<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM S-8
REGISTRATION STATEMENT UNDER THE
SECURITIES ACT OF 1933
Ohio & Southwestern Energy Company
----------------------------------
(Exact Name of Registrant as Specified in Its Charter)
Colorado 84-1116458
(State or Other Jurisdiction of (IRS Employer
Incorporation or Organization ) Identification No.)
650 W. Georgia Street, Suite 450, Vancouver, B.C., Canada V6B 4N8
(Address of principal executive offices) (Zip Code)
CONSULTANTS AND PROFESSIONALS COMMON STOCK COMPENSATION PLAN
(Full title of the plan)
Bruce F. Fein, esq. 6363 Woodway Drive, Suite 965, Houston, TX 77057
(Name and address of agent for service)
7613-273-6600
(Telephone number, including area code, of agent for service)
<TABLE>
<CAPTION>
---------------------- -------------- ------------------ ------------------ ------------------
Title of Amount Proposed maximum Proposed
Securities to be To be Offering price Maximum aggregate Amount of
Registered Registered Per Share (1) Offering price Registration fee
---------------------- -------------- ------------------ ------------------ ------------------
<S> <C> <C> <C> <C>
Common stock 495,023 $3.52 $1,742,481 $435.62
---------------------- -------------- ------------------ ------------------ ------------------
</TABLE>
(1) Estimated solely for the purpose of calculating the registration fee.
<PAGE>
PART I
INFORMATION REQUIRED IN THE SECTION 10(a) PROSPECTUS
The document or documents containing the information specified in Part
I are not required to be filed with the securities and Exchange Commission (the
"Commission") as part of this Form S-8 Registration Statement.
There are individual letter agreements with the securities attorney,
the media consultant and an e-commerce consultant which provide for the payment
for services rendered in shares of the common stock of the Company in lieu of
cash.
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
ITEM 3. INCORPORATION OF DOCUMENTS BY REFERENCE
(a) The Annual Reports on Form 10K-SB of the Ohio & Southwestern Energy
Company for the fiscal year ended December 31, 1999.
(b) All reports filed by the Company pursuant to Section 13 of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), since December
31, 1999.
None
(c) The description of the common shares issued by the company in a
Registration Statement dated January 4, 1990, and any amendment or report filed
for the purpose of updating such description under Registration Statement
33-28188.
All documents subsequently filed by the Company pursuant to Sections
13(a), 13(c), 14 or 15 of the Exchange Act after the date of filing of this
Registration Statement and prior to such time as the Company files a
post-effective amendment to this Registration Statement which indicates that all
common shares covered by this Registration Statement have been sold or which
deregisters all securities then remaining unsold, shall be deemed to be
incorporated by reference in the registration statement and to be part thereof
from the date of filing of such documents. Copies of these documents are not
required to be filed with the registration statement.
ITEM 4. DESCRIPTION OF SECURITIES
Not applicable.
ITEM 5. INTERESTS OF NAMED EXPERTS AND COUNSEL.
The validity of the securities being registered hereunder will be
passed on for the Company by Bruce F. Fein, securities attorney of Houston,
Texas. He is an independent securities attorney and the owner of 5,023 free
trading shares registered pursuant to this S-8 Registration Statement, plus will
be issued 25,000 common shares upon the completion of an Agreement and Plan of
Reorganization that the Company is conducting with Canarab Technology Limited as
outlined in the Company's 8K filing dated July 31, 2000.
2
<PAGE>
ITEM 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Our Certificate of Incorporation includes a provision that eliminates
the personal liability of our directors to us or our stockholders for monetary
damages for breach of fiduciary duty as a director to the maximum extent
permitted by the Colorado Revised Statutes, Section 7-108-402 ("CRS"). The CRS
does not permit liability to be eliminated (i) for any breach of one of our
director's duty of loyalty to the Company or its stockholders, (ii) for acts or
omissions not in good faith or that involve intentional misconduct or a knowing
violation of law, (iii) for unlawful payments of dividends or unlawful stock
repurchases or redemptions, as provided in the CRS, or (iv) for any transaction
for which one of our directors derived an improper personal benefit. Our
Certificate of Incorporation also provides that Company shall indemnify our
directors and executive officers to the fullest extent permitted by the CRS,
including those circumstances in which indemnification would otherwise be
discretionary, subject to certain exceptions. Our Certificate of Incorporation
also provides that the Company will advance expenses to directors and executive
officers incurred in connection with an action or proceeding as to which they
may be entitled to indemnification, subject to certain exceptions.
