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: September 30, 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: 000-28475
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GOLDEN SOIL, INC.
-----------------
(Exact name of registrant as specified in its charter)
Nevada
------
(State or other jurisdiction of incorporation)
87-0635270
----------
(IRS Employer Identification Number)
2 Limassol Ave Street, Aluminum Tower, 5th Flr, Nicosia 2003 Cyprus
-------------------------------------------------------------------
(Address of principal executive offices and zip code)
Registrant's telephone number, including area code: 357-233-6933
372 East 12600 South Draper Utah, 84020
---------------------------------------
(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 as of September 30, 2000
----- ------------------------------------
Common Stock, $0.001 6,750,000
<PAGE>
<TABLE>
<CAPTION>
GOLDEN SOIL, INC.
FORM 10-QSB
September 30, 2000
Table of Contents
Page
<S> <C>
PART I - FINANCIAL INFORMATION.....................................................................................................1
ITEM 1. FINANCIAL STATEMENTS..............................................................................................1
Balance Sheets...................................................................................................2
Statements of Operations.........................................................................................3
Statement of Cash Flows..........................................................................................4
Notes to Financial Statements....................................................................................5
ITEM 2 MANAGEMENT DISCUSSION AND ANALYSIS.................................................................................8
Plan of Operations.............................................................................................8
Liquidity and Capital Resources..................................................................................8
Recent Accounting Pronouncements.................................................................................9
"Safe Harbor" Statement under the Private Securities Litigation Reform Act of 1995...............................9
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK........................................................9
PART II OTHER INFORMATION.........................................................................................................10
ITEM 1 LEGAL PROCEEDINGS.................................................................................................10
ITEM 2 CHANGES IN SECURITIES AND USE OF PROCEEDINGS......................................................................10
Recent Sales of Unregistered Securities.........................................................................10
Use of Proceeds.................................................................................................10
ITEM 3 DEFAULTS UPON SENIOR SECURITIES...................................................................................10
ITEM 4 SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS...............................................................10
ITEM 5 OTHER INFORMATION.................................................................................................10
Agreement and Plan of Reorganization Entered Into with Merilus Technologies, Inc...............................10
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.................................................................................11
Exhibits .......................................................................................................11
Reports on Form 8-K.............................................................................................11
SIGNATURES........................................................................................................................12
</TABLE>
<PAGE>
PART I - FINANCIAL INFORMATION
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ITEM 1. FINANCIAL STATEMENTS
--------------------------------------------------------------------------------
The accompanying balance sheets of Golden Soil ( development stage company) at
September 30, 2000 and December 31 1999, and the related statements of
operations and the statement of cash flows for the nine months ended September
30, 2000 and the period May 7, 1985 (date of inception) to September 30, 2000,
have been prepared by Golden Soil'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, cash flows, and
stockholders' equity 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 September 30, 2000, are not necessarily
indicative of the results that can be expected for the year ending December 31,
2000.
Page 1 of 12
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<TABLE>
<CAPTION>
GOLDEN SOIL, INC.
( Development Stage Company)
BALANCE SHEETS
September 30, 2000, and December 31, 1999
-------------------------------------------------------------------------------------------
Sept 30, Dec 31,
2000 1999
---------- --------
<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash $ -- $ --
--------- ---------
Total Current Assets -- --
--------- ---------
OTHER ASSETS
Note and accrued interest receivable - related party - Note 3 151,085 --
--------- ---------
$ 151,085 $ --
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable $ -- $ 500
--------- ---------
Total Current Liabilities -- 500
--------- ---------
STOCKHOLDERS' EQUITY
Common stock
100,000,000 shares authorized, at $0.001 par value;
6,750,000 shares issued and outstanding on
September 30, 2000; 6,750,000 on December 30, 1999 6,750 6,750
Capital in excess of par value 189,610 38,250
Deficit accumulated during the development stage (45,275) (45,500)
--------- ---------
Total Stockholders' Equity (deficiency) 151,085 (500)
--------- ---------
$ 151,085 $ --
========= =========
</TABLE>
The accompanying notes are an integral part of
these financial statements.
Page 2 of 12
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<TABLE>
<CAPTION>
GOLDEN SOIL, INC.
