UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-SB12G/A#2
Amendment No. 2
GENERAL FORM FOR REGISTRATION OF SECURITIES
SMALL BUSINESS ISSUERS
UNDER SECTION 12 (b) OR (g) OF THE SECURITIES EXCHANGE ACT OF
1934
ARBOR, INC.
(Name of Small Business Issuer in its charter)
Nevada Applied For
(State or other jurisdiction (IRS Employer Identification
of incorporation organization) Number)
28 Lavalencia Garden, N.E., (780) 452-2587
Calgary, AB T1Y 6P4 (Issuers Telephone Number)
(Address of principal
executive offices)
Securities to be registered pursuant to section 12 (b) of the
Act:
Title of each class to be registered: NONE
Name of each exchange on which each class is to be registered:
NONE
Securities to be registered pursuant to section 12 (g) of the
Act:
Title of each class to be registered:
Name of each exchange on which each class is to be registered:
Common stock, $0.001 par value
Arbor, Inc.
Form 10-SB
Table of Contents
ALTERNATIVE 3
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Item SUB-ITEM DESCRIPTION PAGE
PART 1.
ITEM 1. DESCRIPTION OF BUSINESS 4
1:1 Forward-Looking Statements 4
1:2 Business Development 5
1:3 Business of Issuer 7
1:4 Reports To Security Holders 17
ITEM 2. MANAGEMENT'S DISCUSSION AND 17
ANALYSIS OR PLAN OF OPERATION
2:1 Plan of Operation 17
2:2 Management's Discussion and 24
Analysis of Financial Condition
and Results of Operations
ITEM 3. DESCRIPTION OF PROPERTY 28
3:1 Location and Condition of 28
Property
3:2 Investment Policies 29
3:3 Description of Real Estate and 29
Operating Data
ITEM 4. SECURITY OWNERSHIP OF MANAGEMENT 29
AND CERTAIN SECURITY HOLDERS
4:1 Security Ownership of Certain 29
Beneficial Owners
4:2 Security Ownership of Management 30
4:3 Changes in Control 32
ITEM 5. DIRECTORS, EXECUTIVE OFFICERS, 32
PROMOTERS AND CONTROL PERSONS
5:1 Directors and Officers 32
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5:2 Significant Employees 33
5:3 Family Relationships 34
5:4 Involvement in Legal Proceedings 34
ITEM 6. EXECUTIVE COMPENSATION 34
6:1 General 34
6:2 Summary Compensation Table 34
ITEM 7. CERTAIN RELATIONSHIPS AND 35
RELATED TRANSACTIONS
7:1 Previous Two Years 35
7:2 Exempt 35
7:3 Parent Company 35
7:4 Transactions with Promoters 35
ITEM 8. DESCRIPTION OF SECURITIES 35
8:1 Common or Preferred Stock 35
8:2 Debt Securities 38
8:3 Other Securities 38
PART 11. 38
ITEM 1. MARKET PRICE OF AND DIVIDENDS ON 38
THE REGISTRANTS COMMON EQUITY
AND OTHER SHAREHOLDER MATTERS
1:1 Market Information 38
1:2 Holders 38
1:3 Dividends 38
ITEM 2. LEGAL PROCEEDINGS 39
2:1 Pending Legal Proceeding 39
2:2 Government Authority 39
Contemplating
ITEM 3. CHANGES IN AND DISAGREEMENTS 39
WITH ACCOUNTANTS
3:1 Accountant Dismissed 39
3:2 Accountant Disclosures 39
3:3 Detail of Subject Matter 39
3:4 Discussions with Board of 39
Directors
3:5 Accountant Authorized to Issue 39
Subsequent Report
ITEM 4. RECENT SALES OF UNREGISTERED 39
SECURITIES
4:1 Date, Title and Amount Sold 39
4:2 Underwriters 41
4:3 Offering Price 41
4:4 Exemption Applied 41
4:5 Conversion Terms 42
4:6 Report Items 42
ITEM 5. INDEMNIFICATION OF DIRECTORS AND 42
OFFICERS
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PART F/S 43
ITEM 1. FINANCIAL STATEMENTS 43
PART 111. 54
ITEM 1. INDEX TO EXHIBITS 54
ITEM 2. DESCRIPTION OF EXHIBITS 54
SIGNATURES 54
ITEM 1. DESCRIPTION OF BUSINESS
1:1 Forward-looking Statements
Certain statements made in this Registration Statement are "forward-looking
statements" (within the meaning of the Private Securities Litigation Reform Act
of 1995) regarding the plans and objectives of management for future operations.
Such statements involve known and unknown risks, uncertainties and other factors
that may cause actual results, performance or achievements of Arbor, Inc., a
Nevada corporation (the "Company") to be materially different from any future
results, performance or achievements expressed or implied by such
forward-looking statements the forward-looking statements made in this Report
are based on current expectations that involve numerous risks and uncertainties.
The Company's plans and objectives are based, in part, on assumptions involving
the growth and expansion of business. Assumptions relating to the foregoing
involve judgments with respect to, among other things, future economic,
competitive and market conditions and future business decisions, all of which
are difficult or impossible to predict accurately and many of which are beyond
the control of the Company. Although the Company believes that its assumptions
underlying the forward-looking statements are reasonable, and of the assumptions
could prove inaccurate and, therefore, there can be no assurance that the
forward-looking statements made in this Report will prove to be accurate. In
light of the significant uncertainties inherent in the forward-looking
statements made in this Report, inclusion of such information should not be
regarded as a representation by the Company or any other person that the
objectives and plans of the Company will be achieved.
In addition, this Registration Statement includes forward-looking
statements within the meaning of Section 21E of the Securities Exchange Act of
1934 (the "Exchange Act"). These statements are based on management's beliefs
and assumptions, and on information currently available to management.
Forward-looking statements include statements in which words such as "expect,"
"anticipate," "intend," "plan," "believe," "estimate," "consider," or similar
expressions are used.
In summary, forward-looking statements are not guarantees of future
performance. They involve risks, uncertainties and assumptions. The Company's
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future results and stockholder values may differ materially from those expressed
in these forward-looking statements. Many of the factors that will determine
these results and values are beyond the Company's ability to control or predict.
In addition, the Company does not have any intention or obligation to update
forward-looking statements after the effectiveness of this Registration
Statement, even if new information, future events or other circumstances have
made them incorrect or misleading. For these statements, the Company claims the
protection of the safe harbor for forward- looking statements contained in
Section 21E of the Exchange Act. The Securities and Exchange Commission has not
and will not be making any determination as to whether the disclosures
(including, e.g., cautionary language or the placement of disclosures) satisfy
the requirements of Section 21E of the Exchange Act.
1:2 Business Development
Arbor, Inc. (the "Company") was incorporated in the State of Nevada as E
Investments, Inc., on February 25, 1999, and will be engaged in the business of
manufacturing, selling and distributing fence posts to be used by government
parks, highway departments, ranchers and farmers throughout North America. We
currently have no operations as the production process will begin approximately
two months following our successful listing as a public company on an exchange.
The Company's initial purpose for incorporation was to formally structure a
company that would eventually be transferred to its current management. The
company was formed by an entity that specializes in organizing new corporations
in the state of Nevada. The initial authorized common stock of the Company was
25,000,000 shares.
The Company's first Director and Incorporator, Thomas C. Rowley, resigned
on March 1, 1999, following the appointment of Yarek Bartosz as Director and
President. Bartosz subsequently resigned on March 10, 1999, following the
appointment of Joginder Brar ("Brar"), Jarek Zubik ("Zubik") and Harjit Mand
("Mand") as directors. Brar and Zubik had purchased the company from Bartosz and
Rowley for $1,500.
With the new Board of Directors in place, our purpose for incorporation
became the manufacturing of fence posts to be used by government parks, highway
departments, ranchers and farmers.
On March 10, 1999, we initially agreed to issue Brar and Zubic 1,500,000
shares each of our $0.001 par value common stock for services rendered to us
during our formation and initial organization. The amount of shares to be issued
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to Brar and Zubic were subsequently reduced to 600,000 shares each in order to
satisfy the requirements of individual investors contemplating an investment in
our company. On March 10, 1999, we issued a Private Placement Memorandum,
promulgated under Rule 504 of Regulation D ("504"), in order to raise an initial
$100,000 by offering 2,000,000 shares at $.05 each. In addition, the board
elected to issue a $.10 warrant to be attached to each share convertible to
shares of the Company's common stock.
The Board of Directors called a special meeting on March 18, 1999, during
which they accepted the first $19,000 of the 504 proceeds and authorized the
subsequent issuance of 380,000 shares in consideration thereof.
On April 5, 1999, the Board of Directors called a second special meeting.
The board acknowledged the receipt of $70,800 in total proceeds to date from the
504, and authorized the subsequent total issue (including the original
authorized issuance of 380,000 shares on March 18, 1999) of 1,416,000 shares in
consideration thereof.
In summary, we sold 1,416,000 shares under the Private Placement Memorandum
for which we received total proceeds of $70,800. In addition, Brar and Zubik
were issued 1,200,000 restricted shares for services rendered. This brought our
total issued and outstanding shares to 2,616,000.
Further, we submitted our initial Form D to the Securities and Exchange
Commission ("SEC") on April 5, 1999, reflecting total sales of $25,000 at the
time the initial filing was prepared. Subsequent to the initial filing, we
received the balance of $45,800, bringing our total raised to $70,800. We are
currently in the process of filing our amended Form D to reflect the total sales
of $70,800.
The Board of Directors held its first regular board meeting on April 11,
1999.
Subsequent to that meeting, the Board of Directors held three additional
special meetings on May 28, 1999, July 9, 1999 and September 6, 1999, during
which business and financial consultants were retained by the Company, resulting
in rapid development of the Company's business plan and initiation of several
required government filings, including this 10SB12G. In early December, Leo
Moisio, an expert in the wood industry joined the Company as Vice-President in
charge of Production.
On December 16, 1999, we changed our name to Arbor, Inc.
We are scheduled to begin field operations approximately two months
following our successful listing as a public company on an exchange.
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1:3 Business of Issuer
We will be in the business of manufacturing, selling and distributing fence
posts throughout North America. Our principal product will be the wooden fence
post, used primarily by government parks, highway departments, ranchers and
farmers. After contacting many fence post distributors, farmers and ranchers,
and then tabulating that data, we have concluded that there is a solid demand
for wooden fence posts, especially for the purpose of confining and restricting
the movement of both domestic and wild animals. According to international wood
fencing distributors in the Alberta and Saskatchewan provinces, a demand is
being created for fencing to separate the farming from the ranching operations,
due in part to the current trend of farmers branching out into livestock
management in the local Alberta region.
Large sawmills can provide timber at greatly reduced rates by providing
what they consider "waste material" that is quite often discarded by burning or
burying. The timber they destroy, which is comprised of the top 20 to 30 feet of
a tree, are perfect for the production of 3" to 4" posts. The Company will set
up field operations directly in the forest where the sawmills are located,
thereby reducing transportation costs by processing directly on site. Finished
products will then be shipped directly to buyers.