The CRS provides that a corporation may indemnify any person who was or
is a party or is threatened to be made a party to any threatened, pending or
completed action or proceeding, whether civil, criminal, administrative or
investigative, by reason of the fact that he is or was a director, officer,
employee or agent of the Company or is or was serving at our request in such
capacity in another corporation or business association, against expenses
(including attorneys' fees), judgments, fines and amounts paid in settlement
actually and reasonably incurred by him in connection with such action, suit or
proceeding if he acted in good faith and in a manner he reasonably believed to
be in or not opposed to the best interests of the Company and, with respect to
any criminal action or proceeding, had no reasonable cause to believe his
conduct was unlawful.
We have entered into indemnification agreements with certain of our
directors and executive officers that provide the maximum indemnity allowed to
directors and executive officers by the CRS and our Certificate of
Incorporation, subject to certain exceptions as well as certain additional
procedural protections. In addition, the indemnification agreements provide
generally that we will advance expenses incurred by directors and executives
officers in any action or proceeding as to which they may be entitled to
indemnification, subject to certain exceptions.
The indemnification provisions in our Certificate of Incorporation and
the indemnity agreements entered into between us and certain of our directors
and executive officers may permit indemnification for liabilities arising under
the Securities Act of 1933. Insofar as indemnification for liabilities arising
under the Securities Act of 1933 may be permitted to directors, officer and
controlling persons of the Company pursuant to the foregoing provisions, or
otherwise, we have been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as expressed
in the Securities Act and is, therefore, unenforceable.
3
<PAGE>
ITEM 7. EXEMPTION FROM REGISTRATION CLAIMED
Not applicable.
ITEM 8. EXHIBITS.
EXHIBIT
NUMBER DESCRIPTION
------ -----------
5.1 Opinion of Bruce F. Fein, PC.
23.1 Consent of Amisano & Hanson, CA.
23.2 Consent of Bruce F. Fein, PC.
(contained in Exhibit 5.1).
24.1 Power of Attorney (included on signature page of this
Registration Statement).
ITEM 9. UNDERTAKINGS.
(a) The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are
being made, a post-effective amendment to this Registration Statement:
(i) To include any prospectus required by Section
10(a)(3) of the Securities Act;
(ii) To reflect in the prospectus any facts or events
arising after the effective date of this Registration Statement (or the most
recent post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth in this
Registration Statement. Notwithstanding the foregoing, any increase or decrease
in volume of securities offered (if the total dollar value of securities offered
would not exceed that which was registered) and any deviation from the high or
low end of the estimated maximum offering range may be reflected in the form of
prospectus filed with the Commission pursuant to Rule 424(b) if, in the
aggregate, the changes in volume and price represent no more than 20 percent
change in the maximum aggregate offering price set forth in the "Calculation of
Registration Fee" table in the effective Registration Statement; and
(iii) include any additional or changed material
information on the plan of distribution not previously disclosed in the
Registration Statement or any material change to such information in the
Registration Statement.
4
<PAGE>
PROVIDED HOWEVER, that paragraphs (a)(1)(i) and (a)(1)(ii) do not apply
if the Registration Statement is on Form S-3, Form S-8 or Form F-3, and the
information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed with or furnished to the
Commission by the Registrant pursuant to Section 13 or Section 15(d) of the
Exchange Act that are incorporated by reference in the Registration Statement.
(2) That, for the purpose of determining any liability under
the Securities Act, each such post-effective amendment shall be deemed to be a
new registration statement relating to the securities offered therein, and the
offering of the securities at that time shall be deemed to be the initial BONA
FIDE offering.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at the
termination of the offering.
(b) The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
Registrant's annual report pursuant to section 13(a) or section 15(d) of the
Securities Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in the
Registration Statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial BONA FIDE offering thereof.
