UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
FORM 10-QSB
(x ) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2000
-----------------------
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from________________to
Commission File number 000-27469
RICH EARTH, INC.
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(Exact name of registrant as specified in charter)
Nevada 87-0635536
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
688 West Hasting St, Vancouver BC V6B1P1, Canada
- -------------------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code
(Former name, former address, and former fiscal year, if changed since last
report.)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), Yes [x ] No [ ] and (2) has
been subject to such filing requirements for the past 90 days. Yes [x ] No [
]
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the last practicable date.
Class Outstanding at March 31, 2000
------ ------------------------------
Common Stock, $0.001 9,960,000
INDEX
Page
Number
------
PART I.
ITEM 1. Financial Statements (unaudited) 3
Balance Sheets 4
March 31, 2000 and
December 31, 1998
Statements of Operations
For the three months ended
March 31, 2000 and 1999 5
and the period October 19, 1988
to March 31, 2000
Statements of Cash Flows
For the three months ended
March 31, 2000 and 1999 6
and the period from October 19,
1988 to March 31, 2000
Notes to Financial Statements 7
ITEM 2. Management Discussion and Analysis 12
PART 2
. Signatures 12
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
The accompanying balance sheets of Rich Earth, Inc. (a development stage
company) at March 31, 2000 and December 31 1999, and the statements of
operations for the three months ended March 31, 2000 and 1999 and the period
October 19, 2000 (date of development stage) to March 31, 2000, the cash flows
and the statement of stockholder' equity for the three months ended March 31,
2000 and 1999, and the period from October 19, 1988 to March 31, 2000, have been
prepared by the Company's management and they do not include all information and
notes to the financial statements necessary for a complete presentation of the
financial position, results of operations, and cash flows in conformity with
generally accepted accounting principles. In the opinion of management, all
adjustments considered necessary for a fair presentation of the results of
operations and financial position have been included and all such adjustments
are of a normal recurring nature.
Operating results for the quarter ended March 31, 2000, are not necessarily
indicative of the results that can be expected for the year ending December 31,
2000.
RICH EARTH, INC.
( DEVELOPMENT STAGE COMPANY)
BALANCE SHEETS
MARCH 31, 2000 AND DECEMBER 31, 1999
<TABLE>
<CAPTION>
MAR 31, DEC 31,
2000 1999
------------------------------------
<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash . . . . . . . . . . . . . . . . . . . . . . . . . $ 82,772 $ -
Note receivable - Note 3 . . . . . . . . . . . . . 2,427,198 -
------------------------- ---------
Total Current Assets . . . . . . . . . . . . . . . . $ 2,509,970 $ -
========================= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable . . . . . . . . . . . . . . . . . . . $ - $ -
------------------------- ---------
Total Current Liabilities. . . . . . . . . . . . . . . - -
------------------------- ---------
STOCKHOLDERS' EQUITY
Common stock
100,000,000 shares authorized, at $0.001 par
value; 9,960,000 shares issued and outstanding 9,960 9,960
Capital in excess of par value . . . . . . . . . . . . 24,790 24,790
Stock subscriptions received - Note 4. . . . . . . 2,509,970 -
Deficit accumulated during the development stage . (34,750) (34,750)
------------------------- ---------
Total Stockholders' Equity . . . . . . . . . . . . . . 2,509,970 -
------------------------- ---------
$ 2,509,970 $ -
========================= =========
</TABLE>
The accompanying notes are an integral part of these
financial statements.
RICH EARTH, INC.
( DEVELOPMENT STAGE COMPANY)
STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED MARCH 31, 2000 AND 1999 AND THE
PERIOD OCTOBER 19, 1988 (DATE OF INCEPTION) TO MARCH 31, 2000
<TABLE>
<CAPTION>
MAR 31, MAR 31, OCT 19, 1988 TO
2000 1999 MAR 31, 2000
---------- ---------- -----------------
<S> <C> <C> <C>
REVENUES . . . . . . $ - $ - $ -
EXPENSES . . . . . . - - 34,750
---------- ---------- -----------------
NET LOSS . . . . . . $ - $ - $ (34,750)
========== ========== =================
NET LOSS PER COMMON
SHARE
Basic. . . . . . . . $ - $ -
---------- ----------
AVERAGE OUTSTANDING
SHARES
Basic . . . . . 9,960,000 9,880,000
---------- ----------
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
RICH EARTH, INC.