( Development Stage Company)
STATEMENTS OF OPERATIONS
For the Three and Nine Months Ended September 30, 2000, and 1999
and the Period May 7, 1985 (Date of Inception) to September 30, 2000
-----------------------------------------------------------------------------------------------
Three Months Nine Months
------------ -----------
Sept 30, Sept 30, Sept 30, Sept 30, May 7, 1985 to
2000 1999 2000 1999 Sept 30, 2000
-------- -------- ------- -------- ---------------
<S> <C> <C> <C> <C> <C>
REVENUES $ 1,085 $ -- $ 1,085 $ -- $ 1,085
EXPENSES -- 10,000 860 10,000 46,360
----------- ----------- ----------- ----------- -----------
NET LOSS $ 1,085 $ (10,000) $ 225 $ (10,000) $ (45,275)
=========== =========== =========== =========== ===========
NET LOSS PER COMMON
SHARE
Basic $ -- $ -- $ -- $ --
----------- ----------- ----------- -----------
AVERAGE OUTSTANDING
SHARES
Basic 6,750,000 5,120,000 6,750,000 5,120,000
----------- ----------- ----------- -----------
</TABLE>
The accompanying notes are an integral part of
these financial statements.
Page 3 of 12
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<TABLE>
<CAPTION>
GOLDEN SOIL, INC.
( Development Stage Company)
STATEMENT OF CASH FLOWS
For the Nine Months Ended September 30, 2000, and 1999
and the Period May 7, 1985 (Date of Inception) to September 30, 2000
--------------------------------------------------------------------------------------------------
May 7, 1985
Sept 30, Sept 30, to Sept 30,
2000 1999 2000
------ -------- --------
<S> <C> <C> <C>
CASH FLOWS FROM
OPERATING ACTIVITIES
Net loss $ 225 $ (10,000) $ (45,275)
Adjustments to reconcile net loss to
net cash provided by operating activities
Changes in accrued interest receivable (1,085) -- (1,085)
Contributions to capital - expenses 860 -- 1,360
Net Cash Used in Operations -- (10,000) (45,000)
--------- --------- ---------
CASH FLOWS FROM INVESTING
ACTIVITIES
Investment in note receivable (150,000) -- (150,000)
--------- --------- ---------
CASH FLOWS FROM FINANCING
ACTIVITIES
Proceeds from pending issuance of common stock 150,000 10,000 195,000
--------- --------- ---------
Net Increase (Decrease) in Cash -- -- --
Cash at Beginning of Period -- -- --
--------- --------- ---------
Cash at End of Period $ -- $ -- $ --
========= ========= =========
NON CASH FLOWS FROM OPERATING ACTIVITIES
Contributions to capital - expenses - related party $ 860 $ 1,360
--------- ---------
</TABLE>
The accompanying notes are an integral part of
these financial statements.
Page 4 of 12
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GOLDEN SOIL, INC.
( Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
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1. ORGANIZATION
Golden Soil was incorporated under the laws of the State of Nevada on May 7,
1985 with the name of Architronics 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 Golden Soil Inc.
On June 28, 1999 Golden Soil completed a forward common stock split of 200
shares for each outstanding share and on August 10, 2000 a forward stock split
of 10 shares for each outstanding share. This report has been prepared showing
after stock split shares with a par value of $.001 from inception.
Golden Soil is in the development stage and has been engaged in the activity of
seeking developmental mining properties and became inactive after 1992.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Accounting Methods
------------------
Golden Soil recognizes income and expenses based on the accrual method of
accounting.
Dividend Policy
---------------
Golden Soil has not adopted a policy regarding payment of dividends.
Income Taxes
------------
On September 30, 2000, Golden Soil had a net operating loss carry forward of
$45,275. 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 undeterminable
since Golden Soil has no operations. The net operating loss will expire starting
in 2007 through 2122.
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. 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, including a note receivable, and
accounts payable, are considered by management to be their estimated fair
values.
Concentration of Credit Risk
----------------------------
Financial instruments that potentially subject Golden Soil to significant
concentration of credit risk consists primarily of cash and notes receivable.
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. The notes receivable are unsecured, however, management
considers them to be fully collectable.
Page 5 of 12
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GOLDEN SOIL, INC.