(c) Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the foregoing provisions, or otherwise, the Registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Securities Act
and is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the Registrant of expenses
incurred or paid by a director, officer or controlling person of the Registrant
in the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Securities Act and will be governed by the final
adjudication of such issue.
5
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form S-8 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Jericho, New York, on this 8th day of January, 2001.
OHIO & SOUTHWESTERN ENERGY COMPANY
By: /s/ RALPH SHEARING
----------------------------
Ralph Shearing
Chief Operating Officer
KNOW ALL MEN BY THESE PRESENTS, that each person whose
signature appears below constitutes and appoints Ralph Shearing his true and
lawful attorneys-in-fact and agents, with full power of substitution and
resubstitution, for him and in his name, place and stead, in any and all
capacities, to sign any and all amendments (including post-effective amendments)
to this Registration Statement, and to file the same, with all exhibits thereto
and other documents in connection therewith, with the Securities and Exchange
Commission, granting unto said attorneys-in-fact and agents, full power and
authority to do and perform each and every act and thing requisite or necessary
to be done in and about the premises, as fully to all intents and purposes as he
might or could do in person, hereby ratifying and confirming all that said
attorneys-in-fact and agents or either of them or their or his substitute or
substitutes, may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
SIGNATURE TITLE DATE
--------- ----- ----
/S/ Ralph Shearing President January 8, 2001
/S/ Abbas Salih Director January 8, 2001
6
<PAGE>
THE OHIO & SOUTHWESTERN ENERGY COMPANY
(A Development Stage Company)
REPORT AND FINANCIAL STATEMENTS
December 31, 1999 and 1998
(Stated in US Dollars)
7
<PAGE>
AUDITORS' REPORT
To the Stockholders,
The Ohio & Southwestern Energy Company
We have audited the balance sheet of The Ohio & Southwestern Energy Company (A
Development Stage Company) as at December 31, 1999 and 1998 and the statements
of loss and deficit accumulated during the development stage, stockholders'
equity and cash flows for the years ended December 31, 1999 and 1998. These
financial statements are the responsibility of the company's management. Our
responsibility is to express an opinion on these financial statements based on
our audit.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform an audit to obtain
reasonable assurance 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.
In our opinion, these financial statements present fairly, in all material
respects, the financial position of the company as at December 31, 1999 and
1998, and the results of its operations and its cash flows for the years ended
December 31, 1999 and 1998 in accordance with generally accepted accounting
principles in the United States.
The financial statements as at December 31, 1997 and for the period from
inception, February 28, 1989 to December 31, 1997 were audited by other auditors
who expressed an opinion without reservation on those statements in there report
dated April 16,1998.
Vancouver, Canada
February 16, 2000 Chartered Accountants
Comments by Auditors for U.S. Readers on Canada - U.S. Reporting Conflict
-------------------------------------------------------------------------
In the United States, reporting standards for auditors require the addition of
an explanatory paragraph (following the opinion paragraph) when there is
substantial doubt about a company's ability to continue as a going concern. The
accompanying financial statements have been prepared on the basis of accounting
principles applicable to a going concern which assumes the realization of assets
and discharge of liabilities in the normal course of business. As discussed in
Note 1 to the accompanying financial statements in respect of the company's
working capital deficiency and its substantial losses from operations,
substantial doubt about the company's ability to continue as a going concern
exists. The accompanying financial statements do not include any adjustments
that might result from the outcome of this uncertainty.
Our report to the Stockholders dated February 16, 2000 is expressed in
accordance with Canadian reporting standards, which do not permit a reference to
such uncertainty in the auditors' report when the uncertainty is adequately
disclosed in the financial statements.