In addition, forests which primarily contain raw material timber for the
small posts are the most plentiful types. Our operation requires small diameter
timber, while the sawmill is looking to purchase large diameter timber and is
not interested in forests with small diameter timber.
We have contacted several real estate agencies and have located several
forest properties for sale at prices ranging from $250 to $350 per acre for
approximately 1500 acres. One acre will produce 60 to 90 cubic meters of timber
out of which 30% will be large diameter timber sawmill grade and 70% will be
suitable material for our operations. We have also contacted the government and
there are several properties available for timber harvest from the government
owned land on a lease basis. This exercise was done to evaluate the most
economical method for production available utilizing the different sources of
raw material timber supply.
Our Board of Directors have decided that for the first 12-24 months, the
most suitable operation for the company will be to purchase the treetops from
sawmills as this type of operation is the most economical and also the most
simple operation for a company like ours that is just beginning its field
operations.
When the company gains experience and develops a strong fiscal foundation,
then we will be extending our operations to harvesting the forests, either from
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private forests which we will be purchasing or from leased government forests.
While the ultimate production costs are about the same on private land as
utilizing leased government land, the administrative process is far less
cumbersome on private land. Furthermore, on government land we will have to pay
for reforestation and timber dues as compared to private land where we will have
the one time expense of the purchase price. After we have completed harvesting
on private land we can reforest the land and keep it in our inventory as an
asset with future forest to be harvested or sold as grazing land to a rancher
for approximately 50% of the original cost.
Initially we will rely solely on large sawmills, including Vanderwell
Sawmill in Slave Lake, Alberta to provide the raw material timber for our
manufacturing operation during the first 3 stages of our operations. In
addition, other sawmills in Alberta, including MillWestern in Atabaska and
Bluerich Lumber have expressed interest to sell us their treetops, and we will
be using them for our stage 4 and 5 operations.
In the event the sawmills cannot supply the necessary raw material treetops
in the future, we will set up operating facilities on leased government land to
manufacture and finish our product line. We will obtain all the necessary
permits and other permission from the government in order to be able to harvest
on government owned land.
Logging operations are normally conducted by the logging company hired to
do actual cutting, which is priced out at $11 per cubic meter of material
removed from the property. We will need to obtain a commercial timber permit to
work on government owned land. All of the permits are governed by the Canadian
Forest Act, Operating Ground Rules, Timber Harvest Planning and the Commercial
Timber Permit Section 22 of the Forest Act and Section 37-41 of those
regulations authorizing a person to cut down timber. The cost of complying with
government regulations are primarily reforestation costs of $8.62 per cubic
meter and timber dues at $0.18 to $0.98 per cubic meter paid directly to the
government for each cubic meter removed from the land. The permitting process
will take approximately 30 days.
Nonetheless, we will continue to purchase our own material treetops
directly from the large sawmills until it becomes economically feasible for us
to begin our own logging operations.
The Production Process
The production process will begin approximately two months following our
successful listing as a public company on an exchange and is made up of six
distinctive parts, beginning with Pre-Production and continuing through five
stages that encompass a period of two years. During the initial two years of
operations, we will purchase raw materials directly from the large saw mills in
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the Slave Lake region. We will obtain all the necessary permits to be able to
harvest in the event for any reason we would be unable to purchase our raw
materials from the saw mills. Because we will not initially be harvesting
timber, the permit process will be minimal and will be in place prior to our
beginning field operations. Once we are ready to begin harvesting, any
additional permitting processes will take approximately 30 days.
At this time we do not have any written agreements with area sawmills.
However, we do have verbal understandings with several sawmills and distributors
for supplying us with raw materials and purchasing our finished product.
Specifically, we have an understanding with Greentree Fencing Supplies and
Sunpine Forest Products. We have chosen not to enter into any written agreements
at this time because of the inherit obligations that would exist until such time
as we have secured the necessary financing to fulfill those obligations. While
the availability of raw material and the subsequent purchase of the finished
product cannot be guaranteed until we enter into the aforementioned written
agreements, there is no indication that we can determine which would prohibit us
from entering into favorable written agreements once our financing is secured.
In the event that the sawmills would cease operation and therefore not be in a
position to supply us with the necessary raw materials, we would then utilize
other methods for acquiring raw materials, including obtaining raw materials
from government or private forests, and, in the unlikely event that the market
for fence posts collapses, this could have an adverse effect on us that could
result in reduced operating profits and, in a worse case scenario, make it very
difficult for us to stay in business under our current business model.
Logging permits are usually obtained by the logging company hired to do the
actual cutting. We will need to obtain a commercial timber permit to work on
government owned land. All permits issued are covered by the Alberta Timber
Harvest Planning and Operating Ground Rules and Section's 22 and 37-41 of the
Alberta Environmental Protection Forest Act
The key factors in the physical production process are the equipment and
the skill of the loader operators, post peeler operators and cutters. Each
wooden fence post is made the same way. Initially, the wood will be acquired
from sawmills. At this point the logs have been cut to eight-foot lengths with
different diameters, the most common being 3" to 4" and 5" to 6". The "poles"
are then placed on the post peeler, which acts like an electric sharpener, and
the fence post takes its final shape. Once completed, the posts are put on a
stacker. When the stacker is full, it is tied and a loader moves the stacker
aside, replacing it with an empty stacker. The loaders then move the tied posts
to the loading area, where the posts are loaded on a truck for delivery to the
buyers.
The first 12 months of production, which will encompass Stage's 1, 2 and 3,
will be set up in the forest in and around Slave Lake, Alberta, where we will be
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purchasing wood (tree tops) from Vanderwell, LTD, a large sawmill in the area.
They inform us that they can provide approximately 25,000 cubic meters per year
at a cost to us of $5.59 per cubic meter. Our initial requirement will be 1080
cubic meters per month per one postpeeler. The initial amount of wood available
to us will be enough to support two postpeelers for 12 months and beyond. During
our pre-production phase we will be finalizing a contract with Vanderwell to
supply the raw material timber. We will not need to work on government land
initially, as we will be operating at the sawmill site. Therefore, there will be
no need to obtain any permits or other permission from the government except
workman's compensation insurance, employment insurance and Canadian Pension
Plan.
During the pre-production phase, we will be acquiring our initial
equipment, including the post peeler, jenset, loader and chainsaws. During the
initial set-up, we will need to finalize our agreements with the buyers of our
finished product, the sawmills who supply the tree tops; create a production
yard, hire electricians on a temporary basis to connect the post peeler to the
jenset and to connect lights in the yard, hire our labor force and set up our
field office. We will also need to arrange agreements with the government
concerning workman compensation insurance, employment insurance, Canadian
pension plan and obtain equipment insurance, set up accounting policies, fuel
supply, and spare parts supplies for our equipment. We will also need to arrange
for the removal of the chips and sawdust from our yard, which is usually sold to
paper mills equal to the cost of transporting it, and make arrangements with
mechanics and electricians on an as needed basis in case of equipment failure.
Stage 1 of the Production Process will involve the use of one post peeler
that will produce 56,160 fence posts per month. There are a number of factors
that will determine the exact amount of fence posts that can be produced,
including weather, equipment down time and labor down time. One hour of
continuous production at 50% capacity during Stage 1 will produce 240 3" to 4"
by 8' fence posts. At 9 hours per day, 26 days per month, the Company can
produce 56,160 fence posts per month, allowing for normal delays and unforseen
stoppages. In determining monthly production at all stages, we have discounted
50% of the operating time and assigned 25% down time for labor, 20% down time
for equipment repair and 5% down time for extreme weather. Revenue, operating
and profits figures are calculated on 50% down time or 56,160 3"-4"x8' fence
posts per month.
The labor need during Stage 1 is one supervisor, who also serves as a
loader operator, two post peeler operators, one general helper and three
dedicated cutters. We will need to acquire 41.5 cubic meters of wood per day and
provide fuel for the post peeler and jenset, loader and chainsaws. In addition,
we will need to maintain the equipment, clean up the yard and arrange
transportation of the finished product to the buyer. It takes eight hours to
load, transport the product and unload at buyer location. Each load can hold
approximately 3400 3"-4"x8' fence posts. It will take a minimum of 17 loads per
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month to transport the finished goods to the buyer.
In order to increase production during Stage 2, we will need to acquire
additional equipment and expand our crew. We will acquire an additional post
peeler, loader, jenset and several chainsaws. We will need to provide fuel and
transportation.
Stage 2 of the Production Process will involve the use of two post peelers
that will produce 112,320 3"-4"x8' fence posts per month. One hour of continuous
production at 50% capacity during Stage 2 will produce 480 3" to 4" by 8 fence
posts. At 9 hours per day, 26 days per month, we can produce 112,320 posts per
month.
The basic labor needed during Stage 2 is one supervisor, who also serves as
a loader operator, one additional loader operator, four post peeler operators, 2
general helper cutter and six dedicated cutters. We will need to acquire 83
cubic meters of wood per day. It will take a minimum of 34 loads per month to
transport the finished goods to the buyer.
Stage 3 of the Production Process will involve the use of two post peelers
that will produce 112,320 fence posts per month. One hour of continuous
production at 50% capacity during Stage 3 will produce 480 3" -4" x 8' fence
posts. At 9 hours per day, 26 days per month, we can produce 112,320 3"- 4"x8'
fence posts per month.
The labor need during Stage 3 is one supervisor, who also serves as a
loader operator, one additional loader operator, four post peeler operators and
one general helper. We will need 83 cubic meters of wood per day. It will take a
minimum of 34 loads per month to transport the finished goods to the buyer.
The onset of Stage 4, will see a dramatic increase in our production
capabilities. We will acquire an additional 20 chainsaws, 2 post peelers, 2
loaders and 2 jensets. These additions of new equipment will double the
production output.
Stage 4 of the Production Process will involve the use of four post peelers
that will produce 224,640 fence posts per month. One hour of continuous
production at 50% capacity during Stage 4 will produce 1920 3" to 4" by 8 fence
posts. At 9 hours per day, 26 days per month, we can produce 224,640 3"- 4"x8'
fence posts per month.
The labor need during Stage 4 is one supervisor, four loader operators,
eight post peeler operators, 4 general helper cutters and twelve dedicated
cutters. We will need to acquire 166 cubic meters of wood per day. It will take
a minimum of 68 loads per month to transport the finished goods to the buyer.
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Stage 5 production will involve the use of four post peelers that will
produce 224,640 fence posts per month. One hour of continuous production at 100%
capacity during Stage 5 will produce 1920 3" to 4" by 8 fence posts. At 9 hours
per day, 26 days per month, we can produce 224,640 posts per month.
The labor need during Stage 5 is one supervisor, four additional loader
operators, eight post peeler operators and 4 general helpers. We will need 166
cubic meters of wood per day. It will take a minimum of 68 loads per month to
transport the finished goods to the buyer.
Marketing Strategy
Our marketing strategy is to build a solid base initially with major
wholesalers who have existing distribution channels and a significant customer
base in place in Canada. Once that market is secured, we will focus on supplying
our product line to large distributors in the U.S. who distribute to State
Parks, Highway Departments, Ranchers and Farmers.