( Development Stage Company)
NOTES TO FINANCIAL STATEMENTS (Continued)
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2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
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.
Comprehensive Income
--------------------
Golden Soil adopted Statement of Financial Accounting Standards No. 130. The
adoption of this standard had no impact on the total stockholder's equity.
Recent Accounting Pronouncements
--------------------------------
Golden Soil does not expect that the adoption of other recent accounting
pronouncements will have a material impact on its financial statements.
3. NOTES RECEIVABLE AND ACCRUED INTEREST RECEIVABLE
At the balance sheet date Golden Soil had made loans to Merilus Technologies
Inc., a related party, amounting to $150,000 at 8% interest with a due date of
November 30, 2000. Interest income has been accrued through September 30, 2000.
Additional loans were made after September 30, 2000 amounting to $1,850,000. The
funds used for these loans were provided by the sale of warrants outlined in
Note 5.
4. RELATED PARTY TRANSACTIONS
The outstanding common stock of Golden Soil is 6,750,000 of which 196,750 shares
are held by related parties.
See Note 3 for loans to related party.
5. COMMON CAPITAL STOCK
Golden Soil issued 2,000,000 warrants to Imperium Capital, Inc. at a nominal
value on August 31, 2000. Each warrant is exercisable for one share of common
stock in Golden Soil at an exercise price of $1.00 per share at any time on or
before August 30, 2001. As of November 17, 2000, all 2,000,000 warrants were
exercised. To date no shares have been issued to the warrant holder on exercise.
Golden Soil is in the process of issuing the underlying shares as directed by
the warrant holder.
Page 6 of 12
<PAGE>
GOLDEN SOIL, INC.
( Development Stage Company)
NOTES TO FINANCIAL STATEMENTS (Continued)
--------------------------------------------------------------------------------
5. SUBSEQUENT EVENTS
On October 19, 2000 Golden Soil signed an agreement to purchase all of the
outstanding common capital stock of Merilus Technologies Inc.(Note 3), a British
Columbia Corporation, in exchange for exchangeable shares which may be converted
at any time for 3,787,500 newly issued shares of Golden Soil. The transaction is
subject to approval of the stockholders of both companies, as well as other
closing conditions. Merilus Technologies Inc. is a solutions provider of
hardened firewalls, virtual private networking, e-commerce solutions, high-speed
bandwidth allocation and shaping, and custom Linux solutions.
On completion of the acquisition, Golden Soil will change its name to Merilus
Inc. and Merlius Technologies, Inc. will be an indirect wholly owned subsidiary
of Golden Soil. This transaction is expected to close in early December, 2000.
Included in the following are the summarized, combined, unaudited pro-forma
financial statements of Golden Soil and Merilus Technologies, Inc. The fiscal
year of Golden Soil is December 31 and Merilus Technologies Inc. is September
30. For this report the fiscal year of Golden Soil has been restated to
September 30. All intercompany transactions have been eliminated.
<TABLE>
<CAPTION>
GOLDEN SOIL, INC. AND SUBSIDIARY
PROFORMA COMBINED BALANCE SHEETS
September 30, 2000
-------------------------------------------------------------------------------------------------------------------
Golden Soil Merilus Elimination Total
----------- ------- ----------- -----
<S> <C> <C> <C> <C>
ASSETS
CURRENT ASSETS
Cash $ -- $ 4,522 $ -- $ 4,522
Accounts receivable - related parties -- 15,257 -- 15,257
Accounts receivable - trade -- 119,864 -- 119,864
--------- --------- --------- ---------
Total Current Assets -- 139,643 -- 139,643
--------- --------- --------- ---------
EQUIPMENT - net of accumulated depreciation -- 44,770 -- 44,770
--------- --------- --------- ---------
OTHER ASSETS
Note receivable - related party 151,085 -- (151,085) --
--------- --------- --------- ---------
$ 151,085 $ 184,413 -- $ 184,413
========= ========= ========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable $ -- $ 764,776 $(151,085) $ 613,691
--------- --------- --------- ---------
Total Current Liabilities -- 764,776 -- 613,691
--------- --------- --------- ---------
STOCKHOLDERS' EQUITY (DEFICIENCY) 151,085 (580,363) -- (429,278)
--------- --------- --------- ---------
$ 151,085 $ 184,413 -- $ 184,413
========= ========= ========= =========
</TABLE>
Page 7 of 12
<PAGE>
GOLDEN SOIL, INC. AND SUBSIDIARY
PROFORMA COMBINED STATEMENTS OF OPERATIONS
For the Year Ended September 30, 2000
--------------------------------------------------------------------------------
Golden Soil Merilus Elimination Total
----------- ------- ----------- -----
REVENUES $ 1,085 $ 276,906 -- $ 277,991
COST OF SALES -- 68,464 -- 68,464
--------- --------- --------- ---------
GROSS PROFIT 1,085 208,442 209,527
EXPENSES 10,860 723,365 734,225
--------- --------- --------- ---------
NET PROFIT (LOSS) $ (9,775) $(514,923) $(524,698)
========= ========= ========= =========
--------------------------------------------------------------------------------
ITEM 2 MANAGEMENT DISCUSSION AND ANALYSIS
--------------------------------------------------------------------------------
Plan of Operations.
