___. The page numbers for the financial statement categories
are as follows:
Page ........Description
F-1 Report of Independent Auditors
F-2 Balance Sheets as of July 31, 2000, 1999 and 1998
F-3 Statements of Operations for the Years Ended
July 31, 2000, 1999 and 1998
F-4 Statements of Stockholders' Equity [Deficiency] and
Comprehensive Loss for the Years Ended
July 31, 2000, 1999 and 1998
F-5 Statements of Cash Flows for the Years Ended
July 31, 2000, 1999 and 1998
F-6 through F-21 Notes to Financial Statements
(b) 8-K Reports
No reports on Form 8-K have been filed on behalf of the Company.
(c) Exhibits:
3.1 Articles of Incorporation (1)
3.2 By-laws (1)
10 Material contracts (N/A)
11 Statement of Computation of Earnings per Share
21 Subsidiaries of the Company
23 Consent of KPMG LLP
27 Financial Data Schedule
-------------------------------
1. Incorporated by reference to the Company's original registration statement on
Form 10SB.
<PAGE>
ADDITIONAL INFORMATION
Corporate Headquarters
40 Trowers Road, Woodbridge, Ontario, Canada L4L 7K6
Telephone Number: (905) 264-0198; Fax Number: (905) 265-0515
Toll Free Telephone Number: (877) 746-6224
Internet Address http://www.rhinoeco.com;
E-mail Address [email protected]
Independent Public Accountants
KPMG LLP
Suite 600
3700 Steeles Avenue West
Vaughan, Ontario L4L 8K8
Transfer Agent
American Stock Transfer & Trust Company
40 Wall Street
New York, New York 10005
Exhibits to Form 10-KSB will be provided to shareholders of the Registrant
upon written request addressed to Rhino Ecosystems, Inc., 40 Trowers Road,
Woodbridge, Ontario, Canada L4L 7K6. Any exhibits furnished are subject to a
reasonable photocopying charge.
The Securities and Exchange Commission has not approved or disapproved of
this Form 10-KSB and Annual Report to Shareholders nor has it passed upon its
accuracy or adequacy.
KPMG LLP
Chartered Accountants
3700 Steeles Avenue West, Suite 600
Vaughan, Ontario L4L 8K8
(905) 264-4100
<PAGE>
INDEPENDENT AUDITOR'S REPORT
Consolidated Financial Statements
(Stated in United States dollars)
Rhino Ecosystems, Inc.
(A DEVELOPMENT STAGE COMPANY)
Years ended July 31, 2000, 1999 and 1998
<PAGE>
Independent auditors' report
To the Board of Directors and Stockholders
Rhino Ecosystems, Inc.
We have audited the accompanying consolidated balance sheets of Rhino
Ecosystems, Inc. (a development stage company) as at July 31, 2000 and 1999 and
the related consolidated statements of operations, stockholders' equity
(deficiency) and comprehensive loss and cash flows for each of the years in the
three-year period ended July 31, 2000 and for the period from inception of the
development stage on June 7, 1996 to July 31, 2000. These consolidated financial
statements are the responsibility of Rhino Ecosystems, Inc.'s management. Our
responsibility is to express an opinion on these consolidated financial
statements based on our audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above, present
fairly, in all material respects, the financial position of Rhino Ecosystems,
Inc. as of July 31, 2000 and 1999 and the results of its operations and its cash
flows for each of the years in the three-year period ended July 31, 2000 and for
the period from inception of the development stage on June 7, 1996 to July 31,
2000, in conformity with accounting principles generally accepted in the United
States of America.
The accompanying consolidated financial statements have been prepared assuming
that Rhino Ecosystems, Inc. will continue as a going concern. As discussed in
note 1(b) to the financial statements, Rhino Ecosystems, Inc. has suffered
recurring losses from operations and has a net capital deficiency that raise
substantial doubt about its ability to continue as a going concern. Management's
plans in regards to these matters are also described in note 1(b). The financial
statements do not include any adjustments that might result from the outcome of
this uncertainty.
/s/ KPMG, LLP
Chartered Accountants
Toronto, Canada
October 20, 2000, except
as to note 15 which is as
of November 6, 2000
<PAGE>
<TABLE>
<CAPTION>
Rhino Ecosystems, Inc.