Vancouver, Canada
February 16, 2000 Chartered Accountants
8
<PAGE>
<TABLE>
THE OHIO & SOUTHWESTERN ENERGY COMPANY
(A Development Stage Company)
BALANCE SHEETS
December 31, 1999 and 1998
(Stated in US Dollars)
----------------------
<CAPTION>
LIABILITIES
-----------
December 31, December 31,
1999 1998
---- ----
<S> <C> <C>
Current
Accounts payable $ 27,188 $ 21,642
Due to related party - Note 4 58,772 28,323
------------ ------------
85,960 49,965
------------ ------------
STOCKHOLDERS' DEFICIENCY
------------------------
Common stock - Note 3 118,730 118,730
Contributed capital 25,442 25,442
Deficit accumulated during the development stage (230,132) (194,137)
------------ ------------
(85,960) (49,965)
------------ ------------
$ - $ -
============ ============
Nature and Continuance of Operations - Note 1
</TABLE>
ON BEHALF OF THE BOARD:
, Director , Director
----------------------- -----------------------
SEE ACCOMPANYING NOTES
9
<PAGE>
<TABLE>
THE OHIO & SOUTHWESTERN ENERGY COMPANY
(A Development Stage Company)
STATEMENTS OF OPERATIONS AND DEFICIT
for the years ended December 31, 1999 and 1998
and February 28, 1989 (Date of Inception) to December 31, 1999
(Stated in US Dollars)
----------------------
<CAPTION>
Cumulative
from February
28, 1989 (Date
of Inception) to
December 31,
1999 1998 1997 1999
---- ---- ---- ----
<S> <C> <C> <C> <C>
Expenses
Accounting and audit fees $ 4,277 $ 4,500 $ - $ 8,777
Amortization - - - 750
Consulting fees - Note 4 - 6,200 10,000 16,200
Filing fees - 300 - 300
General and administrative expenses -Note 4 5,619 8,542 7,261 71,124
Legal fees - Note 4 10,462 33,090 5,000 48,552
Management fees - Note 4 - 7,000 - 7,000
Rent - Note 4 5,471 2,886 - 8,357
Telephone expense 2,250 2,452 - 4,702
Transfer agent fees 3,058 1,358 - 4,416
Travel and promotion 4,858 1,444 - 6,302
------------- ------------- ------------- -------------
Loss before the following: ( 35,995) ( 67,772) ( 22,261) ( 176,480)
Unauthorized distribution - - - ( 69,116)
Gain on settlement of debt - 15,464 - 15,464
------------- ------------- ------------- -------------
Net loss for the period ( 35,995) ( 52,308) ( 22,261) $( 230,132)
=============
Deficit, beginning of year ( 194,137) ( 141,829) ( 119,568)
------------- ------------- -------------
Deficit, end of year $ ( 230,132) $( 194,137) $( 141,829)
============= ============= =============
Net loss per share $ - $( 0.01) $( 0.01)
============= ============= =============
Weighted average number of common shares
outstanding 9,736,695 7,835,928 1,683,818
============= ============= =============
</TABLE>
SEE ACCOMPANYING NOTES
10
<PAGE>
<TABLE>
THE OHIO & SOUTHWESTERN ENERGY COMPANY
(A Development Stage Company)
STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIT)
for the period from February 28, 1989 (Date of Inception) to December 31, 1999
(Stated in US Dollars)
----------------------
<CAPTION>
Deficit
Accumulated
Common Stock During the
------------------------- Contributed Development
Shares Amount Capital Stage Total
------ ------ ------- ----- -----
<S> <C> <C> <C> <C> <C>
Balance, February 28, 1989 - $ - $ - $ - $ -
Issuance of stock to insiders
on March 7, 1989 - at $0.30
per share 33,347 10,000 - - 10,000
--------------- --------------- --------------- --------------- ---------------
Balance, December 31, 1989 33,347 10,000 - - 10,000
Issuance of stock during
public offering for $3.00 per
share, net of offering costs of
$27,270 33,348 72,730 - - 72,730
Net loss - - - ( 84,159) ( 84,159)
--------------- --------------- --------------- --------------- ---------------
Balance, December 31, 1990 66,695 82,730 - ( 84,159) ( 1,429)
Net loss - - - ( 3,416) ( 3,416)
--------------- --------------- --------------- --------------- ---------------
Balance, December 31, 1991 66,695 82,730 - ( 85,575) ( 4,845)
Net loss - - - ( 2,713) ( 2,713)
--------------- --------------- --------------- --------------- ---------------
Balance, December 31, 1992 66,695 82,730 - ( 90,288) ( 7,558)
Net loss - - - ( 1,614) ( 1,614)
--------------- --------------- --------------- --------------- ---------------
Balance, December 31, 1993 66,695 82,730 - ( 91,902) ( 9,172)
Net loss - - - ( 1,863) ( 1,863)
--------------- --------------- --------------- --------------- ---------------
Balance, December 31, 1994 66,695 82,730 - ( 93,765) ( 11,035)
.../Cont'd.