To penetrate these markets, we will rely on several marketing techniques
including direct executive sales, direct mail, repeat business from satisfied
customers, advertising and promotion and industry specific public relations.
During our first twelve months of field operations, we will sell all of our
fence products to Green Tree Fencing Supplies Ltd. in Prince Albert,
Saskatchewan. They are an established major wholesaler with a selling history of
more then 20 years and a volume of more then 5,000,000 fence post per year.
After we establish a strong base and relationship with Green Tree and other
wholesalers in the future, we will try to expand to U.S. markets when and if
market conditions permit. However, we have to be cautious with expansion to the
U.S. market because Green Tree and others in our area also have a strong base in
the U.S. If we decide to market our product line in the U.S., we would become
direct competitors rather than a supplier to those companies.
At present, we do not have any written agreements with Green Tree. However,
we have had several discussions with Green Tree and they have indicated to us
that they would be interested in purchasing our production output providing that
we meet their quality standards. All other details, including pricing
arrangements, will be made once we enter into a formal written agreement. It
should also be noted that we have been in discussions with Green Tree since our
inception and that the only item prohibiting us from entering into a written
agreement is our ability to secure the necessary financing.
Sales Strategy
The Company's sales and marketing are conducted through its Calgary,
Alberta headquarters.
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The business of the Company is straightforward: the manufacturing and
distribution of wooden fence posts. The Company's sales strategy is also
straightforward: build a solid, consistent product that is delivered as ordered
and on time. As government regulations and the demand for wooden fence posts
fluctuate, it is important that the Company build a reputation as a steady
supplier of wooden fence posts. Personal relationships play a key
role as trust is developed between buyer and seller. The Company will build on
its relationship with these key buyers as it implements its marketing strategy
to steadily increase its sales.
Distribution Methods for Products and Services
The Company's product line is distributed by truck directly from the
in-field forest location to the buyer. Each truckload can carry approximately
3400 3"-4"x8' finished fence posts.
During our first year of operations, we will be selling all of the fence
posts to Green Tree Fencing Supplies LTD. Their prices will be free on board
("F.O.B.") our yard, Slave Lake, Alberta. Initially, we will not have the need
for trucks as Green Tree will utilize their own trucks to pick up the finished
product at our location. However, in the event we develop markets elsewhere, we
will contract trucks as needed. We have already contracted several trucking
companies in the area, with all providing approximately the same estimates
averaging $59 per hour. We have no plans at present time to lease or purchase
trucks.
Growth Strategy
We plan to commence production approximately two months following our
successful listing as a public company on an exchange with one post peeler and
production in excess of 56,000 3"-4" x 8 fence posts per month during the first
stage of the operation. After two years, we plan to have 4 post peelers on the
production line. As we add post peelers to our operation, our gross revenues
will increase while our operating expenses will begin to level off, resulting in
steady growth.
The initial growth strategy for the Company calls for five stages of
development during the first two years of operation. Stage 1 of the Production
Process will involve the use of one post peeler that will produce 56,160
3"-4"x8' fence posts per month.
In order to increase production during Stage 2, the Company will need to
acquire additional equipment and expand its crew. Stage 2 of the Production
Process will involve the use of two post peelers that will produce 112,320
3"-4"x8' fence posts per month.
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Stage 3 of the Production Process will involve the use of two post peelers
that will produce 112,320 3"-4"x8' fence posts per month. The onset of Stage 4
will see a dramatic increase in the Company's production capabilities. Stage 4
of the Production Process will involve the use of four post peelers that will
produce 224,640 3"-4"x8' fence posts per month.
Stage 5 production will involve the use of four post peelers that will
produce 224,640 3"-4"x8' fence posts per month.
Once we completes our initial growth strategy, we will concentrate on
expanding our distribution capabilities through the leasing of government lands
and eventually the purchase of private forests. This will allow us to sell all
of the timber harvested, thereby greatly enhancing the total revenue and
ultimate profitability of the Company. On each tree that is logged, seventy per
cent is used for fencing while the remaining thirty per cent is used for high
grade saw mill product. Once we are harvesting our own trees, we will be able to
sell the thirty per cent high grade portion of each tree.
New Products and Services
The process of manufacturing wooden fence posts has remained the same for
quite some time. However, the source of the basic wood product from suppliers
such as saw mills could change in the future as foreign mills begin to outsource
their product internationally.
Competitive Business Conditions
Competition in the Company's market segment is primarily based on price and
quality, and to a lesser extent, the ability to meet delivery requirements on a
consistent long-term basis and to provide specialized customer service.
The Company competes in North American lumber markets, primarily with other
companies in the United States, Canada and Europe. Many of the Company's
competitors have substantially greater financial and operating resources than
the Company. In addition, wood products are subject to increasing competition
from a variety of substitutes, including non-wood and engineered wood products.
Initially, by supplying our product to major wholesalers, the Company will
have no direct competition since the "competition" is also the buyer of our
product. Because we are supplying our product at a discounted rate, it is more
feasible for the wholesaler to purchase directly from us rather than bear the
cost of production themselves. Once the Company develops and markets its product
line and has achieved financial stability, the possibility will exist to sell
the product directly to the United States, thereby limiting the need for
resellers of the product.
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During our initial twelve months of field operations, we plan to sell all
of our fence products to Green Tree. As stated earlier, Green Tree is well
established with a large selling base in the U.S. with more then 20 years
selling experience and volume in excess of 5,000,000 fence posts per year. When
we develop our own market in the U.S., we will have to make sure that our
markets in the US are large and on a solid basis, as our potential Canadian
wholesalers most likely will not renew any purchase orders in place that we may
have at that time once they realize we are competing directly with them in the
U.S..
Sources and Availability of Raw Materials
The primary source of raw material for next 2 years for our product line
are primarily private-sawmill treetops. In the past, sawmills have traditionally
discarded tree tops as waste. However, these tree tops make good quality fence
posts. By acquiring the tree tops from the sawmills, we preclude having to lease
government lands for logging. At the same time we save the sawmill the step of
having to discard the tree top. As an alternative source of raw materials, we
can lease government owned forest land. At the present time we have no leases or
purchases of privately owned or government land. We have discussed in principle
with several sawmill operations the opportunity to purchase their tree top with
positive results, and have verbal assurances from them that they will be signing
contracts with us as soon as we are ready to commence production.
Customer Dependence
We will rely on two companies, Greentree Fencing Supply in Sakatchwan and
Sunpine Forest Products in Alberta, for the majority of our initial sales during
the first two years. As we grow, we will become less dependent on any one
company.
During our first year, we currently plan to sell all of our production to
Green Tree. Once we exceed Green Tree's ability to handle our production output,
which we expect to occur after the first year, we plan to begin selling our
excess production to Sunpine. As with Green Tree, we have had extensive
discussions with Sunpine since our inception.
Intellectual Properties
The Company's production process does not currently rely on any
intellectual properties. The Company utilizes existing equipment that it
purchases in the marketplace.
Government Approval of Products and Services
We will have to comply with all of the Forest Act Environmental Laws as we
15
<PAGE>
fully implement our business model. The exact compliance issues, including
logging, road building, fire hazards, fuel handling and reforestation, will
depend upon our exact activities at any given time.
In addition, to the extent that we might become directly involved in
logging at some point in the future, we will be required to abide by
reforestation guidelines established by the Canadian government at the time we
would commence logging operations. We would need a commercial timber permit to
work on government owned land. All the permits are governed by Forest Act,
Operating Ground Rules, Timber Harvest Planning Commercial timber permit Section
22 of the Forest Act and Section 37-41 of those regulations authorizing a person
to cut crown timber. However, at the present time we have no plans to be
involved in logging, as we will be purchasing our raw material timber directly
from the sawmill.
Effects of Government Regulations on Business
The Cost of complying with government regulations are primarily
reforestation costs at $8.62 per cubic meter and timber dues at $0.18 to $0.98
cubic meter paid directly to government for each cubic meter removed from the
land.
Research and Development
The Company has not been involved in any direct research and development
activities. During the normal course of business, the Company may develop new or
improved log cutting, production or transportation methods.
Compliance with Environmental Laws
Currently the Company will be conducting its operations solely in Canada.
The activities of the Company are subject to various Canadian environmental laws
and regulations that impose limitations on the discharge of pollutants into the
air and water, establish standards for the treatment, storage and disposal of
solid and hazardous waste, and govern the discharge of runoff storm water and
wastewater. The Company is and will remain in compliance with such laws and
regulations.
During our first 12 months of field operations, we will be regulated by our
pending agreement with the sawmill for using approximable two acres of adjacent
forest land. Our cost for clean up of the yard will run approximately $1340 per
month. The clean up activities include disposal of wood chips, sawdust and any
other materials that have to be removed from the work area. If and when we
decide to run operations on government forest land, we will have to comply with
Forest Act environmental laws. At present, the cost of reforestation is $8.62
per cubic meter, paid directly to the government for each cubic meter of forest
16
<PAGE>
removed from their land. Timber dues run from $0.18-$0.98 per cubic meter. The
exact costs depend on the forest location and type of timber harvested.
Employees
The Company will begin its operation with seven full time employees. As the
Company progresses through the different stages of its production process, the
number of full time employees will increase to 29 in stage 4.
1:4 Reports to Security Holders
The Company currently is not required to deliver an annual report to
security holders. The Company will begin to voluntarily send an annual report
and quarterlies, including audited financial statements, to security holders
beginning with the current fiscal year. In addition, the Company will begin
filing reports and other information required by the SEC upon initial filing of
its registration.
The public may read and copy any materials filed with the SEC at the SECs
Public Reference Room at 450 Fifth Street, N.W., Washington, D.C. 20549. The
public may also obtain information on the operation of the Public Reference Room
by calling the SEC at 1-800-SEC-0330.
The SEC maintains and Internet site that contains reports, proxy and
information statements, and other information regarding issuers that file
electronically with the SEC. This information, once the Company completes its
filing, will be available at http://www.sec.gov. It will also be available on
the Company's web site in the future.
ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
2:1 Plan of Operation
During the next two years, our Plan of Operation is to focus on the
manufacturing of fence posts in the Canadian province of Alberta. We plan to
sell our product line to distributors who traditionally sell wooden fence posts
utilized by government parks, highway departments, ranchers and farmers
throughout North America.
We plan to implement our manufacturing process in five distinct stages,
taking into consideration our ability to fund each stage of production, our cash
flow and the subsequent need to raise cash. We have already secured financing
for the pre-production study and listing costs and have secured verbal
commitments from existing shareholders for Stage 1 cash requirements once they
exercise their warrants. Based on our current production schedule and the
availability of raw material timber in the Alberta area, revenues generated from
operations during the next two years should be sufficient to fund Stages 2
17
<PAGE>
through 5.
Cash Flow and The Need To Raise Cash
We believe, and our auditor concurs, that without the realization of
additional capital, it would be unlikely for the company to continue as a going
concern. Our existing shareholders have verbally committed to exercising their
warrants once we are a fully reporting, publicly traded company.