(A DEVELOPMENT STAGE COMPANY)
Consolidated Balance Sheets
(Stated in United States dollars)
July 31, 2000 and 1999
------------------------------------------------------------------------------------------------------------------------------------
2000 1999
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Assets
Current assets:
Accounts receivable $ 14,896 $ -
Goods and services tax recoverable 11,600 6,298
Investment tax credits recoverable 33,054 26,675
Inventory (note 3) 202,775 37,917
Prepaid expenses and deposits 14,508 11,402
------------------------------------------------------------------------------------------------------------------------------------
276,833 82,292
Fixed assets (note 4) 112,718 277,647
Patent 98,159 77,691
------------------------------------------------------------------------------------------------------------------------------------
$ 487,710 $ 437,630
------------------------------------------------------------------------------------------------------------------------------------
Liabilities and Stockholders' Deficiency
Current liabilities:
Bank indebtedness $ 8,806 $ 34,532
Accounts payable and accrued liabilities 344,004 181,376
Current portion of deferred revenue (note 5) 2,461 -
Due to related parties (note 6) 120,141 111,468
Current portion of long-term debt (note 7) 21,015 20,746
------------------------------------------------------------------------------------------------------------------------------------
496,427 348,122
Deferred revenue (note 5) 11,486 -
Long-term debt (note 7) 108,580 127,935
Due to Rhino U.S. (note 8) - 311,946
Stockholders' deficiency:
Share capital (note 8) 1,661,704 736,387
Deficit accumulated during development stage (1,787,389) (1,081,316)
Accumulated other comprehensive loss (3,098) (5,444)
------------------------------------------------------------------------------------------------------------------------------------
(128,783) (350,373)
Future operations (note 1(b)) Commitments and contingencies (note 9) Subsequent
event (note 15)
------------------------------------------------------------------------------------------------------------------------------------
$ 487,710 $ 437,630
------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
See accompanying notes to consolidated financial statements.
F-2
<PAGE>
<TABLE>
<CAPTION>
Rhino Ecosystems, Inc.
(A DEVELOPMENT STAGE COMPANY)
Consolidated Statements of Operations
(Stated in United States dollars)
Years ended July 31, 2000, 1999 and 1998 and cumulative from inception on June
7, 1996 to July 31, 2000
------------------------------------------------------------------------------------------------------------------------------------
Cumulative
total from
inception on
June 7, 1996
2000 1999 1998 to July 31, 2000
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Sales and other income $ 173,942 $ 28,998 $ - $ 202,940
Expenses:
Cost of goods sold (excluding
amortization of fixed assets) 65,710 13,384 - 79,094
Marketing 265,863 156,788 113,750 536,401
Professional and consulting fees 160,237 115,454 77,530 374,721
Amortization of fixed assets 111,614 115,253 8,616 235,483
Office salaries, benefits and
services 108,322 92,502 55,374 256,198
Rent 45,457 37,505 38,593 129,924
Research and product
development (note 10) 37,488 45,087 2,183 105,762
Telephone 17,396 10,475 5,167 36,118
Office and general 17,379 13,667 25,252 66,287
Bank charges and interest 16,970 14,104 11,428 42,577
Interest on long-term debt 13,166 15,679 5,012 33,857
Travel and promotion 9,906 25,925 21,576 75,804
Utilities 5,025 3,563 1,124 9,765
Royalties 3,805 - - 3,805
Insurance 1,677 2,310 546 4,533
------------------------------------------------------------------------------------------------------------------------------------
880,015 661,696 366,151 1,990,329
------------------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------------------
Loss for the year $ 706,073 $ 632,698 $ 366,151 $ 1,787,389
------------------------------------------------------------------------------------------------------------------------------------
Loss per common share $ 0.11 $ 0.11 $ 0.11 $ 0.50
------------------------------------------------------------------------------------------------------------------------------------
Weighted average number of
common shares outstanding 6,525,539 5,608,872 3,327,005 3,558,997
------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
See accompanying notes to consolidated financial statements.
F-3
<PAGE>
<TABLE>
<CAPTION>
RHINO ECOSYSTEMS, INC.
(A DEVELOPMENT STAGE COMPANY)
Consolidated Statements of Stockholders' Equity (Deficiency) and Comprehensive Loss
(Stated in United States dollars)
Years ended July 31, 2000, 1999 and 1998
------------------------------------------------------------------------------------------------------------------------------------
Deficit
------------------------------------------------------------------------------------------------------------------------------------
accumulated Accumulated
------------------------------------------------------------------------------------------------------------------------------------
Common Shares during other
-------------------------
Number of Stated development comprehensive Comprehensive
Shares value stage income (loss) Total income (loss)
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Shares issued on
incorporation 100 $ 73 $ - $ - $ 73
Loss for the year - - (82,467) - (82,467) $ (82,467)
Foreign currency
translation adjustment - - - 682 682 682
----------------------------------------------------------------------------------------------- ------------
$ (81,785)
Balance, July 31, 1997 100 73 (82,467) 682 (81,712)
Shares issued for:
Cash 4,746,729 609,117 - - 609,117
Services 20,000 14,015 - - 14,015
Cash and conversion
of loans (note 11) 758,710 157,871 - - 157,871
------------------------------------------------------------------------------------------
5,525,439 781,003 - - 781,003
Less share issue costs - (44,689) - - (44,689)
-------------------------------------------------------------------------------------------
5,525,439 736,314 - - 736,314
-----------------------------------------------------------------------------------------------
Loss for the year - - (366,151) - (366,151) $ (366,151)
Foreign currency
translation adjustment - - - (14,072) (14,072) (14,072)
------------------------------------------------------------------------------------------------ -------------
$ (380,223)
Balance, July 31, 1998 5,525,539 736,387 (448,618) (13,390) 274,379
Loss for the year - - (632,698) - (632,698) $ (632,698)
Foreign currency
translation adjustment - - - 7,946 7,946 7,946
----------------------------------------------------------------------------------------------- ------------
$ (624,752)
Balance, July 31, 1999 - 736,387 (1,081,316) (5,444) (350,373)
Loss for the year - - (706,073) - (706,073) $ (706,073)
Recapitalization (note 1(a))1,000,000 925,317 - - 925,317
Foreign currency
translation adjustment - - - 2,346 2,346 2,346
------------
$ (703,727)
------------------------------------------------------------------------------------------------------------------------
Balance, July 31, 2000 6,525,539 $ 1,661,704 $ (1,787,389) $ (3,098) $ (128,783)
------------------------------------------------------------------------------------------------------------------------
</TABLE>
See accompanying notes to consolidated financial statements.