SEE ACCOMPANYING NOTES
11
<PAGE>
Continued
THE OHIO & SOUTHWESTERN ENERGY COMPANY
(A Development Stage Company)
STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIT)
for the period from February 28, 1989 (Date of Inception) to December 31, 1999
(Stated in US Dollars)
----------------------
Deficit
Accumulated
Common Stock During the
------------------------- Contributed Development
Shares Amount Capital Stage Total
------ ------ ------- ----- -----
Issuances of stock for
services rendered - at $0.03
per share 50,000 1,500 - - 1,500
Contributed capital - - 24,842 - 24,842
Net loss - - - ( 16,735) ( 16,735)
--------------- --------------- --------------- --------------- ---------------
Balance, December 31, 1995 116,695 84,230 24,842 ( 110,500) ( 1,428)
Net loss - - - ( 9,068) ( 9,068)
--------------- --------------- --------------- --------------- ---------------
Balance, December 31, 1996 116,895 84,230 24,842 ( 119,568) ( 10,496)
Issuance of stock for cash
- at $0.011 per share 2,000,000 21,300 - - 21,300
Contributed capital - - 600 - 600
Net loss - - - ( 22,261) ( 22,261)
--------------- --------------- --------------- --------------- ---------------
Balance, December 31, 1997 2,116,695 105,530 25,442 ( 141,829) ( 10,857)
Issuance of stock for
services rendered
- at $0.001 per share 7,000,000 7,000 - - 7,000
- at $0.01 per share 620,000 6,200 - - 6,200
Net loss - - - ( 52,308) ( 52,308)
--------------- --------------- --------------- --------------- ---------------
Balance, December 31, 1998 9,736,695 $ 118,730 $ 25,442 $ ( 194,137) $ ( 49,965)
Net loss - - - ( 35,995) ( 35,995)
--------------- --------------- --------------- --------------- ---------------
Balance, December 31, 1999 9,736,695 $ 118,730 $ 25,442 $ ( 230,132) $ ( 85,960)
=============== =============== =============== =============== ===============
</TABLE>
SEE ACCOMPANYING NOTES
12
<PAGE>
<TABLE>
THE OHIO & SOUTHWESTERN ENERGY COMPANY
(A Development Stage Company)
STATEMENTS OF CASH FLOWS
for years ended December 31, 1999, 1998 and 1997
and February 28, 1989 (Date of Inception) to December 31, 1999
(Stated in US Dollars)
----------------------
<CAPTION>
Cumulative
from February
28, 1989
(Date of Incep-
tion) to
December 31,
1999 1998 1997 1999
---- ---- ---- ----
<S> <C> <C> <C> <C>
Cash flow used in operating activities:
Net loss $ ( 35,995) $ ( 52,308) $ ( 22,261) $ ( 230,132)
Adjustments to reconcile net loss to net cash
used in operations:
Amortization - - - 750
Consulting fees - 6,200 - 6,200
Gain on settlement of debt - ( 15,464) - ( 15,464)
Management fees - 7,000 - 7,000
Changes in non-cash items:
Accounts payable 5,546 26,037 573 44,152
Due to related party 30,449 28,323 - 58,772
------------- ------------- ------------- -------------
Net cash used in operating activities - ( 212) ( 21,688) ( 128,722)
------------- ------------- ------------- -------------
Cash flows used in investing activity
Organization costs - - - ( 750)
------------- ------------- ------------- -------------
Net cash used in investing activity - - - ( 750)
------------- ------------- ------------- -------------
Cash flows from financing activities:
Proceeds from issuance of common stock - - 21,300 131,300
Payment of offering costs - - - ( 27,270)
Contributed capital - - 600 25,442
------------- ------------- ------------- -------------
Net cash provided by financing activities - - 21,900 129,472
------------- ------------- ------------- -------------
Net increase in cash - - 212 -
Cash, beginning of period - 212 - -
------------- ------------- ------------- -------------
Cash, end of period $ - $ - $ 212 $ -
============= ============= ============= =============
Non-Cash Transactions - Note 7
</TABLE>
SEE ACCOMPANYING NOTES
13
<PAGE>
THE OHIO & SOUTHWESTERN ENERGY COMPANY
(A Development Stage Company)
NOTE TO THE FINANCIAL STATEMENTS
December 31, 1999 and 1998
(Stated in US Dollars)
----------------------
Note 1 Nature and Continuance of Operations
------ ------------------------------------
The company is in the development stage and is devoting its
efforts to locating merger candidates.