( DEVELOPMENT STAGE COMPANY)
STATEMENT OF CASH FLOWS
FOR THE THREE MONTHS ENDED MARCH 31, 2000 AND 1999 AND THE
PERIOD OCTOBER 19, 1988 (DATE OF INCEPTION) TO MARCH 31, 2000
<TABLE>
<CAPTION>
MAR 31, MAR 31, OCT 19, 1988 TO
2000 1999 MAR 31, 2000
------------ --------- -----------------
<S> <C> <C> <C>
CASH FLOWS FROM
OPERATING ACTIVITIES
Net loss. . . . . . . . . . . . . . . . . . . . . . . $ - $ - $ (34,750)
Adjustments to reconcile net loss to
net cash provided by operating
activities. . . . . . . . . . . . . . . . . . . . . . - - -
Net Cash Used in Operations . . . . . . . . . . . . . - - (34,750)
------------ --------- -----------------
CASH FLOWS FROM INVESTING
ACTIVITIES
Advances on note receivable . . . . . . . . (2,427,198) - (2,427,198)
------------ --------- -----------------
CASH FLOWS FROM FINANCING
ACTIVITIES
Subscriptions received for purchase of common stock 2,509,970 - 2,509,970
Proceeds from issuance of common capital stock. . . - - 34,750
------------ --------- -----------------
Net Increase (Decrease) in Cash . . . . . . . . . . . 82,772 - 82,772
Cash at Beginning of Period . . . . . . . . . . . . . - - -
------------ --------- -----------------
Cash at End of Period . . . . . . . . . . . . . . . . $ 82,772 $ - $ 82.772
============ ========= =================
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
RICH EARTH, INC.
(DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
1. ORGANIZATION
The Company was incorporated under the laws of the State of Nevada on October
19, 1988 with the name of Charken Contractors Inc. with authorized common stock
of 2,500 shares with no par value. On June 28, 1999 the authorized capital
stock was increased to 100,000,000 shares with a par value of $0.001 in
connection with a name change to Rich Earth, Inc.
On June 28, 1999 the Company completed a forward common stock split of 200
shares for each outstanding share and on March 1, 2000 a forward stock split of
20 common shares for each outstanding share in the form of a 100% stock
dividend. This report has been prepared showing after stock split shares with a
par value of $.001 from inception.
The Company is in the development stage and has been engaged in the activity of
seeking developmental mining properties and became inactive after 1993.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Accounting Methods
- -------------------
THE COMPANY RECOGNIZES INCOME AND EXPENSES BASED ON THE ACCRUAL METHOD OF
ACCOUNTING.
DIVIDEND POLICY
- ----------------
THE COMPANY HAS NOT ADOPTED A POLICY REGARDING PAYMENT OF DIVIDENDS.
INCOME TAXES
- -------------
ON MARCH 31, 2000, THE COMPANY HAD A NET OPERATING LOSS CARRY FORWARD OF
$34,750. THE TAX BENEFIT FROM THE LOSS CARRY FORWARD HAS BEEN FULLY OFFSET BY
A VALUATION RESERVE BECAUSE THE USE OF THE FUTURE TAX BENEFIT IS DOUBTFUL SINCE
THE COMPANY HAS NO OPERATIONS. THE NET OPERATING LOSS WILL EXPIRE IN 2021.
BASIC AND DILUTED NET INCOME (LOSS) PER SHARE
- ----------------------------------------------------
BASIC NET INCOME (LOSS) PER SHARE AMOUNTS ARE COMPUTED BASED ON THE WEIGHTED
AVERAGE NUMBER OF SHARES ACTUALLY OUTSTANDING, AFTER THE STOCK SPLIT. DILUTED
NET INCOME (LOSS) PER SHARE AMOUNTS ARE COMPUTED USING THE WEIGHTED AVERAGE
NUMBER OF COMMON SHARES AND COMMON EQUIVALENT SHARES OUTSTANDING AS IF SHARES
HAD BEEN ISSUED ON THE EXERCISE OF THE PREFERRED SHARE RIGHTS UNLESS THE
EXERCISE BECOMES ANTIDILUTIVE AND THEN ONLY THE BASIC PER SHARE AMOUNTS ARE
SHOWN IN THE REPORT.