F-4
<PAGE>
<TABLE>
<CAPTION>
Rhino Ecosystems, Inc.
(A DEVELOPMENT STAGE COMPANY)
Consolidated Statements of Cash Flows
(Stated in United States dollars)
Years ended July 31, 2000, 1999 and 1998
------------------------------------------------------------------------------------------------------------------------------------
Cumulative
------------------------------------------------------------------------------------------------------------------------------------
total from
------------------------------------------------------------------------------------------------------------------------------------
inception on
------------------------------------------------------------------------------------------------------------------------------------
June 7, 1996
------------------------------------------------------------------------------------------------------------------------------------
2000 1999 1998 to July 31, 2000
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Cash provided by (used in):
Operations:
Loss for the year $ (706,073) $ (632,698) $ (366,151) $ (1,787,389)
Adjustments to reconcile loss for the year to net cash:
Amortization of fixed assets 111,614 115,253 8,616 235,483
Accounts receivable (14,896) - - (14,896)
Goods and services tax
recoverable (5,302) 38,837 (39,704) (11,600)
Inventory (164,858) (17,434) (20,483) (202,775)
Prepaid expenses and deposits (3,106) 23,941 (35,343) (14,508)
Due from related parties - 38,233 (14,966) -
Accounts payable and accrued
liabilities 162,628 59,231 65,864 344,004
Deferred revenue 13,947 - - 13,947
Due to related parties 8,673 109,445 (29,510) 120,141
------------------------------------------------------------------------------------------------------------------------------------
(597,373) (265,192) (431,677) (1,317,593)
Financing:
Bank indebtedness (25,726) 34,532 - 8,806
Proceeds from long-term debt - - 165,355 165,355
Principal payments on long-term debt (19,086) (16,674) - (35,760)
Advances from Rhino U.S. (note 8) 613,371 311,946 - 925,317
Issuance of share capital - - 710,921 710,994
Share issue costs - - (44,689) (44,689)
Loans payable (note 11) - - (2,471) 70,082
------------------------------------------------------------------------------------------------------------------------------------
568,559 329,804 829,116 1,800,105
Investments:
Expenditures on fixed assets (46,319) (50,296) (351,220) (447,835)
Expenditures on patent (20,468) (48,386) (6,592) (98,159)
Investment tax credits 93,255 (99) 495 66,580
Due from Le Group De Recuperation
O'Energie P.H. Inc. (note 12) - 99,213 (99,213) -
Accounts payable for fixed assets - (97,817) 97,817 -
------------------------------------------------------------------------------------------------------------------------------------
26,468 (97,385) (358,713) (479,414)
Other:
Foreign currency translation
adjustment 2,346 7,946 (14,072) (3,098)
------------------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------------------
Increase (decrease) in cash - (24,827) 24,654 -
Cash, beginning of year - 24,827 173 -
------------------------------------------------------------------------------------------------------------------------------------
Cash, end of year $ - $ - $ 24,827 $ -
------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
Supplemental information (note 16)
See accompanying notes to consolidated financial statements.
F-5
<PAGE>
Rhino Ecosystems, Inc.
(A DEVELOPMENT STAGE COMPANY)
Notes to Consolidated Financial Statements (continued)
(Stated in United States dollars)
Years ended July 31, 2000, 1999 and 1998
--------------------------------------------------------------------------------
Rhino Ecosystems, Inc.
(A DEVELOPMENT STAGE COMPANY)
Notes to Consolidated Financial Statements
(Stated in United States dollars)
Years ended July 31, 2000, 1999 and 1998
--------------------------------------------------------------------------------
Rhino Ecosystems, Inc. ("Rhino U.S." or "the Company") is incorporated
under the laws of the State of Florida. Rhino U.S. is considered to be a
development stage company, as from inception, Rhino U.S. and its wholly owned
subsidiary have been primarily engaged in developing the manufacturing
process for a wet waste interceptor and has had no significant revenue derived
from operations.