As of April 5, 1999, we had raised $70,800. These funds have been allocated
for production studies, listing costs, prospectus, consulting fees, attorneys,
accounting and all other expenses including telephone and travel. We believe
that $70,800 is sufficient to proceed with our initial plans and there is no
immediate need to further dilute existing shareholders by raising additional
funds at this time in part due to the issuance of warrants to our shareholders
who in turn have verbally committed to exercising those warrants once we become
a fully reporting, publicly traded company. This will result in additional funds
of $141,600 coming into our treasury. Our current cash requirement to implement
production and begin Stage 1 is $97,902. Once production is initiated, we will
have a cash reserve of $43,698 in our field operating account.
Our cash flow plans call for five separate stages of development in the
production process following pre- production.
Pre-production expenses include the purchase of all equipment, development
of the yard, salaries, reserves, gasoline for equipment, cash reserves,
government fees and any other expenses.
Stage 1 will require approximately $37,500 in cash per month, which will
cover labor costs, government fees, wood, fuel, repair, clean up,
transportation, insurance and general administrative costs. This stage could
produce gross revenues of approximately $70,690 per month. Stage 1 will last
approximately five months. During this period, we hope to generate $165,950 in
net operating income. We will purchase our equipment for a total expenditure of
$55,944.
Existing cash flow forecasts have already been discounted fifty per cent
(50%) from what we actually expect to produce. Uncertainties include labor
downtime, equipment repair and weather related downtime. We believe that we have
taken a very conservative approach by reducing expected amounts as indicated.
However, there are other factors that could further reduce or increase our
results including the price of fuel and the gross revenues received for our
product. As the prices for these and other items are constantly changing, the
expected amounts are based on current pricing.
The second stage of production will require approximately $75,000 in cash
18
<PAGE>
per month to sustain field operations. This stage could produce gross revenue of
approximately $141,381 per month.
During Stage 3 the Company will have two post peelers in operation. Cash
requirements during this period are approximately $75,000 per month. This stage
could produce gross revenue of approximately $141,381 per month.
We hope to realize $531,048 in net operating income for the eight month
period that encompasses Stage's 2 and 3. At the end of Stage 3, we plan to
purchase additional equipment, which is expected to cost $282,517.
Stage 4 will commence with the purchase of additional equipment, which we
believe will double our production capability. Monthly cash requirements will be
approximately $150,874. This stage could produce gross revenue of approximately
$282,763 per month
Stage 5 will commence with the operation of four post peelers. Monthly
production costs are expected to average $150,874. This stage could produce
gross revenue of approximately $282,763 per month.
In summary, initial operations could generate $165,950 in net operating
income. From these earnings we plan to purchase additional equipment at a cost
of $55,944, which could result in net income before tax of $110,006. Initial
annual operations could generate $959,918 in net operating income. During that
year we plan to purchase additional equipment at a cost of $282,517,which could
result in net income before tax of $677,401. Field Operations in the subsequent
year could generate $1,582,704 in net operating income. In the event these
expected net income results materialize, we plan to begin our own sawmill
operations. Planning for this multi-million dollar endeavor could begin after we
have concluded eighteen month of production.
To recap, in order to begin field operations, we have to receive the
additional $97,902 from the execution of warrants by our existing shareholders.
In the event the warrants are not exercised, we will have to obtain funding from
another source. Failure to do so would have a material adverse effect on us.
Summary of Pre-Production Costs:
<TABLE>
<S> <C>
Item Amount
Equipment Costs
Post Peeler 13,986
Loader 20,979
19
<PAGE>
Chainsaws 6,993
Jenset 13,986
Total 55,944
Item Amount
Set-Up Costs
Equipment 2,097
Transportation
Creation of Yard 979
Electrician 1,398
Insurance 490
Total 4,964
Item Amount
General Costs
Salaries 12,662
Yard Cleaning 1,398
Wood 6,083
Fuel 5,594
Repairs 3,006
Office & Legal 4,895
Government Fees 3,356
Total 36,994
Total Pre- 97,902
Production
</TABLE>
Upon exercise of the warrants we hope to have $141,600 in our treasury. We
need $97,902 to commence production. This would leave us with $43,698 in cash
reserves.
After commencing the production, second stage will financed from company
accumulated proceeds.
Summary of Production Costs per month:
20
<PAGE>
<TABLE>
<CAPTION>
Item Stage 1 Stage 2 Stage 3 Stage 4 Stage 5
<S> <C> <C> <C> <C> <C>
Labor 13,418 26,836 26,836 57,169 57,169
Costs
Governmen 3,354 6,709 6,709 14,292 14,292
t Fees
Wood 6,041 12,083 12,083 24,167 24,167
Fuel 5,594 11,188 11,188 22,377 22,377
Repair 3,496 6,993 6,993 13,986 13,986
Yard 1,398 2,797 2,797 5,594 5,594
Cleanup
Insurance 699 1,398 1,398 2,797 2,797
G & A 3,496 6,993 6,993 10,489 10,489
Total 37,496 74,997 74,997 150,871 150,871
</TABLE>
Note: Government Fees include worker's compensation insurance, employment
insurance, pension plan requirements.
Summary of Projected Revenues per month:
<TABLE>
<CAPTION>
Item Pre- Stage 1 Stage 2 Stage 3 Stage 4 Stage 5
Product
ion
<S> <C> <C> <C> <C> <C> <C>
Fence 0 70,690 141,381 141,381 282,763 282,763
Posts
Sales
</TABLE>
Summary of Projected One-Time Expenditures
<TABLE>
<CAPTION>
Item Pre- Stage 1 Stage 2 Stage 3 Stage 4 Stage 5
Product
ion
<S> <C> <C> <C> <C> <C> <C>
One-
21
<PAGE>
Time
Expendi
ture
Start- 97,902
Up
Costs
Used 55,944
Equipme
nt
Costs
New 282,517
Equipme
nt
Costs
Total 97,902 55,944 282,517
</TABLE>
Planned Research and Development
We will not be involved in any direct research and development activities.
During the normal course of business, we may develop new or improved log
cutting, production or transportation methods. However, we do not plan to spend
any resources on development, nor do we plan to do any research.
Purchase or Sale of Plant and/or Equipment
We will be purchasing various pieces of equipment during the pre-production
period and during Stage 2 and Stage 4. With each piece of equipment purchased,
the Company's production capability expands, resulting in increased revenues,
assets.
Pre-Production Equipment Purchase (used equipment to keep costs down):
<TABLE>
<CAPTION>
Item Amount
<S> <C>
Post Peeler 13,986
Loader 20,979
Chainsaws (new) 6,993
Jenset Generator 13,986
Total 55,944
</TABLE>
22
<PAGE>
Stage 2 Equipment Purchase (used equipment):
<TABLE>
<CAPTION>
Item Amount
<S> <C>
Post peeler 13,986
Loader 20,979
Chainsaws (new) 6,993
Jenset 13,986
Total 55,944
</TABLE>
Stage 4 Equipment Purchase (new equipment) for use in two separate field
operations:
<TABLE>
<CAPTION>
Item Amount
<S> <C>
Post peeler 63,636
Loader 156,643
Chainsaws (new) 11,888
Jenset 50,349
Total 282,516
</TABLE>
Significant Changes in the Number of Employees
As the Company proceeds through the different stages, its number of
employees will gradually increase through the stages until the fifth stage when
we will have 29 field employees plus three in the office.
<TABLE>
<CAPTION>
Position Stage 1 Stage 2 Stage 3 Stage 4 Stage
5
Fall Winter Summer Fall/Winte Summer
Year 1 Year 1 Year 1 r Y2 Y2
<S> <C> <C> <C> <C> <C>
Superviso 0 0 0 1 1
r
23
<PAGE>
Superviso 1 1 1 0 0
r /
Loader
Operator
Loader 0 1 1 4 4
Operator
Post 2 4 4 8 8
Peeler
Operators
Cutter/ 1 2 2 4 4
General
Help
Cutters 3 6 6 12 12
Office 1 2 2 3 3
Total 8 16 16 32 32
</TABLE>
2:2 Managements Discussion and Analysis of Financial Condition and Results of
Operations
Financial Condition
We had no field operations during fiscal year 1999.
The following table sets forth selected information from the statements of
operations for the period ended September 30, 2000 and the year ended December
31, 1999.
Selected Statement of Operations Information
<TABLE>
<CAPTION>
For the Period For the Year Ended
Ended September 30, December 31, 1999
2000
<S> <C> <C>
Total Revenues $0 $0
Total Expenses $14,129 $109,504
Income (Loss) From $(14,129) $(109,504)
Operations
Total Other Income $(0) $(0)
(Expense)
Net Profit (Loss) $(14,129) $(109,504)
24
<PAGE>
Total Revenues
</TABLE>
The Company did not generate any revenues in 1999.
Cost of Goods Sold
The Company did not have any cost of goods sold in 1999.
Selling and General Administrative Expense
The Company's selling and general administrative expense totaled $109,504
during fiscal year 1999. This expense was primarily due to start up costs and
the expense of initiating the Company's NASDAQ listing.
Retained Earnings
The Company had a retained earnings balance of $(123,633) as of September
30, 2000 and $(109,504) as of December 31, 1999.
Net Shareholder Equity
For the period ended September 30, 2000, net shareholder equity was $7,167
and for the year ended December 31, 1999, net shareholder equity was 21,296.
Tax Issues
We have not had any revenues and as a result we do not currently have any
material tax issues.
Liquidity and Capital Resources
Selected Balance Sheet Information
<TABLE>
<CAPTION>
For the Period For the Year Ended
Ended September 30, December 31, 1999
2000
<S> <C> <C>
Total Current $8,167 $21,296
Assets
25
<PAGE>
Total Current $1,000 $0
Liabilities
Total Property & $0 $0
Equipment
Total Liabilities $1,000 $0
Total Other Assets $0 $0
Total Assets $8,167 $21,296
Net Shareholders' $7,167 $21,296
Equity
</TABLE>
As of September 30, 2000, we have relied solely on the proceeds from the
private sale of our Common Stock as of April 5, 1999. This will be sufficient to
meet our liquidity requirement for pre-production study, listing costs,
prospectus, consulting, attorney and accounting fees, research and all other
expenses we may accrue during this period. The additional funds needed to meet
our requirement for initial start up costs, equipment purchases and Stage 1
funding should be provided by proceeds from our warrants being exercised. This
could generate $141,600 in additional funding. Thereafter, we will be able to
cover all necessary costs from revenues generated by ongoing operations.
Other than the foregoing and the risk factors discussed herein, we know of
no trends, demands, or uncertainties that are reasonably likely to have a
material impact on our short term liquidity or capital resources.
Impact of Recently Issued Accounting Standards
Statement of Financial Accounting Standards 133 - Accounting for Derivative
Instruments and Hedging Activities (SFAS 133) was recently issued. SFAS 133
established accounting and reporting standards for derivative financial
instruments and for hedging activities. The Company does not currently engage in
any activities that would be covered by SFAS 133.
Accounting for Stock Options
In October 1995, the FASB issued Statement of Financial Accounting
Standards No. 123 "Accounting for Stock Based Compensation" (SFAS123), which
established the "fair value" method of accounting for stock based compensation
arrangements. The company has not adopted any Stock Option Plan as of December
31, 1999. But the Board of Directors may plan to adopt a stock option plan in
the future to reward the exceptional contributions to the Company by its
management and employees.