--------------------
Golden Soil has not engaged in any material operations or had any revenues from
operations since inception. During this quarter, Golden Soil has been actively
pursuing and has secured an agreement to acquire all the outstanding share
capital of Merilus Technologies Inc., a private British Columbia corporation in
return for exchangeable shares which may be converted at any time for 3,787,500
shares of common stock of Golden Soil. The transaction is subject to approval of
the stockholders of both companies, as well as other closing conditions. Merilus
Technologies Inc. was founded in 1996 and incorporated in 1997. Merilus
Technologies Inc. is a total solution provider focused on solutions for securely
connecting corporate computer networks to the Internet. Merilus Technologies
Inc.'s solutions include hardened firewalls, virtual private networking, e-
commerce solutions, high-speed bandwidth allocation and shaping, and custom
Linux solutions.
Messrs. John Paul DeJoria, Gerald C. Allen, Gene Hoffman, Jr., Aaron Fleck,
Myron Gushlak, Dana Epp, Kevin Terass, Ross Merazik and Steve Hemingway have all
agreed to join the Board of Directors of Golden Soil Inc. on close of the
acquisition of Merilus Technologies Inc. and Golden Soil having obtained
adequate directors and officers insurance,
On completion of the acquisition, Golden Soil will change its name to Merilus
Inc. and Merlius Technologies, Inc. will be a wholly owned subsidiary of Golden
Soil. Golden Soil is in the process of preparing a detailed information
statement to send out to all of its stockholders concerning this proposed
acquisition and expects to close this acquisition sometime in early December.
As at September 30, 2000, the Company's had total assets of $0 other than a
promissory note evidencing a loan made by Golden Soil to Merilus Technologies
Inc. on September 6, 2000 for $150,000. The promissory note bears 8% interest
and is due November 30, 2000. Since September 30, 2000, Golden Soil has made
additional loans to Merilus Technologies Inc. amounting to $1,850,000.
Promissory notes have been received from Merilus Technologies Inc. for each
loan. Each promissory note bears 8% interest and is due November 30, 2000. These
funds were provided by the exercise of warrants issued in a private placement by
Golden Soil.
Page 8 of 12
<PAGE>
Liquidity and Capital Resources
-------------------------------
During the quarter ended September 30, 2000, Golden Soil received $150,000
through the exercise of 150,000 private placement warrants. Golden Soil
immediately loaned these funds to Merilus Technologies Inc. which Golden Soil is
in the process of acquiring. Golden Soil has been able to pay its expenses and
costs through the private sale of its stock. As of September 30, 2000 Golden
Soil had $0 in cash or cash equivalents on hand. Golden Soil anticipates that it
will need to raise additional funds through the sale of stock or borrowing just
to maintain the corporate existence of Golden Soil and to maintain Golden Soil
on the OTC Bulletin Board. No assurance can be given that Golden Soil will be
able to raise these funds.