1. Basis of presentation:
(a) Recapitalization:
In the fiscal year ended July 31, 1999, Rhino U.S. filed a Rule 504,
Regulation D Offering under the United States Securities Act of 1933
(the "504 Offering"). Pursuant to the 504 Offering, one million
common shares of Rhino U.S. were offered at the price of (USD) $1.00
each. In fiscal 1999 and 2000, the one million shares were fully
subscribed.
The funds received for the share subscriptions were transferred to
Rhino Ecosystems Inc. ("Rhino Canada") a company incorporated under
the laws of the Province of Ontario, Canada on June 7, 1996.
On November 3, 1999, the stockholders of Rhino Canada approved a
share exchange whereby, the stockholders of Rhino Canada, exchanged
all 5,525,539 of the issued and outstanding common shares of Rhino
Canada for 5,525,539 common shares of Rhino U.S. Upon completion of
this transaction, Rhino U.S. had issued and outstanding 6,525,539
common shares of which the former stockholders of Rhino Canada held
approximately 85% of the common shares of Rhino U.S.
As former stockholders of Rhino Canada hold approximately 85% of the
outstanding common shares of Rhino U.S. immediately subsequent to
these transactions, the combination of the two companies has been
accounted for as a recapitalization, effectively as if Rhino Canada
had issued 5,525,539 common shares for consideration equal to the
net monetary assets of Rhino U.S.
Application of recapitalization accounting results in the following:
(i)
The consolidated financial statements of the combined entity
are issued under the name of the legal parent ("Rhino U.S.")
but are considered a continuation of the financial
statements of the legal subsidiary, Rhino Canada.
(ii)
Rhino Canada's assets and liabilities are included in the
consolidated financial statements at their historical
carrying values.
<PAGE>
1. Basis of presentation (continued):
(iii)
The consolidated statements of stockholders' equity
(deficiency) presents the equity transactions of Rhino
Canada on a historical basis with the recapitalization
presented with effect from November 3, 1999.
For purposes of this transaction, the deemed consideration is
considered to be equivalent to the net book value of Rhino U.S.'s
net monetary assets as at November 3, 1999. The net monetary assets
of Rhino U.S. as at November 3, 1999 consisted solely of a
receivable from Rhino Canada in the amount of $925,317 which had
arisen from the transfer of the net funds received from the 504
Offering.
--------------------------------------------------------------------------------
Deemed consideration $ 925,317
Assigned value of net monetary assets:
Due from Rhino Canada $ 925,317
--------------------------------------------------------------------------------
(b) Future operations:
These consolidated financial statements have been prepared assuming
the Company will continue as a going concern notwithstanding the
Company has suffered recurring losses since inception and has
negative working capital and a net capital deficiency that raise
substantial doubt as to its ability to continue as a going concern.
The application of the going concern concept which assumes the
realization of assets and liquidation of liabilities in the normal
course of business, is dependent on the Company's ability to attain
profitable operations and obtain sufficient cash from external
financing to meet the Company's liabilities and commitments as they
become payable. Management is of the opinion that sufficient working
capital will be obtained from operations and external financing to
meet the Company's liabilities and commitments as they become
payable. However, no additional financing sources have been
contracted to October 20, 2000 and there can be no certainty as to
the availability of such financing in the future. Failure to
identify additional financing in the near term may require the
Company reduce its operating activities.
A failure to continue as a going concern would then require that
stated amounts of assets and liabilities be reflected on a
liquidation basis which could differ from the going concern basis.
<PAGE>
2. Summary of significant accounting policies and practices:
(a) Principles of consolidation:
The consolidated financial statements include the accounts of Rhino
U.S. and its wholly owned subsidiary, Rhino Canada. All significant
intercompany balances and transactions have been eliminated on
consolidation.
(b) Inventory:
Inventory is valued at the lower of cost, determined on a first-in,
first-out basis and market. For materials, market is defined as
replacement cost; for work-in-process and finished goods, market is
defined as net realizable value.
(c) Fixed assets:
Fixed assets are stated at cost less related investment tax credits.
Amortization is provided on a straight-line basis from the date the
asset is put in use using the following annual rates:
--------------------------------------------------------------------------------
Asset Rate
--------------------------------------------------------------------------------
Moulds and dies 3 years
Manufacturing equipment 3 years
Furniture and fixtures 3 years
Office equipment 3 years
Computer equipment 3 years
Vehicle 2 years
--------------------------------------------------------------------------------
(d) Patent:
Patent is stated at the cost incurred to date with respect to a
Patent Cooperation Treaty International Application to apply for
letters of patent. It is anticipated that amortization will be
provided by the straight-line basis over seventeen years when a
commercial level of production and sales is attained.
<PAGE>
2. Summary of significant accounting policies and practices (continued):
(e) Impairment of long-lived assets and long-lived assets to be disposed
of:
Long-lived assets are accounted for in accordance with the
provisions of Statement of Financial Accounting Standards ("SFAS")
No. 121, Accounting for the Impairment of Long-Lived Assets and
Long-Lived Assets to be Disposed of. This statement requires that
long-lived assets and certain identifiable intangibles be reviewed
for impairment whenever events or changes in circumstances indicate
that the carrying amount of an asset may not be recoverable.