Trends on Liquidity
The demand for wood fence posts in North America, according to our
26
<PAGE>
distributors, shoud will have a positive effect on our liquidity in future
fiscal years.
Sources of Liquidity
The Company's liquidity will come from its ongoing operations and from
proceeds generated by the sale of its Common Stock through Warrants that were
issued during the Company's initial private placement in April 1999. The
warrants expire on April 30, 2001. They will generate $141,600 in additional
funding for us, enabling the start of pre-production and Stage 1. As of December
31, 1999, the following warrants were still outstanding:
<TABLE>
<CAPTION>
Item Number Conversion Exercise Expiration
Price Date
<S> <C> <C> <C> <C>
Common 1,416,000 One for $0.10 April 30,
Stock One 2001
Purchase
Warrants
Total $141,600
Conversion
------------------------ ----------------------- ----------------------- ----------------------- -----------------------
</TABLE>
Material Commitments for Capital Expenditures and the Expected Sources of
Funds for These
During pre-production and Stage 1, funding for capital expenditures will
come from the proceeds generated by the sale of our Common Stock Warrants.
During Stages 2 and 4 as described herein, we will be purchasing additional
equipment to facilitate our ongoing and expanded operations. The source of funds
for these expenditures will come from ongoing operations.
Trends, Events and Uncertainties that could have an Impact on Net Operating
Results
Not Applicable.
Significant Elements of Income/Loss Not From Continuing Operations
27
<PAGE>
Not Applicable
Causes for any Material Change in Line Items
Not Applicable
Seasonal Aspects that Effect Results
The Company's future results may be affected in the event that sustained
severe weather prohibits the Company from conducting operations in the forests
around Alberta for a lengthy period of time. During the first few years, we will
be purchasing our raw material timber from large sawmills on a year round basis.
Therefore, seasonal conditions should not effect our results initially. We are
not subject to other seasonal aspects, such as changing market conditions as the
demand for our product is year round.
Impact of Inflation
The Company believes that inflation has not had a material effect on its
past business.
Interim Periods
Not Applicable.
Material Changes
Not Applicable.
Discussion on Material Events That Would Cause Reported Information Not to be
Indicative of Future
Not Applicable.
ITEM 3. DESCRIPTION OF PROPERTY
3:1 Location and Condition of Property
Principal Offices
Our principal offices are located at 28 Lavalencia Garden, N.E. Calgary,
AB. T1Y 6P4. Our current office space of approximable 200 square feet is
provided to us at no charge by our President. Once we begin field operations, we
will establish a small office for administrative tasks.
Field Offices
28
<PAGE>
The field operations will be situated in Northern Alberta (Edmonton area).
The exact location of these field offices will vary depending upon where ongoing
operations are being conducted. Our initial field office will be at the sawmill
site in Alberta. the exact size and cost has not yet been determined.
3:2 Investment Policies
We do not own any real estate and currently do not have any investments in
residential or commercial real estate. Our Board of Directors would decide any
policies in the future.
3:3 Description of Real Estate and Operating Data
Not applicable.
ITEM 4. SECURITY OWNERSHIP OF MANAGEMENT AND CERTAIN SECURITY HOLDERS
4:1 Security Ownership of Certain Beneficial Owners
The following table sets forth information as of September 30, 2000, based
on information obtained from the persons named below, with respect to the
beneficial ownership of the Common Stock by (i) each person known by the Company
to own beneficially 5% or more of the Common Stock:
<TABLE>
<CAPTION>
Title Name and Shares owned % If Corporation,
Address of Beneficially Owned Beneficial Owner
beneficial (1) of Corporation
Owner
<S> <C> <C> <C> <C>
Common Joginder 600,000 23% N/A
Brar
28
Lavalencia
Gds. NE
Calgary,
Alberta T1Y
654
Common Jaroslav 600,000 23% N/A
Zubik
6427 Dalton
Dr. NW
Calgary,
Alberta T3A
29
<PAGE>
IEI
Common Jan Libal 180,000 7% N/A
10636-120
Street NW
#417
Edmonton,
Alberta T5H
4L5
Common Dr. S. 140,000 5% N/A
Krizala
Velke
Namesti 143
Hradec
Kralove 1
501 Chech
Republic
Beneficial 1,520,000 58%
Owners of
5% or More
as a Group
---------------- ----------------------- ------------------------- ------------- ------------------------------------ --
</TABLE>
Note (1) The number of shares of Common Stock owned are those "beneficially
owned" as determined under the rules of the Securities and Exchange Commission,
including any shares of Common Stock as to which a person has sole or shared
voting or investment power and any shares of Common Stock which the person has
the right to acquire within 60 days through the exercise of any option, warrant
or right. As of December 31, 1999, there were 2,616,000 common shares
outstanding encompassing 47 beneficial owners.
4:2 Securities Ownership of Management
The following table sets forth information as of the date hereof, based on
information obtained from the persons named below, with respect to the
beneficial ownership of the Common Stock by (i) each director and officer of the
Company and (ii) all directors and officers as a group:
<TABLE>
<CAPTION>
Title of Name and Address Shares Owned % Owned
Class of beneficial Beneficially
Owner (1)(2)
<S> <C> <C> <C>
30
<PAGE>
Common Joginder Brar 600,000 23%
28 Lavalencia
Gds. NE Calgary,
Alberta T1Y 654
Common Jaroslav Zubik 600,000 23%
6427 Dalton Dr.
NW Calgary,
Alberta T3A IEI
Common Harjit Mand 0 0%
163 Rundle Ridge
Route NE,
Calgary, Alberta
T1Y 256
Common Leo Moisio 0 0%
B104-53016
Highway 60
Acheson
Industrial Area
Spruce Grove,
Alberta, Canada
T7X 3G7
--------------------
Officers and 1,200,000 46%
Directors as a
Group
-------------------- ----------------------------------- ------------------------------------ --------------------- -- --
</TABLE>
Note (1) The number of shares of Common Stock owned are those "beneficially
owned" as determined under the rules of the Securities and Exchange Commission,
including any shares of Common Stock as to which a person has sole or shared
voting or investment power and any shares of Common Stock which the person has
the right to acquire within 60 days through the exercise of any option, warrant
or right. As of March 31, 2000, there were 2,616,000 common shares outstanding.
Note (2) No officer, director or security holder listed above owns any warrants,
options or rights. (See Certain Relationships and Related Transactions.")
Compliance with Section 16(A) of the Exchange Act
Under the securities laws of the United States, the Company's Directors,
its Executive Officers (and certain other officers) and any persons holding more
than 5% of the Company's outstanding voting securities are required to report
their ownership in the Company's securities and any changes in that ownership to
the Securities and Exchange Commission. Based solely upon the Company's reliance
31
<PAGE>
upon the written representations of its Directors and officers, the Company
believes that it is in compliance with Section 16(a) of the Exchange Act.
4:3 Changes in Control
The Company does not anticipate any changes in control.
ITEM 5. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS
5:1 Directors and Officers
The Directors and executive officers of the Company were appointed and/or
elected to their respective positions on March 11, 1999. As of September 30,
2000, the names, ages and positions are as follows:
<TABLE>
Name Age Position
<S> <C> <C>
Joginder Brar 34 President/Director
Jaroslav Zubik 45 Secretary/Director
Harjit Mand 33 Treasurer/Director
Leo Moisio 55 Vice-President
</TABLE>
All Directors of the Company will hold office until the next annual meeting
of shareholders of the Company or until successors are duly elected and
qualified.
The Officers of the Company are elected by the Board of Directors at the
first meeting after each annual meeting of the Company's shareholders, and hold
office until their death, or until they shall resign or have been removed.
Joginder Brar, 34, Director, has served as President of the Company since
March 11, 1999. While organizing the Company, Brar worked for the City of
Calgary in its Transportation Department as a Dispatcher since 1990. Prior to
working for the City of Calgary, he served as President of Nexus Telecom of
Calgary. Brar received his Bachelor of Arts degree from India's Punjab
University.
Jaroslav Zubik, 45, Director, Secretary, has been with the Company since
March 11, 1999. Zubik has been President of S.O.S. Printing and Laminations for
Less in Calgary since 1985. Fluent in the English, Czech, German and Russian
languages, he received his Mechanical Engineering Diploma from SPISS Technology
Institute in 1975.
Harjit Mand, 33, Director, Treasurer, joined the Company on March 11, 1999.
32
<PAGE>
Mand has spent the past nine years working for the City of Calgary in their
Transportation Department. He previously served as the Sales Manager for Crescet
Bakery in Calgary from 1986-1989. Mand studied Mechanical Engineering at the
SAIT Technical School in Calgary.
Leo Moisio, 55, VICE -PRESIDENT has joined the Company as Vice-President in
charge of production. An expert in the wood product industry, Moisio has
developed industry contacts worldwide. Earning a degree in pulp and paper from
the Pulp and Paper College in Finland IN 1969, Moisio recently served as
International Sales Manager for Treeline Wood Products, Ltd., located in
Edmonton, Alberta. During his tenure there, he was responsible for the shipping
of two million board feet of wood product per month to Japan during a four-year
period. He also spent 11 years with Eurocan B.C., during which time the company
produced up to 1,000 tons of paper per day.
Board Committees
During the fiscal year ended December 31, 1999, the Directors of the
Company did not formulate any formal committee.
Director Compensation
All authorized out-of-pocket expenses incurred by a Director on behalf of
the Company will be subject to reimbursement upon receipt by the Company of
required supporting document of such expenses. Although Directors may be
eligible to participate in the Company's future stock option and / or incentive
plan(s), if any, Directors do not receive any additional compensation or an
annual Directors fee at the present time.
5:2 Significant Employees
The operations of the Company are divided into two groups, management
personnel and in-field operational personnel. The general management of the
Company will be critical due in part to the seasonality of the business.
Scheduling and distribution must be precise in order to maintain the wood
product flow. For each post peeler in operation, the Company will need to employ
one key supervisor, two operators, one general laborer and three woodcutters.
Each post peeler group has key, significant employees that are vital to the
ongoing operations of the Company. The loss of any one of these significant
employees could have a material adverse effect on the operations of the Company
if they cannot be replaced in a timely manner. The Company is in the process of
filing these positions.
33
<PAGE>
The Company has retained consultant Jan Libal to assist in the development
of its product line and staffing requirements. Libal joined the Company as an
consultant after serving as vice-president for Timber King Forest Products,
where he secured equipment for their post peeling operation, arranged contracts
for the finished product, yard and yard maintenance, supervised the accounting
department and prepared business plans. Prior to Timber King, he secured mining
property for Calvest Resources and served as President of Westaurum Industries,
Inc. During his career he has served as a senior technologist, layout engineer
and contractor.
Leo Moisio, 55, has joined the Company as Vice- President in charge of
production. An expert in the wood product industry, Moisio has developed
industry contacts worldwide. Earning a degree in pulp and paper from the Pulp
and Paper College in Finland IN 1969, Moisio recently served for seven years as
International Sales Manager for Treeline Wood Products, Ltd., located in
Edmonton, Alberta. During his tenure there, he was responsible for the shipping
of two million board feet of wood product per month to Japan during a four-year
period. He also spent 11 years with Eurocan B.C., during which time the company
produced up to 1,000 tons of paper per day.