These financial statements have been prepared on a going concern
basis. The company has working capital deficiency of $85,960 and
has accumulated a deficit of $230,132 since inception. Its ability
to continue as a going concern is dependent upon the ability of
the company to generate profitable operations in the future and/or
to obtain the necessary financing to meet its obligations and
repay its liabilities arising from normal business operations when
they come due.
The company was incorporated in Colorado on February 28, 1989.
Note 2 Summary of Significant Accounting Policies
------ ------------------------------------------
The financial statements of the company have been prepared in
accordance with generally accepted accounting principles in the
United States. Because a precise determination of many assets and
liabilities is dependent upon future events, the preparation of
financial statements for a period necessarily involves the use of
estimates which have been made using careful judgement. Actual
results could differ from those estimates.
The financial statements have, in management's opinion, been
properly prepared within reasonable limits of materiality and
within the framework of the significant accounting policies
summarized below:
Development Stage Company
-------------------------
The company is a development stage company as defined in Statement
of Financial Accounting Standards No. 7. The company is devoting
substantially all of its present efforts to establish a new
business and none of its planned principal operations have
commenced. All losses accumulated since inception have been
considered as part of the company's development stage activities.
Income Taxes
------------
The company uses the liability method of accounting for income
taxes pursuant to Statement of Financial Accounting Standards, No.
109 "Accounting for Income Taxes".
Loss Per Share
--------------
Loss per share figures have been calculated based upon the
weighted average number of shares outstanding during the years.
14
<PAGE>
The Ohio & Southwestern Energy Company
(A Development Stage Company)
Notes to the Financial Statements
December 31, 1999 and 1998 - Page 2
(Stated in US Dollars)
--------------------
Note 2 Summary of Significant Accounting Policies - (cont'd)
------ -----------------------------------------------------
Fair Value of Financial Instruments
-----------------------------------
The carrying value of accounts payable and due to related parties
approximates fair value because of the short maturity of these
instruments.
Note 3 Capital Stock - Note 4
------ ----------------------
i) Preferred Stock
a) Authorized:
100,000,000, $0.01 par value
b) Issued:
None issued
ii) Common stock
a) Authorized:
100,000,000, no par value
b) Issued: # $
----------- ---------
Balance, December 31, 1999 and 1998 9,736,695 118,730
=========== =========
Note 4 Related Party Transactions
------ --------------------------
During the year ended December 31, 1999, a director of the company
charged management fees of $Nil (1998: $7,000 - these 1998 fees
were settled by the issuance of 7,000,000 shares of the company at
$0.001 per share).
The company was charged the following by a company with a common
director or by a shareholder:
<TABLE>
<CAPTION>
1999 1998 1997 Total
---- ---- ---- -----
<S> <C> <C> <C> <C>
Consulting fees $ - $ 6,200 $ 10,000 $ 16,200
General and administration expenses 4,639 2,171 - 6,810
Legal fees - - 5,000 5,000
Management fees - 7,000 - 7,000
Rent 5,471 2,886 - 8,357
-------------- -------------- -------------- --------------
$ 10,110 $ 18,257 $ 15,000 $ 43,367
============== ============== ============== ==============
</TABLE>
15
<PAGE>
The Ohio & Southwestern Energy Company
(A Development Stage Company)
Notes to the Financial Statements
December 31, 1999 and 1998 - Page 3
(Stated in US Dollars)
--------------------
Note 4 Related Party Transactions - (cont'd)
------ -------------------------------------
During the year ended December 31, 1997, the company paid $10,000
to a shareholder for consulting services and $5,000 to a
shareholder for legal fees.