Recoverability of assets to be held and used is measured by a
comparison of the carrying amount of an asset to future net cash
flows expected to be generated by the asset. If such assets are
considered to be impaired, the impairment to be recognized is
measured by the amount by which the carrying amount of the assets
exceed the fair value of the assets. Assets to be disposed of are
reported at the lower of the carrying amount or fair value less
costs to sell.
(f) Revenue recognition:
(i) Product sales:
Revenue from product sales is recorded when the purchaser has
paid, or is obligated to pay for the product, and the obligation
is not contingent on resale of the product.
(ii)Dealer agreements:
Rhino Canada grants both exclusive and non-exclusive rights to
distribute and sell its products. The agreements are based on
the dealer purchasing a yearly minimum amount of product and/or
on a payment for a dealer licence. Revenue derived from the sale
of product in accordance with the product supply agreements is
recorded when the dealer has paid, or is obligated to pay and
the obligation is not contingent on the resale of the product.
Revenue from dealer licence fees is deferred and amortized over
the term of the agreement.
(iii) Deferred revenue:
Proceeds received in advance of meeting the revenue recognition
criteria is recorded as deferred revenue.
<PAGE>
2. Summary of significant accounting policies and practices (continued):
(iv)Warranty claims:
Provision for potential warranty claims is provided for at the
time revenue is recognized, based on warranty terms and claims
experience.
(g) Stock-based compensation:
To the date of these consolidated financial statements, arrangements
have not been entered into whereby one or more employees receive
shares of stock or other equity instruments of the Company or cash
payments based on the future value of the Company for services
performed. The Company will recognize equity grants to employees by
the intrinsic value method whereby compensation expense is recorded
only to the extent that the market value at the grant date exceeds
the exercise or payment price for the underlying instrument.
(h) Comprehensive income:
The Company applies SFAS No. 130, Reporting Comprehensive Income.
SFAS No. 130 establishes standards for reporting and presentation of
comprehensive income and its components in a full set of financial
statements. Comprehensive income consists of net loss and foreign
currency translation adjustments and is presented in the
consolidated statements of stockholders' equity (deficiency) and
comprehensive loss. The statement requires only additional
disclosures in the consolidated financial statements; it does not
affect the Company's financial position or results of operations.
(i) Income taxes:
Income taxes are accounted for under the asset and liability method.
Under the asset and liability method, deferred tax assets and
liabilities are recognized for the future tax consequences
attributable to differences between the financial statement carrying
amounts of existing assets and liabilities and their respective tax
bases and operating loss and tax credit carryforwards. Deferred tax
assets and liabilities are measured using enacted tax rates expected
to apply to taxable income in the years in which those temporary
differences are expected to be recovered or settled. The effect on
deferred tax assets and liabilities of a change in tax rates is
recognized in income in the year that includes the enactment date.
<PAGE>
2. Summary of significant accounting policies and practices (continued):
(j) Investment tax credits:
Investment tax credits relating to fixed asset purchases and
research and development expenses are accounted for by the deferral
method as a reduction of the cost of such assets and expenses in the
period allowable.
(k) Research and product development:
Research and product development costs (R&D) are expensed as
incurred. Related investment tax credits reduce R&D expense in the
same period in which the related expenditures are charged to
operations, provided there is reasonable assurance the benefits will
be realized.
(l) Foreign currency translation:
The Canadian dollar is the functional currency of the Company's
business. The consolidated financial statements are translated into
United States dollars using the average rates for the year for items
included in the consolidated statements of operations and the
current rate for items included in the consolidated balance sheets.
The translation gains or losses are included in the consolidated
statements of stockholders' equity (deficiency) and comprehensive
loss as other comprehensive income or loss.
(m) Use of estimates:
The preparation of financial statements in conformity with
accounting principles generally accepted in the United States of
America requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure
of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during
the year. Actual results could differ from those estimates.
3. Inventory:
--------------------------------------------------------------------------------
2000 1999
--------------------------------------------------------------------------------
Materials $ 73,788 $ 28,291
Work-in-process and finished goods 128,987 9,626
--------------------------------------------------------------------------------
$ 202,775 $ 37,917
--------------------------------------------------------------------------------
<PAGE>
<TABLE>
<CAPTION>
4. Fixed assets:
------------------------------------------------------------------------------------------------------------------------------------
Accumulated Net book
2000 Cost amortization value
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Moulds and dies $ 238,467 $ 180,028 $ 58,439
Manufacturing equipment 37,062 18,036 19,026
Furniture and fixtures 24,490 14,040 10,450
Office equipment 26,129 7,495 18,634
Computer equipment 9,608 5,006 4,602
Vehicle 4,531 2,964 1,567
------------------------------------------------------------------------------------------------------------------------------------
$ 340,287 $ 227,569 $ 112,718
------------------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------------------
Accumulated Net book
1999 Cost amortization value
------------------------------------------------------------------------------------------------------------------------------------
Moulds and dies $ 324,447 $ 98,553 $ 225,894
Manufacturing equipment 35,273 5,609 29,664
Furniture and fixtures 19,388 6,464 12,924
Office equipment 6,721 2,241 4,480
Computer equipment 6,140 2,078 4,062
Vehicle 1,247 624 623
------------------------------------------------------------------------------------------------------------------------------------
$ 393,216 $ 115,569 $ 277,647
------------------------------------------------------------------------------------------------------------------------------------
5. Deferred revenue:
------------------------------------------------------------------------------------------------------------------------------------
2000 1999
------------------------------------------------------------------------------------------------------------------------------------
Deferred revenue $ 13,947 $ -
Current portion of deferred revenue (2,461) -
------------------------------------------------------------------------------------------------------------------------------------
$ 11,486 $ -
------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
Deferred revenue represents the unearned revenue derived from a fee
received for a dealer licence which is being recorded to revenue over the
period of the agreement term of sixty months.