5:3 Family Relationships
Not Applicable.
5:4 Involvement in Legal Proceedings
Not Applicable.
ITEM 6. EXECUTIVE COMPENSATION
6:1 General
None of the Company's officers and directors receives any cash compensation
at this time. The Company does plan to initiate a compensation schedule for its
officers once the Company is profitable.
Brar and Zubik each received 600,000 shares of the Company's $.001 par
value Common Stock for services and as founders of the Company.
The Company has retained a consultant, Jan Libal, to assist in the initial
start-up of the Company. He receives compensation up to a maximum of $3,000 per
month, plus expenses.
6:2 Summary Compensation Table
34
<PAGE>
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
Long Term Compensation
Annual Compensation Awards
Name and Year Annual Restricted Total
Principal Salary Stock Award Compensation
Position
<S> <C> <C> <C> <C>
-----------------------
Joginder 1999 $0 600,000 $30,000
Brar(1) shares
President Value $0.05
per share
Jaroslav 1999 $0 600,000 $30,000
Zubik(1) shares
Secretary Value $0.05
per share
Harjit 1999 $0 $0 $0
Mand
Treasurer
Leo Moisio 1999 $0 $0 $0
Vice-
President
----------------------- --------------- -------------------------- ------------------------- ------------------------
</TABLE>
ITEM 7. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
7:1 Previous Two Years
Not Applicable
7:2 Exempt
Not Applicable.
7:3 Parent Company
Not Applicable.
7:4 Transactions with Promoters
None.
ITEM 8. DESCRIPTION OF SECURITIES
8:1 Common or Preferred Stock
35
<PAGE>
The authorized capital stock of the Company consists of 25,000,000 shares
of $.001 par value Common Stock. All shares have equal voting rights and are
non-assessable. Voting rights are not cumulative, and therefore, the holders of
more than fifty percent (50%) of the Common Stock of the Company could, if they
chose to do so, elect all the Directors.
Upon liquidation, dissolution or winding up of the Company, the assets of
the Company, after the payment of liabilities, will be distributed pro rata to
the holders of the Common Stock. The holders of the Common Stock do not have
preemptive rights to subscribe for any securities of the Company and have no
right to require the Company to redeem or purchase their shares. The shares of
Common Stock presently outstanding are fully paid and non-assessable.
Holders of Common Stock are entitled to share equally in dividends when,
and if declared by the Board of Directors of the Company, out of funds legally
available thereof. The Company has not paid any cash dividends on its Common
Stock, and it is unlikely that any such dividends will be declared in the
foreseeable future.
As of September 30, 2000, the Company had outstanding 2,616,000 shares of
common stock.
Preferred Stock
The Company is not currently authorized to issue shares of Preferred Stock,
and as a result, there have been no preferred shares issued or outstanding as of
the date hereof.
In the event that the Company's Board of Directors authorize the issuance
of Preferred Stock in the future, any of the Company's Preferred Stock may be
issued in series from time to time with such designation, rights, preferences
and limitations as the Board of Directors of the Company may determine by
resolution. The rights, preferences and limitations of separate series of
Preferred Stock may differ with respect to such matters as may be determined by
the Board of Directors. This is to include, without limitation, the rate of
dividends, method and nature of payment of dividends, terms of redemption,
amounts payable on liquidation, sinking fund provisions (if any), conversion
rights (if any), and voting rights. The potential exists therefore, that
additional preferred stock might be issued which would grant additional dividend
preferences and liquidation preferences to preferred shareholders. Unless the
nature of a particular transaction and applicable statutes require such
approval, the Board of Directors has the authority to issue these shares without
shareholder approval. The issuance of Preferred Stock, if any, may have the
effect of delaying or preventing change in control of the Company without any
further action by shareholders.
36
<PAGE>
Dividends
The Company has never paid a cash dividend on its Common Stock nor does the
Company anticipate paying cash dividends on its Common Stock in the near future.
It is the present policy of the Company not to pay cash dividends on the Common
Stock but to retain earnings, if any, to fund growth and expansion. Under Nevada
law, a company is prohibited from paying dividends if the company, as a result
of paying such dividends, would not be able to pay its debts as they come due,
or if the company's total liabilities and preferences to preferred shareholders
exceed total assets. Any payment of cash dividends of the Common Stock in the
future will be dependent upon the Company's financial condition, results of
operations, current and anticipated cash requirements, plans for expansion, as
well as other factors the Board of Directors deems relevant.
Warrants
There are warrants outstanding to acquire additional shares of common
stock. These warrants are attached to the shares issued pursuant to the public
offering as described in Note #1 and are convertible to the company's common
stock at $ 0.10 per share.
Penny Stock Rules
While the Company is not currently a publicly traded company, the
securities of the Company could eventually be subject to a Securities and
Exchange Commission rule that imposes special sales practice requirements upon
broker- dealers who sell such securities to persons other than established
customers or accredited investors. For purposes of the rule, the phrase
"accredited investors" means, in general terms, institutions with assets in
excess of $5,000,000, or individuals having a net worth in excess of $1,000,000
or having an annual income that exceeds $200,000 (or that, when combined with a
spouse's income, exceeds $300,000). For transactions covered by the rule, the
broker- dealer must make a special suitability determination for the purchaser
and receive the purchaser's written agreement to the transaction prior to the
sale. Consequently, the rule may affect the ability of broker-dealers to sell
the securities of the Company and also may affect the ability of any shareholder
to sell their securities in any market that might develop for the common stock.
In addition, the Securities and Exchange Commission has adopted a number of
rules to regulate "penny stocks." Such rules include Rules 3a51-1, 15g-1, 15g-2,
15g-3, 15g-4, 15g-5, 15g-6 and 15g-7 under the Securities Exchange Act of 1934,
as amended. Because the securities of the Company constitute "penny stocks"
within the meaning of the rules, the rules apply to the Company and to its
securities. The rules may further affect the ability of owners of shares to sell
the securities of the Company in any market that might develop for them.
37
<PAGE>
Shareholders should be aware that, according to Securities and Exchange
Release No. 34-29093, the market for penny stocks has suffered in recent years
from patterns of fraud and abuse. Such patterns include (i) control of the
market for the security by one or a few broker-dealers that are often related to
the promoter or issuer; (ii) manipulation of prices through prearranged matching
of purchases and sales and false and misleading press releases; (iii) "boiler
room" practices involving high-pressure sales tactics and unrealistic price
projections by inexperienced sales person; and (iv) the wholesale dumping of the
same securities by promoters and broker-dealers after prices have been
manipulated to a desired level, along with the resulting inevitable collapse of
those prices and with consequent investor losses.
8:2 Debt Securities
None.
8:3 Other Securities
None.
PART 11
ITEM 1. MARKET PRICE OF AND DIVIDENDS ON THE REGISTRANTS COMMON EQUITY AND OTHER
SHAREHOLDER MATTERS
1:1 Market Information
The Company's common stock does not currently trade on the NASD Over The
Counter Bulletin Board. Subsequent to this filing, the Company will apply to be
listed on the NASD Over The Counter Bulletin Board.
Quarterly Stock Trading Summary: Not Applicable.
As of September 30, 2000, there were 1,200,000 shares of Common Stock
considered to be restricted, pursuant to Rule 144 under the Securities Act of
1933, as amended (the "Securities Act"). There were 1,416,000 free trading
shares of Common Stock as of September 30, 2000.
1:2 Holders
As of September 30, 2000, there were 47 beneficial holders of record of the
Company's Common Stock, and the number of beneficial holders of 5% or more was
4.
1:3 Dividends
38
<PAGE>
The Company has not issued any dividends on its Common Stock and has no
plans to issue any dividends in fiscal year 2000.
ITEM 2. LEGAL PROCEEDINGS
2:1 Pending Legal Proceeding
There are no pending legal proceedings.
2:2 Government Authority Contemplating
Not Applicable.
ITEM 3. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
3:1 Accountant Dismissed
Not Applicable.
3:2 Accountant Disclosures
Not Applicable.
3:3 Detail of Subject Matter
Not Applicable.
3:4 Discussions with Board of Directors
Not Applicable.
3:5 Accountant Authorized to Issue Subsequent Report
Not Applicable.
ITEM 4. RECENT SALES OF UNREGISTERED SECURITIES
4:1 Date, Title, and Amount Sold
As of September 30, 2000, the Company had 2,616,000 shares of its $.001 par
value common stock issued and outstanding of which 1,200,000 shares were issued
in transactions exempt by reason of Section 4(2) of the Securities Act of 1933,
as amended, and 1,416,000 shares were issued in transactions exempt by reasons
of Rule 504 of Regulation D promulgated pursuant to Section 3(b) of the
39
<PAGE>
Securities Act of 1933, as amended.
<TABLE>
<CAPTION>
Date Class Shares Price Conside Issued Status
<S> <C> <C> <C> <C> <C> <C>
ration To:
4/5/99 Common 1,200,00 0.05 Svcs Brar, 144
0 Zubic
4/5/99 Common 140,000 .05 Cash Krizala 504
4/5/99 Common 180,000 .05 Cash Libal 504
4/5/99 Common 60,000 .05 Cash Fiala 504
4/5/99 Common 67,000 .05 Cash Sangha 504
4/5/99 Common 67,000 .05 Cash Gill 504
4/5/99 Common 67,000 .05 Cash Dhillon 504
4/5/99 Common 67,000 .05 Cash Minhas 504
4/5/99 Common 67,000 .05 Cash Gill 504
4/5/99 Common 67,000 .05 Cash Sangha 504
4/5/99 Common 67,000 .05 Cash Sangha 504
4/5/99 Common 67,000 .05 Cash Dhillon 504
4/5/99 Common 67,000 .05 Cash Mangat 504
4/5/99 Common 67,000 .05 Cash Sidhu 504
4/5/99 Common 67,000 .05 Cash Minhas 504
4/5/99 Common 20,000 .05 Cash Cech 504
4/5/99 Common 40,000 .05 Cash Khan 504
4/5/99 Common 40,000 .05 Cash Minhas 504
4/5/99 Common 40,000 .05 Cash Mithani 504
4/5/99 Common 40,000 .05 Cash Kanji 504
4/5/99 Common 4,000 .05 Cash McDonald 504
4/5/99 Common 8,000 .05 Cash Kanji 504
4/5/99 Common 6,000 .05 Cash Dhaliwal 504
4/5/99 Common 4,000 .05 Cash Scriver 504
4/5/99 Common 4,000 .05 Cash Scriver 504
4/5/99 Common 4,000 .05 Cash Scriver 504
4/5/99 Common 4,000 .05 Cash Kaur 504
4/5/99 Common 4,000 .05 Cash Mangat 504
4/5/99 Common 4,000 .05 Cash Mangat 504
4/5/99 Common 4,000 .05 Cash Randha 504
4/5/99 Common 4,000 .05 Cash Sandhu 504
4/5/99 Common 2,000 .05 Cash Kidwai 504
4/5/99 Common 2,000 .05 Cash Cole 504
4/5/99 Common 2,000 .05 Cash Gill 504
4/5/99 Common 2,000 .05 Cash Dhalla 504
4/5/99 Common 2,000 .05 Cash Hasham 504
4/5/99 Common 2,000 .05 Cash Mithani 504
4/5/99 Common 2,000 .05 Cash Mithani 504
40
<PAGE>
4/5/99 Common 2,000 .05 Cash Mithani 504
4/5/99 Common 2,000 .05 Cash Common 504
4/5/99 Common 2,000 .05 Cash Djakovic 504
4/5/99 Common 2,000 .05 Cash Husarik 504
4/5/99 Common 2,000 .05 Cash Lodomez 504
4/5/99 Common 31,000 .05 Cash Parmar 504
4/5/99 Common 8,000 .05 Cash Sallh 504
4/5/99 Common 6,000 .05 Cash Fernande 504
s
----------------- ----------------- ------------------- -------------- ---------------- ------------------- --------------
</TABLE>
On April 5, 1999, the Company issued to 45 individuals and entities an
aggregate 1,416,000 shares of its $.001 par value common stock at $0.05 each by
virtue of Rule 504 of Regulation D promulgated pursuant to Section 3(b) of the
Securities Act of 1933, as amended, for a total consideration of $70,800 in
cash. Of the 1,416,000 shares issued, 1,416,000 shares were free trading and 0
were restricted. In addition, there were 1,416,000 warrants that were attached
to the common shares sold during the offering with an exercise price of $0.10
per share. None of the warrants have been exercised.