Recent Accounting Pronouncements
--------------------------------
In June 1998, the FASB issued SFAS 133, "Accounting for Derivative Instruments
and Hedging Activity," which was subsequently amended by SFAS 137, "Accounting
for Derivative Instruments and Hedging Activities: Deferral of Effective Date of
FASB 133" and Statement No.138, "Accounting for Certain Derivative Instruments
and Certain Hedging Activities: an amendment of FASB Statement No. 133." SFAS
137 requires adoption of SFAS 133 in years beginning after June 15, 2000. SFAS
138 establishes accounting and reporting standards for derivative instruments
and addresses a limited number of issues causing implementation difficulties for
numerous entities. The Statement requires us to recognize all derivatives on the
balance sheet at fair value. Derivatives that are not hedges must be recorded at
fair value through earnings. If the derivative qualifies as a hedge, depending
on the nature of the exposure being hedged, changes in the fair value of
derivatives are either offset against the change in fair value of hedged assets,
liabilities, or firm commitments through earnings or are recognized in other
comprehensive income until the hedged cash flow is recognized in earnings. The
ineffective portion of a derivative's change in fair value is recognized in
earnings. The Statement permits early adoption as of the beginning of any fiscal
quarter. SFAS 133 will become effective for our first fiscal quarter of fiscal
year 2002 and we do not expect adoption to have a material effect on our
financial statements.
In December 1999, the SEC issued SAB 101, "Revenue Recognition in Financial
Statements." SAB 101 summarizes certain aspects of the staff's views in applying
generally accepted accounting principles to revenue recognition in financial
statements. On March 24, 2000 and June 26, 2000, the SEC issued Staff Accounting
Bulletin No. 101A and No. 101B, respectively, which extend the transition
provisions of SAB 101 until no later than the fourth quarter of fiscal years
beginning after December 15, 1999, which would be December 31, 2000 for us. We
chose to adopt the provisions of SAB 101 early beginning with the fiscal year
ended December 31, 1999.
In March 2000, the FASB issued FIN 44, "Accounting for Certain Transactions
Involving Stock Compensation - an Interpretation of APB No. 25, Accounting for
Stock Issued to Employees". This Interpretation clarifies (a) the definition of
employee for purposes of applying Opinion 25, (b) the criteria for determining
whether a plan qualifies as a non- compensatory plan, (c) the accounting
consequences of various modifications to the terms of a previously fixed stock
option or award, and (d) the accounting for an exchange of stock compensation
awards in a business combination. This Interpretation is effective July 1, 2000,
but certain conclusions in this Interpretation cover specific events that occur
after either December 15, 1998, or January 12, 2000. To the extent that this
Interpretation covers events occurring during the period after December 15,
1998, or January 12, 2000, but before the effective date of July 1, 2000, the
effects of applying this Interpretation are recognized on a prospective basis
from July 1, 2000.
"Safe Harbor" Statement under the Private Securities Litigation Reform Act of
--------------------------------------------------------------------------------
1995
----
The statements contained in this document and other statements which are not
historical facts are forward looking statements that involve risks and
uncertainties, including, the success of newly implemented sales strategies; the
continued existence of agreements with product providers; market acceptance of
Golden Soil's products and services; the ability to obtain a larger number and
size of contracts; the timing of contract awards; work performance and customer
response; the impact of competitive products and pricing; technological
developments by Golden Soil's competitors or difficulties in Golden Soil's
research and development efforts; and other risks as detailed in Golden Soil's
Securities and Exchange Commission filings.
Page 9 of 12
<PAGE>
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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
--------------------------------------------------------------------------------
Not applicable at this time.
PART II OTHER INFORMATION
--------------------------------------------------------------------------------
ITEM 1 LEGAL PROCEEDINGS
--------------------------------------------------------------------------------
To Golden Soil's knowledge, there are no lawsuits nor were any lawsuits
commenced against Golden Soil during the quarter ended September 30, 2000, nor
did Golden Soil commence any lawsuits during the same period.
--------------------------------------------------------------------------------
ITEM 2 CHANGES IN SECURITIES AND USE OF PROCEEDINGS
--------------------------------------------------------------------------------
Recent Sales of Unregistered Securities
---------------------------------------
During the quarter ended September 30, 2000, Golden Soil has issued the
following securities, none of which will be registered under the Securities Act
of 1933 (the "1933 Act"):
Private Placement. Golden Soil has completed a private placement warrant
offering of 2,000,000 warrants which were issued at no cost to one private
placee on August 31, 2000. Each warrant was exercisable for one share of
common stock of Golden Soil for $1.00 per share any time on or before August
31, 2001. As of November 17, 2000, all of these warrants were exercised.