FINANCIAL INSTRUMENTS
- ----------------------
THE CARRYING AMOUNTS OF FINANCIAL INSTRUMENTS ARE CONSIDERED BY MANAGEMENT TO
BE THEIR ESTIMATED FAIR VALUES.
<PAGE>
RICH EARTH, INC.
( DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
CONCENTRATION OF CREDIT RISK
- -------------------------------
FINANCIAL INSTRUMENTS THAT POTENTIALLY SUBJECT THE COMPANY TO SIGNIFICANT
CONCENTRATION OF CREDIT RISK CONSISTS PRIMARILY OF CASH AND ACCOUNT
RECEIVABLES. CASH BALANCES ARE MAINTAINED IN ACCOUNTS THAT ARE NOT FEDERALLY
INSURED FOR AMOUNTS OVER $100,000 BUT ARE OTHER WISE IN FINANCIAL INSTITUTIONS
OF HIGH CREDIT QUALITY. ACCOUNTS RECEIVABLE ARE UNSECURED HOWEVER MANAGEMENT
CONSIDERS THE NOTE RECEIVABLE TO BE COLLECTABLE WITHIN THE COMING YEAR.
COMPREHENSIVE INCOME
- ---------------------
THE COMPANY ADOPTED STATEMENT OF FINANCIAL ACCOUNTING STANDARDS NO. 130. THE
ADOPTION OF THIS STANDARD HAD NO IMPACT ON THE TOTAL STOCKHOLDER'S EQUITY ON
DECEMBER 31, 1999.
RECENT ACCOUNTING PRONOUNCEMENTS
- ----------------------------------
THE COMPANY DOES NOT EXPECT THAT THE ADOPTION OF OTHER RECENT ACCOUNTING
PRONOUNCEMENTS WILL
HAVE A MATERIAL IMPACT ON ITS FINANCIAL STATEMENTS.
ESTIMATES AND ASSUMPTIONS
- ---------------------------
MANAGEMENT USES ESTIMATES AND ASSUMPTIONS IN PREPARING FINANCIAL STATEMENTS IN
ACCORDANCE WITH GENERALLY ACCEPTED ACCOUNTING PRINCIPLES. THOSE ESTIMATES AND
ASSUMPTIONS AFFECT THE REPORTED AMOUNTS OF THE ASSETS AND LIABILITIES, THE
DISCLOSURE OF CONTINGENT ASSETS AND LIABILITIES, AND THE REPORTED REVENUES AND
EXPENSES. ACTUAL RESULTS COULD VARY FROM THE ESTIMATES THAT WERE ASSUMED IN
PREPARING THESE FINANCIAL STATEMENTS.
3. NOTE RECEIVABLE
ON MARCH 22, 2000 THE COMPANY ADVANCED $2,427,198 OF THE PROCEEDS RECEIVED FROM
THE STOCK SUBSCRIPTIONS RECEIVED TO DTA COMMUNICATIONS NETWORK, A RELATED
PARTY, ON A NOTE RECEIVABLE. THE NOTE IS DUE MAY 31, 2000 WITHOUT INTEREST,
HOWEVER, IF THE COMPANY IS UNABLE TO COMPLETE THE ACQUISITION OUTLINED IN NOTE
5 THEN THE NOTE SHALL BE EXTENDED FOR SIX MONTHS AND AFTER THE MATURITY DATE THE
NOTE WILL CARRY AN INTEREST RATE OF 8%.
MANAGEMENT CONSIDERS THE NOTE RECEIVABLE TO BE FULLY COLLECTABLE.
4. RELATED PARTY TRANSACTIONS
RELATED PARTIES HAVE ACQUIRED 50% OF THE OUTSTANDING COMMON STOCK OF THE
COMPANY.
<PAGE>
RICH EARTH, INC.
( DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
5. ACQUISITION OF ALL OUTSTANDING STOCK OF GLOBALNET, INC.
ON MARCH 23, 2000 THE COMPANY SIGNED AN AGREEMENT TO ACQUIRE ALL OUTSTANDING
COMMON CAPITAL STOCK OF GLOBALNET, INC. , A PRIVATE DELAWARE CORPORATION,
SUCCESSOR TO DTA COMMUNICATIONS NETWORK LLC, AND PARENT COMPANY OF GLOBALNET
LLC, IN EXCHANGE FOR 20,000,000 AFTER STOCK SPLIT SHARES OF THE COMPANY.