Due to a related party at December 31, 1999 is comprised of
expenses paid by a company with a common director on behalf of the
company for operating costs. This amount is non-interest bearing,
unsecured and is there are no specific terms for repayment.
Note 5 Deferred Tax Assets
------ -------------------
The Financial Accounting Standards Board issued Statement Number
109 in Accounting for Income Taxes ("FAS 109") which is effective
for fiscal years beginning after December 15, 1992. FAS 109
requires the use of the asset and liability method of accounting
of income taxes. Under the assets and liability method of FAS 109,
deferred tax assts and liabilities are recognized for the future
tax consequences attributable to temporary differences between the
financial statements carrying amounts of existing assets and
liabilities and their respective tax bases. 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 following table summarizes the significant components of the
company's deferred tax assets:
Total
-----
Deferred Tax Assets
Non-capital loss carryforwards $ 230,132
===============
Gross deferred tax assets $ 115,066
Valuation allowance for deferred tax asset ( 115,066)
---------------
$ -
===============
The amount taken into income as deferred tax assets must reflect
that portion of the income tax loss carryforwards which is likely
to be realized from future operations. The company has chosen to
provide an allowance of 100% against all available income tax loss
carryforwards, regardless of their time of expiry.
16
<PAGE>
The Ohio & Southwestern Energy Company
(A Development Stage Company)
Notes to the Financial Statements
December 31, 1999 and 1998 - Page 4
(Stated in US Dollars)
--------------------
Note 6 Income Taxes
------ ------------
No provision for income taxes has been provided in these financial
statements due to the net loss. At December 31, 1999, the company
has net operating loss carryforwards which expire commencing in
2005 totalling approximately $230,132, the potential tax benefit
of which has not been recorded in the financial statements.
Note 7 Non-Cash Transactions - Note 4
------ ------------------------------
Operating, investing and financing activities that do not have a
direct impact on cash flows are excluded from the statement of
cash flows. The company issued common shares for services provided
to the company during the following years:
Number of Price
Common Shares Per Share $
------------- --------- -----------
1995 50,000 $0.03 1,500
1998 7,000,000 $0.001 7,000
1998 620,000 $0.01 6,200
---------- ----------
7,670,000 14,700
========== ==========
Note 8 Comparative Figures
------ -------------------
Certain figures of the prior years have been restated to conform
with the presentation used in the current year.
Note 9 New Accounting Standards
------ ------------------------
In December 1997, the Accounting Standard Board Issued statement
3465, "Income Taxes", which establishes standards for the
recognition, measurement, presentation and disclosure of income
and refundable taxes. This statement is effective for fiscal years
beginning on or after January 1, 2000. Adopting this standard will
not have a material impact on the company's financial position,
results of operations or cash flows.
In April 1998, the Accounting Standards Executive committee issued
SOP 98-5, "Reporting on the cost of start-up activities". This
statement is effective for fiscal years beginning after December
15, 1998. Adopting this standard did not have a material impact on
the company's financial position, results of operations or cash
flows.
17
<PAGE>
The Ohio & Southwestern Energy Company
(A Development Stage Company)
Notes to the Financial Statements
December 31, 1999 and 1998 - Page 5
(Stated in US Dollars)
--------------------
Note 9 New Accounting Standards - (cont'd)
------ -----------------------------------
In June 1998, the Financial Accounting Standards board issued SFAS
No. 133, "Accounting for Derivative Instruments and Hedging
Activities," which standardized the accounting for derivative
instruments. SFAS is effective for all fiscal quarters of all
fiscal years beginning after June 15, 1999. Adopting this standard
will not have a significant impact on the company's financial
positions, results of operations or cash flows.
Note 10 Uncertainty Due to the Year 2000 Issue
------- --------------------------------------
The Year 2000 Issue arises because many computerized systems use
two digits rather than four to identify a year. Date-sensitive
systems may recognize the year 2000 as 1900 or some other date,
resulting in errors when information using the year 2000 date is
processed. In addition, similar problems may arise in some systems
which use certain dates in 1999 to represent something other than
a date. Although the change in date has occurred, it is not
possible to conclude that all aspects of the Year 2000 Issue that
may affect the entity, including those related to customers,
suppliers or other third parties, have been fully resolved.
18