<PAGE>
6. Related party transactions:
Rhino U.S. and Rhino Canada (the "Companies") purchase products,
administrative, consulting and marketing services from its officers,
stockholders, individuals and companies related to the stockholders
("related parties"). The cost of these products and services aggregating
2000 - $116,850; 1999 - $136,498; and 1998 - $81,694 was charged as
follows:
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------
2000 1999 1998
------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Cost of goods sold $ 20,162 $ 14,842 $ -
Marketing 9,744 - -
Professional and consulting fees 39,124 51,642 44,061
Office salaries, benefits and services 44,016 47,008 30,521
Travel and promotion - 15,724 7,382
Royalties 3,804 - -
Expenditures on fixed assets - 7,282 -
------------------------------------------------------------------------------------------------------------------
$ 116,850 $ 136,498 $ 81,964
------------------------------------------------------------------------------------------------------------------
</TABLE>
These transactions are measured at the exchange amount, which is the
amount of consideration established and agreed to by the related parties.
The Companies also transfer and receive funds from the related parties.
In 2000 and 1999, the Companies incurred interest of nil, 1998 - $6,847
on amounts due to related parties.
The amount due to related parties that has arisen from these transactions
is unsecured with no fixed terms of payment is as follows:
-------------------------------------------------------------------------
2000 1999
-------------------------------------------------------------------------
Due to related parties:
Due to stockholders $ 120,141 $ 111,468
-------------------------------------------------------------------------
<PAGE>
7. Long-term debt:
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------------------------
2000 1999
--------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Termloan bearing interest at the bank's prime rate plus 2.5%, repayable
in principal monthly installments of $2,604 plus
interest, due October 2008 $ 129,595 $ 148,681
Current portion of long-term debt (21,015) (20,746)
--------------------------------------------------------------------------------------------------------------------
$ 108,580 $ 127,935
--------------------------------------------------------------------------------------------------------------------
</TABLE>
The term loan is secured by a security agreement on specific equipment
and by a stockholder's guarantee in the amount of $41,339.
The aggregate maturities on long-term debt for each of the five years
subsequent to July 31, 2000 are as follows: 2001 - $21,015; 2002 -
$21,015; 2003 - $21,015; 2004 - $21,015 and 2005 - $21,015.
<PAGE>
8. Share capital:
(a) Authorized:
25,000,000 common shares at a par value of $0.0001 per share.
(b) Issued and outstanding share capital of Rhino U.S. is:
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------------------------
Number
--------------------------------------------------------------------------------------------------------------------
<S> <C>
Issued and outstanding:
Prior to the recapitalization 1,000,000
Shares issued on recapitalization 5,525,539
---------------------------------------------------------------------------------------------------------------------
6,525,539
---------------------------------------------------------------------------------------------------------------------
As a result of the recapitalization described in note 1(a), total
share capital on the consolidated financial statements is
represented by:
--------------------------------------------------------------------------------------------------------------------
Existing share capital of Rhino Canada, prior
to recapitalization on November 3, 1999 $ 736,387
Assigned value of Rhino U.S. shares exchanged
for common shares of Rhino Canada (note 1(a)) 925,317
---------------------------------------------------------------------------------------------------------------------
$ 1,661,704
---------------------------------------------------------------------------------------------------------------------
</TABLE>
As at July 31, 2000 and 1999, Rhino U.S. had transferred the funds
received from the 504 Offering (note 1(a)) to Rhino Canada and Rhino
Canada had incurred share issue costs related thereto. These
transactions are summarized as follows and the net funds received
from the 504 Offering was recorded in the accounts as at July 31,
2000 and 1999 of Rhino U.S. and Rhino Canada as a receivable and
payable, respectively.