GLOBALNET INC. IS A FACILITIES BASED GLOBAL PROVIDER OF HIGH QUALITY VOICE ,
FAX, AND OTHER VALUE ADDED APPLICATIONS OVER THE INTERNET. THE AGREEMENT IS
SUBJECT TO THE COMPANY RAISING $6,000,000 THROUGH A PRIVATE PLACEMENT OF 600,000
UNITS AT $10.00 PER UNIT WITH EACH UNIT CONSISTING OF ONE SHARE OF COMMON STOCK
OF THE COMPANY AND ONE WARRANT. EACH WARRANT ENTITLES THE HOLDER TO PURCHASE ONE
COMMON SHARE OF THE COMPANY FOR $15.00 AT ANY TIME BEFORE SIX MONTHS FROM THE
DATE OF THE ACQUISITION OF THE UNITS.
ON THE DATE OF THE BALANCE SHEET THE COMPANY HAD COMPLETED THE PLACEMENT OF
250,000 UNITS AT $10.00 AND ON THE DATE OF THIS REPORT THE COMPANY HAD RECEIVED
AN ADDITIONAL $3,406,970 ON THE PURCHASE PRICE OF ADDITIONAL UNITS
INCLUDED IN THE FOLLOWING ARE THE SUMMARIZED, CONSOLIDATED, UNAUDITED PRO-FORMA
FINANCIAL STATEMENTS OF THE COMPANY AND GLOBALNET, INC. AS IF THE ACQUISITION
HAD BEEN COMPLETED ON JANUARY 1, 2000. ALL INTERCOMPANY TRANSACTIONS HAVE BEEN
ELIMINATED.
<PAGE>
RICH EARTH, INC. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
JANUARY 1, 2000
<TABLE>
<CAPTION>
<S> <C>
ASSETS
CURRENT ASSETS
Cash. . . . . . . . . . . . . . . . . . . . $ 717,854
Accounts receivable . . . . . . . . . . 806,489
Prepaid expenses. . . . . . . . . . . . 3,443
------------
Total Current Assets. . . . . . . . . . . 1,527,786
------------
EQUIPMENT - net of accumulated depreciation 4,888,689
------------
$ 6,416,475
============
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable. . . . . . . . . . . . . . $ 2,689,444
------------
Total Current Liabilities . . . . . . . . . 2,689,444
------------
OTHER LIABILITIES . . . . . . . . . . . . . 5,505,158
------------
STOCKHOLDERS' DEFICIENCY . . . . . . . . . (1,778,127)
------------
$ 6,416,475
============
</TABLE>
RICH EARTH, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED DECEMBER 31, 1999, AND 1998
(STATED IN THOUSANDS)
<TABLE>
<CAPTION>
DEC 31, DEC 31,
1999 1998
--------- ---------
<S> <C> <C>
REVENUES $25,971 $4,046
COST OF TELECOMMUNICATIONS 25,084 3,370
--------- ---------
GROSS PROFIT 887 676
EXPENSES 2,618 866
--------- ---------
NET LOSS $(1,731) $(190)
========= =========
</TABLE>
ITEM 2. PLAN OF OPERATIONS
On March 23, 2000 the Company signed an agreement to acquire all outstanding
common capital stock of GlobalNet, Inc. , a private Delaware Corporation,
successor to DTA Communications Network LLC, and parent company of GlobalNet
LLC, in exchange for 20,000,000 after stock split shares of the Company.
GlobalNet Inc. is a facilities based global provider of high quality voice ,
fax, and other value added applications over the Internet. The agreement is
subject to the Company raising $6,000,000 through a private placement of 600,000
units at $10.00 per unit with each unit consisting of one share of common stock
of the Company and one warrant. Each warrant entitles the holder to purchase one
common share of the Company for $15.00 at any time before six months from the
date of the acquisition of the units.
On the date of the balance sheet the Company had completed the placement of
250,000 units at $10.00 and on the date of this report the Company had received
an additional $3,406,970 on the purchase price of additional units
Results of Operations
- -----------------------
The Company has had no operations during this reporting period.
PART 2 - SIGNATURES
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned there unto duly authorized.
RICH EARTH, INC.
[Registrant]
Dated May 12, 2000 By: Xenios Xenopoulos
------------------
Xenios Xenopoulos , President