Golden Soil intends to issue the underlying shares as directed by the warrant
holder within the next five days.
Use of Proceeds
---------------
Golden Soil has used all private placement funds received by through the warrant
offering to provide Merilus Technologies, Inc. with the following bridge loans:
1. a loan of $ 150,000 on September 6, 2000;
2. a loan of $ 150,000 on October 5, 2000;
3. a loan of $ 150,000 on October 20, 2000;
4. a loan of $ 200,000 on November 1, 2000; and
5. a loan of $ 1,350,000 on November 17, 2000.
--------------------------------------------------------------------------------
ITEM 3 DEFAULTS UPON SENIOR SECURITIES
--------------------------------------------------------------------------------
Not applicable.
--------------------------------------------------------------------------------
ITEM 4 SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
--------------------------------------------------------------------------------
No matters were put forward to a vote of the security holders of the Golden Soil
this quarter.
--------------------------------------------------------------------------------
ITEM 5 OTHER INFORMATION
--------------------------------------------------------------------------------
Agreement and Plan of Reorganization Entered Into with Merilus Technologies,
--------------------------------------------------------------------------------
Inc.
----
On October 19, 2000, Golden Soil entered into an agreement and plan of
reorganization with Merilus Technologies Inc., a private British Columbia
Corporation and 613636 British Columbia, Inc., a wholly owned subsidiary of
Golden Soil formed
Page 10 of 12
<PAGE>
for the purpose of the proposed transaction, (the "Reorganization Agreement").
Under the terms of the Reorganization Agreement the stockholders of Merilus
Technologies Inc. will receive exchangeable shares which may be exchanged into
3,787,500 shares of common stock of Golden Soil at anytime. The stockholders of
Merilus Technologies Inc. as a result of the Reorganization Agreement will hold
approximately 35.94 % of Golden Soil's total issued and outstanding share
capital as of September 30, 2000 and 30.21% after issuing the shares of common
stock on exercise of the warrant offering discussed in Item 2. This agreement
replaced a letter of intent between the parties dated August 24, 2000.
In connection with the Reorganization Agreement, Golden Soil has agreed to:
1. Carry out a private placement warrant offering of 2,000,000 warrants,
each warrant exercisable for one share of common stock of Golden Soil
at $1.00 per share and a private placement offering of a minimum of
1,000,000 to a maximum of 2,000,000 shares at a purchase price of not
less than $5.00 per share to be completed within 60 days from closing
the Reorganization Agreement.
2. Provide Merilus Technologies Inc. with a serious of bridge loans
totaling not less than $2,000,000 from all private placement funds
received by Golden Soil immediately on receipt of such funds.
3. Cause Merilus Technologies Inc. to enter into employment agreements
with Messrs. Dana Epp, Chad Northcott, Kevin Trass, Steven Hemenway
and Ross Mrazek immediately after closing the Reorganization
Agreement.
4. Adopt a stock option plan to issue up to 1,400,000 shares of common
stock of Golden Soil.
5. Amend the articles of incorporation to change the name of Golden Soil
to "Merilus, Inc." and to create a special preferred class of shares
immediately on closing the Reorganization Agreement.
6. Enter into a support agreement, voting and exchange trust agreement,
registration rights agreement and an escrow agreement.
Golden Soil is in the process of preparing and filing an information statement
with the Securities and Exchange Commission which will contain a copy of the
Reorganization Agreement and details about the transaction and the business of
Merilus Technologies Inc.
--------------------------------------------------------------------------------
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
--------------------------------------------------------------------------------
Exhibits
1. EXHIBIT # 27 Financial Data Schedule for the period ended September 30, 2000.
Reports on Form 8-K
On September 6, 2000, we filed a current report on Form 8-K to announce a change
in the board of directors of Golden Soil.
On September 29, 2000, we filed an amended current report of Form 8-K to amend
the report filed on September 6, 2000.
Page 11 of 12
<PAGE>
--------------------------------------------------------------------------------
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.
GOLDEN SOIL INC.
/s/ Xenios Xenopoulos /s/
Per:
Xenios Xenopoulos
President
Date: November 20, 2000.
Page 12 of 12