The shares issued to Brar and Zubik on April 5, 1999 were for services that
included administrative duties, board duties, contract negotiations, financing
services, production and distribution research, shareholder communication and
organizational duties.
4:2 Underwriters
Not Applicable.
4:3 Offering Price
The Company has issued one Private Placement Memorandum ("PPM") by virtue
of Rule 504 of Regulation D promulgated pursuant to Section 3(b) of the
Securities Act of 1933, as amended, at $.05 per share.
The first PPM was issued on March 10, 1999, offering up to $100,000 of the
Company's Common Stock at $0.05 per share. In addition, there were 1,416,000
warrants that were attached to the common shares sold during the offering with
an exercise price of $0.10 per share.. The PPM was closed on April 5, 1999. As
of the date of this filing, no warrants have been exercised.
4:4 Exemption Applied
The Common Stock was offered, issued and sold pursuant to and in accordance
41
<PAGE>
with the exemption from securities registration afforded by Rule 504 of
Regulation D promulgated under the Securities Act of 1933, as amended.
4:5 Conversion Terms
Not Applicable.
4:6 Report Items
Not Applicable.
ITEM 5. INDEMNIFICATION OF DIRECTORS AND OFFICERS
The 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,
suit, or proceeding, whether civil, criminal, administrative, or investigative,
(other than an action by or in the right of the corporation) by reason of the
fact that he is or was a director, officer, employee, fiduciary or agent of the
corporation or is or was serving at the request of the corporation as a
director, officer, employee, fiduciary or agent of another corporation,
partnership, joint venture, trust, or other enterprise, against expenses
(including attorney fees), judgments, fines, and amounts paid in settlement
actually and reasonably believed to be in the best interests of the corporation
and, with respect to any criminal action or proceeding, had no reasonable cause
to believe his conduct was unlawful. The termination of any action, suit, or
proceeding by judgment, order, settlement, or conviction or upon a pleas of nolo
contenders or its equivalent shall not of itself create a presumption that the
person did not act in good faith and in a manner which he reasonably believed to
be in the best interests of the corporation and, with respect to any criminal
action or proceeding, had reasonable cause to believe his conduct was unlawful.
The 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
suit by or in the right of the corporation to procure a judgment in its favor by
reason of the fact that he is or was a director, officer, employee, or agent of
the corporation or is or was serving at the request of the corporation as a
director, officer, employee, fiduciary or agent of another corporation,
partnership, joint venture, trust or other enterprise against expenses
(including attorney fees) actually and reasonably incurred by him in connection
with the defense or settlement of such action or suit if he acted in good faith
and in a manner he reasonably believed to be in the best interests of the
corporation; but no indemnification shall be made in respect of any claim,
issue, or matter as to which such person has been adjudged to be liable for
negligence or misconduct in the performance of his duty to the corporation
unless and only to the extent that the court in which such action or suit was
brought determines upon application that, despite the adjudication of liability,
42
<PAGE>
but in view of all circumstances of the case, such person is fairly and
reasonably entitled to indemnification for such expenses which such court deems
proper.
To the extent that a director, officer, employee, fiduciary or agent of a
corporation has been successful on the merits in defense of any action, suit, or
proceeding referred to in this Article or in defense of any claim, issue, or
matter therein, he shall be indemnified against expenses (including attorney
fees) actually and reasonably incurred by him in connection therewith.
Any indemnification under this Article (unless ordered by a court) shall be
made by the corporation only as authorized in the specific case upon a
determination that indemnification of the director, officer, employee, fiduciary
or agent is proper in the circumstances because he has meet the applicable
standard of conduct set forth herein. Such determination shall be made by the
board of directors by a majority vote of a quorum consisting of directors who
were not parties to such action, suit, or proceeding, or, if such a quorum is
not obtainable, or, even if obtainable, a quorum of disinterested directors so
directs.
Expenses (including attorneys fees) incurred in defending a civil or
criminal action, suit or proceeding may be paid by the corporation in advance of
the final disposition of such action, suit or proceeding as authorized in this
Article, upon receipt of an undertaking by or on behalf of the director,
officer, employee or agent to repay such amount, unless it shall ultimately be
determined that he is entitled to be indemnified by the corporation as
authorized in this Article.
The board of directors may exercise the corporations power to purchase and
maintain insurance on behalf of any person who is or was a director, officer,
employee or agent of the corporation, or is or was serving at the request of the
corporation as a director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise, against any liability
asserted against him and incurred by him in any such capacity, or arising out of
his status as such, whether or not the corporation would have the power to
indemnify him against such liability under this Article.
The indemnification provided by this Article shall not be deemed exclusive
of any other rights to which those seeking indemnification may be entitled under
these Articles of Incorporation, the Bylaws, agreements, vote of the
shareholders or disinterested directors, or otherwise, both as to action in his
official capacity and as to action in another capacity while holding such
office, and shall continue as to a person who has ceased to be a director,
officer, employee or agent and shall inure to the benefit of the heirs and
personal representatives of such a person.
43
<PAGE>
PART F/S
ITEM 1. FINANCIAL STATEMENTS
Audited Financial Statement as of September 30, 2000 and December 31, 1999.
ARBOR, INC.
(FORMERLY E INVESTMENTS, INC.)
(A DEVELOPMENTAL STAGE COMPANY)
FINANCIAL STATEMENTS
September 30, 2000
December 31, 1999
(End of page)
<TABLE>
<S> <C>
TABLE OF CONTENTS
INDEPENDENT AUDITOR'S REPORT 1
ASSETS 2
LIABILITIES AND STOCKHOLDERS' EQUITY 3
STATEMENT OF OPERATIONS 4
STATEMENT OF STOCKHOLDERS' EQUITY 5
STATEMENT OF CASH FLOWS 6
NOTES TO FINANCIAL STATEMENTS 7-11
</TABLE>
BARRY L. FRIEDMAN, P.C.
Certified Public Accountant
1582 TULITA DRIVE OFFICE (702) 361-8414
LAS VEGAS, NEVADA 89123 FAX NO. (702) 896-0278
INDEPENDENT AUDITORS REPORT
Board Of Directors November 1, 2000
Arbor, INC.
Calgary, Alberta, Canada
I have audited the Balance Sheets of Arbor, Inc., (Formerly E INVESTMENTS,
44
<PAGE>
INC.),(A Development Stage Company), as of September 30, 2000, and December 31,
1999, and the related Statements of Operations, Stockholders, Equity and Cash
Flows for the periods January 1, 2000, to September 30, 2000, and February 25,
1999, (inception) to December 31, 1999. These financial statements are the
responsibility of the Company's management. My responsibility is to express an
opinion on these financial statements based on my audit.
I conducted my audit in accordance with generally accepted auditing
standards. Those standards require that I plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
I believe that my audit provides a reasonable basis for my opinion.
In my opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Arbor, Inc. (Formerly E
INVESTMENTS, INC.), (A Development Stage Company), as of September 30, 2000, and
December 31, 1999, and the results of its operations and cash flows for the
periods January 1, 2000, to September 30, 2000, and February 25, 1999,
(inception) to December 31, 1999, in conformity with generally accepted
accounting principles.
The accompanying financial statements have been prepared assuming the
Company will continue as a going concern. As discussed in Note #5 to the
financial statements, the Company has no established source of revenue. This
raises substantial doubt about its ability to continue as a going concern.
Managements plans in regard to these matters are also described in Note #5. The
financial statements do not include any adjustments that might result from the
outcome of this uncertainty.
Barry L. Friedman
Certified Public Accountant
ARBOR, INC.
(Formerly E INVESTMENTS, INC.)
(A Developmental Stage Company)
BALANCE SHEET
ASSETS
45
<PAGE>
<TABLE>
<CAPTION>
September December 31,
30, 2000 1999
<S> <C> <C>
CURRENT ASSETS
Cash $8,167 $21,296
TOTAL CURRENT ASSETS $8,167 $21,296
OTHER ASSETS $0 $0
TOTAL OTHER ASSETS $0 $0
TOTAL ASSETS $8,167 $21,296
</TABLE>
The accompanying notes are an integral part of these financial statements.
ARBOR, INC.
(Formerly E INVESTMENTS, INC.)
(A Developmental Stage Company)
BALANCE SHEET
LIABILITIES AND STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
September December 31,
30, 2000 1999
<S> <C> <C>
CURRENT LIABILITIES $1,000 $0
TOTAL CURRENT $1,000 $0
LIABILITIES
STOCKHOLDERS' EQUITY
Common Stock, $.001 par $2,616 $2,616
value, authorized
25,000,000 shares;
issued and outstanding
at December 31, 1999 -
2,616,000 shares
March 31, 2000 -
2,616,000 shares
Additional paid-in 128,184 128,814
capital
Deficit accumulated (123,633) (109,504)
during the development
46
<PAGE>
stage
TOTAL STOCKHOLDERS' $7,167 $21,296
EQUITY
TOTAL LIABILITIES AND $8,167 $21,296
STOCKHOLDERS' EQUITY
</TABLE>
The accompanying notes are an integral part of these financial statements.
ARBOR, INC.
(Formerly E INVESTMENTS, INC.)