--------------------------------------------------------------------------------
2000 1999
--------------------------------------------------------------------------------
Proceeds from 504 Offering $ 977,181 $ 323,517
Shares issued for services 188,828 -
--------------------------------------------------------------------------------
1,166,009 323,517
Less share issue costs 240,692 11,571
--------------------------------------------------------------------------------
$ 925,317 $ 311,946
--------------------------------------------------------------------------------
<PAGE>
9. Commitments and contingencies:
(a)
Lease commitments:
Rhino Canada rents premises and equipment under operating leases
with minimum aggregate payments as follows:
--------------------------------------------------
2001 $ 18,812
2002 1,091
2003 1,000
--------------------------------------------------
$ 20,903
--------------------------------------------------
(b)
Supply agreement:
Rhino Canada has in place an exclusive supply agreement with
Filterco Inc. which expires April 30, 2003. Pursuant to the
agreement, Filterco Inc. is the exclusive supplier to Rhino Canada
of the disposable filtration bags utilized in its wet waste
interceptors.
(c) Royalties:
Sales of wet waste interceptors are subject to royalties at a rate
of 3% of the sales price. The royalties are payable to the inventor
of the wet waste interceptor who is also a stockholder, as
consideration for the inventor's assignment of all rights, title and
interest in the invention.
10. Research and product development:
<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------------------
2000 1999 1998
-------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Research and product development $ 37,488 $ 45,087 $ 3,913
Less investment tax credits - - 1,730
-------------------------------------------------------------------------------------------------------
$ 37,488 $ 45,087 $ 2,183
-------------------------------------------------------------------------------------------------------
</TABLE>
11. Loans payable:
In the fiscal year ended July 31, 1997, Rhino Canada received interest
free loans in the aggregate amount of $72,553. In the fiscal year ended
July 31, 1998, the lenders acquired in aggregate 758,710 common shares of
Rhino Canada for consideration consisting of cash $87,789 and conversion
of the loans of $70,082 to share capital.
<PAGE>
12. Due from Le Group De Recuperation O'Energie P.H. Inc.:
In March 1998, in the course of negotiations to acquire all of the
outstanding and issued shares of Le Group De Recuperation O'Energie P.H.
Inc., Rhino Canada advanced to Le Group De Recuperation O'Energie P.H.
Inc. $99,213. The advance was non-interest bearing and was to be
recovered upon either the favourable or unfavourable conclusion of the
negotiations. On August 26, 1999, the negotiations were concluded with
the transaction not proceeding. During the year ended July 31, 1999,
Rhino Canada received cash of $99,213 in full settlement of the amount
advanced.
13. Fair value of financial assets and financial liabilities:
Financial instruments:
The following table presents the carrying amounts and estimated fair
values of financial instruments at July 31, 2000 and 1999. The estimated
fair value of a financial instrument is the amount at which the
instrument could be exchanged in a current transaction between willing
parties, other than a forced or liquidation sale. These estimates,
although based on the relevant market information about the financial
instrument, are subjective in nature and involve uncertainties and
matters of significant judgment and therefore cannot be determined with
precision.
Changes in assumptions could significantly affect the estimates.
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------
2000 2000 1999 1999
------------------------------------------------------------------------------------------------------------------
Carrying Fair Carrying Fair
amount value amount value
------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Financial assets:
Accounts receivable $ 14,896 $ 14,896 $ - $ -
Deposits 14,200 14,200 11,174 11,174
Financial liabilities:
Bank indebtedness 8,806 8,806 34,532 34,532
Accounts payable and accrued liabilities 344,004 344,004 181,376 181,376
Long-term debt 129,595 129,595 148,681 148,681
Due to Rhino U.S. - - 311,946 311,946
Due to related parties 120,141 120,141 111,468 111,468
------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
13. Fair value of financial assets and financial liabilities (continued):
The following methods and assumptions were used to estimate the fair
value of each class of financial instruments:
(i) Accounts receivable, deposits, bank indebtedness, accounts payable
and accrued liabilities and due to Rhino U.S.:
The carrying amounts approximate fair value because of the short
term to maturity of these instruments.
(ii) Long-term debt:
The fair value is estimated by discounting the future cash flows at
rates currently offered to Rhino U.S. and Rhino Canada for similar
debt instruments of comparable maturity by the Company's bankers.
(iii) Due to related parties:
Imputed interest computed at comparable market rates on the interest
free advances from related parties is not considered to be material
to the financial statements. Consequently, the financial statements
do not include a charge for imputed interest on the interest free
advances and the fair value is considered to be comparable to the
carrying value.
14. Income taxes:
The tax effects of temporary differences that give rise to significant
portions of the deferred tax assets at July 31, 2000 and 1999 are
presented below:
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------------
2000 1999
------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Deferred tax assets:
Net operating loss carryforwards $ 623,000 $ 337,000
Fixed assets, principally due to differences
in amortization 12,000 52,000
Unamortized share issue costs 7,000 11,000
-----------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------
Total gross deferred tax assets 642,000 400,000
Less valuation allowance (642,000) (400,000)
-----------------------------------------------------------------------------------------------------------------------
Net deferred tax assets $ - $ -
-----------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
14. Income taxes (continued):
The valuation allowance for deferred tax assets as at July 31, 2000 and
1999 was $642,000 and $400,000, respectively. The net change in the total
valuation allowance for the years ended July 31, 2000, 1999 and 1998 was
an increase of $242,000, $223,000, and $143,000, respectively. In
assessing the realizability of deferred tax assets, management considers
whether it is more likely than not that some portion or all of the
deferred tax assets will not be realized. The ultimate realization of
deferred tax assets is dependent upon the generation of future taxable
income during the periods in which those temporary differences become
deductible.