(A Developmental Stage Company)
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
Jan. 1, 2000 to Feb. 25, 1999, to Feb. 25, 1999
Sep. 30, 2000 Dec. 31, 1999 (inception) to
<S> <C> <C> <C>
Sep. 30, 2000
INCOME
Revenue $0 $0 $0
EXPENSES
Accounting Fees $2,000 $825 $2,825
Bank Charges 72 79 151
Consulting Fees 3,500 26,600 30,100
Directors' Expense 3,000 0 3,000
Legal 2,000 0 2,000
Registration Costs 707 13,000 13,707
Telephone 200 0 200
Transfer Fees 650 0 650
Travel Expense 2,000 9,000 11,000
Services 0 60,000 60,000
TOTAL EXPENSES $14,129 $109,504 $123,633
Net loss $(14,129) $(109,504) $(123,633)
Net loss per share $(.0054) $(.4186) $(.4726)
- Basic
47
<PAGE>
Net loss per share $(.0035) $(.2716) $(.3066)
- Diluted
Weighted average 2,616,000 2,616,000 2,616,000
number of common
shares outstanding
Assuming average 4,032,000 4,032,000 4,032,000
number of diluted
shares outstanding
</TABLE>
The accompanying notes are an integral part of these financial statements.
ARBOR, INC.
(Formerly E INVESTMENTS, INC.)
(A Developmental Stage Company)
STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
Common Stock Common Stock Additional Deficit
Shares Amount paid-in accumulated
capital during
development
stage
<S> <C> <C> <C> <C>
April 5, 1999 1,200,000 $1,200 $58,800 $0
issued for
services
April 5, 1999 1,416,000 1,416 69,384
issued for
cash
Net loss, $(109,504)
February 25,
1999
(inception) to
December 31,
1999
Balance, 2,616,000 $2,616 $128,184 $(109,504)
December 31,
1999
Net loss, (14,129)
January 1,
2000 to
September 30,
48
<PAGE>
2000
Balance, 2,616,000 $2,616 $128,184 $(123,633)
September 30,
2000
</TABLE>
The accompanying notes are an integral part of these financial statements.
ARBOR, INC.
(Formerly E INVESTMENTS, INC.)
(A Developmental Stage Company)
STATEMENT OF CASH FLOWS
<TABLE>
<CAPTION>
Cash Flows from Jan. 1, 2000 to Feb. 25, 1999, to Feb. 25, 1999
Operating Sep. 30, 2000 Dec. 31, 1999 (inception) to
Activities Sep. 30, 2000
<S> <C> <C> <C>
Net Loss $(14,129) $(109,504) $(123,633)
Issuance of +60,000 +60,000
common stock for
services
Changes in Assets
and Liabilities
Officer's +1,000 0 +1,000
Advances
Net Cash Flows $(13,129) $(49,504) $(62,633)
from Operating
Activities
Cash Flows From $0 $0 $0
Investing
Activities
Cash Flows From
Financing
Activities
Issuance of $0 $+70,800 $+70,800
common stock for
cash
Net Cash Flows $0 $+70,800 $+70,800
49
<PAGE>
From Financing
Activities
Net increase in $(13,129) $+21,296 $+8,167
cash
Cash, Beginning 21,296 0 0
of period
Cash, End of $8,167 $21,296 $8,167
period
</TABLE>
The accompanying notes are an integral part of these financial statements.
ARBOR, INC.
(Formerly E INVESTMENTS, INC.)
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
September 30, 2000, and December 31, 1999
NOTE #1 - HISTORY AND ORGANIZATION OF THE COMPANY
The Company was organized February 25, 1999, under the laws of the State of
Nevada, as E INVESTMENTS, INC. The Company currently has no operations and,
in accordance with SFAS #7, is considered a development stage company. On
December 16, 1999, the Company changed its name to ARBOR, INC.
NOTE #2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Accounting Method
The Company records income and expenses on the accrual method.
Estimates
The preparation of Financial Statements, in conformity with generally
accepted accounting principles, requires management to make estimates and
assumptions which 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 revenue and expenses
50
<PAGE>
during the reporting period. Actual results could differ from those
estimates.
Cash and Equivalents
The Company maintains a cash balance in a non-interest-bearing bank, which
currently does not exceed federally insured limits. For the purpose of the
statements of cash flows, all highly liquid investments, with the maturity
of three months or less, are considered to be cash equivalents. There are
no cash equivalents as of December 31, 1999, or September 30, 2000.
Income Taxes
Income taxes are provided for using the liability method of accounting in
accordance with Statement of Financial Accounting Standards No. 109 (SFAS
#109) "Accounting for Income Taxes". A deferred tax asset or liability is
recorded for all temporary difference between financial and tax reporting.
Deferred tax expense (benefit) results from the net change during the year
of deferred tax assets and liabilities.
ARBOR, INC.
(Formerly E INVESTMENTS, INC.)
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
September 30, 2000, and December 31, 1999
NOTE #2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Reporting on Costs of Start-Up Activities
Statement of Position 98-5 ("SOP 98-5"), "Reporting on the Costs of
Start-Up Activities," which provides guidance on the financial reporting of
start-up costs and organization costs. It requires most costs of start-up
activities and organization costs to be expensed, as incurred. SOP 98-5 is
effective for fiscal years beginning after December 15, 1998. With the
adoption of SOP 98-5, there has been little or no effect on the Company's
Financial Statements.
Net loss per share is provided in accordance with Statement of Financial
Accounting Standards No. 128 (SFAS #128) "Earnings Per Share". Basic loss
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per share is computed by dividing losses available to common stockholders
by the weighted average number of common shares outstanding during the
period. Diluted loss per share reflects per-share amounts that would have
resulted if dilutive common stock equivalents had been converted to common
stock. There are 1,416,000 warrants outstanding (See Note #4).
Year End
The Company has selected December 31st, as its year-end.
Year 2000 Disclosure
The Y2K issue had no effect on this Company.
Policy in Regards to Issuance of Common Stock in a Non-Cash Transaction
The Company's accounting policy for issuing shares in a non-cash
transaction is to issue the equivalent amount of stock equal to the fair
market value of the assets or services received.
ARBOR, INC.
(Formerly E INVESTMENTS, INC.)
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
September 30, 2000, and December 31, 1999
NOTE #3 - INCOME TAXES
There is no provision for income taxes for the period ended September 30,
2000. The Company's total deferred tax asset, as of December 31, 1999, is
as follows:
Net operation loss carry-forward $ 109,504
Valuation allowance $ 109,504
Net deferred tax asset $ 0
The federal net operating loss carry-forward will expire in 2019.
This carry-forward may be limited upon the consummation of a business
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combination under IRC Section 381.
NOTE #4 - STOCKHOLDERS' EQUITY
Common Stock
The authorized common stock of the Company consists of 25,000,000 shares,
with a par value of $0.001 per share.
Preferred Stock
ARBOR, INC. has no preferred stock.
On April 5, 1999, the Company issued 1,200,000 shares of its $0.001 par
value common stock for services for $$0.05 per share, or a total of
$60,000, to its two directors.
On April 5, 1999, the Company completed a public offering that was offered
without registration, under the Securities Act of 1933, as amended ("The
Act"), in reliance upon the exemption from registration afforded by
Sections 4 (2) and 3 (b) of the Securities Act, and Regulation D
promulgated thereunder. The Company sold 1,416,000 shares of common stock
at a price of $0.05 per share, with warrants attached, for a total amount
raised of $70,800.
ARBOR, INC.
(Formerly E INVESTMENTS, INC.)
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
September 30, 2000, and December 31, 1999
NOTE #5 - GOING CONCERN
The Company's Financial Statements are prepared using generally accepted
accounting principles applicable to a going concern, which contemplates the
realization of assets and liquidation of liabilities in the normal course
of business. However, the Company has no current source of revenue. This
raises substantial doubt about its ability to continue as a going concern.
Without realization of additional capital, it would be unlikely for the
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Company to continue as a going concern.
NOTE #6 - RELATED PARTY TRANSACTIONS
The Company neither owns nor leases any real or personal property. An
officer of the corporation provides office services without charge. Such
costs are immaterial to the Financial Statements and, accordingly, have not
been reflected therein. The officers and directors of the Company are
involved in other business activities and may, in the future, become
involved in other business opportunities. If a specific business
opportunity becomes available, such persons may face a conflict in
selecting between the Company and their other business interests. The
Company has not formulated a policy for the resolution of such conflicts.
NOTE #7 - WARRANTS AND OPTIONS
There are warrants outstanding to acquire additional shares of common
stock. These warrants are attached to the shares issued pursuant to the
public offering, as described in Note #4, and are convertible to shares,
with 1-year restriction, before they become free trading shares. There are
1,416,000 warrants issued, but not exercised. These warrants have an
expiration date of April 30, 2001. These warrants are to be exercised at
$0.10 per share. For purposes of calculating earnings per share, the
warrants have been fully exercised.
NOTE #8 - OFFICERS ADVANCES
While the Company is seeking additional capital, an officer of the Company
has advanced funds on behalf of the Company to pay for any costs incurred
by it. These funds are interest free. As of September 30, 2000, $1,000.00
has been advanced.
ARBOR, INC.
(Formerly E INVESTMENTS, INC.)
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
September 30, 2000, and December 31, 1999
Note # 9 - Foreign Currency Exchange
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There is no foreign currency exchange transactions. All transactions are
done in U.S. dollars through a U.S. Dollar bank account.
PART III
ITEM 1. INDEX TO EXHIBITS
Exhibit Description of Document
--------- ----------------------------------------------------------------------
2 Charter and By-Laws
--------- ----------------------------------------------------------------------
--------- ----------------------------------------------------------------------
2.1 Articles of Incorporation Arbor, Inc.(Formerly E
Investments, Inc.)
--------- ----------------------------------------------------------------------
2.2 By-Laws of Arbor, Inc. (Formerly E Investments,
Inc.)
--------- ----------------------------------------------------------------------
2.3 Name Change
--------- ----------------------------------------------------------------------
--------- ----------------------------------------------------------------------
3 Instruments Defining the Rights of Security
Holders
--------- ----------------------------------------------------------------------
--------- ----------------------------------------------------------------------
3.1 See Exhibit 2.1 "Articles of Incorporation"
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5 Voting Trust Agreement
-------- -----------------------------------------------------------------------
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5.1 None
-------- -----------------------------------------------------------------------
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6 Material Contracts
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-------- -----------------------------------------------------------------------
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6.1 Consulting Agreement with Libal
-------- -----------------------------------------------------------------------
-------- -----------------------------------------------------------------------
------- ------------------------------------------------------------------------
7 Material Foreign Patents
------- ------------------------------------------------------------------------
------- ------------------------------------------------------------------------
7.1 None
------- ------------------------------------------------------------------------
------- ------------------------------------------------------------------------
12 Sales Materials
------- ------------------------------------------------------------------------
------ -------------------------------------------------------------------------
12.1 None
------ -------------------------------------------------------------------------
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15 Additional Exhibits
----- --------------------------------------------------------------------------
----- --------------------------------------------------------------------------
15.1 None
----- --------------------------------------------------------------------------
----- --------------------------------------------------------------------------
27 Schedules
----- --------------------------------------------------------------------------
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27.1 Financial Data Schedule
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SIGNATURES
Pursuant to the requirements of Section 12 of the Securities Exchange Act of
1934, the registrant has duly caused this amended registration statement to be
signed on its behalf by the undersigned, thereunto duly authorized.
Arbor, Inc.
Date: September 30, 2000
By:
Joginder Brar, President
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