Management considers projected future taxable income and tax planning
strategies in making this assessment. In order to fully realize the
deferred tax assets, the Company will need to generate future taxable
income of approximately $1,400,000 prior to the expiration of the net
operating loss carryforwards which occur between 2004 and 2007. Based
upon the level of historical taxable income and that the Company is
considered a development stage company, it cannot be reasonably estimated
at this time if its more likely than not the Company will realize the
benefits of the deferred tax assets. Consequently, the deferred tax
assets have been reduced by an equivalent valuation allowance. The
valuation allowance will be adjusted in the period that is determined
with reasonable certainty that it is more likely than not that some
portion or all of the deferred tax assets will be realized.
At July 31, 2000, the Company has net operating loss carryforwards for
income tax purposes of approximately $1,400,000 which are available to
offset future taxable income, if any, through 2004 to 2007. In addition,
the Company has unamortized capital cost over net book value of fixed
assets and unamortized share issue costs for income tax purposes
aggregating approximately $42,000 available to reduce future years'
income for tax purposes.
<PAGE>
15. Subsequent event:
On August 23, 2000, the Company filed a Registration Statement
("Registration Statement") on Form S-8 with the United States Securities
and Exchange Commission.
Pursuant to the Registration Statement, an aggregate of 670,000 common
shares ("shares") of the Company were registered as having been issued
and sold. The shares were issuable to compensate for services received or
to be received pursuant to ten separate consulting agreements and one fee
agreement with legal counsel.
20,000 of the issued shares were released as compensation to retain the
services of legal counsel. The Company deferred release of the remaining
650,000 shares until such time it was satisfied it had received the
services to be paid for by the release of the shares.
As of November 6, 2000, the Company determined that the services set out
in six of the ten consulting agreements ("agreements") would not be
rendered. Consequently, the Company will not be releasing 390,000 of the
shares that had been issued for the six agreements and it intends to
cancel the 390,000 shares. It is the opinion of management that the
Company will have no liability for the non-release of the shares and
subsequent cancellation.
The remaining 260,000 shares held for four agreements are to be released
to the intended recipients when the Company is satisfied that services
pursuant to the agreements have been satisfactorily rendered. The
services to be provided and the number of shares to be released pursuant
to the four agreements are as follows:
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------------------
Nature of service Number of shares
--------------------------------------------------------------------------------------------------------------
<S> <C>
Developing corporate dealerships 90,000
Mould design 60,000
Testing measurements required on the
patenting and plumbing code compliance 50,000
Assistance in locating warehouses throughout
the United States for delivery of the Company's products 60,000
---------------------------------------------------------------------------------------------------------------
260,000
---------------------------------------------------------------------------------------------------------------
</TABLE>
The fair value of these shares determined by reference to the market
value of the Company's common shares will be recognized during the period
to performance completion.
<PAGE>
15. Subsequent event (continued):
As of November 6, 2000, the Company has instructed its legal counsel to
take the action required to inform the SEC concerning its intent to
cancel 390,000 shares issued pursuant to the Registration Statement of
August 23, 2000.
16. Supplemental information to consolidated statements of cash flows:
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------
2000 1999 1998
------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
(a) Cash paid during the year for:
Interest $ 22,140 $ 18,165 $ 11,859
Income taxes - - -
------------------------------------------------------------------------------------------------------------------
</TABLE>
(b) Non-cash financing activities:
(i)
In fiscal 2000, 188,828 common shares of Rhino U.S. were
issued to compensate a merchant bank for the sale of shares
pursuant to the 504 Offering.
(ii)
In fiscal 2000, 5,525,539 common shares of Rhino U.S. were
issued upon the recapitalization described in note 1(a).
(iii)
In fiscal 1998, 20,000 common shares of Rhino Canada were
issued to settle a liability in the amount of $14,015.
<PAGE>
SIGNATURES
In accordance with Section 13 or 15(d) of the Securities Exchange Act of
1934, the Registrant caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
Rhino EcoSystems, Inc.
October 30, 2000 By: /s/ Mark Wiertzema
--------------------------------
Mark Wiertzema, President
and Chief Financial Officer
In accordance with the Securities Exchange Act of 1934, this report has
been signed below by the following persons on behalf of the Registrant and in
the capacities and on the dates indicated.
Rhino EcoSystems, Inc.
October 30, 2000 By: /s/ Mark Wiertzema
-------------------------------
Mark Wiertzema, Director
October 30, 2000 By: /s/ Gordon Novak
--------------------------------
Gordon Novak, Vice President
October 30, 2000 By: /s/ Jan Walsh
-------------------------------------
Jan Walsh, Secretary/Treasurer
